Extended foreign buying propels PSEi closer to 8,000 as May ends

LOCAL EQUITIES ended the month up for the fourth straight trading day and marked the second weekly climb, buoyed by foreign buying that pushed the main index closer to the 8,000 mark last seen on May 2.

The Philippine Stock Exchange index gained 133.47 points or 1.7% to finish 7,970.02 on Friday — 2.88% higher than a week ago — while the all-shares index added 68.31 points or 1.41% to end at 4,890.37.

“Our index closed strong today due to big net foreign buying activity amounting to P734 million… This positive close may have been buoyed by the BSP’s statement that there will be more rate cuts this year which will likely bring down borrowing costs for companies with aggressive expansion plans,” Jervin S. de Celis, equity trader at the Timson Securities, Inc., said in a mobile phone message on Friday, referring to expectations that the Bangko Sentral ng Pilipinas (BSP) will follow up its 25 basis point cut in benchmark interest rates last May 9 to continue rolling back a cumulative 175 bp increase fired off last year.

BSP Governor Benjamin E. Diokno had said last May 16 that monetary authorities will “closely look at how banks will use funds freed up” by the phased 200 bp reserve requirement ratio (RRR) cut that began on Friday with a 100 bp cut to 17%.

The 200 bp cut in big banks’ RRR is expected to unleash about P190 billion into the financial system, starting with some P95 billion on Friday.

A 200 bp cut in RRR of thrift banks and 100 bp for rural and cooperative banks are estimated to release an additional P22 billion.

“Proper use will encourage further cuts and speculation will do otherwise,” Mr. Diokno had said.

Foreigners were predominantly bullish for the second consecutive session, ending Friday with P734.415-million net buying that was nearly double Thursday’s P392.5 million.

“Philippine equities extended their winning streak to a fourth straight day, with the PSEi ending the week at 7,970.02, up 133.47 points or 1.7%, closing in on the major resistance at 8,000,” RCBC Securities, Inc. said in a Stock Market Weekend Recap authored by analyst Fiorenzo D. De Jesus.

“The 100bps cut in the reserve requirement effective today together with the BSP’s forecast that May 2019 inflation hit around 2.8-3.6% help sustain the market’s rally.”

FOREIGN BOURSES
Reuters reported on that Wall Street steadied on Thursday after a sell-off, with The Dow Jones Industrial Average climbing 0.17%, the S&P 500 adding 0.21% and the Nasdaq Composite increasing by 0.27%.

Much of Asia was down on Friday: Japan’s Topix and Nikkei 225 by 1.29% and 1.63%, respectively; the Shanghai SE Composite by 0.24%, Hong Kong’s Hang Seng by 0.79%, India’s S&P BSE Sensex by 0.30% and the MSCI Asia APEX 50 by 0.18%.

On the other hand, South Korea’s KOSPI gained 0.14%.

LOCAL SCENE
RCBC Securities noted that index heavyweights Ayala Land, Inc. (which increased by 2.7% to P49.50 apiece); SM Prime Holdings, Inc. (which climbed 2.05% to P39.80) and SM Investments Corp. (which added 1.4% to P942 each) “piled 49.56 points onto the market barometer”.

It also noted that “[o]nly five index names ended in negative territory”, namely: Globe Telecom, Inc. (-1.81% to P2,170 apiece); GT Capital Holdings, Inc. (-1.03% to P863), Metropolitan Bank & Trust Co. (-0.35% to P71.75); Megaworld Corp. (-0.34% to P5.90) and Security Bank Corp. (-0.17% to P175 each). “Investors may have taken profits on Megaworld after the counter hit a 52-week high yesterday,” RCBC Securities said on Friday.

All six sectoral indices increased on Friday: mining & oil by 256.18 points or 3.59% to 7,388.4, property by 96.57 points or 2.28% to 4,325.82, industrials by 195.93 points or 1.71% to 11,634.44, holding firms by 113.59 points or 1.52% to 7,577.31, services by 21.25 points or 1.27% to 1,683.12 and financials by 11.18 points or 0.65% to 1,728.59.

Stocks that gained outnumbered those that declined 105 to 72, while 52 others ended Friday flat.

Some 669.506 million shares worth P8.489 billion changed hands on Friday, compared to Thursday’s 694.774 million shares worth P6.569 billion. — with Vincent Mariel P. Galang