Stock rally breaks intraday record

MANILA, Philippines — The main stock barometer pierced the 8,300 mark yesterday to set a new intraday record as investors shrugged off nationwide protests against the Duterte administration to focus more on economic fundamentals such as interest rate movement and the tax reform bill.

The benchmark Philippine Stock Exchange index (PSEi) touched 8,321.81 in intraday trades before easing to close at 8,286.86, still up 67.54 points or 0.82 percent, while the broader All Shares gauge gained 30.96 points or 0.64 percent to end at 4,885.

Most of the indexes likewise closed in the green, marking another festive day at the local stock market.

Among the different indexes, holding firms, reflecting conglomerates’ positive performance in the first half of the year, gained 1.27 percent while industrial and services were also big gainers.

However, total value turnover was just below P8 billion, at P7.956 billion. Advancing stocks outnumbered decliners, 107 to 95, while 54 issues were left unchanged.

Astro del Castillo, managing director at First Grade Finance Inc., said market investors opted to focus on opportunities in the stock market.

“The rally in our local market drowned out the voices in Luneta and Plaza Miranda. Investors opted to ignore the political noise and focus on the opportunities in the financial markets. The Fed announcement was already discounted and development on the passage of tax reforms also triggered the excitement in the market,” Del Castillo said.

Moving forward, he said liquidity and optimism of investors may help us test the 8,300 mark again.

“But there are already signs that profit taking is imminent,” he said.

Ed Francisco, president of BDO Capital, said the breach of the 8,300 mark shows investors are confident on the country’s growth prospects.

But he said, they are keeping a close watch on the passage of the tax reform package.

“PSE highs will be sustained if tax packages are approved as the country would have the revenues to support the infrastructure expenses,” Francisco said.

The government is pushing for the passage of House Bill 5636 or Tax Reform for Acceleration and Inclusion (TRAIN) but is at risk of being watered down by the Senate.

HB 5636 will yield P1.163-trillion in net revenue from 2018 to 2022 with the complementary measures, slightly lower compared to the P1.266 trillion under the original proposal submitted by the Department of Finance (DOF).

The Duterte administration has raised the budget deficit ceiling gap to three percent of gross domestic product (GDP) instead of two percent of GDP to fund an ambitious infrastructure program where it intends to spend up to P9 trillion until 2022.

In its latest commentary, First Metro Securities said the PSEi may retest the 8,300 level anew as investors digest news about the Senate approving the tax reform bill at the committee level.

“Movement should depend on the market’s perception, as this will still be up for the second and third reading in plenary,” it said.

In addition, the Bangko Sentral ng Pilipinas decision to hold policy rates steady – keeping in line with the US Federal Reserve’s action – is also a contributing factor to the positive investor sentiment.