Stock Market: Analysts Predict Bullish Prices For Banks, Telcos In 2022

As the pandemic situation continues to stabilize in the country resulting in economic recovery, investors are reportedly leaning on buying bank stocks in 2022 as lenders are projected to be in a better position to bounce back according to Business World Online

The Philippine Stock Exchange index (PSEi) has seen a steady upward trend and is currently hovering at the 7150 mark as of this writing. The financials sub-index, which mainly consists of banks, is now at 1438.17 in Q4 compared to 1423 in Q3.

China Bank Securities Corp. Research Associate Zoren Philip A. Musngi gave light on what caused the downtrend in Q3.

“What mainly affected bank stock performance in [the third quarter and early fourth quarter] were pandemic-related developments, particularly the rise in COVID-19 (coronavirus disease 2019) cases due to the Delta variant, subsequent tightening of restrictions, and eventual easing of quarantine classifications as daily virus case counts retreated,” Musngi said.

And now that businesses are slowly getting back on their feet, loan transactions are expected to soar.

“Loan growth is likely to accelerate with the resumption of business and consumer spending, buoying revenues and offsetting the pressure on margins stemming from excess liquidity,” said Fitch Ratings.

“This, along with lower – albeit still elevated – impairment charges, should lead to better net overall profitability,” it added.

Another sector that is expected to see steady growth is the telco industry. With business transactions and work dynamics now heavily relying on broadband usage, subscriber count and plan upgrades are expected to go up. 

“Rising data consumption and broadband usage continue to drive revenue growth and a higher proportion of revenues,” Moody’s Investors Service said in its “Telecommunications — Asia-Pacific 2022 Outlook” report.

The report also stated that they see a 5% steady growth for the industry in 2022. Furthermore, the dividend stability that telco giants like Globe and PLDT provide investors an opportunity that is too hard to pass up on.

“On top of this, Globe Telecom, Inc. and PLDT, Inc. offer stable dividends at attractive yields,” the report added.

Furthermore, investors are keeping a watchful eye on the 2022 presidential elections and a candidate with a strong economic agenda might further boost investor trust in the country.

Recently, three presidential candidates bared their economic agenda to business leaders on Dec. 7, Tuesday.

Sen. Manny Pacquiao remains hell-bent on stopping corruption in the government, while Sen. Panfilo Lacson’s plan is to fund SMEs as well as the Universal Health Care Act that will give free healthcare to all Filipinos. 

Vice President Leni Robredo’s economic agenda is centered on harnessing technology and improving digitalization in the country. 

She further added that for investors and businesses to thrive, the next government should give them an equal playing field and not favor those who have connections in the higher office.

“When rules are unevenly applied, when they are changed in the middle of the game to favor one interest over another, when the government cannot be trusted to keep its word, then the economic environment becomes unpredictable. It is this unpredictability that breeds lack of confidence and keeps investments away,” she said.

“Conversely, a credible and trustworthy environment inspires confidence because investors will know rules will be followed … outcomes will be more predictable, projections more reliable and horizons come into clearer view,” she added.

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