Market flirts with 8,000 pts as Duterte takes oath
INVESTOR enthusiasm for a chance to cash in on the public’s optimism over the prospects of a better government fueled a brief rally on the stock market on Thursday, before caution set in to trim the day’s overall gains.
The benchmark Philippine Stock Exchange index (PSEi) nearly hit the 8,000-point resistance level as President-elect Rodrigo Duterte took his oath of office and promised genuine change by attacking the country’s biggest problems, namely crime, corruption and poverty, which he said really stemmed from the people’s loss of trust in government.
Pledging to address the weakness of the country’s economic and financial policies, Duterte said in his inaugural speech: “The test of government is not whether we add more to the abundance of those who have much; it is whether we provide for those who have little,” quoting the US’ 32nd President, Franklin Delano Roosevelt.
“And from Lincoln, I draw this expression: ‘You cannot strengthen the weak by weakening the strong; You cannot help the poor by discouraging the rich; You cannot help the wage earner by pulling down the wage payer; You cannot further the brotherhood by inciting class hatred among men,’” he added, referring to Abraham Lincoln, the 16th US president.
In afternoon trade, however, the PSEi lost momentum as buyers took caution and profit-takers took over.
“Investors are bullish because of Duterte’s economic policies, but they would still have to see whether they [the new Administration]would be able to follow through with its commitments,” Alexander Adrian Tiu, senior equity analyst at AB Capital Securities Inc., said.
“It is one thing to outline a policy and it is another thing to follow through. We still have to see that,” he added.
Intraday, the PSEi hit a high of 7,980.75 points, However, the benchmark index shed all its morning gains and lost 2.28 points or 0.03 percent for the full-day session to settle at 7,796.25.
The biggest gainer during the Duterte inauguration was death services firm Golden Haven on its second trading day after Wednesday’s initial public offering. It gained P4.56 or 28.97 percent to close at P20.30, after hitting a high of P23.10 earlier in the session.
“The PSEi easily broke past the 7,900-line, marking at least 13 percent in year-to-date gains. At the noon break, the index stood at 7,974.54, 176.01 points [2.26 percent] up over the previous day and nearly 15 percent on the year-to-date,” A&A Securities research and marketing head Justino Calaycay Jr., said.
“Had the day’s gains held, it would have been the 15th biggest single day gain since as far back as our available records go or December 19, 1990,” he added.
Aniceto Pangan, trader at Diversified Securities Inc., attributed the intraday performance to last night’s market recovery both in the US and Europe, thus “spilling over to the Asian region.”
Waiting for details
Assessing the afternoon retreat on the main board, Calaycay said, “The shift in the view, which came even as peer Asian markets held on to gains, could be a reflection of investors opting to move to the sidelines as the Duterte Administration, just a few hours old, begins to draw and communicate a clear roadmap. What has been said so far were the broad stokes and the markets are keenly waiting for the details.”
Meanwhile, Tiu said that while the local bourse investors are optimistic about the change of administration because of the basic economic policy outlines shared by the new government, many investors are still waiting to see whether it can live up to its promises.
BDO Unibank chief market strategist Jonathan Ravelas, meanwhile, noted “local markets are optimistic about the new Philippine leader as his change is expected to shift the country’s growth rate to a higher path through focus on agriculture, infrastructure, and peace and order.”
“However, high ‘valuations’ could limit the market’s rise and prompt some profit taking,” Ravelas said.
Bucking the downward afternoon trend, the broader All Shares index held some of its early gains to close Thursday at 4.720.65 – which is 1.15 percent or 53.84 points higher. Among the sectoral indices, industrials and holding firms saw slight declines at the close, while the other sectors all ended the day in positive territory.
Total value turnover for the day was the highest for the week so far at P15.5 billion, with more than 1.7 billion shares changing hands. Decliners just slightly outpaced advancers 99 to 97, while 46 issues were unchanged.