Philippine stocks hit a new high of 5,030

MANILA, Philippines—The local stocks index soared to a new historic high on Monday as strong liquidity in a low-interest rate environment alongside indications of a more serious government pump-priming lured more investors into equities.

The main-share Philippine Stock Exchange index gained 14.28 points, or 0.3 percent, to finish at the day’s high and a new record peak of 5,030.58.

The market bounced from a sluggish start to sustain its winning streak for the fourth trading day. The index has closed above the 5,000-mark in the last two sessions.

“Lower interest rates and taking cue from latest data on deficit, the national government appears to have started its spending mode. Investors took this as a signal to still buy stocks. This is further supported by positive earnings results,” said Banco de Oro Unibank chief strategist Jonathan Ravelas.

It was reported on Monday that the Philippine government ended 2011 with a budget deficit of P197.8 percent, or 2 percent of gross domestic product.

“The index rose again to a new high but on lower volumes. We are switching our strategy from buying the dips to taking some profits off the highs,” said Gonzalo Ordoñez, president of First Metro Securities.

“We remain bullish medium to long term,” Ordoñez added.

Bank of the Philippine Islands senior vice president Paul Joseph Garcia said the market was still enjoying strong momentum due to large foreign flows.  The index may hover between 4,900 and 5,100 this week, Garcia said.

A recent catalyst for the market since last week was a fresh 25-basis point interest rate reduction by the Bangko Sentral ng Pilipinas last week, which meant more funds out there seeking better returns.

By counter, the outperformers for the day were the property and mining/oil counters, which respectively surged by 2.2 percent and 1.85 percent. Only the financial counter ended in the red.

Value turnover was relatively thinner at P5.5 billion compared with Friday’s P7.11 billion. There were 92 stocks that gained versus the 71 that declined while 40 were unchanged.

First Metro Securities said the PSEi’s gains were driven mainly by heavy gains eked out by Ayala Land, ICTSI, Manila Water and San Miguel Corp.

PLDT, AGI, Semirara, Aboitiz Power and MPIC also contributed to the PSEi’s rise.  Other stocks that gained in heavy volume were Philodrill, Marcventures, Union Bank, NiHao, Geograce and ORE.

On the other hand, the PSEi’s gains were tempered by the decline in shares of Metrobank, SMIC, BPI, JG Summit, EDC and Banco de Oro.

The local stock market traded with caution in the morning session before bouncing to new heights toward the end of trading. Apart from profit-taking, US President Obama’s tough stance on the Iran nuclear problem and jitters over the Greek debt exchange tempered risk-taking early in the session.