PSEi posts gains as China cuts risk reserve ratio

By Denise A. Valdez, Senior Reporter

THE MAIN INDEX closed with gains on Monday as investors’ attention remained glued to foreign events due to the lack of a strong local catalyst.

The benchmark Philippine Stock Exchange index (PSEi) picked up 5.44 points or 0.09% to close at 5,937.05 on Monday, while the wider all shares index increased 7.97 points or 0.22% to end at 3,571.82. The index hit an intraday high of 5,954.47 and a low of 5,910.73.

Due to the absence of a local impetus during trading hours, the market’s movement was predominantly driven by international events on Monday, Timson Securities, Inc. Trader Darren T. Pangan said.

“The index ended on green territory… as market participants watched the Chinese yuan closely, after the People’s Bank of China moved to lower the currency’s forward reserve requirements over the weekend,” he said in a text message.

China’s central bank said it will lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading to zero with effect from Monday, Reuters reported.

Under current rules, financial institutions must set aside 20% of the previous month’s yuan forwards settlement amount as foreign exchange risk reserves.

Hopes for additional fiscal stimulus in the United States also helped lift investor sentiment on Monday, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said.

“The PSEi started slightly higher as investors remained optimistic over prospects for another round of fiscal stimulus from (US) Congress eventually,” Mr. Limlingan said in a mobile message.

Back home, investors continued to wait for significant developments in the national budget talks, which are scheduled to resume this week, Philstocks Financial, Inc. Research Associate Claire T. Alviar said in a text message.

“Possible 2021 budget passage delay would give negative sentiment in the market,” she said.

Most sectoral indices ended Monday’s session with gains. Mining and oil rose 202.21 points or 3.08% to 6,766; property added 21.84 points or 0.79% to 2,754.72; industrials increased 42.60 points or 0.53% to 7,974.14; services climbed 6.05 points or 0.41% to 1,461.77; and financials inched up 2.71 points or 0.23% to 1,162.41.

The sole declining index was holding firms, which fell 38.15 points or 0.61% to 6,164.53 at the close of trading.

Value turnover on Monday stood at P5.34 billion with 11.13 billion issues switching hands, lower than Friday’s P5.63 billion worth of 9.16 billion issues.

Advancers outnumbered decliners, 105 against 96, while 42 names ended unchanged.

Foreign investors recorded their 22^nd straight day of net selling worth P436.79 million on Monday, lower than Friday’s P676.51 million. — with Reuters