Capital marts growth seen to slow in second semester

MANILA, Philippines - ATR KimEng Financial Corp. (ATRKE) said it expects growth in the capital markets to slow in the second semester as mergers and acquisitions (M&A) and other fund-building activities thin down.

ATRKE president Manuel Tordesillas said most of the major M&A and capital-raising activities of big companies were already undertaken in the latter part of 2009 and the first quarter of 2010.

“We are still fairly optimistic especially if the foreign players will show strong interest in the capital markets with the negative development in the eurozone,” he said.

Tordesillas said that potential M&As and capital-raising activities remain strong in the power and property sector.

The Greece debt crisis, which forced the eurozone and the International Monetary Fund (IMF) to raise a $1-trillion bailout package, is not expected to widely impact on the country, except in terms of exports and remittance inflows from overseas Filipinos in the eurozone.

Tordesillas said foreign investors are staying away from Europe and could pick the Asian emerging markets. Consumer buying will weaken in the European market and employment opportunities for migrant workers may shrink.

For its part, ATRKE has made major gains so far this year as consolidated net income in the first three months nearly doubled to P94.3 million from P48.4 million in the same period last year.

“Our first quarter revenues already approximate 35 percent of our full-year 2009 revenues,” Tordesillas pointed out.

Total consolidated revenues increased 33.9 percent to P757.4 million from P565.5 million in the same three-month period last year. Insurance premiums, as well as commission and interest income from the capital markets, drove the strong revenue performance.

Meanwhile, ATRKE declared an eight-percent stock dividend and an increase in capital stock to P1.3 billion. New common shares of up to 79 million will be issued via the stock dividends.

The financial institution is also encouraging shareholders to sell their dividends in the secondary market.

It will also start a one-year share buyback program covering up to 25 million common shares.

Tordesillas said ATRKE will purchase the company’s shares if they become undervalued. “If the price is undervalued, or share prices are considered highly volatile, the company will purchase if it will result in enhancing shareholder value,” he added.