MANILA, Philippines — Defying the effects of repeated shocks to the global economy, the Philippine Stock Exchange earned a spot as among the best equity performers for 2011 even without the anticipated Santa Claus rally.

The PSE index ended the year at 4,371.96, higher by 170.82 points or 4.1 percent from its previous close of 4,201.14 in 2010.

“The index has been a top performer throughout the year compared with its peers in the region. In fact, the PSEi soared to record highs seven times this year alone,” Mr. PSE president Hans B. Sicat said.

SB Equities’ Erwin Balita said the marginal return was enough to put Philippine equities among the top index performers in the world (ranked third behind Venezuela and US) and best in Asia, trumping its bigger counterparts such as Indonesia (+1.7 percent) and Thailand (-0.44 percent) which still had one trading day left for 2011.

In terms of sectoral indices, the Mining & Oil index emerged as the best performer in 2011 as it surged by 68.5 percent. This was followed by the Holding Firms index which grew by 3.4 percent.

“We are glad to report that despite the uncertainties in the global market that hounded us throughout the year, your local stock market has closed 2011 with yet another set of significant milestones,” Sicat said.

Total value turnover for 2011 registered a new record high for the exchange as it reached P1.42 trillion, 17.8 percent higher than the P1.21 billion registered in 2010.

Mergers and acquisitions, the rise of the yellow metal to nominal highs, and the flurry of backdoor listings contributed heavily in lifting Philippine market sentiment in 2011, Balita said.

These factors lured foreign investors to shift funds into the local market from more volatile overseas bourses. Preliminary figures show that foreign investors went into net buying territory in 2011 in the amount of P56.52 billion, higher than the net buying figure of P35.62 billion in 2009.

The combined market capitalization of listed issues in the PSE at yearend came in at P8.7 trillion, supported by the 5.0 percent improvement in domestic market capitalization, which finished the year at its highest ever recorded level of P7.24 trillion.

Capital raised at the Philippine stock market reached P107.50 billion in 2011, the highest total amount raised in a single year. This figure is 26.6 percent higher than the amount raised last year and breaches by 19.3 percent the previous record posted in 2007.

Capital raising activities include initial public offerings, follow-on offerings, stock rights and private placements.

A total of five companies conducted their maiden listing in 2011 – Megawide Construction Corporation, Puregold Price Club, Inc., Cirtek Holdings Philippines Corporation, Calapan Ventures, Inc. and Touch Solutions, Inc. – raising a total of P9.04 billion from the market.

Meanwhile, capital proceeds from private placement, stock rights offerings and follow-on offerings amounted to P42.85 billion, P40.61 billion and P15 billion, respectively. Looking Back at 2011

“We started the year fearing the worst out of Europe, albeit guardedly optimistic on the domestic front. Our fears were not realized as Europe managed to show a strong desire to address the focal issues on its debt crisis,” said Justino Calaycay Jr. of Accord Securities.

However, Calaycay noted that “internal politics in member-economies posed additional hurdles to a comprehensive rescue plan such that nearing the end of 2011, a solution remains elusive.”

While the US economy intermittently lent encouragement throughout the year, Calaycay said “the weight of the 2008 recession plus the lingering crisis across the Atlantic posed the drag.”

On the domestic front, the nation looked forward to the first full year of the new administration. The economy was hoped to show more than resilience on the back of the centerpiece Private-Public Partnership scheme.

“This however, failed to take-off and missing the overly optimistic official government target numbers became evident as soon as the first quarter figures were released,” Calaycay said.

Gross domestic product figures were less-than-expected for each of the first three quarters but the macro-economic performance fell in line with targets – inflation hovered near the upper end of the target range, GIR and remittances hit record levels and except for two separate tweaks of 25 basis points each, interest rates have remained pretty much stable.

BDO Unibank chief market strategist Jonathan Ravelas said the Philippine fiscal position notably improved due to higher revenues and lower government spending. It also registered consistent growth.

“The Philippines remained somewhat insulated from the global downturn due to its self-sustaining economy and the Bangko Sentral ng Pilipinas’ monetary policies,” he said noting that fundamentals remained strong and stable as these were anchored on the strong OFW flows supportive of consumption and the continued growth in the BPO sector supporting job growth.

In the stock market, Balita said stirring up interest in local equities is the surge of metal process which pushed up mining stocks.

Also of interest was PLDT’s whirlwind takeover of Digitel and the backdoor listing of Century Properties and Enrique Razon’s gaming venture Bloombury. The PSE’s enforcement of the 10 percent public offer rule also forced some companies to consider (but some aborted) a follow on offer.

These included companies such as San Miguel Corporation, Tanduay Holdings, Petron Corporation, and Filinvest Development Corporation.

Acquisitions in the financial services sector brought some life to the otherwise boring sector the year also saw the rise of the tourism and gaming industries.

Outlook for 2012

Despite the volatility in 2011, market analysts remain guardedly optimistic in their outlook for 2012, the year of the Dragon.

Ravelas said “2012 will be a tough one, with reduced global growth outlook due to global uncertainties. Financial market barometers will experience near-term volatility but should stabilize in the medium term.”

He noted that saving graces for the Philippines include its strong macroeconomic fundamentals, resilient OFW flows that help keep consumers spending.

Ravelas added that, with the slower economic growth, commodity prices are expected to recede, reducing inflation forecasts. Lower interest rates can also be a factor in business growth.

“Growth can also be found in sunshine industries, expansion of energy and mining investments, and construction of low/medium cost housing and office buildings,” he said.

For his part, Calaycay said that, “as 2012 looms, global headwinds from the Euro zone continue to shake the markets, causing investors to stay liquid and risk averse. We may experience near-term volatility in local financial markets but once investors realize that we can withstand these so-called headwinds, they will start rolling their funds again in the financial markets.”