SHARE prices inched higher on Wednesday, with the main index returning to the 5,000-point level as markets in the United States soared overnight and investors had a delayed reaction to the local central bank’s more aggressive move to pour more money into the market.
The benchmark Philippine Stock Exchange index (PSEi) gained 253.49 points to close at 5,027.76 points.
President Duterte also signed into law the Bayanihan bill, but analysts said it still had little impact on the market trading.
“The local market’s rally was primarily due to the Bangko Sentral ng Pilipinas’s 200-basis-point cut in banks’ reserve requirement ratio, which will inject more liquidity into the economy as it fights the impact of the Covid-19 spread,” Japhet Louis O. Tantiangco, senior research analyst at Philstocks Financials Inc., said.
“The BSP has been utilizing its arsenal lately to mitigate the effects of the coronavirus on the economy, from the aggressive policy rate cut, to the buying of government securities, to the RRR reduction. Investors are appreciating this,” he said.
Yet another market boost, per Finance Secretary Carlos G. Dominguez III: the state-run pension funds Social Security System (SSS) and Government Service Insurance System (GSIS) have already spent almost a billion pesos to support the stock market.
Meanwhile, Luis Limlingan, managing director at Regina Capital and Development Corp., said the rise in prices was also a result of strong market rebound across countries as investors call it a “turnaround Tuesday.”
“US markets rallied 8 percent to 11 percent, with Dow Jones having the biggest daily gain since 1933 and S&P [enjoying] its biggest single-day rally since October 2008,” he said.
Foreign investors, however, are still dumping local shares as they were net sellers at P1.66 billion.
Total value of trade reached P8.29 billion. Gainers led losers 158 to 44 and 29 shares were unchanged.
All other sub-indices gained, led by the broader All Shares index that rose 117.18 points to 3,065.13, the Financials index was up 54.93 to 1,158.80, the Industrial index added 247.10 to 5,999.63 and the Holding Firms index climbed 265.11 to 4,967.76.
Alliance Global Group Inc. was the day’s top traded and it gained P0.26 to close at P6.40, Ayala Land Inc. added P1.60 to P30.70, SM Prime Holdings Inc. rose P1.50 to P27, Jollibee Foods Corp. climbed P3.45 to P98.45. SM Investments Corp. was up P52.50 to P800 and Ayala Corp. increased P20.40 to P460.
SSS, GSIS boost
Dominguez on Wednesday told reporters via teleconference that the nearly a billion pesos spent by the GSIS and the SSS also provided the much-needed boost in the benchmark PSEi.
“I think so far they have already put almost a billion pesos in the stock market and the results have been that yesterday and today, the stock markets have firmed up and that I understand this morning they have opened up at 4 percent,” he said. “It showed that government institutions have confidence in the stock market and are providing liquidity and a willing buyer.”
In a separate interview on Wednesday with Bloomberg, Dominguez also said they will keep the steady hand in the market as they watch out for developments.
“As you know, the state funds have a responsibility to future generations as well, so while we are supportive of the market, we are going to do it in a responsible way,” he said.
He also said they have no plans to shut financial markets should the situation worsen even after it became the first country to do so.
“There are no plans to do that. We did that initially to make sure that the markets have time to consider the developments. And, so far, I’m told today, yesterday and today the markets have steadied,” he said.
Asked how deeply he expects the volatility in the stock market to go, Dominguez said: “We have already dropped almost 50 percent in the stock market so I don’t know how much more you can go but basically you know, this is a trend around the world. And we are not out of the ball field, so basically, we are all there; but I want to emphasize our debt capacity is very strong, our economic fundamentals are very strong and we will take advantage of the return to normalcy.”
The country’s finance chief earlier instructed the SSS and the GSIS to “take advantage of low stock prices as well as to support the stock market by at least doubling their average purchase volumes last year.”
On Wednesday the PSEi closed at 5,027.76 points up by 253.49 points or 5.31 percent.
The PSEi on Tuesday closed at 4,774.27 points up by 30.90 points or 0.65 percent.
To address volatility during trading, the PSE said it has been allowed to reduce the lower static threshold of individual stock prices to 30 percent from 50 percent based on its previous closing price.
The move came after share prices sank to their lowest in eight years when trading resumed on March 19 on lingering fears on Covid-19, as analysts are talking on the possibility of a global recession caused by the pandemic. The PSEi fell 711.95 points or 13 percent to close at 4,623.42 points, as all other sub-indices ended in the red. The last time the main index was at this level was on January 26, 2012, when it closed at 4,611.68 points.
With a report from Bernadette D. Nicolas