Stocks surge back to 5,000 territory

MANILA, Philippines — The stock market rallied yesterday after the Bangko Sentral ng Pilipinas (BSP) agreed to cut the reserve requirement ratios of banks to inject more cash into the economy.

The benchmark Philippine Stock Exchange index (PSEi), rallied by 253.49 points, or 5.31 percent, to finish at 5,027.76.

Likewise, the broader All Shares index surge by 117.18 points, or 3.97 percent, to end at 3,065.13.

Most sectors were up as market investors found some assurance in the BSP’s decision to cushion the economy from the negative impact of the rapid spread of the coronavirus disease 2019 or COVID-19.

Total value turnover reached P8.30 billion. Market breadth was positive with 158 gainers and 44 losers while 29 issues were left unchanged.

The BSP on Tuesday decided to free up more money to keep the economy afloat, releasing another P200 billion to the financial system by reducing bank reserve requirements and complementing a P300-billion stimulus package.

BSP Governor Benjamin Diokno said the reserve requirement ratios (RRR) of universal and commercial banks would be reduced by 200 basis points to 12 percent effective March 30.

This is from a high of 20 percent in early 2018.

“The reduction is intended to calm the financial markets and encourage banks to continue lending to the retail and corporate sectors,” Diokno said.

The cut aims to encourage banks to continue to lend.

“The approval of economic stimulus packages and the recent easing from the BSP have helped investors relax after days of brutal sell downs. We saw a little bit of selling at the open, but more investors were optimistic, buying up heavily battered issues which signaled sellers to walk away and not dampen the momentum. We are currently up for the week because of today’s advances. If the PSEi can maintain this trend in the coming days, then this may signal a bottom for the market after two weeks of massive losses,” said Chris Mangun of AAA Securities.