The local stock barometer Monday retested the 7,000-mark for the first time this year but profit-taking amid valuation concerns pared gains at the close.
Rising for the fifth straight session, the main-share Philippine Stock Exchange index (PSEi) added 36.82 points or 0.53 percent to close at 6,999.10. This was after the main index, now trading at its highest level for this year, hit 7,016.71 in intra-day trade.
“The market closed just a shade below the key 7,000 level after floating above it for most of the trading day. The market seems to be driven more by sentiment than fundamentals as the market is now very expensive at 22x P/E (price-to-earnings ratio),” said Manny Lisbona, deputy chief at PNB Securities.
A P/E ratio of 22x means investors are paying 22x the amount of money that they expect to make this year. Philippine stocks have historically traded at an average 14-15x P/E.
Lisbona noted that the market was likewise trading at around the 22x P/E valuations for three months in May 2013 before the reversal that was induced by the US Federal Reserve’s tapering talks. The local index last year hit an all-time high level of 7,400.
Only the mining/oil index ended lower yesterday. Total value turnover amounted to P8.31 billion. There were 114 advancers as against 74 decliners while 42 stocks were unchanged.
Foreign investors were in a net buying position amounting to around P900 million for the day.
Megaworld was among the biggest gainers among PSEi stocks, rising by 3.28 percent, alongside gains of parent firm Alliance Global Group Inc. (+1.54 percent). Globe, Ayala Land and BPI also advanced by more than 1 percent.
Investors likewise loaded up on shares of PLDT, Metrobank, BDO, URC, Ayala Corp. and Semirara.
Outside of PSEi stocks, Sinophil (+12.14 percent) was a notable gainer. This company will become the gaming investment holding firm of the Sy family-led Belle Corp., which will open the City of Dreams Manila, a partnership with the Melco group of Macau, by Oct. 1 this year. Doris C. Dumlao