PSEi back to 7,300 mark on bets of Clinton victory

LOCAL stocks rallied back to the 7,300 mark on Tuesday as regional markets increasingly bet that America would pick Democratic standard-bearer Hillary Clinton as its next president.

The main-share Philippine Stock Exchange index gained 110.61 points or 1.54 percent to close at 7,307.80, tracking upbeat regional markets on the eve of the US presidential elections.

Japanese investment house Nomura tagged the US presidential election as the largest “known unknown” markets have had to contend with since the global financial crisis – more than the Brexit (Britain exit from the European Union) vote, the 2012 US election, various peripheral European elections, US debt ceiling debates, OPEC (Organization of Petroleum Exporting Countries) meetings or even US Federal Reserve decisions.

“The near-term market reaction will likely be driven entirely by the outcome of the presidential race. The higher likelihood there is still that Clinton prevails. Her slide in polling numbers appears to be stabilising over the past two days, and reports about a surge in early voting over the weekend are positive for her,” Nomura said in an equity research dated Nov. 7.

Nomura recommend using any such rally to trim positions in Asian equities, noting that it’s almost impossible for Democrats to be in control of Congress and that a very narrow margin of victory would likely leave Clinton little room to maneuver on policy objectives. At the same time, it noted that Clinton was set to inherit a very difficult presidency on foreign policy, among other risks.

“On the other hand, a Trump victory would likely lead to a further sell-off in Asian equities (down possibly more than 6 percent), at which point we would reevaluate our position as (hopefully) more clarity emerges about policy and economic implications,” Nomura said.

At the local market on Tuesday, the industrial counter outperformed with its 3.08 percent gain while the financial, holding firm, mining/oil and property counters all advanced by over 1 percent. Only the services counter ended lower, weighed down by the selldown on telecom stocks Globe and PLDT which respectively fell by 5.49 percent and 1.5 percent.

Value turnover for the day amounted to P7.19 billion. There was a modest net foreign buying amounting to P106 million.

There were 119 advancers that beat 64 decliners while 49 stocks were unchanged.

The PSEi was led higher by URC, which surged by 6.87 percent while Jollibee gained 4.6 percent. Metrobank, MPI, Megaworld and DMCI all gained over 3 percent while AEV and SM Prime were up by over 2 percent.

ALI, BDO and JG Summit were all up by over 1 percent. BPI and AC also contributed modest gains.

Notable gainers outside PSEi stocks were mining firms Nickel Asia and FNI, which were both up by over 6 percent. Newly listed Shell PH gained 3 percent while cement-maker Cemex rose by 1.74 percent.

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