00:00Who do we blame for this recent underperformance? What do we blame?
00:04Well, I'm not in the blaming game, but I would say what's causing the problem in our equity market.
00:10Basically, it's the political scenarios happening here, the corruption scandal, the investigations.
00:19So what's happening to our market basically is really, it's a sentiment issue, a confidence issue.
00:25Because our fundamentals are still very strong. Earnings of our index companies are up, you know, almost 17% for the first half.
00:37The CIMEPA law, which reduced the stock transaction tax from 60 bps to 10 bps, was passed and was made effective July.
00:47And in July, we saw an increase in our volume.
00:49I mean, our volume increased 30.4% compared to the, you know, average daily volume we had in 2024.
00:57We had, you know, after a net foreign selling of about 23, you know, 0.2 billion in 2024.
01:05In July, we had a positive net foreign buying of about 1.6 billion pesos.
01:11And of course, after the corruption scandal erupted, this, you know, reverted back to net foreign selling for August and September.
01:21But again, I mean, that's what's confronting our market now.
01:26But I would say that, you know, not all is, you know, gloom and doom.
01:32There's some, well, there's still some bright spots that we look forward to.
01:39But the most important thing is we've got to get over this problem on the corruption scandal.
01:44I think the formation of an independent commission for infrastructure to investigate all these corruptions was a right step forward.
01:54But, of course, you know, the investigation results must be swift, must be credible, and must, you know, must be fair.
02:04When I say fair, I mean, you know, I mean, if it hits the allies or, you know, or, you know, senators and congressmen, so be it.
02:13I mean, you know, cases have to be filed, you know, against them.
02:17So that's one bright spot, the, you know, formation of the independent commission to investigate this corruption scandal.
02:26Our big IPO for the year, my NILAD, okay, has, you know, has been garnering a lot of foreign interests.
02:35There are two multilateral lenders who will, you know, serve as their anchor investors, which is IFC and ADB, who is still getting board approval.
02:48But they expect to invest about $245 million in the IPO.
02:54And just recently, it was confirmed that, you know, there are six foreign cornerstone investors.
03:01So I hope the results of the ICI investigation and the my NILAD IPO would be the catalyst to, you know, turn around what's happening in our market.
03:11But do you see further downside in the short to medium term if the corruption scandal is still ongoing and still continuing to spook foreign investors?
03:22Yes.
03:23Yes, I think until foreign investors see clarity in the results of the investigation, you know, they will continue to price in risk in our market, you know.
03:34But it's October now, the listing for my NILAD IPO is November 7.
03:42We have one month.
03:43Hopefully in this one month period, something, you know, concrete will happen, you know, in the ICI investigation.
03:49And hopefully this could, you know, be the catalyst to, you know, turn around what's happening to our market.
03:57Yeah, Mr. Monzon, and, you know, let me ask you directly, you know, in some sense, we've seen many of these investigations in the past.
04:06The sense I get from the people I talk to and the news flow coming throughout Manila, and I can't look at it in a vacuum, right?
04:12I look at the recent elections and the changes there, and I, you know, I just got to wonder whether there is some level of change in political accountability that's taking place there.
04:23And do you see perhaps, well, okay, let me put it this way.
04:27Foreign investors seem to be worried that this might have a, pardon the pun, a spillover effect into more of consequence issues.
04:35You know, a re-rating of the ability for the country to raise money, GDP spending, the credit ratings, for example.
04:45Are foreign investors being too pessimistic over what's going on there, or is there really something taking place?
04:51Well, there's probably, I might call skepticism, you know, not cynicism on what could, you know, what could this independent commission really achieve.
05:03But I think, well, our president, I think, knows the, you know, the real score.
05:09This is something that can't be a cosmetic, you know, approach to the problem.
05:13Right.
05:14I think, as you can see in the September 21 rally, I think a lot of people are angry.
05:20I mean, they are really angry, you know.
05:22So, you know, I think they have to, and I think they recognize this.
05:27So, I don't think this is going to be a, you know, one of those cosmetic investigations that, you know, will be short-term.
05:34I think this will have some really, you know, significant results that will hopefully change the governance of, you know, our political leaders.
05:43The recent low of 5,900 points then, do you see the market going below that again?
05:53What's sort of your expectations around the levels to the downside and the upside in the short term?
05:58I think in the short term, everything will depend on what's happening politically.
06:02Because, like I said, fundamentally, you know, our inflation rate is within targets, our GDP growth rate is within targets, the corporate earnings are, you know, up.
06:14So, it's really the political events.
06:17And, you know, like I said, if the coming, you know, in the coming weeks, if the results of the investigation show that it's going over, I can see the market going down some more.
06:30So, you know, I think it's very important that something swift, credible, and, you know, all-encompassing investigations should be, and prosecutions should be, you know, should be done.
06:43Mr. Monza, a final question for you.
06:45To your point, the fundamentals seem unchanged, right?
06:48And the only difference is it's just a much cheaper market now.
06:51We're trading in single-digit multiples there.
06:55You know, as they say, do what locals do.
06:57What is the sense among the local institutional investor community there over market sentiment?
07:04Well, I think the local institutions are, you know, following the lead of the foreign investors.
07:10We see net foreign selling, the market, you know, big net foreign selling in August when the corruption scandal erupted.
07:19Another, you know, big net foreign selling in September.
07:22So, I think our local institutions are just going to be following the, you know, the lead of the foreign investors.
07:29They're going to await, you know, something significant or meaningful that, you know, that can come out of these investigations.
07:36If you want, but you can see them in half an idiot.
07:43If you want, you would go to the top of anointed CEO, you know, the company is Guess 8x.
07:45The sogal object disruption and that will be a little bit heavier.
07:47They're going to be��� Mode.
07:49Well, it's always something you want to do with that now.
07:49But it's always said, just something you enjoy.
07:51Yep, you don't want to buy right nobody to buy right nobody to buy right nobody to buy right somebody.
07:53When I ê·¹ha, I mean to supply, you know, let's pay nobody to buy right nobody to buy.
07:55Sometimes we've got the reasons.
07:56I never really didn't get a place limited and back where I don't like to buy them though.
07:57But it's just anyway.
07:58If you live with the common mouldland fino very much cheaper, that will give you hope.
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