MANILA, Philippines — Local shares bounced back on Wednesday, taking cues from US equities that rebounded overnight as markets calmed down days after fears of another financial crisis resurfaced.
The Philippine Stock Exchange index rallied 1.14% to close 6,466.1 on Wednesday. The broader All Shares index landed in the green, advancing 0.7%.
Subindices were a mixed bag, topbilled by shares in the industrials index closing up.
Michael Enriquez, chief investment officer at Sun Life Investment Management and Trust Corp., explained the case for the local bourse’s upbeat performance today.
“The PSEi bounced in reaction to higher US markets overnight. Banks led the gains as the DOF assured investors that local banks remain strong and won’t be affected by any fallout from SVB,” he said in a Viber message.
The Bankers Association of the Philippines and the Bangko Sentral ng Pilipinas assured in separate statements that domestic banks and the country’s financial system stood secure from the collapse of Silicon Valley Bank and Signature Bank.
SVB’s closure last Friday was precipitated by a bank run, essentially the bank did not have any cash to pay back its depositors. The bank was considered one of the largest lenders to the tech sector.
Likewise, SVB’s collapse was quickened by the US Federal Reserve’s aggressive interest rate hikes, targeted at cooling an overheating US economy. Expensive borrowing costs strained securities, according to experts.
Two days later, the ensuing panic forced US regulators to shut down Signature Bank to try to soothe equity markets and investors.
Experts reckoned that SVB was the largest bank to fail ever since the 2008 Global Financial Crisis.
Luis Limlingan, head of sales at local brokerage Regina Capital, spotlighted the optimism that coloured trading on Wednesday, noting that the market broke a 5-day losing streak.
“Back home investors continued to assess how the SVB meltdown as the index tried to inch back closer to 6500,” he said in a Viber message.
Regional equities saw similar gains as well, tracking Wall Street’s lead. Hong Kong, Singapore, Seoul, and Taipei all put on more than 1%, while Bangkok was more than 2% higher.
Shanghai, Sydney, Mumbai and Wellington were also up, while Tokyo and Jakarta were flat.
At home, foreign investors sold P4.78 billion more shares than they bought in the local stock market. A total of 1.19 billion stocks, valued at P11.07 billion, switched hands on Wednesday. — with AFP