PSEi rallies to 8,400 on tax reform ratification
The local stock barometer surged back to the 8,400 mark on Thursday as investors cheered the ratification of the first phase of the tax reform program, which is seen necessary to fund the Duterte administration’s massive infrastructure-building.
The main-share Philippine Stock Exchange index racked up 101.45 points or 1.21 percent to close at 8,461.06. There was about P1.06 billion in net buying from foreign investors that perked up the main index.
“Both houses of the Philippines’ Congress ratified the Tax Reform for Acceleration and Inclusion (TRAIN) bill late (Wednesday) night. This is a positive development and, barring any veto by the President, should be signed into law by 19 December,” Credit Suisse said in a research note.
“Net-net, the macroeconomic impact should be a slight cross between the Senate and the House bills. The final bicameral bill is slightly more supportive for headline private consumption compared with the initial House bill HB5636,” the investment firm said.
Revenue yield should be quite similar with the House bill at around 0.6 to 0.7 percent of gross domestic product (GDP) in the first year, rising to around 1 percent of GDP cumulatively by 2020, Credit Suisse estimated.
“The Bicameral Bill is a touch more supportive for aggregate private consumption in 2018: There are three key reasons. First, the allocation for cash transfers to lower income households is slightly higher compared with the House Bill, according to our estimates. Second, the tax hikes are more spread out, leading to a lower inflation rise in 2018. Third, the bill is less negative for higher-incomes, as qualifying incomes for the top 35 percent bracket has been raised to P8 million,” the research note added.
Except for the mining/oil counter, comprising sectors which will face higher taxes under the new framework, all counters at the local stock market gained.
The day’s biggest gainers were the holding firm and services counters, which respectively rose by 1.79 percent and 1.45 percent.
Value turnover for the day amounted to P7.6 billion.
There were 110 advancers that edged out 103 decliners while 33 stocks were unchanged.
The PSEi was lifted by the gains of GT Capital, which added 4.96 percent, while SM Prime and Metro Pacific both added over 3 percent.
SM Investments, URC, PLDT and JG Summit all rose by over 2 percent while Meralco, BDO, ICTSI and BPI also contributed gains.
Notable gainers outside the PSEi include Bloomberry, which surged by 6.67 percent, while Melco Resorts added 3.08 percent. CIC and Sun Life both rose by over 2 percent.
On the other hand, Ayala Land and Jollibee both fell by over 1 percent while Ayala Corp. also slipped.
