Stocks up 1.89% on BoJ stimulus


The stock market capped a roller coaster week with a rally on Friday as investors took heart from a stronger domestic economy plus a surprise Bank of Japan stimulus—the latter a key factor behind a regional surge.

The benchmark Philippine Stock Exchange Index (PSEi) picked up by 1.89 percent or 124.24 points to close at 6,687.62, while the wider All Shares added 1.64 percent or 61.52 points to finish at 3, 812.87.

“There were positive news … that made investors interested in going into equities. For one, the Bank of Japan (BoJ) cut its interest rates down to negative percent. This move would discourage investors from parking their money in banks and spur spending as well as invest into markets that yield better results such as the equity market,” said Astro del Castillo, president and managing director at First Grade Finance Inc. said.

The US Federal Reserve’s decision a day earlier, meanwhile, to keep interest rates unchanged likewise benefited equities markets, del Castillo said.

“The signal to delay any rate hike would not bring much investors to the bond market, making the equity market more preferable to more investors,” he said.

Jason Escartin, analyst at 2TradeAsia said, attributed the stock market’s performance mainly to the BoJ’s move of setting interest rates at negative 0.1 percent in a bid to spur banks to lend instead of parking money at the central bank.

“Local equities closed in the green, aided by an afternoon rally after the Bank of Japan [BoJ] surprised investors across the region with a negative interest rate policy,” Escartin said.

Alexander Tiu, analyst at AB Capital Inc. said that in addition to the BoJ move, investors in the Philippines were upbeat given news that economic growth accelerated to 6.3 percent in the fourth quarter from 6.1 percent three months earlier.

“The market’s rally … may be attributed to positive momentum following the GDP (gross domestic product) results for the fourth quarter as well as its full-year growth rate. This development only reinforces that the country’s economic fundamentals remain intact and unaffected by the global economic woes, making local investors confident vis-à-vis during the past weeks,” Tiu said.

The Philippine economy slowed last year but its growth was still one of the fastest in Asia. The 6.3-percent expansion for the October-December period pushed full-year growth to 5.8 percent.

While within the 5.7 percent to 5.9 percent forecast range in a Manila Times poll of economists, it was lower than the 6.1 percent recorded in 2014 and well below the government’s 7 percent to 8 percent target.

All sub-indices were green on Friday except for mining and oil, which retreated by 0.99 percent. Holding firms recorded the highest gain at 2.51 percent.

Total value turnover soared to 9.789 billion, with gainers outnumbering losers, 116 to 53, while 46 issues remained the same.


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