Stocks recover as traders cheer cut in bank reserves

MANILA, Philippines — The stock market recovered yesterday as investors cheered the move of the Bangko Sentral ng Pilipinas (BSP) to cut banks’ reserve requirement ratio.

The Philippine Stock Exchange index (PSEi) soared by 108.66 points, or 1.45 percent, to finish at 7,583.82.

Likewise, the broader All Shares gauge rose 50.41 points, or 1.08 percent, to end at 4,713.27.

Most of the sectors went up as well with the services, financials and property gauges leading the gains.

Total value turnover, meanwhile, reached P8.207 billion. Market breadth was positive.

There were 122 advancing stocks and 72 decliners. Only 40 issues were unchanged.

“The announced 200 basis point RRR cue fuelled the local market’s rally today to above its 7,500 support line. The PSEi closed at 7,583.82, up by 108.66 points or 1.45 percent,” Philstocks Financials said.

Services led a broad based advance, climbing by 2.40 percent.

The BSP announced Wednesday a phased reduction in the amount of cash banks must hold as reserves.

The move is meant to inject more liquidity in the financial system amid easing inflation and sluggish economic growth.

Thus, The BSP said it decided to gradually trim the  RRR, by a total of 200 basis points to 16 percent from 18 percent.

The first cut — amounting to 100 basis points — will take effect on May 31. This will be followed by 50 bps reduction in end-June and another 50 bps cut in end-July.