Image from pse.com.ph
MANILA, Philippines—The main stocks index surged to a new all-time high close of 5,375.52 on Wednesday, on expectations that the Bangko Sentral ng Pilipinas might cut interest rates further.
The main-share Philippine Stock Exchange index gained 26.84 points, or 0.5 percent. Its closing level topped the previous record finish of 5,369.98 posted last July 5 but was still below the all-time intraday high of 5,403.16 seen last July 4.
“It’s still mostly liquidity,” said Jose Mari Lacson, head of research at stock brokerage Campos Lanuza & Co., noting, however, that the volume was much less compared to when the stock market was posting all-time highs in July.
But light trading did not come as a surprise as the China and South Korea markets were still on a holiday break.
Lacson said that if the Bangko Sentral ng Pilipinas relaxed monetary settings to curb peso appreciation and sterilize flows, this would drive more money to the stock market. “Right now, it’s a question of expectation, which is a more powerful factor than actual change (in rates),” he said.
The BSP’s overnight borrowing rate is currently at a record low level of 3.75 percent.
Despite recent hints of an ending “dovish” or monetary easing cycle, the Bangko Sentral ng Pilipinas might slash interest rates one more time to curb sharp peso appreciation and temper speculative capital flows, Citibank’s chief Asia-Pacific economist Johanna Chua said on Tuesday.
Chua said the BSP might slash key interests by another 25 basis points or pursue other measures like a reduction in the reserve requirement on banks or the release of funds locked up in special deposit accounts.
The PSEi’s upsurge was led by holding firms, which went up by 1.06 percent. The financial, industrial and property counters also contributed gains.
On the other hand, the mining/oil counter fell by 1.29 percent while the services sub-index was also slightly in the red.
Value turnover amounted to P6.23 billion. Despite the overall index gain, decliners (84) outnumbered advancers (68) while 55 stocks were unchanged, reflecting the concentration of buying on index stocks.
The biggest contributors to the PSEi’s gains were Meralco (+3.79 percent), SM Investments (+2.7 percent), EDC (+1.45 percent), Megaworld (+1.33 percent), Jollibee (+1.3 percent), RLC (+1.25 percent), AC (+1.14 percent), Aboitiz Power (+1.05 percent) and ALI (+0.85 percent).
On the other hand, Philex (-3.57 percent), alongside AGI, PLDT and SM Prime, lagged.
Since the start of the year, the PSEi has gained 1,003.56 points, or about 23 percent, from the 2011 yearend closing of 4,371.96.
Across the region, sentiment was mixed amid continuing jitters over a Spanish bailout.
Many investors also stayed on the sidelines ahead of a European Central Bank policy meeting on Thursday and the release of the latest US jobs data on Friday.