Stocks surge to new high
The local stock barometer skyrocketed by 2.27 percent Friday to close at a new historic high of 5,145.89 as a string of favorable US and local economic data kept the bulls surging.
The Philippine Stock Exchange index added 114.11 points in heavy value turnover of P10.58 billion as investors snapped up blue chips that are seen to provide higher yields in the current 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 continued 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.
“Our market continues to uncover new territories and we hope this influences trading activity and redounds to new issuances,” he added.
For the week, the benchmark index gained 165.18 points or
3.3 percent. Since the start of the year, the benchmark index has added 773.93 points or 17.7 percent, sustaining an upswing for the fourth straight year.
The sovereign credit-rating upgrades given by global rating firms on the Philippines was likewise helping, Sicat said. He also pointed out that with Europe still grappling with its fiscal issues, the Philippines and other Asian markets have 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 (+5.78 percent), Jollibee (+13.38 percent), PLDT (+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 in an uncharted territory, Cruz said there was no resistance level to refer to but to cement this breakout, he said the index must rise 3-5 percent past the 5,000 hurdle. This suggested 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 perceived 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.
By sector, the day’s outperformers were the property and industrial counters, which surged 5.5 percent and 2.6 percent. There were 132 advancers that overwhelmed 32 decliners while 42 stocks were unchanged.
An upbeat sentiment in Wall Street and the buoyant trading elsewhere in the region provided a strong backdrop to the day’s run-up. The Dow Jones industrial average extended its gains for the seventh session to close at 13,252.76 on Friday, gaining another 58.66 points or 0.44 percent. The broader S&P 500 index also closed above 1,400 for the first time since the US subprime crisis. Doris C. Dumlao
