PSEi rallies as Greece clinches new bailout deal

THE LOCAL stock barometer rallied sharply on Monday as debt-strapped Greece clinched a new bailout deal with the European Union while China’s asset markets stabilized after a four-week freefall.

Tracking the upswing in regional markets as jitters over Greece and China eased, the Philippine Stock Exchange index racked up 103.74 points or 1.4 percent to close at 7.496.33 albeit in thin trade.

Fears of a “Grexit” or Greek exit from the euro-zone were allayed as EU announced “en-Greekment” or an agreement to continue supporting Greece after a closely-watched 17-hour summit in Brussels. A fund will be set up using Greek state assets valued at 50 billion euros to recapitalize Greek banks and reduce debt stock. The three-year deal requires a number of structural reforms in Greece, such as privatization of state assets as well as changes in the pension program and labor markets.

“The market joined most major global markets in a collective sigh of relief on news that Greece was able to strike a bailout deal,” said Manuel Lisbona, deputy chief of local stock brokerage PNB Securities.

“While today’s (Monday’s) close at 7,496 brings the index a bit above the its 200-day moving average, the index has to decisively break above 7,580 and 7,660 to convince more bulls to reenter the market,” he added.

All counters firmed up at the local stock market on Monday led by the property counter, which rose by 2.63 percent. The holding firm and mining/oil counters also advanced by over 1.8 percent.

Value turnover was thin at P4.76 billion. There were 107 advancers which overwhelmed 64 decliners while 37 stocks were unchanged.

SMIC led the PSEi’s rise, surging by 4.06 percent while ALI and Megaworld both rose by over 3 percent. SMPH gained 2.73 percent while AC, URC, Metrobank, MPI, JG Summit and Semirara all advanced by over 1 percent.

BDO, PLDT, AEV and Jollibee also gained ground.

On the other hand, Globe, AGI and Meralco declined. Outside of PSEi stocks, retailer SSI slipped by 0.82 percent.

Even before the Greek debt deal was announced, emerging markets were already on the rise alongside the rebound in China’s stock markets after the rout seen in the past four weeks.

In a research note, investment bank Merrill Lynch said the stock market turmoil in China could have limited negative impact on the economy and was unlikely to cause systematic financial problems. As expected, the Chinese government has ramped up policy support to ensure ample liquidity.

Merrill Lynch added that initial public offering suspensions and the equity market decline in China should not have a big impact on overall corporate financing, adding that the ability of banks to lend would likely stay largely intact.