By EDU H. LOPEZ
Market players are expecting more positive news from the third quarter corporate results of listed companies.
The stock market sentiment improved after government pushed through with the implementation of the EVAT, says BPI Securities.
This fiscal reform would help raise revenues and reduce the budget gap.
The earnings trend for the quarter has generally been positive despite the difficult environment of high oil prices and the peso depreciation during the uarter.
BPI Securities noted that the banking sector was generally positive. BPI reported third quarter net income of
P2.03 billion, up 13 percent year-on-year.
Banco de Oro posted a nine month net income of
P1.84 billion, up by 35 percent year-on-year. Union Bank’s nine-month net income was up 17 percent year-on-year.
PNB reported a ninemonth net income of
P454 million, up from P142 million last year. Metrobank also reported a nine-month net income of P3.2 billion.
Other factors that helped improved sentiment were the dip in world oil prices and the peso appreciation.
Oil prices were trading below the US$60 level per barrel. This may help to partially offset the impact of the VAT on oil prices.
The peso is appreciating against the US dollar in the fourth quarter compared to the third quarter where it tested the
P56.40 level a couple of times.
"While the market is still cautious due to the political uncertainty, investors have shifted their focus to corporate earnings and have started to accumulate select stocks expected to sustain their strong earnings for the year," says BPI Securities.
Despite the political uncertainty in the third quarter, the economy still managed to post some growth in the third quarter.
AB Capital Securities expects third quarter earnings reporting and the implementation of the expanded value added tax will take center stage for stock investors this week.
"Investors should go through the profit reports, keeping an eye also on the companies’ outlooks. Any comments companies make on costs and pricing should be closely watched. We expect companies to talk about rising costs, margin pressures and a more guarded outlook for sales," says AB Capital Securities.
"Expectation for earnings has been dimmed by the impact of high oil prices and the country’s political woes. However, we believe that this has already been discounted in share prices in the past weeks."
The implementation of the EVAT law is a positive signal for investors, who have long doubted the government’s political will to make such an unpopular action.
AB Capital Securities believes that the sentiment on the evat is that it would not bode well for the short term.
"Central Bank officials have warned about the potential for higher inflation. However, we believe that investors have also taken that into account and are putting more weight on its positive impact on the economy in the long run."
