Bourse resumes climb to fresh peak
By Krista A. M. Montealegre
National Correspondent
THE PHILIPPINE STOCK EXCHANGE index (PSEi) sustained its dizzying ascent to uncharted territory, with the upcoming third-quarter economic growth data and corporate earnings season likely dictating if the rally has more gas left in its tank.
Returning from a three-day break, the benchmark PSEi broke through the 8,500 mark and came 14 points shy of piercing 8,600 before settling at 8,497.74 on Tuesday, still finishing at an all-time high.
The PSEi has extended its year-to-date returns to 24.22%, marked by three straight sessions that the bellwether index closed at a record.
The equities market has shattered all-time high levels 10 times this year since the record-breaking run commenced on Sept. 14 when the bellwether index eclipsed the previous record of 8,127.48 set on April 10, 2015.
“The signal is you have a very strong economy and market structure, institutions are working — give and take the political noise — it is net positive for the Philippines compared to other emerging markets,” PSE Chief Operating Officer Roel A. Refran said in a phone interview.
Average daily value turnover improved by 4.3% year-on-year to P8.15 billion, accompanied by a net foreign buying position at P53.95 billion as of Oct. 13, according to data presented by PSE President and Chief Executive Officer Ramon S. Monzon in a forum on Monday.
“We see that the average value traded is picking up and that signals confidence in terms of people willing to part with their money and park it in the Philippines,” Mr. Refran said.
The Philippines is not alone. The PSEi has been mimicking a general trend seen in the United States and elsewhere in Asia where stock markets have been hovering at record, multi-year highs.
“Optimism may be due to sentiment that global economy — at least US and Japan — are firming up,” Raul P. Ruiz, vice-president and research head of RCBC Securities, Inc., said in a mobile phone message.
Also providing an anchor for the stock market’s ascent is the optimism on the government’s aggressive infrastructure drive and expected faster third-quarter economic growth — scheduled to be reported on Nov. 16 — on the back of increased exports, rising automotive sales and bigger government spending, First Metro Investment Corp. Head of Research Cristina S. Ulang said in a separate message.
“Every little thing helps. It’s not just one big thing, but it’s a lot of little things,” April Lynn L. Tan, vice-president and head of research at COL Financial Group, Inc., said in a telephone interview.
Ms. Tan added that investors will set their sights on the third-quarter corporate earnings season that is scheduled to start later this month, with telecommunications and select consumer stocks expected to report faster growth momentum.
With the stock market’s recent strength, RCBC Securities is considering upgrading its yearend target of 8,500 for the PSEi, even as it cautioned that the market may eventually correct as trading shifts from index heavyweights to second- and third-line issues and as investors await the decision of the Federal Reserve on interest rates when its Federal Open Market Committee meets on Oct. 31-Nov. 1 and on Dec. 12-13.
“Although it may seem expensive now, the long-term perspective is quite positive,” COL Financial’s Ms. Tan said.
“Just hang on. Fundamentals will eventually catch up.”