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Analysts see potential drags to upcoming initial public offerings

INVESTOR appetite for upcoming initial public offerings (IPOs) is seen by some analysts to be weaker than before amid uncertainties, including those that come with the transition to a new administration.

“Demand might not be as strong for IPOs given the weak performance of the market and the recent IPOs. Investors might prefer to just buy stocks that are already listed given that many are already trading at very cheap valuations,” COL Financial Group First Vice-President April Lynn C. Lee-Tan said in a Viber message.

Raslag Corp. is the first company to list this month. The solar energy developer will debut on Monday, June 6, and offer up to 350 million primary shares and up to 52.50 million over-allotment option shares at P2.00 per share.

Balai ni Fruitas, Inc., VistaREIT, Inc., and North Star Meat Merchants, Inc. have also been given the go signal by the Philippine Stock Exchange (PSE) for their respective IPOs.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said that the sentiment on these IPOs would be taken on a per-company or case-to-case basis, based on fundamentals and future industry prospects.

“However, both external and local risk factors could be potential drags on market sentiment, including the still wait-and-see attitude,” he added.

Mr. Ricafort said that the policy and reform priorities of the incoming administration, especially in tackling debt management, could lead to some pickup in prices, with higher inflation as an unintended consequence.

President-elect Ferdinand R. Marcos, Jr. has chosen Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno to be his Finance secretary, with Monetary Board member Felipe M. Medalla taking over as central bank head. Alfredo E. Pascual, former president of the University of the Philippines, was tapped as Trade secretary.

Mr. Ricafort said he sees market sentiment to be partly supported after Mr. Diokno signaled that the government would target a narrower budget deficit of about 3% of gross domestic product by 2028 as part of efforts to improve its fiscal performance. This was after the country reached a new record high outstanding national government debt of P12.76 trillion as of April 2022.

He added that better market conditions would support the demand for new IPOs, especially with the slow reopening of the economy amid eased restrictions.

Malacañang announced last week that Metro Manila will remain under Alert Level 1 until at least June 15. Under the most relaxed quarantine restriction, establishments including workplaces and public transportation are allowed to be fully operational.

“Definitely, better market conditions would support market demand and prices for the coming IPOs, with the further re-opening of the economy towards greater normalcy would be an offsetting positive factor vis-a-via the risk factors that are most external nature that are beyond the country’s reasonable control,” he added. — Luisa Maria Jacinta C. Jocson

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