GCash IPO May Prompt Reshuffle of Philippine Portfolios

MANILA, Philippines — The upcoming blockbuster GCash initial public offering (IPO) may be big enough to prompt local and foreign funds to reshuffle their Philippine stock portfolios as they free up cash to participate in the offering, according to brokerage COL Financial. April Lynn Tan, chief equity strategist at COL, said the IPO of GCash parent Mynt could be among the factors influencing portfolio positioning ahead of the fintech giant’s planned October market debut. READ: GCash files for IPO, targets Q4 debut Mynt is scheduled to conduct an offering from Oct. 6 to Oct. 12 that could raise more than P90 billion. Listing is targeted for Oct. 20. “Since a large portion of the IPO is expected to be allocated to institutional investors, some local and foreign funds may need to free up cash to participate,” Tan said. She said this could lead some funds to trim existing Philippine stock positions or rebalance their portfolios to make room for the offering. Tan, however, stressed there was no direct evidence linking preparations for the GCash IPO to last week’s market decline. The Philippine Stock Exchange Index ended the week at 5,956.32 after breaking below an important support level. “There is currently no direct evidence that last week’s selling was specifically caused by the GCash IPO,” Tan said, adding it should only be considered a possible contributing factor. She said there was no single major catalyst behind the market’s sharp decline. Instead, foreign portfolio rebalancing, the peso’s weakness, month-end positioning and technical selling likely contributed to the pressure. “Putting everything together, the magnitude of the market decline seemed disproportionate to the company-specific fundamental news released during the week,” Tan said. She suggested portfolio flows and technical factors played a larger role than fundamentals. This distinction could eventually create opportunities for investors. If the selloff was largely driven by portfolio flows rather than a sharp deterioration in the economic outlook or corporate earnings expectations, Tan said fundamentally strong stocks could become attractive once technical selling pressure eases. INQ