By Revin Mikhael D. Ochave
THE LOCAL MARKET closed the week in green territory as investors reacted positively to Thursday’s decision by the Bangko Sentral ng Pilipinas (BSP) to cut interest rates, analysts said.
The benchmark Philippine Stock Exchange index (PSEi) rose 73.58 points or 1.2% to close at 6,191.84, while the broader all-shares index went up 30.17 points or 0.83% to close at 3,631.15.
In a mobile phone message, PNB Securities, Inc. President Manuel Antonio G. Lisbona said that the market responded favorably to the unexpected rate cut by the central bank.
“The BSP’s unexpected rate cut late yesterday encouraged investors to buy into the market, as lower rates are intended to stimulate economic activity,” he said.
On Thursday, the Monetary Board cut the rates of BSP’s overnight reverse repurchase, lending, and deposit facilities by 50 basis points to 2.25%, 2.75%, and 1.75 respectively – all new record lows.
For Philstocks Financial, Inc. Research Associate Claire T. Alviar, the interest rate cut brings market optimism despite the coronavirus disease 2019 (COVID-19) pandemic.
“The rate cut of BSP spurs optimism in the market since it is helpful for the businesses as it lessens the cost of debt which could cushion the impact of COVID-19,” she said.
However, Ms. Alviar noted that the market moved sideways during intraday trading as investors assessed the decision of the central bank.
“The assessment was because further stimulus could also mean that it expects deeper contraction or more damage in the economy, amid rising COVID-19 cases in the country. Also, rate cuts can only do so much, particularly that demand remains weak,” she said.
All sectoral indices ended as gainers on Friday.
Services picked up 27.66 points or 2.02% to 1,394.5; holding firms climbed 85.84 points or 1.35% to 6,444.47; financials increased 13.89 points or 1.13% to 1,238.96; mining and oil rose 50.54 points or 0.98% to 5,169.86; industrials improved 51.55 points or 0.68% to 7,627.07; and property went up 14.48 points or 0.47% to 3,048.32.
Advancers bested decliners 99 to 91, while 54 names went unchanged.
Net foreign selling was at P862.97 million versus P662.42 million the previous day.
“Foreigners remained net sellers today, which implies that domestic participants helped keep the index afloat,” Timson Securities, Inc. Head of Online Trading and Trader Darren Blaine T. Pangan said in a mobile phone message.
Value turnover stood at P5.3 billion with 1.08 billion issues switching hands, compared with P6.75 billion with 1.34 billion on Thursday.
“Technically, the PSEi is sitting above its 100-day moving average line. We’ll have to observe if this dynamic support area is respected next week,” Mr. Pangan said.
“The market respected the 6,000 to 6,130 support levels. We expect the market to continue consolidating for the next sessions,” Mr. Lisbona said.