PH stock index bounces back to new high at 6,721.45 on BDO, SMIC trade

Photo from pse.gov.ph

MANILA, Philippines—Local stocks sprang back to a new record high on Thursday after a two-day correction, fueled by a late-session rally of tycoon Henry Sy-related stocks.

The main-share Philippine Stock Exchange index racked up 105.18 points or 1.59 percent to its best ever finish of 6,721.45, which also marked a new record intra-day peak.

Jose Vistan, strategist at AB Capital Securities, said the sharp rise by Banco de Oro (+7.96 percent to P99) and SMIC (+3.37 percent to P1,044) contributed about 27 points or about a fifth of the PSEi’s gain for the day.

BDO shares rose sharply late in the session. “This is supported by good fundamentals but as to why the rise is so dramatic, I don’t know why,” said AB Capital Securities strategist Jose Vistan.

Based on AB Capital Securities’ house view, BDO can post a 21 percent growth in net profits this year, much faster than the likely gain by most of its peers, Vistan said.

SMIC head of investor relations Cora Guidote said the rally in SM stocks might be due to the investor confidence triggered by a reverse roadshow conducted by investment bank UBS in the last two days. A reverse roadshow means that the investors were brought onshore to talk to local companies.

“We talked to 20 to 23 investors in the last two days,” Guidote said.  She said corporate Philippines was seeing the most number of reverse roadshows early in the year, suggesting strong interest on the Philippines in general. In January, similar reverse roadshows were conducted by foreign banks JP Morgan, Deutsche Bank and Goldman Sachs.

Belle (+5.55 percent) was likewise a big gainer for the day after Credit Suisse initiated coverage on the Philippine gaming industry and issued an “outperform” rating on Belle and Bloomberry (+2.64 percent).

Credit Suisse set a respective target price of P17.50 and P6.50 for Bloomberry and Belle.

DMCI, Megaworld, Petron, Philex, AP, ICTSI and Semirara also contributed to the day’s upswing.

Value turnover was heavy at P18.52 billion. There were 94 advancers versus 72 decliners while 46 stocks were unchanged.

Meanwhile, a big laggard for the day was SMDC (-4.78 percent), which will be stricken off the PSEi starting March 11 and will be replaced by Bloomberry.

A buoyant regional equity market also boosted local investor appetite.  Sentiment improved after a well-bid Italy bond auction and also after the US Federal Reserve affirmed commitment to its bond buyback activities.