The stock market enjoyed a rally on Wednesday on account of better than expected exports data from China, but the peso fell to a new-six year low as the dollar strengthened.
The benchmark Philippine Stock Exchange Index (PSEi) gained 2.58 percent or 163.58 points to end the day at 6, 494.13, while the Wider Shares index rose by 2.16 percent or 78.85 points to close at 3,724.31.
The peso, meanwhile, lost 10 centavos to close at P47.54 to $1, the weakest since November 5, 2009 when it slid to P47.63 versus the greenback.
Stock markets and the dollar gained after news China’s exports had fallen by 1.4 percent year-on-year in December. Economists had projected a drop of much steeper drop and the latest decline was an improvement from November’s 6.8-percent contraction.
“The peso against the US dollar [was]weaker on a strong dollar trend against major currencies,” said Jonathan Ravelas, chief market strategist at Banco de Oro Unibank.
The peso opened at P47.35 to $1 at the Philippine Dealing System before trading between P47.35 and P47.55. Total volume transacted fell to P858.8 million from P988 million previously.
Jonathan Ravelas, BDO chief market strategist, said a pick-up in Wall Street was also a factor, allowing the stock market to claw back most of the losses posted on Monday, when the PSEi plunged by 287.17 points or 4.37 percent to end the day at 6,288.26, tracking a regional sell-off prompted by weak Chinese data.
“The market finds confidence in these news. But there remains fear on risks brought about by China’s slowing economy. This rally may be merely an indication of a sigh of relief on the part of the investors,” Ravelas warned.
He also noted that the surge was due to increased bargain-hunting.
AB Capital Securities Inc. analyst Alexander Tiu, for his part, said the latest data from China was “critical news … considering that China is mainly a manufacturing country.”
Tiu likewise attributed the surge to bargain-hunting, which he said was “indicative of renewed confidence on the part of traders.”
For the rest of the week, both Ravelas and Tiu said the market could hit as high as 6, 600 points.
All other sub-indices climbed on Tuesday, led by holding firms which gained 2.82 percent. Total turnover was P6.22 billion, and gainers edged losers 109 to 71 while 32 issues were unchanged.