Stock Market

GDP entices bargain hunters

Posted on November 29, 2013

THE LOCAL bourse rose sharply on Thursday, its third consecutive session in the green, as last quarter’s strong economic expansion enticed investors to pick up more bargains.

The Philippine Stock Exchange index (PSEi) surged 116.09 points or 1.92% to close at 6,169.96, while the broader all-share index jumped 51.43 points or 1.39% to end at 3,755.58.

“The market went up on Thursday in a follow-through of [Wednesday’s] recovery,” Manny P. Cruz, market strategist at Asiasec Equities, Inc., said in a telephone interview.

The market snapped a six-day slump starting Tuesday, shaking off fears the devastation brought by super-typhoon Yolanda (international name: Haiyan) would hurt economic growth. As stocks dipped below the 6,000 mark -- a critical support -- investors turned around and used the opportunity to buy while valuations were cheap.

As investors continued to hunt for bargains, news of the third-quarter gross domestic product (GDP) “gave more excitement to the market,” Astro C. del Castillo, managing director of First Grade Finance, Inc., said in a telephone interview.

Abbygayle M. Estrella, analyst at AB Capital Securities, Inc., added: “The PSEi leapt towards the 6,200 level, lifted by the third-quarter GDP.”

“We note that this is the fifth consecutive quarter that the GDP is at or above 7% and it fueled a relief rally since we were down for the past days because of Yolanda,” she added.

The country’s GDP expanded by 7% last quarter. While it slowed from the 7.6% in the April-June period, it still brought the year-to-date average to 7.4%, beating the government’s full-year target of 6%-7%.

Moreover, Mr. Cruz said the local bourse tracked the strong performance of major markets in the region.

“If you look at the regional markets, most of them rebounded sharply [yesterday], and we know for a fact that Philippine equities have been battered in the past weeks,” he said.

“Investors used the improvement in the regional markets as a catalyst to buy back into the local market, which boosted stocks.”

Japan’s Nikkei surged 277.49 points or 1.80% to 15,727.12, while Shanghai composite index rose 18.30 points or 0.83% to 2,219.37.

All sectoral indices showed renewed strength yesterday, led by mining and oil, which soared 374.30 points or 3.13% to 12,315.44.

Property went up 61.23 points or 2.6% to 2,416.45; industrial rose 172.73 points or 1.97% to 8,957.15; financials increased 24.19 points or 1.64% to 1,500.13; services gained 29.99 points or 1.61% to 1,889.26 while holding firms advanced 73.76 points or 1.32% to 5,647.71.

The total value of trades fell to ₱6.78 billion yesterday from ₱11.79 billion on Wednesday.

Gainers outnumbered losers, 98-53, while 44 issues were unchanged.

The daily list of the 20 most actively traded stocks showed 18 advanced while two were unchanged.

Leading the gainers were Philippine Long Distance Telephone Co., Inc., SM Prime Holdings, Inc. and SM Investments Corp.
The market is poised to continue its recovery today.

“There is still some room for the market to trek higher, with the 6,200 a crucial resistance,” Mr. Cruz said.

Mr. del Castillo, for his part, said the P400 billion expected to be pulled out of the central bank’s special deposit accounts by the end of this month could be invested in the equities market.

Given the sharp rebound, both analysts did not rule out the possibility of profit taking for today. -- Cliff Harvey C. Venzon