PSEi closes at highest level this year after testing 6,900-mark
Local share prices continued to gain yesterday on the back of good corporate results and increased inflows, pushing the Philippine Stock Exchange index PSEi) to breach the 6,900 level before settling up 27.63 points at 6,880.44, the highest level this year for the closely watched stock barometer.
Buoyed by the record-breaking rally in Wall Street overnight, the PSEi closed yesterday 27.8063 points or 0.40 percent higher at 6,880.44 on higher volume. A total of 2.34 billion shares valued at P10 billion was traded. But decliners outnumbered gainers, 119-59, with 51 issues unchanged.
“The market continued to trade higher on continued higher investment sentiment driven by good earnings reports and currency flows causing a strong peso to the dollar rate,” said BDO Unibank chief market strategist Jonathan Ravelas.
The Philippines won a credit-rating upgrade from Standard & Poor’s last week, boosting confidence that low borrowing costs will sustain growth. Foreign investors have bought $880 million of the nation’s shares this year, including a 27-day stretch of net inflows that was the longest since at least 1999, according to Bloomberg News.
“The debt rating is a key catalyst in pushing up share prices,” Ravelas said. “It reinforced the fundamentals investors have been trading on, and it supports the outlook that even with a possible adjustment later in the year, interest rates will remain low.”
Other credit-rating companies will also recognize the nation’s economic fundamentals and governance “sooner rather than later,” central bank Governor Amando Tetangco wrote in an e-mail on May 13.
International investors bought a net $65.7 million of Philippine shares today, the biggest inflow in more than six weeks, according to exchange data compiled by Bloomberg.
Ravelas noted that “we managed to touch the 6,906.63 level but market succumbed to some profit taking.” However, despite the correction, Ravelas said the market is still looking for a test towards the 7,000 levels.
Most sub-indices were in the green except for banks and mining and oil counters. However, losers outnumbered gainers 119 to 59 while 51 issues remained unchanged. A total of 1.8 billion shares of stocks worth P10.38 billion changed hands.
Accord Capital Equities Corporation analyst Justino Calaycay Jr. said “the momentum of last week’s breach of the 6800 mark continues to flow with the PSEi testing the 6900 psychological resistance inside the first hour off the opening bell.”
However, he noted that, “even as value activity still favor index-component counters, we are seeing the stirrings of flows into off-index, including what may be considered third tier issues.”
Since market breadth was negative for the session, Calaycay said this suggests that the day’s brief break into 6900 and close above 6800 for a fourth day may be meeting some resistance.
“Nevertheless, the tendency to not wait for a substantial downside before taking fresh positions in these counters has thus far tempered the corrections,” he said.
Mass housing developer 8990 Holdings successfully listed its shares in the PSE yesterday after a P9 billion follow-on offering, closing P0.20 higher at P6.70 per share compared to its offering price of P6.50 per share.
8990 Group President and Chief Executive Januario Jesus Atencio said: “We are extremely pleased with the strong level of interest that we have received from the global and local investor community and we look forward to working closely with them as we continue to create more value for the company, our shareholders and the mass housing market.”