Easing pandemic curbs drive local shares to near 3-month high

MANILA, Philippines — Philippine shares rallied to their best finish in nearly 3 months on Wednesday, as the market cheers a further easing of pandemic restrictions.

Investors were on a shopping spree for local stocks, sending the bellwether Philippine Stock Exchange index (PSEi) up 3.23% to 6,851.69. The broader All Shares index gained a smaller 2.35%.

It was the main index’s best performance since March 10 while all sub-indices finished in the green, led by the property counter. Anna Corenne Agravio, equity analyst at Regina Capital, attributed Wednesday’s rally to looser pandemic curbs that allowed business to resume operations following a brief return to strict lockdowns.

Indeed, there are clear signs of some recovery. The Philippines’ purchasing managers’ index, a measure of factory output, inched up to 49.9 in May from 49 in the previous month. While the latest PMI reading still fell below the 50-mark separating growth from slump, it was nevertheless a milder contraction that show some semblance of stabilization.

“The slower decline in Philippines' May PMI likely led to increased positive market sentiment, as easing lockdown restrictions in the Philippines meant improving manufacturing activity and overall economic recovery,” Agravio said in a Viber message. “This likely fueled buying pressure throughout the day as investors started to turn more bullish.”

Wednesday’s trading saw foreign investors turn buyers, yielding a net foreign buying of P1.8 billion. A total of 1.9 billion shares valued at P9.5 billion switched hands during the day. Meanwhile, advancers trumped decliners, 153 to 52, while 49 names were unchanged.

For Rastine Mackie Mercado, research director at China Bank Securities, the local market might hold on to these gains this week. “We see this strength in the market persisting through the week as momentum and fund flows continue to be bullish. Resistance is currently pegged at around 7,000-7,100,” Mercado said in an e-mail.

“It is also worthy to note that foreigners remained net buyers for the fourth straight day today,” he added.

But Regina Capital’s Agravio was less upbeat. “Today, the PSEi broke out of its 100-day moving average. Further rallies will likely be weighed down by profit-taking, since investors are likely to cash in on gains after months of downturn,” she said.