Philippine stock index soars to new historic high

MANILA, Philippines – The local stock barometer skyrocketed by 2.27 percent on Friday to close at a new historic high of 5,145.89 as a string of upbeat US and local economic data kept the bulls running.

The Philippine Stock Exchange index added a hefty 114.11 points at a heavy value turnover of P10.58 billion as investors snapped up blue chips in search for yields in this low- interest-rate environment.

The rally was in line with a strong risk appetite globally especially given the upbeat trading in Wall Street overnight.

“The market seems to be rewarding the equities market with a huge vote of confidence.

“News continues to be good and this is in line with a number of factors coming together which include good macroeconomic indicators, extremely benign interest rates and very stable monetary policy,” PSE president Hans Sicat said in a press briefing Friday.

The sovereign credit rating upgrades given by global rating firms on the Philippine sovereign was likewise helping, Sicat said. He also pointed out that with the Eurozone still grappling with its fiscal issues, the Philippines and other Asian markets had been thrust into the spotlight as a good investment.

First Metro Securities noted that the biggest index movers were SM Prime Holdings (+11.52 percent), Ayala Land Inc. (+5.78 percent), Jollibee Foods Corp. (+13.38 percent), Philippine Long Distance Telephone Co. (+1.48 percent) and Ayala Corp. (+4.44 percent).

“This is a confluence of all the positive factors such that markets have already gone ahead and upgraded the Philippines while we’re still awaiting an upgrade (to investment grade) this year,” said Ismael Cruz, president of IGC Securities.

Because the local stock market was trading at an uncharted territory, Cruz said there’s no resistance level to refer to but to cement this breakout and the index must rise by 3-5 percent past the 5,000 hurdle. This suggests a next target finish at 5,150, which is not too far from Friday’s close.

“We’re still awaiting that convincing break,” Cruz said.

Even if some investors perceive that local equities were now getting to be expensive, Cruz said the Philippine market was still three times more attractive than US stocks on a PEG (price/earnings to growth) basis, an indicator of the relative trade-off between valuation relative to earnings and the expected growth.