PSEi rally fizzles out

THE LOCAL stock barometer surged to nearly 8,000 level on Thursday as jitters over Brexit waned across regional markets but this only triggered a wave of profit-taking later in the session.

The Philippine Stock Exchange index closed at 7,796.25, down by 2.28 points or 0.03 percent. This was after hitting its highest intraday level for the year at 7,980.75 as regional markets mostly advanced with investors starting to get over their fears over Britain’s looming exit from the European Union.

Mick Jairo Ang, an analyst at AB Capital Securities, said the index had formed a double-top – approximating last year’s high – which could result in a pullback.

At price to earnings (P/E) ratio of around 23 times likely earnings for the year, the market is seen becoming expensive. As such, AB Capital is projecting that the index will pull back to 7,564 by yearend based on an assumed P/E ratio of 19.3x.

“Many markets appear to have recovered from the initial impact of the Brexit but the Philippine market generated an additional impetus from the historic transition to the Duterte Administration. We are hopeful that we will have a strong second half supported by solid economic fundamentals and expectations of further growth under the new administration, PSE president Hans Sicat said.

“The message of President Duterte that contracts will be honored and that rules should not be changed in the middle of the game should be very positive for business. We are optimistic of the incoming administration’s support for business and economic growth, under a backdrop of improved efficiencies in government processes and peace and order,” Sicat added.

Since the start of the year, the PSEi has gained 12.14 percent.

The PSEi was weighed down by the industrial and holding firms while the financial, services, mining/oil and property counters firmed up.

Value turnover for the day was heavy at P15.67 billion. There were 97 advancers which were only slightly edged out by 99 decliners while 46 stocks were unchanged.

Foreign investors were net buyers at the lone market to the tune of P3.18 billion.

Joseph Roxas, president of Eagle Equities, said the upcoming initial public offering of Cemex had also dragged the market. Typically, large IPOs suck funds out of the market as investors prepare to subscribe.

Investors pocked gains from conglomerates SMIC and GT Capital, which both fell by over 1 percent while Globe also slipped by 1.98 percent. URC, AC, AP and BPI also tumbled on Thursday.

On the other hand, SM Prime, BDO, PLDT, MPI, JG Summit and Megaworld all gained over 1 percent while ALI and Metrobank also contributed gains.

Outside of the PSEi, Security Bank rose by 1 percent and was the most actively traded stock. Newly listed death care service provider Golden Haven surged by another 28.97 percent on its second day of trading on the PSE.