While there was no Santa Claus rally last yearend, local equities traded with a bang on Thursday, the second trading session for the year, as investors anticipated further slowdown in inflation this new year.
Outperforming most regional markets, the Philippine Stock Exchange index (PSEi) racked up 191.4 points or 2.56 percent to close at 7,680.60.
“It’s a January rally (with the) return of investors,” said Eagle Equities president Joseph Roxas, adding that these investors had been encouraged by the easing of inflation.
“While the Dow was flat in (Wednesday) night’s trading, the PSEi had a very big day. Trading volume picked up (Thursday) despite the shortened trading week…This is the big move that we have been expecting. It may be that investors (are) anticipating better economic numbers that will be announced next week,” Eagle Equities head of research Christopher Mangun added.
The rally came ahead of the release of the December 2018 inflation data. Bloomberg’s consensus estimate is that the inflation had slowed down further to 5.7 percent from November’s 6 percent and October’s 6.7 percent.
In 2018, the surge in inflation—in turn due to a confluence of rising oil prices, higher excise taxes on petroleum and rice supply bottlenecks—has been a major concern for investors. This has also prompted the Bangko Sentral ng Pilipinas to raise key interest rates five times for a total of 175 basis points last year.
Mangun noted that trading value was above average, with P7.09 billion changing hands excluding block sales.
He noted that foreigners were net buyers on Thursday to the tune of P196 million. While still modest, he noted that this was a turnaround from the net foreign selling seen in the last 10 trading days.
“It looks like we will end the week strong, which is a very good sign for the PSE’s first trading week of 2019,” he added.
All counters firmed up. The rally was led by the holding firm and mining/oil counters which both gained over 3 percent.
The property counter added 2.47 percent, while the financial and services counters both gained over 1 percent.
There were 135 advancers that edged out 61 decliners while 44 stocks were unchanged.
Puregold surged by 5 percent while conglomerates SM Investments and JG Summit rallied by over 4 percent. SM was the day’s most actively traded firm.
Metrobank, Security Bank and Metro Pacific all added over 3 percent, while Ayala Corp., Ayala Land, SM Prime and PLDT gained by over 2 percent.
BDO, BPI, GT Capital and Meralco all rose by over 1 percent.
Megaworld, URC and ICTSI all inched up. Jollibee, however, slipped by 0.34 percent.
Outside of the PSEi, one notable decliner was Wilcon Depot, which lost 1.23 percent.