MANILA, Philippines—The local stock market soared to its 35th record-high this year as yield-seeking investors flocked to equities in search for higher yields given historically low interest rates.
The main-share Philippine Stock Exchange index rallied by 75.92 points, or 1.33 percent, to close at 5,763.64, its best level in history.
“Euphoric sentiment, driven by the conducive macro outlook, strong foreign inflows, and record low 10-year Philippine bond yields are driving the market to all time highs,” said Mark Angeles, head of research at First Metro Securities.
During last Tuesday’s primary auction of long-term Philippine government debt, yield on 10-year Treasury bonds dropped to an all-time low of 4 percent per annum, sliding by 75 basis points from the previous record seen three months ago.
“The strong rally, however, has now stretched multiples, making the Philippines one of the most expensive equity markets in Asia,” Angeles said.
The analyst noted that the Philippine stock market’s trailing price-to-earnings (P/E) ratio based on MSCI Philippines has reached 18.5x. Trailing P/E ratio for the PSEi is about 19.2x, according to Angeles.
A trailing P/E ratio of 19.2 times means that investors are paying 19.2 times the amount of money that they made in the market for the last 12 months.
Index heavyweight PLDT (+2.76 percent) was the day’s most actively traded stock. PLDT, the most valuable company in the stock exchange, has a 12.52 percent weight on the PSEi.
The index was also led higher by Megaworld (+4.85 percent), BDO (+3.95 percent), Globe (+2.94 percent), RLC (+2.79 percent), AP (+2.74 percent), AEV (2.72 percent),URC (+2.21 percent), AC (+2.16 percent) and Metrobank (+2.12 percent).
Value turnover was high at P11.45 billion. There were 103 advancers versus 72 decliners while 38 stocks were unchanged.
All counters jumped but the biggest beneficiaries were the services (+1.72 percent), financial (+1.27 percent) and property (+1.14 percent) counters.
Joseph Roxas, president of Eagle Equities Inc., said President Aquino predicted during the PSE’s 20th anniversary celebration Monday night that the main index may hit 6,000 in 28 days. “This leaves only 25 days,” he said.
At the same time, the local stock market usually ends each year on a strong note given the seasonal “Santa Claus” rally in December. For this year in particular, investors are taking position given upbeat prospects for 2013.