PSE IPO target unlikely amid uncertainties due to tariffs

The Philippine Stock Exchange’s (PSE) target of six initial public offerings (IPOs) this year may no longer be achievable due to uncertainties related to US tariffs, according to analysts.

“Until we see more consistency between President Donald J. Trump’s trade statements and actual policy direction, investor sentiment may remain cautious — making it more important for upcoming IPOs to be timed carefully and backed by strong fundamentals,” DragonFi Securities, Inc. Equity Research Analyst Jarrod Leighton M. Tin said in a Viber message on Wednesday.

“We’ve seen how market volatility can derail IPOs, with Mr. Trump’s unpredictable tariff policies shaking global equity markets… This kind of bearish sentiment makes it harder for IPOs to gain traction,” he added.

AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said that the ongoing trade war has increased the likelihood of an economic slowdown, weakening investors’ risk appetite.

“With markets being as weak as they are, GCash is likely thinking that they won’t be able to get valuations acceptable to existing shareholders. Since they have no immediate need for funds, it would be better for them to wait for better conditions before going public,” he said.

“We thought that the six-IPO target was a long shot even before the trade war, so it’s even more unattainable now. Our most optimistic IPO estimate is four, and only Maynilad will be big,” he added.

Electronic wallet giant GCash recently hinted at possible delays in its planned public listing, citing the Trump administration’s tariffs.

Globe Chief Financial Officer Juan Carlo C. Puno said on Tuesday that the new US tariffs have added a lot of uncertainty. Despite this, he said that GCash’s market debut would likely happen either this year or next year.

“I think this uncertainty does not stop us from preparing. The goal is to get GCash to a point where we are push-button ready. So, when the market opens up, if we find the window where the valuations and interest we’re getting are appropriate and acceptable, we will push that button for the IPO,” Mr. Puno said.

Globe has a 36% stake in Globe Fintech Innovations, Inc. (Mynt), which owns GCash operator G-Xchange, Inc.

Mr. Trump recently announced his “Liberation Day” tariffs, which include a 10% duty on goods from all countries. The Philippines is subject to a 17% tariff on its exports to the US, though these, along with most reciprocal tariffs, have been suspended for 90 days.

The PSE saw its first public listing on April 8 with the PHP 732.6-billion IPO of Cebu-based fuel retailer Top Line Business Development Corp.

Mr. Garcia said that the risk appetite among investors is not there yet despite positive local factors such as slower inflation and easing policy rates.

“Valuations are still at levels not seen since the Global Financial Crisis of 2008, so it’s unlikely that the market will have appetite for high valuations. Companies, on the other hand, are unlikely to accept low valuations for their IPO,” he said.

Philippine inflation eased to 1.8% in March from 2.1% in February, the lowest in 58 months or since the 1.6% logged in May 2020.

The local central bank recently reduced borrowing costs by 25 basis points despite a more challenging external environment.

China Bank Capital Corp. Managing Director Juan Paolo E. Colet said in a Viber message that the risk of economic slowdown caused by the Trump administration’s tariffs would have a negative impact on corporate earnings and valuations.

“Elevated uncertainty around US economic policy has also introduced significant volatility in global financial markets, so that has made some foreign investors more cautious about committing to IPOs in Southeast Asian emerging markets,” he said.

Despite uncertainties, Unicapital Securities, Inc. Equity Research Analyst Peter Louise D.C. Garnace said that the P49-billion IPO of Pangilinan-led water provider Maynilad Water Services, Inc. is still expected to proceed.

“We believe that the water sector is relatively insulated from global trade tensions as growth is domestically driven. On top of this, Maynilad’s IPO has a higher likelihood of pushing through, as the water concessionaire is legally required to list by 2027,” he said in a Viber message.

Mr. Colet said that Maynilad is still on track to have a “successful IPO” despite the uncertainties.

“They are a defensive stock and dividend play, so that would draw a lot of investor interest,” he said.

The offer period of Maynilad’s IPO will be from June 25 to July 2, with a July 10 listing date, based on its prospectus dated March 14.

Signed into law on Dec. 10, 2021, Republic Act No. 11600 granted Maynilad a 25-year legislative franchise until 2047 to establish, operate, and maintain a waterworks system and sewerage and sanitation services in the West Zone service area of Metro Manila and Cavite province.

The law also requires Maynilad to offer at least 30% of its outstanding capital stock within five years from the grant of the franchise. – Revin Mikhael D. Ochave, Reporter