Interest in telcos reach fever pitch, leaving other stocks behind

The stock barometer ended flat on Thursday, but telecom and broadband stocks outperformed amid heightened demand for connectivity during the prolonged pandemic.

The main-share Philippine Stock Exchange index (PSEi) shed 1.62 points, or 0.02 percent, to close at 6,820.53.

Bucking the sluggish market, Globe and PLDT surged by 13.38 percent and 7.73 percent, respectively, and were the day’s two most actively traded companies.

Broadband provider Converge also racked up 4.38 percent and was the third most traded company, while Dito, which is not part of the PSEi, rallied by 9.54 percent in heavy trade.

“Telco valuations are finally reflecting the fact that it was the strongest sector and benefited from lockdowns and work-from-home structures as margins on mobile and home internet are greater than corporate lines,” said Christopher Mangun, head of research at AAA Equities.

He noted, however, that the gains of telco issues were not enough to shore up the entire index because of the smaller weighting of these companies.

The broader market remained sluggish as markets awaited the latest signal from the US Federal Reserve.

“A potential change in its policy will determine the risk appetite of investors and fund managers moving forward,” he said.

Meanwhile, Mangun noted the PSEi had gone up by more than 9 percent from its July lows despite the surge in COVID-19 infections and deaths.

“Over the last two years, Philippine equities have developed this behavior of being the last mover, wherein it rallies and catches up to other markets after the rest of them stop moving higher,” he added.

The financial, industrial, holding firm and property counters all dipped.

The services counter rose by 3.11 percent due to the run-up of telco stocks, while the mining/oil counter firmed up by 0.81 percent.

Value turnover for the day amounted to P9.06 billion.

There were 102 decliners that edged out 94 advancers, while 53 stocks were unchanged.

The PSEi was weighed down by conglomerates SM Investments and JG Summit, which fell by 2.77 percent and 3.99 percent, respectively.

Metro Pacific and AC Energy both lost over 1 percent, while SM Prime and Metrobank slipped by less than 1 percent.

Notable decliners outside the PSEi included Monde Nissin and Emperador, which fell by 1.93 percent and 1.81 percent.

Conglomerates Ayala Corp. and GT Capital rose by nearly 5 percent.

Aboitiz Power added 1.53 percent, while Ayala Land firmed up by 0.88 percent.

—Doris Dumlao-Abadilla