The local stock barometer rallied past the 7,800 mark to close at a new high for the year on Friday, driven by investors’ optimism on the government’s tax reform program, Pres. Duterte’s upcoming trip to China and the country’s first quarter economic growth performance.
The main-share Philippine Stock Exchange index racked up 86.24 points or 1.11 percent to close at 7,841.99, outperforming most regional peers. This marked the PSEi’s highest closing level since Aug. 26, 2016 when it ended at 7,845.49.
The index tested the 7,900 level in intra-day trade, supported by some P1.47 billion in net foreign buying.
For the four-day trading week, the index gained a total of 180.98 points or 2.4 percent. Since the start of the year, the PSEi had gained a total of 1,001.35 points or 14.6 percent.
Manny Cruz, chief strategist at local stock brokerage house AsiaSec Equities, said there were several factors that buoyed the local market, including the passage of the Duterte’s tax reform package at the House of Representatives Committee on Ways and Means.
Cruz also said investors were encouraged by pronouncements that the House may approve the tax package by next month and by then be elevated to the Senate. This is on track with the Department of Finance’s plan to pass this before yearend, Cruz said.
The passage of the tax reform program is crucial to fund the government’s plan to usher in a “golden age of infrastructure.”
Another factor that supported the PSEi’s upswing was optimism on Pres. Duterte’s forthcoming trip to China. After rekindling bilateral ties with China during his state visit late last year, Cruz said this new visit may bring in more development funding to support massive infrastructure-building.
Anticipation of strong first quarter domestic economic performance also boosted investor sentiment, Cruz said, noting that the market consensus was a gross domestic product growth rate of 6.7-6.8 percent.
All these three factors combined attracted net foreign buying to the market, Cruz said.
The PSEi’s next resistance is at 7,960, Cruz said. If breached, he said this could pave the way for the testing of the all time high level at 8,100.
Except for the mining/oil counter (down by 1 percent) which succumbed to profit-taking, all counters gained, led by the financial (+1.04 percent) and property (+2.15 percent) counters which track economic cycles.
Total value turnover for the day was relatively heavy at P14.58 billion, which included a P4.56 billion block sale on BPI. There were 107 advancers that edged out 93 decliners while 40 stocks were unchanged.
SM Prime Holdings led the PSEi higher with its 3.21 percent gain while parent conglomerate SM Investments – the most actively traded stock for the day – also rose by 2.2 percent. SM Prime reported a 13-percent year-on-year growth in first quarter net profit to P6.6 billion.
Ayala Land, URC and GT Capital all gained over 2 percent while BDO, PLDT, ICTSI, Jollibee, Megaworld and DMCI all rose by over 1 percent.
Metrobank, Metro Pacific, Security Bank and BPI also contributed to the day’s gains.
On the other hand, Globe Telecom slipped by 1.54 percent while Ayala and Semirara also slightly declined.