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Investors take heart from weaker inflation

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PHOTO BY SANTIAGO J. ARNAIZ

By Janina C. Lim, Reporter

PHILIPPINE EQUITIES climbed for a third straight trading day on Friday on the back of investor optimism in the face of easing inflation, with consumer stocks particularly benefiting from the latest price data.

The Philippine Stock Exchange Index (PSEi) rose 80.51 points or 1.04% to close 7,761.11 — up 3.95% from Dec. 28’s 7,466.02 finish — while the broader all-shares index went up 42.31 points or 0.91% to finish 4,652.59.

PSEi opened 0.3% weaker at 7,657.18 — the day’s low — but quickly ascended after the release of December inflation data to peak for the day at 7,801.50 before the noon break.




All six sectoral indices gained, while foreigners remained predominantly bullish for the second straight day.

“The local market opened in the red in knee-jerk reaction to the plunge on Wall Street last night but quickly reversed upwards on news that December inflation fell to 5.1%, way below consensus forecast of 5.7%,” RCBC Securities, Inc. said in a Stock Market Weekend Recap attributed to research analyst Fiorenzo D. De Jesus.

RCBC Securities noted that “[c]onsumer names were red-hot as investors may have been encouraged by the lower inflation data, which may support the outlook for discretionary spending growth this year”, particularly citing stocks of fast-food giant Jollibee Foods Corp. that jumped 5.82% and hit a record intra-day high of

P310.40 apiece before closing at P309 each.

“Investors also picked up top retailers Puregold (Price Club, Inc. whose price gained 4.54% to close P47.20 apiece) and Robinsons Retail (Holdings, Inc. which increased by 3.77% to finish P88 each).”

Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile phone message on Friday that “[i]nvestors readjusted their risk assessment of the Philippines as inflation came in much better than expected against the backdrop of a less favorable global outlook.”

The Philippine Statistics Authority reported in the morning that headline inflation eased to 5.1% last month, marking the slowest pace since May’s 4.6% though still much faster than the year-ago 2.9%. The latest inflation pace is lower than the 5.7% median in a BusinessWorld poll late last week and falls below the 5.2-6% estimate given by the Bangko Sentral ng Pilipinas (BSP) for last month.

“Week-to-date, the market woke from its New Year holiday stupor on Wednesday as funds went on a buying binge starting Thursday, anticipating that December inflation would show a substantial easing. The rally extended to Friday, as December inflation managed to beat expectations,” RCBC Securities said, while Regina Capital’s Mr. Limlingan said: “We expect inflation to improve in the coming months especially with the high base last year.”

Besides Jollibee, Puregold and Robinsons Retail, drivers of Friday’s rally included Ayala Land, Inc (up 2.9% to P43.70 apiece); Ayala Corp. (3.78% to P960); SM Prime Holdings, Inc. (1.32% to P38.50) and BDO Unibank, Inc. (2.6% to P132.80 each).

“As you can see, these businesses are in the property and consumer sector which may greatly benefit when the BSP decides to implement lenient policies that may contribute to higher consumer spending, and this means higher sales for these firms,” Timson Securities, Inc. Trader Jervin S. De Celis said in a text message.

Reuters reported that Wall Street plunged on Thursday in the face of signs of slowing US factory activity, with the Dow Jones Industrial Average dropping 2.83%, the S&P 500 shedding 2.48% and the Nasdaq Composite Index losing 3.04%.

Most major Asian markets rose: Hong Kong’s Hang Seng Index by 2.24%, South Korea’s KOSPI index by 0.83%, Shanghai Composite Index by 2.05%, and Jakarta Composite Index by 0.86%, although Japan’s Nikkei Stock Average 225 lost 2.26% while the FTSE Bursa Malaysia KLCI shed 0.36%.

Leading Friday’s charge in the Philippine bourse was mining and oil which surged by 195.44 points or 2.25% to end 8,872.15. It was followed by the industrial sector that climbed 235.20 points or 2.13% to 11,249.91, property which rose by 71.54 points or 1.88% to 3,877.36, financials which gained 11.19 points or 0.62% to 1,813.61, holding firms which went up by 37.21 points or 0.49% to 7,607.04 and services which edged up by 6.15 points or 0.41 to 1,483.41.

Stocks that gained were more than double those that lost 141 to 63, while 39 others closed flat.

Friday’s list of 20 most active stocks showed five that lost, namely: San Miguel Corp. (down 2.48% to P145.30 apiece); Bank of the Philippine Islands (down 1.58% to P93.50), SM Investments Corp. (down 1.25% to P946), International Container Terminal Services, Inc. (down one percent to P99) and Megaworld Corp. (down 0.21% to P4.83%).

Two stocks on the same list ended flat: Universal Robina Corp. at P128.50 apiece and Metropolitan Bank & Trust Co. at P84.60 each.

Trade volume increased for the second straight day to 1.959 billion shares worth P9.042 billion from Thursday’s 985.176 million issued worth P7.164 billion.

Net foreign buying grew more than fivefold to P1.019 billion from Thursday’s P196.718 million.

“Foreigners are… back to our market and they may have also contributed to this rally,” Timson Securities’ Mr. de Celis said, while RCBC Securities noted that “[f]oreign funds also wanted in on the action as net foreign buying reached P1.2bn week-to-date, mostly from the massive P1bn net foreign inflow today.”