Foreign investors pick, drive up PH stocks

The local stock market has attracted droves of foreign investors in the first two months, driving values higher and lifting the main index to unprecedented heights.

Net foreign buying at the local stock market amounted to P22.72 billion from January to February—a dramatic turnaround from the P7.65 billion in net selling reported in the same period last year, the Philippine Stock Exchange said.

In early 2011, investors were dumping emerging market equities due to concerns over rising inflation. But this time around, sound macroeconomic fundamentals have been drawing more funds to Asia’s emerging economies, benefiting the Philippines whose stock market became the region’s best performer in 2011.

The main-share Philippine Stock Exchange index on Thursday breached the 5,000 mark for the first time during intra-day trade. Since the start of the year, the index has gained by 13 percent.

“The trek past the 5,000 index marks a very significant milestone in PSE history. Central banks, especially in the larger, developed economies, have put in place various measures to make sure that we avoid a widespread collapse, and this has provided a rallying point among global markets. Coupled with the country’s own growth story, we are hopeful that this rally will continue,” PSE president and chief executive officer Hans Sicat said in a statement.

The PSE’s total market capitalization as of Feb. 29 stood at P9.31 trillion—up 5.91 percent from the P8.79 trillion reported in the same period last year.

Total value turnover in the first two months reached P331.87 billion, 69.47 percent higher than the level a year ago.

Last January, the PSE extended its trading hours until 3:30 p.m.—part of an effort to increase liquidity in the market.

Stock dealers at first were uneasy about the extended trading hours, but the move eventually attracted stronger interest in the local market.

In terms of sectoral indices, the property index emerged as the best performer in the first two months of 2012, surging by 23.38 percent. This was followed by the financials index, which grew by 21.73 percent.

All other indices also gained in the last two months.

The Philippine economy is all set to grow, and the expected surge will further power stocks to new heights, CLSA Asia-Pacific said in a research paper.

According to the regional investment house, the country is on the cusp of another investment cycle for the first time in 15 years driven by political stability, rising business confidence, low interest rates, robust balance sheet and the country’s long-term demographic potentials.

“The Philippines soars like an eagle again,” the research said.