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Good US data pushes stock index past 5,100

Manila Times

Philippine share prices on Friday resumed its climb to uncharted territory, breaking past the 5,100 level, buoyed by encouraging jobs data in the United States.

At the Philippine Stock Exchange (PSE), the composite index surged 114.11 points or 2.27 percent to 5,145.89, surpassing its previous high of 5,050.99 registered on March 14. This is the 13th time this year that the market reached historic highs.

The broader all-shares index rose 70.62 points or 2.09 percent to 3,447.53. A total of 7.1 billion stocks worth P10.58 billion changed hands. Gainers beat losers, 132 to 32, while 42 stocks were flat.

“We are in a new paradigm. If that’s the case, we’ve proven there’s a new market out there, one which has higher volume,” Hans Sicat, PSE president and chief executive officer, said in a briefing.

The local bourse has been seeing strong foreign fund inflows because “there’s generally a confidence level this time around that it’s different in the Philippines,” Sicat said.

Net foreign buying was at P27.99 billion as of March 15, but even with the huge influx of overseas funds into the market, foreign participation has gone down to 38.5 percent from 40 percent in 2011.

“This means that local investors are indeed giving us a vote confidence in terms of participating in their own market that is the underpinning of a stronger and more mature capital markets in the Philippines,” said Sicat.

Overnight, the Dow Jones industrial average climbed 58.66 points to 13,252.76, its highest close since the last day of 2007, after applications for unemployment benefits dropped last week to 351,000 to remain at a four-year low.

“Once more valuations were pushed aside as optimism that the US recovery continues to gain traction received another push from job market numbers,” said Jun Calaycay of Accord Capital Equities Corp.

Even with a possible global reallocation of funds as the US economy continues to show signs of recovery, strong domestic participation will “help modulate the ins and outs of foreign money coming in.”

“Clearly on a short-term basis, investors always reallocate but there’s always a pot of money for emerging markets and VIP [Vietnam, Indonesia and Philippine] markets or certain Asean [Association of Southeast Asian] markets,” said Sicat.

Because of improved market conditions, more companies may raise capital from the stock market, which may allow capital raised from the local bourse to double to a record P197 billion this year from the P107 billion in 2010.

“We think if markets continue to be what they are and everybody does their fund raising, then you can probably see revenue number increase from last year anywhere between 20 to 25 percent,” said Sicat.

PSE income growth
The PSE’s net income, on the other hand, may grow by 15 percent to 20 percent this year as the bourse moves to control its expenses, Sicat said.

Last year, the PSE’s earnings dipped 2.7 percent to P406.19 million from the previous year’s P417.50 million on higher costs for new product development and expenses related to its new trading engine.

However, higher trading activity and record capital raising levels pushed operating revenues by 9.5 percent to P900.76 million from P822.45 million.

The PSE is working with the Securities and Exchange Commission to introduce new product offerings in the stock market, such as the exchange-traded funds and securities lending to lure investors in the market.

The implementation of the laws on Personal Equity and Retirement Account and Real Estate Investment Trust may also be considered bonuses for the bourse that may further boost liquidity.

“Once those things get turned on, we will not only see increased volume and issuances, but additional asset classes that will spur the market by itself. That is the biggest challenge with the caveat that we do not realize any unforeseen negative situation,” Sicat said.

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Posted by on Mar 18 2012. Filed under Articles, Business, News from the Motherland. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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