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PH stocks post biggest 1-day gain in 6 years

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pse.com.ph photo

MANILA, Philippines—Philippine stocks made a strong comeback on Wednesday, posting the biggest single-day gain in six years, as the recent global shakeout and the dip to “bear” territory attracted some bargain-hunting.

The main Philippine Stock Exchange index (PSEi) recouped 329.88 points, or 5.7 percent, to close at 6,118.94, the stock barometer’s biggest one-day point increase since August 2007.

On Tuesday, the PSEi shed 181.99 points, or 3.05 percent, to close at 5,789.06, down 21.8 percent from the peak of around 7,400 in mid-May, placing the market in bear territory. A market is in bear territory when it pulls back by 20 percent.

Most markets in the region rebounded after China vowed to stabilize its money market as a looming credit crunch triggered fears of a liquidity squeeze similar to that caused by the Wall Street crisis in the United States in 2008.

Investors also took heart from a string of favorable US economic data, such as a sharp rise in business spending, an upswing in house prices, consumer confidence at a five-year high and an increase in single-family home sales.

The PSEi’s rise outpaced the recovery seen across Asian markets for the day and was significantly higher than Indonesia’s Jakarta Composite, which posted a 3.9-percent rise.

Year-to-date, the PSEi has returned to positive territory with a 5.3-percent gain over the end-2012 level of 5,812.73 points.

Governor Amando Tetangco Jr. of the Bangko Sentral ng Pilipinas said on Wednesday at the 2nd Philippine Financial Market Forum that the country’s “high-growth, low-inflation” story was intact alongside a sound banking system and adequate liquidity.

Brake on exuberance

Tetangco said the market shakeout was “good” because “it puts a brake on exuberance” that could otherwise create bubbles in the asset markets.

“Against a backdrop of solid fundamentals that have not changed even amidst the volatility in the past weeks, the declines have served to put some stocks at attractive prices. I think this is what we saw today with the strong recovery of the market,” PSE chairman Jose Pardo said in a statement.

Pardo said volatility was the natural effect of uncertainties that arose from what some perceived as significant policy announcements in other parts of the world.

“When the market goes past the overreaction phase, countries with strong fundamentals and buffers against uncertainties should be able to stay the course of their growth. The causes for the Philippines’ impressive growth continue to persist and should remain strong moving forward,” Pardo added.

PSE officials also expressed confidence that Philippine companies would deliver strong earnings growth this year. Corporate earnings are widely expected to expand at a double-digit pace this year, much faster than the single-digit increase seen in most markets in the region.

“We remain confident of our market’s ability to weather the storm. For the Exchange’s part, we stand by our commitment to implement the various market reforms that we have set out to accomplish, as well as to ensure that the PSE achieves its growth targets for the year,” said PSE president Hans Sicat.

Sicat said that the PSE board recently approved new listings and additional issuances and that he expected “more to come as the second half of 2013 approaches.”

Irrational

Dealers said Tuesday’s decline was as irrational as the earlier run-up that catapulted the index to 7,400 in May, during which investors paid about 22 times the amount they expected to make this year.

Given that local stock valuations, based on price to equity (P/E) ratio, have gone down to 15 to 17 times, there’s some scope to allocate more to equities, said Maria Theresa Javier, senior vice president and head of asset and trust management unit at Ayala-led Bank of the Philippine Islands.

Time to invest now

At current levels, Javier said the market was trading at the same valuations as those seen last December, before the Philippines received sovereign investment-grade ratings from Standard & Poor’s and Fitch Ratings.

Javier added that Tetangco’s speech was reassuring. “If you’re looking at a long-term horizon, the time to invest is now,” she said.

Tetangco’s key message was that underlying Philippine fundamentals were solid and that safeguards had been built to ride out the volatility, indicating that there was no need to deviate from the current policy stance.

This suggested that there won’t be a sharp rise in local interest rates even as the US Federal Reserve Bank unwinds the regime of easy money.

“When the market is up, we experience irrational (buying) exuberance and when falling, there’s also irrational fear,” said First Metro Investments Corp. president Roberto Juanchito Dispo.

“Yes, we’re experiencing net foreign selling but we’re seeing net local buying. Otherwise, the foreign investors can’t exit,” he said.

“Moving forward, the market will recover and those brave enough will benefit,” he said.

Searching for bottom

But despite Wednesday’s strong rebound, Banco de Oro Unibank chief strategist Jonathan Ravelas said the market might not have seen the worst yet.

“I don’t think this is the bottom,” he said.

Ravelas noted that across the region, P/E ratios had gone down to 13x, which meant that local equities were still trading at levels that were more expensive than those of its regional peers.

“To call the bulls back into play, the PSEi needs to climb back to 6,750,” he said, adding that for the full year, the index would have to go back to at least 6,500.

Value turnover at the stock market on Wednesday amounted to P9.63 billion. There were 146 advancers as against 34 decliners. Thirty stocks were unchanged.

Biggest gainers

The day’s biggest index gainers were AEV (+14.88 percent), MWC (+12.27 percent) and Jollibee (+9.86 percent). DMCI, MPI, EDC and URC also surged by over 8 percent. Other big index gainers were ALI (+7.41 percent), SM Prime (+6.76 percent) and AP (+6.61 percent).

PLDT remained the country’s most valuable company in terms of market capitalization at P585 billion (+3.32 percent). Runner-up SM Investments (+6.37 percent) ended with P573.76 billion.

Tetangco said the financial market knew that foreign funds would rotate back to developed markets at some point and that it was just the timing that left market players guessing.

The central bank chief said it was a good thing that the Federal Reserve had earlier given its guidance on the unwinding of its bond-buying activities.

Originally posted at 05:36 pm | Wednesday, June 26, 2013


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Tags: Business , Finance , Philippines , Stock Activity , Stock Market , stocks

  • Ako_Hiking

    Sure this sounds all nice on paper but how does this all benefit the poor masses? The Philippine keeps on hearing good news on economic growth and stocks increase and upgrades but yet unemployment remains high as ever and poverty rate keeps on increasing.

    • hyung27

      I still believe that those who have extra money should start a business so they can employ more Filipinos. Let us uplift the quality of lives of our Kababayan by employing them.

      But, we should also invest in stock market if you have extra money. Just treat this as a monthly deposit in a long-term savings account. At least when you grow old, you have other source of income.

      • Ako_Hiking

        That’s possibly true but at the same time it is up to the Philippine government to not only ask foreign investors to invest but also create an environment in which those foreign investors would be willing to invest.

  • Filipinotristar

    Wag tayo mawalan ng kumpiyansa sa pamahalaan, ang dapat ay mapursige tayo ipakilala ang sarili natin sa pandaigdigan merkado. Mag tulong tulong tayo para sa kinabukasan ng ating mga anak at sana bawasan na natin yong crab mentality, wala kasi buti maidudulot yan sa bawat isa! Matagal na din ako ditto sa labas ng bansa bilang ordinaryong manggagawa at dahil sa tyaga, sipag napagtapos ko ang aking mga anak! Gabayan nawa tayo ng Panginoong Diyos sa lahat ng sandali at sana magtulungan tayo.

    • Allen Douglas

      I agree with you. But I hope you don’t classify those who do not believe on the sincerity of this govt of cleaning the govt bureaucracy courtesy of its TUWID NA DAAN slogan, as CRAB.

  • UrHONOR

    BLESSED are the pretenders for they will someday be GREAT!

  • kilabot

    a vultures’ feast, that’s what it is.
    so, noykapon’s drumbeaters
    are back to marching with the beat
    closely behind the
    pied piper of abnoyance.
    this time around though,
    singing a different tune:
    trickle-down, trickle-down, yeah yeah;
    inclusive, inclusive, we’d sell;
    all the way to sona.

    • Allen Douglas

      that explains why they are all here…sona…hehehe

  • Beguine

    The big players are just making money buying and selling not just
    in Pinas but the rest of SEAsia’s so-called emerging markets.

    What stands out is that Pinas has been posting some of the biggest
    gains, and in turn suffering the worst terrible decline recently.

    Now, it’s shooting back up to 7,300, 7,500 and up some more territory.
    A very dizzying ride indeed but for the big big fund managers only.

    But at least the local economy will benefit from these rollercoaster
    rides in the stock market, and we can just hope the market stays
    up and up and away even.

  • bongarroyo

    ayun na nga bising bisi na si pekeng torney sfakefire sagot dito sagot doon. LOL

    masyado kasing excited pag bumibirit pataas ang ‘stocks’ e….wala namang alam kung paano lumalaro iyan. LOL

    pekeng torney pati pala diarrhea mo tumaas rin apektado ng ‘pse’….hahahahaa

  • padrefaura

    Dont get too excited. This is just part of the last rally. Bargain hunting lang ang mga traders. After this, bear market na tayo.

    • crisostomo_ibarra_the3rd

      How can it be bear market when the regional markets do not support it? Ano ba yan. Umaandar ang pagka crab mo 6500 is the support number up to the end of the year. That was the December 2013 target anyway by the forecasters way back in January 2013. PSE index simply went overboard at nagpakitang gilas. Everyone never expected the bull run to last that long.

      • engkantosakanto

        who knows? as if the crab thing can influence a volatile market. way back January 2013, Bernanke and China was out of the picture. do forecasters still have the same ‘forecast’ now?

      • crisostomo_ibarra_the3rd

        Bro, you mean the market is responding to the crab comments of the reklamadors to make the market volatile? Kahit magngangangawa pa si spitfire, who the hell cares?

        On forecasts, I have not heard any change in the 6500 forecast of the market analysts, so I think it is still the stand. It is based on economic indicators at the start of 2013. The Q1 7.8% growth rate was unexpected alright but just the same the projections on the listed companies’ earnings remains positive. RFM reported a better than expected earnings at 32% and have announced a P1B capex compared to the P360M capex last year. Certainly, that is positive. It means they are projecting an even better consumer spending next year for them to expand.

      • engkantosakanto

        cool. but only history can judge the stock market specially if it does Houdini’s disappearing act.

        i’ve been following reuters and one of the headlines says ‘China’s central bank calms markets, but tighter policy looms’ and that makes me a pessimist.

        well, uncertainties are worrisome. let’s see what happens tomorrow and the day after.

      • spitfire

        Bukas makalawa tatamaan na naman kayong mga alipores ni Kulot ng bullbull run.

        Promise.

      • crisostomo_ibarra_the3rd

        Bukas makalawa, ganoon pa rin ang market bro. Maaaring tumaas at maaring bumaba. Bumagyo man or hindi. Magka diarhea ka man or hindi. Di ba?

      • spitfire

        Nakalimutan mong idol mong si Kulot lang ang magaling magdiarrhea sa publiko?

        Kung ako si carandUng sisipain na kita ora mismo. Pinaalala mo lang yong diarrhea ni Kulot sa Australia.

      • crisostomo_ibarra_the3rd

        Pati diarrhea mo ikinakalat mo pa dito sa forum. Bugok.



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