051907: Stocks hit all-time high; peso soars

 

 

Local stocks soared to record high while the peso powered its way further ahead against the US dollar yesterday, closing at P46.60/$ 1 as investors felt more bullish about the outlook of the economy following the holding of the mid-term elections. The main index of the Philippine Stock Exchange closed yesterday at a new peak of 3,449.18 points, surpassing the previous record of 4,447.60 registered 10 years ago on Feb. 3, 1997. PSE President Francis Lim said a "confluence of favorable developments helped the PSEi set the new record, and I am confident the same factors will support our market as it blazes new stock market trails." "The positive developments include improvements in government’s fiscal position, falling interest and inflation rates and higher corporate earnings. As the market’s recordbreaking performance came after we held mid-term elections, I believe the market’s surge represents our own peace dividend from the elections, which the market views to be relatively peaceful. All these help elevate the level of confidence of investors in our market and explain why more and more investors are entrusting their money in our market, thereby increasing our value turnover," he added. Bigger remittances from overseas Filipino workers for the school opening and portfolio inflows were the main driver for the significant peso appreciation during the week, according to traders. This was further helped by favorable fiscal figures which reflected a budget surplus in April. Bank treasury officials said the excvhange rate is expected to test a new psychological range of between P46.25 and P46.50 next week. "The announcement of a fiscal surplus for the month of April added to the good story of the country to date," a broker of a foreign firm said. Fiscal authorities reported that the budget deficit for the first four months of the year stood at R40 billion and a R12 billion surplus for the month of April. Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. affirmed that the "positive macroeconomic news, particularly, the budget deficit for April" has been one of the compelling reasons for the peso strengthening. Offshore fund managers were going back to the emerging economies, including the Philippines, said Singapore-based JP Morgan Managing Director David Fernandez. "While it’s so hard to stop a train full of money, the market will likely take a breather next week to build a good base above the 3,400 level," First Grade Holdings Inc. Managing Director Astro del Castillo said. He said investors continued to pick companies that are likely to do well for the rest of the year. "It seems the euphoria after the election is still there. Investors have been buying stocks with strong fundamentals," added Castillo. Kelly Lim-Bate, JP Morgan’s head for Philippine equity research, said several macroeconomic factors — such as a strong currency, low interest rates, the government’s higher spending plan for infrastructure and foreign direct investments — have been driving renewed interest in the Philippine stock market. "Earnings growth is quite healthy, and there’s strong potential for upgrade in the second half," Lim-Bate said. JP Morgan’s top industry picks are property, banking and utilities. Gainers outnumbered losers 62 to 40, while 57 stocks were unchanged. Volume turnover totaled 3.1 billion shares worth R9.74 billion, including R4.8 billion worth of block sales.

 

http://www.mb.com.ph/BSNS2007051994188.html