Local equities break 7,000 barrier

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The stock market rose on the back of gains made by telecommunications giant Philippine Long Distance Telephone Company (PLDT) in the MSCI Philippines Index and optimism on international markets, sending the Philippine Stock Exchange index back above the 7,000 mark for the first time this year.

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The PSEi closed at 7,061 with an intraday high of 7,093.06. It added 1.07 percent or 74.76 points by the end of the market session, while the broader All Shares index advanced 0.56 percent or 23.25 points to 4,200.80.

This was the first time the PSEi rose above the 7,000 level this year since closing at 7,228.57 on May 29, 2013. In the year to date, the PSEi has gained 19.88 percent.

The quarterly rebalancing results of the MSCI were announced late Wednesday after the close of the trading day. PLDT jumped 4 percent in the MSCI index, which was greeted with enthusiasm by the market on Thursday.

The Manny Pangilinan-led PLDT has the highest market capitalization weight in the MSCI among big companies, contributing 11.7 percent to the tracking index.

According to its web site, the MSCI Philippines Index is a free-float adjusted market capitalization-weighted index that is designed to track the country’s equity market performance.

Joyce Anne Ramos, equity analyst at AB Capital Securities Inc., said in a phone interview that the market breached 7,000 points because of PLDT’s gains in MSCI index.

The “main driver today was PLDT, with the MSCI rebalancing news yesterday [Wednesday] after the market closed. PLDT is a heavyweight in the MSCI, which pulled up the market, along with fairly good earnings [reports], particularly from Ayala Corp. and JG Summit, and a slight effect from the increase in US markets,” Ramos said.

Miguel Agarao, analyst at Wealth Securities Inc., agreed with Ramos, saying that the PSEi was pushed up on PLDT gains in MSCI, as well as the “very strong” US and Asian markets.

“The market finally broke decisively out of 7,000 resistance [level]on the back of PLDT moving up 4 percent,” Agarao said.

All the sectoral indices ended in positive territory except for the mining and oil counter, which dipped 0.36 percent or 63.05 points to 17,516.03.

Ramos said the 2.37 percent drop of mining firm Nickel Asia Corp. in the MSCI index was the cause of the decline in the mining and oil index. She said that given the 18.72 percent market cap weight of Nickel Asia in the subindex, the company’s drop in the MSCI had a significant impact.

Among the other subindices, services climbed 1.89 percent or 40.58 points to 2,187.43; holding firms jumped 0.74 percent or 46.14 points to 6,282.01; property increased 0.65 percent or 17.16 points to 2,651.49; financials were up 0.59 percent or 9.70 points to 1,655.93; and industrials added 0.24 percent or 25.97 points to close at 10,748.67.

Only Puregold Price Club Inc. and Universal Robina Corp. lost among the most-actively traded companies while the rest advanced. Besides PLDT, blue-chip gainers for the day included Ayala Land Inc., Metropolitan Bank and Trust Company, Ayala Corp., BDO Unibank Inc., Energy Development Corp., Manila Electric Company and SM Prime Holdings Inc.

Volume was fairly heavy at 2.79 billion shares, with a value of P11.286 billion. Advancers outnumbered decliners, 98 to 83, while 48 issues remained unchanged.

Both Ramos and Agarao said the PSEi should continue to rally for the next few days, mirroring the MSCI rebalancing results that will formally take effect on September 1.

“It is possible that the increase will continue, but not as big as the 1 percent today. From now through the MSCI effectivity on September 1, investors will likely copy the MSCI results as the MSCI has a huge following from fund managers as well as investors locally and internationally,” Ramos said.

“Hard to say, but for the following days there is usually a follow through… The market rally will likely to continue,” Agarao added.

From 6,800 to 7,000 in the past few days, the anticipated market range is now at 7,000 to 7,100.

On Wednesday, the PSEi registered a modest 0.04 percent gain, adding 2.75 points to close at 6,986.24, while the All Shares index closed at 4,177.55, gaining 2.23 points or 0.05 percent.

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