PSEi breaches 8,000 level
local share prices on Wednesday breached the 8,000-point level for the first time this year in intraday trading boosted by the favorable ruling of the UN Tribunal in favor of the Philippines in the West Philippine Sea (South China Sea) dispute, and following other regional markets higher after a record close on Wall Street.
The benchmark Philippine Stock Exchange index (PSEi), however, gave back most of its gains in the afternoon session as investors sought to collect gains, closing just 6.07 points or 0.08 percent higher at 7,944.02 after hitting 8,005.73 earlier in the day.
Wednesday’s close was the highest since April 27, 2015, when the PSEi ended at 7,958.07, data from the PSE showed.
The last time the PSEi was above the 8,000-point level was on April 14, 2015 when the index closed at 8,056.49.
Year-to-date, the PSEi has gained 14.27 percent.
“The attempt to revisit previous highs is a reflection of continued interest in our stock market. Philippine equities remain to be a favorite among our peers in the region given [their]resilience during volatile conditions. Interest is also fueled by the growth prospects of the country, particularly in sectors that are expected to do well based on the priorities of the new administration,” PSE President and Chief Executive Officer Hans Sicat said.
Meanwhile, Luis Limlingan, business development head at Regina Capital Development Corp., attributed the morning session’s bullish performance to the decision of the United Nations Permanent Arbitral Tribunal, which upheld the Philippines’ claim to disputed areas in the West Philippine Sea.
“Obviously the decision against China and in favor of the Philippines was received positively by stock market investors like PXP [Philex Petroleum Corp] and some other companies like TAPET [Trans-Asia Petroleum Corp.], which have service contracts in the West Philippine Sea. A big win for these companies,” Limlingan said.
“We don’t expect China to back down but [the ruling]opens up room for negotiation and leverage of Philippine-based companies and the government to get something from that area,” he added.
PXP’s share price rose by 14.4 percent and was last traded at P5.38 apiece, while TAPET increased by 4.25 percent to P4.17 a share.
“I think FGEN [First Gen Corp.] would also benefit [increasing its share price by half a percent]” Limlingan said.
He noted that the market was expecting gaming companies to buck down, given the ruling of the UN Tribunal that is favorable to the Philippines, which in turn is adverse to China.
“Previously we were expecting [listed]gaming [firms]to buck down. But I guess the situation has not escalated to that point. We can see Bloomberry [Resorts Corp.] gaining [by 1.19 percent], while Melco Crown Philippines Resorts Corp. and RWM [Travellers International Hotel Group Inc.] are down [by 1.45 percent and 0.59 percent, respectively,]” Limlingan said.
“So I think the reactions are mixed,” he added.
Limlingan also attributed the PSEi’s reversion to below 8,000 at the close to profit-taking, which would also prevent the local bourse from overheating.
“There’s a bit of profit-taking given some of our stocks were expensive,” he said.