MANILA, Philippines—The local stock market attracted droves of foreign investors in the first two months of the year, driving valuations higher and lifting the main index to unprecedented heights.
Net foreign buying at the local stock market amounted to P22.72 billion during the January to February period, a dramatic turnaround from the P7.65 billion in net selling recorded in the same period last year, the Philippine Stock Exchange reported.
In the early part of 2011, investors were dumping emerging-market equities due to concerns over rising inflation. This time around, however, sound macroeconomic fundamentals are luring more funds into the region, benefiting the Philippines whose stock market was the region’s best performer in 2011.
The main-share Philippine Stock Exchange index pierced through the 5,000 mark for the first time in history in Thursday’s trade. Since the start of the year, the index has gained by 13 percent.
“The trek past the 5,000 index marks a very significant milestone in PSE history. Central banks, especially in the larger, developed economies, have put in place various measures to make sure that we avoid a widespread collapse, and this has provided a rallying point among global markets. Coupled with the country’s own growth story, we are hopeful that this rally will continue,” PSE president and chief executive officer Hans Sicat said in a press statement.
Total market capitalization at the PSE as of February 29 stood at P9.31 trillion, up 5.91 percent from the P8.79 trillion level in the same period last year.
Turnover for the first two months reached P331.87 billion, 69.47 percent higher than the level a year ago.
The PSE extended its trading hours until 3:30 p.m. in January as part of its efforts to increase liquidity in the market. Stock dealers were initially reluctant to accept the longer trading time but it eventually attracted stronger interest in the local market.
In terms of sectoral indices, the property index emerged as the best performer in the first two months of 2012 as it surged by 23.38 percent. This was followed by the financials index, which grew by 21.73 percent. All other indices also posted increases.
The Philippines is undergoing a renaissance that looks all set to bring the economy to higher growth and power stocks to new heights, regional investment house CLSA Asia-Pacific said in a recent research analysis. Like the rare endangered Philippine eagle, a private sector investment cycle was a rare sighting in the country. But now, CLSA said, the country was on the cusp of another investment cycle for the first time in 15 years driven by political stability, rising business confidence, low interest rates, robust balance sheet and the country’s long-term demographic potentials.
“The Philippines soars like an eagle, again,” the analysis said.