The bulls regained control of the local stock market on Monday, allowing the local stock barometer to breach 8,300 and close at its highest level in 16 months.
The Philippine Stock Exchange index (PSEi) racked up 223.47 points, or 2.74 percent, to close at 8,365.29. This marked its highest finish since ending at 8,365.29 on March 13, 2018.
This was also the PSEi’s best single-day performance in 10 months.
Drawing strength from an upbeat US stock market and dovish outlook from both the US Federal Reserve and the Bangko Sentral ng Pilipinas (BSP), the PSEi has risen by more than 20 percent since bottoming out at 6,790.50. Such increase meets the technical definition of a bull market. Last year, concerns on the country’s rising inflation rate impacted on stock market sentiment.
This year, the regime of benign local inflation is back, boosting prospects for a double-digit growth in corporate earnings alongside a buoyant domestic economy.
BDO chief strategist Jonathan Ravelas said the close above the key barrier at 8,200 signaled a return to bull territory but it was best to await affirmation by the end of the week.
All counters headed higher but the banks and holding firms outperformed as their subindices both rallied by more than 3 percent.
Banks, in particular, have been on an upswing since Friday. Local stockbrokerage Papa Securities said this was likely in response to BSP Governor Benjamin Diokno’s statement that there was room to cut key policy rates this third quarter on top of a planned cut in the reserve requirement on banks.
“The progrowth (BSP) Governor has been waxing hot on cutting policy rates and with inflation likely to resume its downward trajectory, it looks like he’s likely to pull the trigger sooner rather than later,” ING Philippines’ Nicholas Mapa said.
Among the banks, Papa Securities said BDO might lead second-quarter earnings growth on the back of strong trading income while Metrobank was attractive due to its “sector-superior” net interest margin and cheap valuation.
Value turnover for the day was P8.5 billion. Foreigners helped lift the local market as there was P1.04 billion in net foreign buying for the day.
There were 124 advancers that overwhelmed 62 advancers while 56 stocks were unchanged.
Investors snapped up shares of Metrobank and SM Investments, which both advanced by more than 4 percent.
BPI, the day’s most actively traded company, rose by 3.58 percent, while BDO also added 3.17 percent.
Megaworld, ICTSI, URC and Security Bank all added more than 1 percent.
Ayala Land, Jollibee and Metro Pacific also firmed up.
Notable gainers outside the PSEi included Phinma Energy, which rose by 6.15 percent, while Filinvest Land added 2.09 percent.
On the other hand, Greenergy slumped by 8.14 percent. The company terminated a deal with Korea’s Bizlink Group for the initial funding of $350 million for various projects, including technology-driven farms in Rizal province.
Manila Water, which is grappling with bulk water supply shortage, also declined by 1.4 percent.