PSEI UP 1.59%

Bets for higher GDP drive PH shares rally

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Philippine shares rose on Wednesday in a technical rally triggered by bargain hunting after the market reached oversold levels, snapping a three-day plunge.

The rally gathered strength from bets that the economy, as measured by the gross domestic product (GDP), did well in the third quarter and probably better than the 7.0 percent year-on-year growth in the second quarter.

The benchmark Philippine Stock Exchange Index (PSEi) closed 1.59 percent or P109.13 points higher at 6,966.28, while the broader All Shares gained 1.16 percent or 48.12 points to 4,211.45.

“I think investors turned optimistic ahead of the GDP results tomorrow, after the PSA reported positive agriculture data,” IB Gimenez Securities Inc. research analyst Joylin Telagen said.


On Tuesday, the Philippine Statistics Authority (PSA) reported farm output in the third quarter grew by 2.98 percent, a turnaround from -0.06 percent a year earlier.

“The local market sought comfort after days of heavy selling, with the government’s hint that Q3 GDP would finish at possibly higher than 7 percent,” said Regina Capital Development Corporation Business Development Head Luis Limlingan.

If better than expected, Telagen noted the GDP results could reset the index back to the 7,000 level. If not, then it’s back to the 6,800 level.

On Monday, the PSEi lost 1.49 percent or 103.61 points at 6,871.48, wiping out its year-to-date gains.
Renewed efforts by the Organization of Petroleum Exporting Countries (OPEC) are also driving optimism among investors, Limlingan also noted.

“West Texas Intermediate crude surged over 5.5 percent to $45.75 per barrel, the largest in seven months following renewed OPEC efforts to shore up a proposed production cut. OPEC will meet on Nov. 30, 2016,” Limlingan said.

Overnight, the Dow Jones Industrial Average hit another all-time high at the close, although the S&P 500 and the Nasdaq outperformed following a sharp 6 percent rebound in crude prices, strong October retail sales and a respite in the bond market, Limlingan added.

Also, market reaction to uncertainty over the policy direction of the Trump presidency has started to subside, Telagen noted.

The “Trump worries have subsided and investors have rebalanced positions after the Q3 report [on estimates]and focused further on companies that could make better forward-looking earnings,” Telagen said.

All sectoral indices posted gains on Wednesday, with the Property sector recording the biggest gain of 3.34 percent or 100.31 points to end at 3,105.03.

More than 1.26 billion shares, valued at P6.523 billion, were traded. Winners led losers, 104 to 75, and 45 issues traded unchanged.

On Tuesday, the PSEi slipped by 0.21 percent or 14.33 points to 6,857.15, while the All Shares eased 0.18 percent or 7.59 percent to 4,163.33 points.

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