Stocks surge to gain back losses from lockdowns

MANILA, Philippines — The local bourse surged for the third straight day on Thursday, continuing this week’s streak that allowed it to recover losses incurred from lockdown measures that sapped investor confidence.

The benchmark index closed up 2.8% to 6,644.77 points on Thursday, the market’s best performance since it ended trading at 6,770.38 on March 6 just days before Metro Manila was placed on lockdown, followed by the entire Luzon.

All subindices ended in green, except mining and oil that slightly dipped 0.29% from previous day. Analysts saw the Philippine Stock Exchange index turning positive for multiple reasons.

On one hand, April Lee Tan, research head of COL Financial, said Philippines appears to be benefiting from declining daily cases of coronavirus disease-2019 (COVID-19) infections that on prior day hit an over 3-month low.

“There might be a rotation to emerging markets now driven by improving COVID-19 numbers,” Tan said in a Viber message.

Indeed, the rally is supported by investors chipping in and delivering some gains. Foreigners were net buyers of local stocks amounting to P623.88 million on Thursday. “I think foreign funds see us a less of a health risk,” Luis Limlingan, managing director at Regina Development Corp., a brokerage, said in a separate Viber message.

On the other hand, Cara Alviar, research associate at Philstocks Financial Inc., said investors may be seeing some hope of recovery from still bad earnings report of companies hit by the pandemic and movement restrictions.

After amassing big gains however, Alviar said a pullback may now be overdue to lock in some profits, although she did not discount the market likely hitting 6,850 levels after Thursday’s close.

“There is optimism at home. Investors are looking into the economic recovery along with the anticipated earnings growth of the companies in the coming year…It can be sustained if optimism lingers and investors’ participation remains,” she said in a text message.

Abroad, Asian markets likewise rallied on the back of heightened hopes that US legislators would soon strike a stimulus deal to salvage the world’s largest economy from pandemic ruin once the national election fever has tapered off. While a convincing result remains unlikely for now, it has now become more likely that Democrat Joe Biden would win the White House.

Tokyo added 1%, while Hong Kong gained a bigger 2% day-to-day. Shanghai inched up 0.6%.

“The contest is not over, and President (Donald) Trump will not go down without a fight, but financial markets are confident to price in a Biden presidency along with a Republican controlled Senate,” said OANDA’s Edward Moya.

On Monday, Mitch McConnell, the Republican leader who was reelected to a new term, said: “Hopefully, the partisan passions that prevented us from doing another rescue package will subside with the election. And I think we need to do it and I think we need to it before the end of the year.” — with AFP