LOCAL stocks hardly gained on Thursday as valuation jitters diminished good tidings from the country’s better-than-expected 7 percent second quarter economic growth rate.
The main-share Philippine Stock Exchange index added 6.62 points or 0.08 percent to close at 7,952.81.
Elsewhere in the region, stock markets were mostly higher as the latest US Federal Reserve minutes eased concerns of hawkish bias by the US central bank.
At the local market, the industrial and mining/oil counters led the day’s gains, respectively rising by 1.2 percent and 2.23 percent. The holding firm counters likewise firmed up.
On the other hand, the services counter fell by 1.76 percent while the financial and property counters also slipped.
Asked why the local market was hardly lifted by the second quarter gross domestic product (GDP) report that exceeded market consensus growth of 6.6 percent, ATR Asset Management head of research Jose Mari Lacson said: “The market has already been propped up by foreign liquidity which isn’t flowing as much as a month ago. Valuations are quite high and investors are still evaluating earnings results to see if potential upgrades are enough to be optimistic.”
“But in a feng shui sense, we are still in that ghost month so it’s hard to convert optimism into action if the smart money chooses to stay in the sidelines,” Lacson said.
The “ghost month” is a period in the Lunar calendar when Chinese investors avoid making big-ticket investments or other big moves like getting married or moving to a new house. This period also coincides during the season when many investors from the West take long summer breaks, thereby resulting in slower trading volumes. This year, the ghost month began on Aug. 3 and will last until Aug. 31.
“I guess if you look at it, the second quarter corporate earnings reporting season was not an incentive. Valuation is quite stretched so even if the second quarter GDP was quite robust, we feel the market has gone beyond its limit. It’s pricey at this point,” said Manny Cruz, chief strategist at Asiasec Equities.
Cruz said there should be a healthy pullback before another market run-up.
Value turnover for the day amounted to P8.33 billion. Despite the PSEi’s slight gain, market breadth was negative. There were 109 decliners that outnumbered 80 advancers while 51 stocks were unchanged.
The day’s modest gains were led by LTG (+4.24 percent) and URC (+3.15 percent).
LTG beat market estimates by posting a 28 percent year-on-year increase in net profit in the first six months to P4.56 billion on higher earnings across its banking, tobacco, liquor and property businesses.
URC, the day’s most actively traded stock, recently inked a P21.34- billion deal to acquire the Snackbrands group, a leading snackfood manufacturer in Australia.
MPI and Globe both gained 1 percent while BPI and SM contributed modest gains.
Outside of the PSEi, the notable advancers were Philweb (+35.4 percent) and IMI (+22.92 percent). Philweb rose following businessman Roberto Ongpin’s offer to donate a 49 percent stake to the government while IMI rose following reports of its acquisition of a German manufacturing firm.
On the other hand, PLDT and ICTSI both fell by over 3 percent while SM Prime, GTCAP, Megaworld, Metrobank and AEV all slipped.