The local stocks index climbed back to the 5,200 level on Monday, backed by investors’ optimism on first-quarter corporate earnings results alongside month-end window-dressing and rising expectations of further monetary easing by the US Federal Reserve.
“I think first-quarter earnings results of (local) corporates will be better than expected,” said Paul Joseph Garcia, senior vice president at the Bank of the Philippine Islands.
A firm trading on Wall Street on Friday, Garcia said, also set a favorable tone to Monday’s trading. Across the region, most markets also traded in the green on hopes of a further monetary stimulus from the US Federal Reserve following reports that the US economy had grown at a slower-than-expected pace of 2.2 percent in the first quarter versus a 2.5 percent market consensus.
The main-share Philippine Stock Exchange gained 33.65 points, or 0.65 percent, to close at 5,202.70. The index is thus now moving closer to the all-time high closing of 5,218.96 and intra-day peak of 5,247.14 posted last April 26.
By sector, the property index was the day’s outperformer (+1.2 percent) boosted by expectations of further monetary easing in the United States. Only the mining/oil index ended in the red, succumbing to further profit-taking after last week’s excitement that the Sampaguita gas discovery could be bigger than the reserves of Malampaya.
Value turnover for the day amounted to P5.59 billion. There were 87 advancers versus 69 decliners while 47 stocks were unchanged.
Among the index stocks, those that gained sharply were MPI (+2.28 percent), ALI (+2.14 percent) and Semirara (+2.11 percent).
In the case of Semirara, the DMCI’s coal mining unit has declared a cash dividend of P12 per share to shareholders as of the record date May 29, payable on June 25 this year.
PLDT, SMIC, Megaworld, AC and AGI also supported the PSE’s rise.
Among the non-index stocks, those that gained sharply in heavy volume were Cebu Holdings (+11.33 percent), Dizon (+4.8 percent) and Megawide (+3.49 percent).
On the other hand, the index stocks that capped the day’s gains were DMCI, Metrobank, Philex, Manila Water and BDO. Philex’ subsidiary PXP fell by 16.49 percent on profit-taking while other investors tempered their optimism on natural gas exploration prospects given escalating tension with China. The concession area is subject to international boundary issues pertaining to certain areas of the West Philippine Sea (South China Sea) although Recto Bank is believed to be well within the country’s exclusive economic zone and not part of the contested Spratly group of islands.
“Sentiment was boosted last Friday in the global market, for no obvious reason. Investors appear to be trying to find any excuse to buy risk assets,” said investment bank Credit Agricole CIB, casting doubts, however, on whether the positive atmosphere can be sustained through the week. It noted that “cautiousness could return heading into the elections in France and Greece.”
While Asian central banks have been putting more focus on inflation of late, data out this week – including the March inflation rate in the Philippines – would not likely suggest a pick-up in inflation that would be substantial enough to trigger the start of a hiking cycle, Credit Agricole CIB said.
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