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Investors Fuel Stock Boom

On Thursday, PHILIPPINE STOCKS inched higher as investors were optimistic that the economy can withstand monetary tightening. This optimism came after the central bank issued another significant rate hike.

On Thursday, the broad-based all-shares index gained by 12.30 points, or 0.36%, to a level of 3,388.60, while the Philippine Stock Exchange index (PSEi) increased by 11.65 points, or 0.18%, to a level of 6,403.74.

Cristina S. Ulang, who is the head of research at First Metro Investment Corp., stated that the market ended higher because investors continue to be optimistic about the country’s growth potential.

“The PSEi closed in positive territory after the downswing in early trade largely, on emerging bets that the strong nine-month GDP (gross domestic product) growth of 7.8% will enable the domestic economy to absorb the aggressive interest rate hiking by the BSP (Bangko Sentral ng Pilipinas) with great resiliency,” Ms. Ulang said in an email on Thursday. “The PSEi closed in positive territory after the downswing in early trade,” she said

She went on to say that a healthy economy will make it easier for businesses to reach complete financial recovery by the year after next.

The Gross Domestic Product of the Philippines grew by 7.6% in the third quarter, which was somewhat quicker than the 7.5% expansion seen in the second quarter. This took the average for the first nine months up to 7.8%, which is already higher than the government’s planned range of 6.5-7.5% for the year.

As the BSP works to maintain price stability and strengthen the peso, it increased its benchmark interest rate by an aggressive 75 basis points (bp) on Thursday, mirroring the most recent action taken by the Federal Reserve in the United States.

Since May, the central bank has implemented a 300-point increase in the cost of borrowing money.

As inflation pinches shoppers heading into the holiday season, “Philippine shares bucked the trend ahead of the BSP meeting,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message on Thursday. “While US markets tumbled yesterday in response to a weak outlook from retail chain target, as inflation pinches shoppers heading into the holiday season,” Limlingan said.

According to Claire T. Alviar, Research Analyst at Philstocks Financial, Inc., share prices increased as a result of a reduction in the level of geopolitical tension that existed between Russia and the North Atlantic Treaty Organization.

Ms. Alviar continued by saying, “Investors also anticipated the 75-bp interest rate hike that the BSP would implement.”

On Thursday, the indexes of the several sectors were divided. The industrials finished the day at 9,421.77, up 92.33 points, or 0.99%, while the property market advanced 14.36 points, or 0.51%, to 2,823.79, and the holding company market advanced 5.94 points, or 0.09%, to 6,101.77.

In the meantime, the value of the financials sector fell by 3.62 points, or 0.22%, to 1,601.86; the value of the services sector fell by 2.66 points, or 0.16%, to 1,646.88; and the value of the mining and oil sector finished at 9,837.12, down 12.66 points, or 0.12%.

The number of shares that changed hands decreased slightly to 582.73 million on Thursday, bringing the value turnover up to P7.3 billion from P7.23 billion with 968.99 million issues traded on Wednesday.

There were 95 names that went up, compared to 83 that went down and 48 names that stayed the same.

On Thursday, the value of net foreign sales was P1.23 billion, which is the opposite of the value of net foreign purchases witnessed on Wednesday, which was P1.09 billion. — AEOJ

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