Philippine share prices reached a 13-month high on Tuesday as investor anxiety over the possibility of a ‘Brexit’ substantially eased and was replaced by local optimism about the next administration’s economic program, analysts said.
The mining and oil sub-index, however, bled significantly as Regina Paz Lopez of ABS-CBN Foundation, a known anti-mining advocate, has been tapped as the next secretary of the Department of Environment and Natural Resources (DENR).
The benchmark Philippine Stock Exchange Index (PSEi) gained 1.33 percent or 101.9 points to close at 7,767.23, while the broader All Shares inched up by 0.79 percent or 36.17 point to end at 4,600.83.
Tuesday’s closing level is the highest since May 22, 2015, when the PSEi closed at 7,810.17.
Victor Felix, equity research analyst at AB Capital Securities Inc., said that the market’s strength could be attributed to easing worries about a ‘Brexit,’ or a vote in Thursday’s referendum in the UK to leave the European Union, as the latest polls there showed that voter inclinations were swinging back to the ‘remain’ side.
“Since last week we have been concerned about Brexit. Over the weekend, there was some relief after [polls]showed that fewer people want the UK leaving the EU. It lifted fears in the international market. And we’re also still digesting the US Fed’s decision to hold rates,” Felix said.
Locally, the market is optimistic about the plans of the incoming Duterte administration, which offered more specific details about its 10-point agenda in a two-day conference in Davao City, Felix said.
“The business community is waiting to see if he will deliver as promised,” Felix said.
Meanwhile, Jonathan Ravelas, BDO Unibank chief market strategist, also attributed the stock market’s strong performance to the talks in Davao City and easing concerns about a ‘Brexit.’
“These positive sentiments are pushing the market to retry the 7,800-point level. Thus, a break of 7,800 could try the 8,000-point level,” Ravelas said.
Mining shares rattled
Joseph Roxas, president of Eagle Equities Inc., said that the main index could have soared much higher were it not for the mining and oil sector, which shed 4.09 percent or 488.55 points after news that President-elect Rodrigo Duterte had asked Lopez to serve as DENR secretary.
“Take a look at Philex Mining Corp. [PX] of the MVP [Manuel V. Pangilinan] Group. It fell significantly [by 12.17 percent]. You remember that word war between Gina [Lopez] and MVP a few years back as Gina was contesting whether there was really such a thing as responsible mining, she’s a very well known advocate against mining,” Roxas said.
PX closed at P8.01 per share Tuesday, down from P9.12 per share on Monday.
“The next administration could have chosen someone who is neutral on the mining sector. There are a lot out there. Why Gina, who is downright anti-mining, that’s the thinking of mining investors now,” Roxas added.
Total value turn over on Tuesday was relatively high at P9.9 billion, with winners only slightly outnumbering losers, 97 to 92, while 48 issues remained unchanged.
Most of the declining issues belonged to the mining sector.
All other sub-indices ended with gains, led by the services sector, which added 2.20 percent, and holding firms, which closed 1.70 percent higher.