PHL stocks at all-time high, as market reacts to interest rate cut by BSP

(Updated 7:16 p.m.) The Philippine Stock Exchange index closed at an all-time high Friday, breaching the elusive 5,000 mark to close 77.69 points higher at 5,016.30 on P7.08-B value turnover. 

 

All economic conditions, domestic and overseas, have contributed for the market to reach this historic level, said Summit Securities Inc. president Harry Liu.

 

Positive developments in the Philippines, the US and even in Europe have all been factored in by the market, said Liu.

 

There are no reasons any more — technical and fundamental — at this point going against the market, Liu added.

 

On the domestic front, “What happened was a delayed reaction to the interest rate cut by Bangko Sentral," said trader Justino Calaycay Jr.

 

Overall, the developments in the US, Europe and the interest rate cut in the Philippines “will invite more investors” into the market, Calaycay noted.

 

The Bangko Sentral ng Pilipinas (BSP) lowered its policy rates anew by 25 basis points on Thursday. BSP Gov. Amando Tetangco Jr. said the policy-setting Monetary Board basically sees inflation remaining manageable this year. 

 

The decision brought the overnight borrowing rate to 4 percent and the overnight lending rate to 6 percent — key rate levels unseen since July 2009.  'Digesting' the interest rate cut

 

“There was a strong market anticipation for this rate cut… It’s just that the market is only now digesting it,” Calaycay noted.

 

More than 3.150 billion shares valued at P7.112 billion were traded during the morning and afternoon sessions Friday, according to the PSE Market Information.

 

Winners led losers 96 to 66, with 38 issues closing unchanged.

 

Other markets in the region also fared better from recently released US economic data and developments surrounding the euro debt crisis.  

“Asian shares and the euro inched up on Friday after a flood of cheap European Central Bank funds this week eased fears of a meltdown in the euro zone financial sector, overriding some weak data and concerns about surging oil prices,” Reuters reported.

 

The MSCI Asia Pacific ex-Japan rose 0.4 percent, but stayed below a seven-month high touched on Wednesday. The index was set to add nearly 1 percent for the week. Japan's Nikkei was up 0.5 percent, but pared some early gains on profit-taking, it added.

 

Europe is more about the perception that monetary and financial institutions, like the ECB, are there to help debt-ridden nations, said Accord Capital’s Calaycay.

 

The ECB's half a trillion euros in cheap, 3-year loans added to the banking system this week underpinned markets, driving down bond yields of highly-indebted euro zone governments, such as Italy, on Thursday, according to Reuters. 'Awash with funds'

 

"Central banks around the world keeping the global financial system awash with funds is prompting investors to keep the recent risk-on momentum," the UK-based news agency added, citing Tetsuro Ii, the president of Commons Asset Management in Tokyo.

 

Overnight on Wall Street, the Dow Jones industrial average was up 49.15 points, or 0.38 percent, at 13,001.22, according to Reuters.

 

Investors zeroed in on positive US economic data in hopes the equity rally would surge forward, it added.

 

In the case of the US market, their economic data point to a stronger recovery from the depression than previously thought of, according to Calaycay.

 

Their Dow Jones industrial average also breached the significant resistance level at 13,000, Accord Capital’s trader noted. Also supporting gains on Wall Street overnight, major US automakers posted stronger sales in February.

 

With the PSEi now in all time high territory, there is no resistance level but the technical goal on the chart is at 5,200, said Summit Securities’ Liu. In the year-to-date, the PSEi has gained 14.7 percent with foreign investors the net buyers at P23.41 billion as of March 1, reversing the P8.01 billion in net selling a year earlier, according to the PSE.   The net foreign buying reflects a 392.1-percent growth year-on-year.   Total market capitalization as of March 1 stood at P9.38 trillion, up 6.2  percent from P 8.83 trillion a year earlier.   Total value turnover as of March 1 reached P339.99 billion, up 69.7 percent from P200.38 billion. — With Reuters/KG/HS/OMG, GMA News