MANILA, Philippines - United Kingdom-based investment bank Credit Suisse sees the property and banking sectors are likely to benefit from the positive outcome of the presidential, national, and local elections scheduled in May.
In its Asian Daily, Credit Suisse research analyst Gilbert Lopez said property and banking companies that are being traded at the Philippine Stock Exchange (PSE) have the most potential upsides to the share price.
“We continue to have a positive political outcome in May 2010 as our base case. Under this scenario, we believe the property and banking sectors would do best and have the most potential upsides to the share price,” Lopez stressed.
He pointed out that the Metrobank Group of taipan George SK Ty as well as property companies such as Ayala Land Inc. and mall giant SM Prime of retail king Henry Sy are expected to perform well.
He said the share price of Metrobank could go up to P59 from the current level of P42 while that of Ayala Land could increase to P14.43 from P10.50 and SM Prime could improve to P12.07 from P9.40.
He added that diversified conglomerate Ayala Corp. and Sy’s SM investments are also expected to perform well this year. The share price of Ayala Corp. is expected to increase to P399.85 from P290 while that of SM Investments would improve to P395.74 from P317.50.
The investment bank stressed the need for the next government to pursue fiscal consolidation after the failure of the administration of President Gloria Macapagal Arroyo to achieve a balanced budget due to the global economic meltdown.
“A fairly smooth presidential and general elections should help the upcoming government with a better chance of achieving its most pressing problem of fiscal consolidation,” Credit Suisse said.
The Philippines has postponed the achievement of a balanced budget to 2013 after failing to balance the budget in 2008 and this year under the Medium Term Philippine Development Plan (MTPDP).
The country likely posted a record high budget deficit of over P290 billion last year due to the full impact of the global financial meltdown eclipsing the previous record level of P210.7 billion booked in 2002.
“The next government needs to raise tax revenues to gross domestic product, which has been a disappointment over the last two years,” Lopez added.
He explained that the government needs to greatly improve collection efficiency, along with reversing the recent tax breaks that contributed to the disappointing tax revenues.