Index returns to green on US stimulus package

MANILA, Philippines — The local stock market returned to positive territory, leading modest gains among Asian bourses yesterday, as investors focused on US stimulus plans, traders said.

The benchmark Philippine Stock Exchange index (PSEi) finished 30.3 points or 0.41 percent higher at 7,273.15 while the broader All Shares index closed at 4,3450.94, up 16.01 points or 0.36 percent.

Traders said despite reports of a new COVID-19 strain found in the country, the PSEi ended higher as buying pressure picked up. Investors were already expecting the mutation, they said.

In the US, President-elect Joe Biden’s pandemic relief package due later on Thursday had promised “trillions” of dollars in aid.

Mizuho Bank said markets are “likely to be seduced by stimulus” ahead of Biden’s fiscal plans, which could help spur a recovery in the world’s largest economy and in turn trade-reliant Asia.

In a briefing yesterday, First Metro Investment Corp. said with the vaccine rollout, corporate earnings recovery, market reform initiatives, and the foreseen return of foreign funds to emerging markets in Asia, the expectation for the PSEi is very bullish and constructive.

“The PSEi is anticipated to hit the range of 7,800 to 8,100. Price earnings ratio is projected around 18x to 19x this year. Corporate earnings will rise to 24 percent, and can even go as high as 29 percent with the enactment of the Corporate Recovery and Tax Incentives for Enterprises (CREATE) bill,” FMIC said.