The local stock barometer rallied to the 7,900 mark on Monday as investors were emboldened by a string of favorable developments here and abroad, including some first quarter local corporate earnings surprises and the market-friendly outcome of the French elections.
The main-share Philippine Stock Exchange index racked up 120.34 points or 1.54 percent to close at 7,962.33, tracking mostly higher regional markets as France elected 39-year-old Emmanuel Macron as its new president, eliminating risks of France exiting the European Union like Great Britain.
“Catalysts are confluence of events: better-than-expected first quarter corporate earnings, within-target domestic inflation, passage of tax reform package on the House ways and means committee, Fed (US Federal Reserve) decision not to raise rates this May, positive sentiment from Macron win in the French elections,” said Ron Acoba, chief investment strategist at equities research consultancy firm Trading Edge.
“Fresh winds coming from the east and the west blew a positive trend in the local market. Macron’s victory calmed the nerves in Europe while encouraging jobs report from the US confirmed its improving economy. String of favorable earnings result fueled more buying and positioning in the market,” said Astro Del Castillo, executive director at fund management firm First Grade Finance.
Over the near term, Acoba said the PSEi might retest the 8,100 resistance.
The 8,100 level was revisited in July last year but the rally was not sustained.
The PSEi’s best finish was on April 10, 2015 when it closed at 8,127.48.
“But PSEi is relatively expensive with full-year 2017 price to earnings (P/E) ratio of 20x compared to region. Implied consensus fundamental target for 2017 based on earnings expectations is only 7,962,” Acoba said. “Index is already there and we’re still in the first half of the year. So Trading Edge expects it to consolidate after reaching the 8,000 area.”
A P/E ratio of 20x means that investors are paying 20 times the kind of money they expect to earn from PSEi stocks.
“The catalyst that may send the index to new highs is still the tax reform, but in terms of earnings, level is already expensive,” Acoba noted.
Companies like Petron Corp. and Ayala Land Inc. (ALI) which reported strong earnings on Monday were among the biggest gainers, respectively rising by 7.22 percent and 4.63 percent. ALI was the day’s most actively traded company.
All counters were up but the biggest gainer among sub-indices was the property counter, which advanced by 2.97 percent. The holding firm and services counters, on the other hand, were both up by over 1 percent.
Total value turnover for the day amounted to P9.44 billion. Foreign investors were net buyers in the market amounting to P681.53 million.
There were 116 advancers that edged out 81 decliners while 42 stocks were unchanged.
Semirara rose by 5.04 percent. Tycoon Andrew Tan-led Megaworld Corp. and AGI gained 4.29 percent and 3.09 percent, respectively.
GT Capital, SM Prime and PLDT all went up by over 2 percent while Ayala Corp. and JG Summit both gained over 1 percent.
SM Investments, BDO, Security Bank, BPI, Metro Pacific, ICTSI and Metrobank also contributed to the day’s gains.
Among the few PSEi stocks that missed the day’s upswing were URC and Puregold.
Outside the PSEi, one notable gainer was gaming firm Bloomberry (+4.74 percent) in anticipation of strong earnings.