Image from pse.com.ph
MANILA, Philippines—The Philippine stock index surged to a new all-time high breaching 5,450 on Thursday, powered by a new wave of foreign buying among investors upbeat on the country’s growth prospects.
The Philippine Stock Exchange index rallied by 68.22 points, or 1.27 percent, to close at a new high of 5,443.74. A new intraday peak of 5,451.96 was likewise breached for the day. The index last pierced through the 5,400 mark in early July.
The upswing was led by conglomerates, especially as foreign investors snapped up shares of tycoon Henry Sy-led SM Investments, which climbed by 5.99 percent.
“A lot of foreign funds want to buy SM because that’s how they can get into the Philippine consumer market. That’s the biggest play for the consumer market,” said stock market veteran Wilson Sy, director at fund management firm Philequity Management Inc.
The surge in liquidity, Sy said, was due to the US Federal Reserve’s third round of quantitative easing (QE3) or a bond buyback scheme to boost liquidity without having to slash further the already near-zero interest rate in the United States.
“Their thinking is if liquidity is so and high interest rate so low, asset prices will go up and improve the economy. Whether this will be successful or not is something we don’t know yet,” Sy said.
Paul Joseph Garcia, senior vice president and head of Odyssey Funds at Bank of the Philippine Islands, said large funds were buying into the Philippine growth story.
“We saw foreign buying on large-cap names. We think funds are positioning for next year since the Philippines is the only economy in Asia where gross domestic product (GDP) growth is being upgraded while all Asian economies are being downgraded,” Garcia said.
Turnover at the local stock market amounted to P8.33 billion. There were 103 advancers against 63 decliners in the market while 37 stocks were unchanged.
Apart from SM, investors also snapped up shares of Ayala Corp. (+3.63 percent), Meralco (+2.85 percent), Ayala Land (+1.69 percent) and JG Summit (+1.36 percent). PLDT, Metrobank, Megaworld, EDC, SM Prime and AEV also contributed some gains. Among the non-index stocks, Bloomberry (+4.44 percent) was an outperformer.
On the other hand, AGI, BDO, Petron, Manila Water and MPI failed to ride on the upswing. Among non-index stocks, GMA Holdings (-9.07 percent) and GMA7 (-8.31 percent) fell sharply as talks over a prospective takeover by the group of PLDT chairman Manuel V. Pangilinan collapsed.
On Wednesday, the ADB said the Philippine economy continued to show strength despite global and regional economic slowdown. It said that stronger-than-expected economic growth in the first half of 2012 was broadly based.
“The upbeat outlook of the economy, including the Asian Development Bank’s assessment in its recent report, affirms confidence in the Philippine market, pushing the main index to yet another unprecedented level,” PSE chairman Jose Pardo said.
“We continue to benefit from stable macroeconomic fundamentals which have augured well for businesses in the country. Such growth expectations should further keep the Philippine stock market in the radar of global investors,” PSE president Hans B. Sicat said.