MANILA, Philippines–The Philippine Stock Exchange has attracted P19.35 billion in net foreign buying in the first quarter of the year as more global funds snapped up local equities in search of higher- yielding Asian assets in a low-interest rate global environment.
The net foreign buying recorded in the first three months was a turnaround from the P4.94 billion in net foreign selling recorded in the same period last year, when concerns on rising inflation triggered the outflow of funds from Asian emerging markets like the Philippines.
This massive liquidity flow, which was also matched by increasing participation among local investors, perked up the main-share PSE index by 16.8 percent to 5,107.73 at end-March. In a press statement on Monday, the PSE attributed this to the upbeat prospects of listed companies, optimism over the local economy, and encouraging signs of recovery of the US and European markets.
Highest quarterly gain
The first quarter rally marked the highest quarterly gain of the index since the third quarter of 2010, the PSE said.
“The PSEi’s journey to uncharted territories in the first quarter underpins investor confidence on Philippine corporates and the promise of our country’s growing economy. Even as the execution and attainment of higher goals are ongoing, our investors have given their affirmation that Philippines, Inc. is indeed headed towards the right direction,” PSE president & CEO Hans Sicat said.
The local stock index hit record highs 13 times during the first quarter, the highest record closing high of which was set on March 16 at 5,145.89.
In terms of sectoral indices, all indices were on the green with the financial counter emerging as the best performer in the first quarter as its sub-index surging by 30.4 percent. This was followed by the property counter which was up by 27 percent.
As cyclical counters usually track economic cycles, the faster economic growth widely expected this year – especially given the government’s more serious infrastructure spending – is also expected to boost the profitability of banking and property firms.
In the case of the financial sector, Philippines banks performed either within expectations or surprised on the upside with their 2011 financial results. Seven out of 10 of the country’s most profitable banks surpassed net profits in 2010 to eke out a new record level and nine of them maintained a double-digit return on equity.
For the first quarter, the holding firms sub-index also posted a hefty increase of 21.1 percent while the mining & oil sub-index climbed 10.5 percent, although analysts said the latter’s upside was recently capped by jitters over a mining policy being drafted by the Aquino administration.
The industrial sub-index edged higher by 10.5 percent while the services sub-index inched up by 8.4 percent.
Market indicators
The PSE said several market indicators were also on track to break the previous year’s record numbers. The combined market capitalization of listed issues in the PSE during the January to March period expanded by 9.8 percent to P9.81 trillion from a year ago. This is the highest market capitalization level recorded ever attained by the local bourse.
Total value turnover for the first quarter reached P502.08 billion or 54.5 percent higher than the level a year ago. This translated to an average daily value turnover of P7.85 billion, likewise an increase of 54.5 percent.
The PSE extended its trading hours to 1 pm in October last year as part of its efforts to increase liquidity in the market. On January 2 this year, trading hours were further extended up to 3:30 PM.