photo from pse.com.ph
MANILA, Philippines—The local stocks index broke past the 6,800-mark to a new all-time high on Wednesday as an overnight rise in US stocks to record highs and the strong earnings performance of Philippine blue chips boosted investors’ risk appetite.
The main-share Philippine Stock Exchange index soared by 123.49 points or 1.84 percent to close at 6,835.21, marking its 23rd record closing for the year.
“I think the market is discounting the possibility of further cuts in SDA (special deposit account) rates by BSP (Bangko Sentral ng Pilipinas) and with the recent earnings results in the fourth quarter by some corporates, the market is anticipating possible upside on first quarter earnings,” said Paul Joseph Garcia, senior vice president and head of Odyssey Funds at Bank of the Philippine Islands.
Garcia said most blue chips were getting equity inflows from foreign funds as well as local funds which are reallocating part of their portfolio from SDAs and fixed-income instruments to equities.
“Retail clients in SDAs are moving to balanced funds and equity funds because of declining interest rates on SDAs. Why wait for the next cut (in SDA rates)? They are switching to equity funds now,” Garcia said.
But Garcia said the local market may see a correction soon. “I think before the Holy Week (last week of March), the market will consolidate and there may be profit-taking by market participants,” he said.
Across the region, risk appetite was high after the Dow Jones Industrial Index closed at a record high 14,253.77 (+0.89 percent) overnight on expectations that major central banks would keep an easy monetary policy.
Value turnover for the day amounted to P13.2 billion. There were nearly twice as many advancers (117) as there were decliners (61).