PSEi climbs on market optimism on RRR cut, Q2
By Arra B. Francia, Senior Reporter
LOCAL EQUITIES climbed on Monday as investors turned optimistic on the reserve requirement ratio (RRR) cut as well as a potentially better second quarter due to election spending.
The benchmark Philippine Stock Exchange index (PSEi) jumped 1% or 76.32 points to close at 7,660.14 yesterday, extending the previous session’s gains amid sluggish trading for most of the day. The broader all- shares index likewise rose 0.72% or 34.13 points to 4,747.40.
“Local investors are bullish that the lowering of the RRR by the BSP (Bangko Sentral ng Pilipinas), along with a potential boost in the second quarter driven by election spending, would support our market moving forward,” AAA Southeast Equities, Inc. President William Matthew M. Cabangon said in a text message.
The BSP announced a 200-basis point (bp) phased cut in big banks’ RRR last Friday, with the first 100-bp reduction to take effect on May 31. This gives banks leeway to lend more money while also increasing liquidity in the market.
“This would explain our market’s outperformance among Asian peers despite the lingering trade war concerns,” Mr. Cabangon said.
The PSEi bucked the weakness across Wall Street indices last Friday. The Dow Jones Industrial Average dropped 0.38% or 98.68 points to 25,764, while the S&P 500 index shed 0.58% or 16.79 points to 2,859.53. The Nasdaq Composite index also fell 1.04% or 81.76 points to 7,816.29.
Mr. Cabangon noted that local investors were able to cushion the market’s foreign outflows which persisted for the 11th straight session at P879.56 million, although lower than Friday’s P1.39 billion.
“With locals now absorbing the foreign selling and propelling the market higher, it is possible that we have found a bottom for the market in the near term,” he explained.
Mining and oil was the lone counter that ended in negative territory, closing 0.33% or 24.21 points lower to 7,232.45.
The rest went up, led by holding firms which gained 1.29% or 91.40 points to 7,161.30. Services advanced 0.93% or 15.31 points to 1,651.90; property firmed up 0.88% or 36.41 points to 4,175.30; financials went up 0.86% or 14.67 points to 1,715.40; while industrials added 0.08% or 9.66 points to 11,068.08.
Some 1.01 billion issues switched hands valued at P4.88 billion, significantly lower than the previous session’s P8.21-billion turnover.
Regina Capital Development Corp. Head of Sales Luis A. Limlingan attributed the lower turnover to the US-China trade war.
“Philippine shares traded positively but with minimal value turnover after a series of moves from the US and China kept investors at bay,” Mr. Limlingan said.
Advancers outpaced decliners, 100 to 84, while 43 names were unchanged.
