PSEi back to the 7,500 level

THE LOCAL stock barometer climbed back to the 7,500 level on Tuesday as the European Union deal that prevented a much-feared “Grexit” spurred global risk-taking for the second straight session.

The Philippine Stock Exchange index added 42.43 points or 0.57 percent to close at 7,538.76, rising for the fourth trading day.

Investors across the region were encouraged by the upbeat trading in Wall Street overnight after Greece struck another bail-out deal with European Union, allowing the debt-strapped nation – the first to default on an International Monetary Fund loan – to remain part of the eurozone.

At the local market, most counters were up for the session. Only the property counter ended in the red.

Total value turnover amounted to P5.73 billion. There were 134 advancers that overwhelmed 40 decliners while 39 stocks were unchanged.

Bloomberry led the PSEi higher, rising by 7.97 percent while Globe – the most actively traded company – rose by 3.19 percent.

URC, AC, MPI and Jollibee all advanced while BDO, Metrobank, ALI, GTCAP, SMIC, JG Summit also contributed gains.

Outside of the PSEi, IT stock Xurpas rose by 6.55 percent ahead of the announcement of a new venture on Wednesday.

Meanwhile, Megaworld weighed down the index, declining by 2.04 percent while SMPH also fell by 1.93 percent. PLDT, AEV and Meralco also slipped.

Local stock brokerage DA Market Securities said if the PSEi index breaks 7,560, this would imply a possible exit from the downtrend which began in April and a possible testing of the next resistance at 7,700.

In a research note, ABN-AMRO said the EU agreement reduced the near-term risks of a “Grexit” – although it believed that the risks of Greece exiting the EU remain high. Having said that, ABN-AMRO said such an event would not constitute a “Lehman moment” for Europe – referring to the collapse of American investment bank Lehman Brothers in 2008 that precipitated a global liquidity crunch.

“Overall, we see the deal not as a panacea for Greece and the eurozone. The risks remain significant that Greece will need to (temporarily) leave the eurozone going forward,” ABN-AMRO said.

ABN-AMRO said implementation risk in Greece was particularly high. “It will be very difficult to stick to the program in coming months, given that the economy looks set for a sharp contraction. This is not the ideal background to be implementing tough measures. What is more, the implementation will only push the economy deeper into recession, which will also increase the likelihood that the fiscal targets will be missed. This, in turn, will probably result in tougher new measures, or heated debates when tranches of a new aid package need to be paid,” it said.