Credit upgrade lifts stocks
Philippine Daily Inquirer
Local stocks surged to a new record high Friday, a day after Standard and Poor’s raised the country’s debt rating to investment grade and as investors took stock of better-than-expected corporate earnings for the week.
The benchmark Philippine Stock Exchange index (PSEi) breached the 7,200 mark in early trade and held on to those gains to close at 7,215.35, up 1.72 percent. Index-heavyweights like Alliance Global Group Inc. (+3.34 percent), Philippine Long Distance Telephone Co. (+0.32 percent), Ayala Land Inc. (+2.36 percent) and SM Investments Corp. (+2 percent) led the list of most actively traded issues.
All sub-indices ended in the green, with the biggest jump seen for holding firms (+2.42 percent) and financials (+2.31 percent) sub-counters.
S&P’s rating action came a month after Fitch Ratings raised the country’s debt rating to investment-grade.
“The S&P upgrade is a confirmatory upgrade, you need at least two to be a full-fledged investment grade destination,” Jonathan Ravelas, chief strategist at BDO Unibank Inc., said in an interview. “The rating by S&P highlights the prospects for the Philippines as an investment destination so there is renewed demand for Philippine assets.”
Ravelas noted that first-quarter earnings contributed to the gains, with many of the country’s biggest banks and conglomerates reporting strong results.
Aboitiz Equity Ventures (+2.54 percent) said on Friday that first quarter profits hit P6.8 billion, up 17 percent, mainly from its power-heavy business.
Ravelas warned that valuation concerns might cause some near-term profit-taking. “There could vulnerability moving forward but the market right now remains euphoric,” he said. Miguel R. Camus