PSEi surges past 5,300 on EU efforts to stabilize banks
MANILA, Philippines—The main-share Philippine Stock Exchange index (PSEi) surged past 5,300 to retest record highs on Monday as investors were encouraged by initiatives mapped out by the European Union to stabilize the region’s banking system.
The PSEi rallied by 53.83 points, or 1.03 percent, to finish at 5,300.24 as investors loaded up on blue chips led by heavyweight Philippine Long Distance Telephone Co. whose share price surged by 2.49 percent. PLDT’s gain thus made the services counter the day’s outperformer, rising by 1.73 percent, although all other sub-indices also ended higher.
The main index climbed closer to the all-time high finish of 5,300.41 posted last May 3 and the record intra-day high of 5,329.76 posted last May 4.
“We’re seeing more flows from foreign funds to emerging markets, including the Philippines,” said Paul Joseph Garcia, senior vice president at Bank of the Philippine Islands and head of Odyssey Funds, which has over P100 billion in assets under management.
“With Philippine stocks hitting record highs today, we could see new record highs down the road. People should really be in equities,” said Gus Cosio, president of First Metro Asset Management Inc.
Across the region, sentiment was upbeat after a recent European Union Summit yielded initiatives to stabilize the region’s banking system. Eurozone leaders agreed to aid stricken banks using their bailout funds and intervene on bond markets to support troubled member states.
Garcia said the market seemed to be re-rating local stocks or changing its view on pricing in expectations of higher earnings. The PSEi has been trading at 15 to 16 times the projected earnings for this year and 13-14 times projected earnings for next year, Garcia said.
“Many investors are confident and are thinking that the guidelines given by corporates may be too conservative and earnings may thus surprise on the upside. Also, next year is an (interim) election year so that will add to spending,” Garcia said.
With the current pace, Garcia said the market could climb to new highs with 5,400 as the short-term target and 5,200 as the support level. By year’s end, he said the index might end at 5,500 to 5,600.
Garcia said he was expecting corporate earnings per share to grow by an average of 12-13 percent in 2012 and 10-12 percent in 2013.
Value turnover on Monday amounted to P6.57 billion. There were 108 advancers, which eclipsed 65 decliners, while 39 stocks were unchanged.
Aside from PLDT, investors snapped up shares of Megaworld (+1.83 percent), Metrobank (+2.54 percent), ALI (+2.08 percent) and EDC (+1.82 percent). Other index gainers were AGI, AC, DMCI, BDO, AP, First Gen, Belle and Meralco.
Investors also bought shares of GT Capital, PNB, FPH and LR.
On the other hand, SM Investments and URC bucked the day’s upswing.
SM shares were lower after rival ALI made a pitch for the privately held property developer Ortigas Holdings, which the market earlier priced in as already in the bag for SM. Analysts said the rival bid could either snatch the deal from SM or make such a takeover more costly.
