Bargain-hunting pushes PH stock barometer back to 7,900

The local stock barometer climbed back to the 7,900 mark on Monday as last week’s market pullback spurred selective bargain-hunting.

The main-share Philippine Stock Exchange index (PSEi) gained 61.53 points or 0.78 percent to close at 7,943.75, tracking upbeat regional markets.

“PSEi’s ebullient run-up of 7.8 percent in April and May suggests short-term correction, especially in the light of the usually weak months of July and August. However, the positive sentiment, especially among foreign investors, in the light of the approval of the first package of the Comprehensive Tax Reform Program (in the Lower House) and the “Build-build-build” plan move to improve infrastructure, will provide the market sufficient fuel to retain a positive outlook for the rest of the year,” First Metro Investments Corp. and University of Asia and the Pacific said in a joint research note.

The local market resumed its bargain-hunting mode after the sharp selldown last week, said Luis Gerardo Limlingan, managing director at Regina Capital Development.

“With various regional central banks discussing their later monetary policy, attention is now shifting focus to our own BSP (Bangko Sentral ng Pilipinas), which will meet later in the week. Many are expecting the BSP to leave policy rates unchanged, keeping the overnight reverse repo (repurchase) rate at 3 percent, the overnight deposit rate at 2.5 percent, and the reserve requirement ratio at 20 percent,” Limlingan said.

“We continue to expect that the BSP will hike policy rates twice (25 basis points each time) this year, but have pushed back our expectation for the first hike to third quarter and into the term of the new BSP governor, as the BSP hasn’t been explicit in its signaling of a policy rate hike in the near term. At this stage we do not expect a reserve requirement ratio cut as domestic liquidity continues to grow at a healthy pace, the banking system remains flush with liquidity in excess of reserve requirements and the economy is growing at a healthy pace with inflation moving up significantly over the past year,” he said.

Regionally, Limlingan said the market was moved by Amazon’s announcement of a big merger plan with Whole Foods.

Domestic investors supported the domestic market as foreign investors were net sellers, resulting in a net outflow of P165.86 million.

Despite the PSEi’s rise, market breadth was negative as buying targeted selected large-cap and second-liner stocks. In the broader market, there were 102 decliners that outnumbered 91 advancers while 49 stocks were unchanged.

All counters gained, led by the industrial and holding firm counters which all firmed up by over 1 percent.

Value turnover for the day amounted to P7.09 billion.

The PSEi was led higher by SM Investments and URC which advanced by over 2 percent while Ayala Corp. and DMCI both rose by over 1 percent.

Meralco, Ayala Land, ICTSI, SM Prime, Semirara and BPI also contributed to the day’s gains.

Outside of the PSEi, investors also loaded up of shares of retailers MRSGI, SSI and Wilcon which respectively surged by 8.83 percent, 7.42 percent and 2.64 percent.

On the other hand, shares of BDO, GT Capital, PLDT, Globe and Jollibee slipped.