MANILA -Stock market bulls achieved an elusive win on Thursday after the Philippine benchmark index (PSEi) soared over 100 points to its highest close in more than a month after new inflation data in the United States showed further signs of cooling.
The better-than-expected US inflation report overnight—following recent domestic data showing the consumer price index on a five-month downtrend—energized investors betting on another leg up after the PSEi’s short-lived bull run early this year, when it touched a recent high of 7,137.
The PSEi gained 1.73 percent, or 111.64 points, to 6,578.49 on Thursday while the broader All Shares index added 1.15 percent, or 39.73 points, to 3,497.06.
“The narratives are favoring the bull scenario. However, there is still doubt given upside risks to inflation due to El Niño and geopolitical tensions,” Jonathan Ravelas, senior adviser at Reyes Tacandong & Co., told the Inquirer in an interview.
The rally on Thursday saw an increase in trading activity while foreign buying was sustained from the previous session.
Activity was driven by large banks such as BDO Unibank Inc. and Bank of the Philippine Islands, which traded at multiyear highs amid better profit expectations due to the high interest rate environment.
Ravelas still expects the PSEi to remain range bound until bulls successfully reclaim the 6,700 level.
“Buy on breakout above 6,700 with volume,” he advised. “The other way of doing it is to buy companies offering dividend yields of 5-6 percent.”
These could be telecom stocks, energy firms and select real estate investment trusts.
“For investors with limited bullets, go for dividend yields. Don’t go for price appreciation because there’s still downside risks,” he said.
Market momentum
Juan Paolo Colet, managing director at investment bank China Bank Capital Corp., said the PSEi’s close on Thursday was its strongest in over a month.
“There is momentum for the market to test the 6,600 resistance zone that it last saw in May,” he said.
Colet said 6,750 was the decisive area for bulls to conquer for a successful range breakout to the upside.
Trading activity was modestly higher as 509.6 million shares valued at P6.04 billion changed hands while net foreign buying ended at P995.2 million, data from the stock exchange showed.
Colet said additional foreign inflows were needed to fuel a breakout.
“Ideal scenario is for market to consolidate above 6,600 then attempt to break 6,750,” he said.
Jollibee Foods Corp. was the top-traded stock as it rose 3.86 percent to P253 per share.
It was followed by BDO Unibank Inc., up 4.23 percent to P148; Bank of the Philippine Islands, up 1.53 percent to P112.60; Ayala Land Inc., up 0.81 percent to P24.95; and SM Investments Corp., up 2.25 percent to P931 per share.
International Container Terminal Services Inc. was up 1.28 percent to P205; Globe Telecom, up 3.07 percent to P1,881; GT Capital Holdings Inc., up 4.21 percent to P520; SM Prime Holdings Inc., up 1.07 percent to P33.10; and Ayala Corp., up 0.90 percent to P619 per share.
Overall, there were 114 advancers against 69 losers while 48 companies closed unchanged, data from the stock exchange showed.