By Arra B. Francia
Reporter

THE PHILIPPINE STOCK EXCHANGE INDEX (PSEi) broke through the 8,900 line on Tuesday, resuming its ascent to a fresh peak on the back of expectations that the next tax reform package will cut corporate income tax rates.

The fifth trading day of 2018 saw PSEi log its fourth record high, gaining 2.04% or 178.60 points to finish 8,923.72 on Tuesday. It was now up 4.27% from its record-high 8,558.42 finish in 2017.

Timson Securities, Inc. Equities trader Jervin S. de Celis attributed the main index’ jump yesterday to news on the Department of Finance (DoF) plan to submit three more tax reform packages to Congress within the year, including the second one that will slash corporate income taxes to 25% from 30% currently.

“That’s what’s keeping the PSEi going up since our corporate income tax is the highest among Southeast Asian nations. Most of our neighboring countries implement corporate tax rates between 12.5% and 25%,” Mr. De Celis said in a mobile phone message.

Foreign investors continued to bet on the strength of the Philippine economy, with net foreign inflows ballooning to P1.42 billion from P1.202 billion on Monday.

All six sectoral indices moved into positive territory, with the property sector lodging the biggest increase at 2.4%, followed by financials at 2.24%.

Summit Securities, Inc. President Harry G. Liu said that apart from the tax reform program, investors are banking on companies’ year-end financial reports.

“Of course there’s the tax reform program, the infrastructure program. And then you have the yearend reports, these are the ones that are causing the market to get more positive,” Mr. Liu said in a telephone interview.

He added that such developments pointing to further boost to the macroeconomy down the road will continue to fuel investor optimism.

“So looking at it, I think in the long term this trend would be very much upward-looking,” Mr. Liu said.

“In the short term, maybe we can meet a bit of resistance for profit-taking. But nevertheless, my long term picture should be about 10,000 for the year.”

Timson Securities’ Mr. De Celis said the PSEi could breach the 9,000 mark as early as this week. Some analysts had earlier projected the market reach this level later into the year. “This week, the PSEi breaching the 9,000 is highly like since we are just a few points away from it and this is due to optimism on economic reforms of the current administration as well as the expected higher government spending on infrastructure projects,” he said. “While the ascent of the PSEi is too fast and steep, it may consolidate probably above 8,800-9,000 level once the market has already factored in these news.”

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