PSEi firms up over 7,000 as regional markets rebound
MANILA, Philippines — The local stock barometer strengthened its hold above the 7,000 mark on Monday, tracking a regional rebound following last week’s sell-down triggered by global growth jitters.
The Philippine Stock Exchange index recouped 54.31 points or 0.78 percent to close at 7,057.53.
The day’s upswing was led by the industrial and property counters, which both rose by over 1 percent. On the other hand, the services and mining/oil counters slipped.
Value turnover for the day was thin at P5.99 billion. There were 89 advancers that edged out 78 decliners while 44 stocks were unchanged.
EDC was the day’s most actively traded stock, rising by 3.97 percent.
SM stocks SM Prime and SMIC also contributed to the PSEi’s gain, both rising by over 3 percent.
BDO, Petron and AP all advanced by over 1 percent while ALI, AC and Meralco all contributed to the PSEi’s gains.
Luz Lorenzo, economist at Maybank ATR Kim Eng Securities, said her firm was retaining its “overweight” rating on the Philippines despite the recent bearish turn that had given rise to stock market volatility and 5 percent pullback in PSEi since late September. She added that the Philippine economy was expected to outperform regional peers.
Overweight is a recommendation to accumulate stocks relative to a certain benchmark index.
“The Philippines’ edge given the present global situation is that growth is demand-driven, its banking system is healthy, the population of 100-million is young, overall leverage is low among households and corporates while debt ratios of the government are declining, and last but not least, there is fiscal and monetary space for accelerating growth. Thus we remain optimistic on corporate performance as a result,” Lorenzo said.
With the country’s first-semester gross domestic product (GDP) growth at 6 percent, Lorenzo said that the consensus among three multilateral institutions was that this second semester would be better. “We concur as recent issues holding back growth in first half 2014 are being resolved. First, inflation now seems to be heading down with September headline inflation of 4.4 percent year-on-year well below the 4.9% posted in July and August as food and fuel prices rose at slower rates,” Lorenzo said.
With oil prices continuing to decline and imports of basic food commodities such as rice coming in, Lorenzo said the inflation downtrend was expected to be sustained.
“Second, port congestion has eased with the indefinite suspension of the truck ban in Manila. Vigilance by the private sector keeps the issue on the top of the minds of government officials and we believe this will help prevent a recurrence of the problem,” Lorenzo said.
On weak government spending because of the budget controversy involving a government scheme to accelerate disbursements that was declared unconstitutional, Lorenzo noted that a P13-billion supplemental budget was scheduled to be submitted to Congress this week to fund projects left unfinished when the Supreme Court issued its decision. “In addition, we look forward to more PPP projects being bid out and awarded. These big-ticket projects involve basic infrastructure and will have broad impact on the rest of the economy,” she said.
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