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PSEi surges over 6,700 on strong foreign buying and positive news

Favorable news that accumulated over the long Lenten weekend and strong foreign buying boosted local share prices, allowing the Philippine Stock Exchange to catch up with its neighbors.

The benchmark Philippine Stock Exchange index (PSEi) surged to nine-month high past the 6,700 psychological barrier to close 96.33 points or 1.44 percent higher at 6,767.51 as all sectors posted strong gains. Gainers swamped losers 123 to 54 with 39 issues unchanged. Volume was relatively heavy with a total of 1.48 billion shares valued at P8.77 billion traded.

Accord Capital Equities Corporation analyst Justino Calaycay Jr. noted that the PSEi’s winning run has extended to a third day and validating the 6570 to 6600 support band. Last Friday’s close at 6671.18 marked the measure’s highest close below the 6700-line in nearly ten months.

“The PSEI tipped the 6700-line at the open and wasted no time erecting gains of 87.64 points at the noon recess as advancers swamped decliners nearly three-to-one. The afternoon session moved at a less steep but still positive slope further increasing the advance pushing it tantalizingly close to the 6800-mark,” said Calaycay.

Tensions in the Ukraine eased following a pact reached by the Western allies and Russia while positive numbers emerged from the US on the jobs and manufacturing fronts.

“Local markets are playing catch-up with its Asian neighbors. Also lifting the local markets were expectations of good first quarter earnings and strong first quarter GDP numbers of at least 6 percent,” said BDO Unibank chief market strategist Jonathan Ravelas.

He noted that, “given the strong momentum, the market is seen testing the 6,850 to 7,000 levels.”

“The flow of foreign funds, a widely-tracked indicator, should elicit more optimism. From its lowest point on February 6th, when the net aggregate position was at a negative P7.8 billion, foreign funds have moved in increasingly on the buy side such that a little over two months since, the total has completely reversed to a net purchased position worth P25.2 billion,” said Calaycay.

He added that, “at the very least, those who were closely tracking the movements of these funds would’ve started to accumulate stocks in early March when the numbers turned positive and the index at 6394.60.”

Calaycay noted that “this is a direct contravention of erstwhile expressed fears of ‘capital flight’ following the Federal Reserves’ initiation and continuing cuts in the original $85 billion stimulus fund.”

While large, so-called “blue chip” stocks all gained, the index is pulled up higher by Philippine Long Distance Telephone Co., heavily weighted in the index, which gained 3.1% and was. Utilities and toll-road operator Metro Pacific Investments Corp. and developer SM Prime Holdings Inc. were big gainers.

“For the last 15 days there has been continuous foreign buying. A lot of that buying has really been on the blue chip stocks,” said Raul Ruiz, head of research at RCBC Securities in the Philippines