Stocks index rallies again, peso flat vs. USD

Stocks index rallies again, peso flat vs. USD

MANILA – The Philippine Stock Exchange index (PSEi) gained anew Tuesday but the peso ended the day flat against the US dollar.

The main equities index rose by 0.66 percent, or 39.16 points, to 5,966.27 points.

All Shares followed with a 0.42 percent, or 14.60 points, jump to 3,508.24 points.

Industrial led the sectors with an increase of 1.76 percent and was trailed by the Financials, 1.05 percent; Property, 0.71 percent; Services, 0.53 percent; and Holding Firms, 0.14 percent.

Only the Mining and Oil counter ended the day on the red after it fell 1.48 percent.

Volume totaled 1.18 billion shares amounting to PHP3.57 billion.

Losers led gainers at 103 to 74, while 47 shares were unchanged.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the main equities index rose anew but it is “still near (the) two-month lows (since June 2, 2020).”

“President (Rodrigo R) Duterte’s affirmation of the priority economic reform measures during last Monday’s SONA (State-of-the-Nation Address) such as the CREATE (Corporate Recovery and Tax Incentives for Enterprises) Bill (reduction of the corporate income tax rate to 25 percent from the current 30 percent, FIST (Financial Institutions Strategic Transfer) Bill, Bayanihan II Bill, among others, supported market sentiment recently,” he said.

Ricafort said the decline of domestic interest rates could also have provided some support for the local equities market amid some search for higher returns in stock markets and other riskier asset classes.

“Lower borrowing costs/interest rates that translate to higher net income, assuming all other factors are the same, also help improve the valuation of some listed companies,” he said.

He forecasts the PSEi’s support level to be at 5,850 “which helps keep the underlying upward trend intact.”

Meanwhile, the local currency finished the day unchanged at 49.19.

It opened the trade at 49.19, sideways from its 49.12 start in the previous session.

It traded between 49.24 and 49.19, resulting in an average of 49.217.

Volume totaled to USD551.71 million, lower than its USD849.4 million volume a day ago.

Ricafort said the peso’s close Wednesday is its “strongest in more than 3.5 years or since November 15, 2016 when it closed at 49.17.”

He attributed this result to weaker US consumer confidence data, which fell to 92.6 last July from the previous month’s 98.3.

He said this factor was, however, countered by optimism on the ongoing studies for a possible coronavirus disease 2019 (Covid-19) vaccines by Pfizer and BioNTech, Moderna, and Eastman Kodak.

Ricafort also cited the rise of gold prices in the international market to another record-high of about PHP1,937 an ounce, which negatively impacted the US dollar.

“A gauge of the US dollar vs. major global currencies has been among the lowest levels in more than two years (since May 2018) amid near record-low US interest rates that reduce the attractiveness of the US currency, less demand for safe havens such as the US dollar amid improved global market risk appetite recently especially with positive developments on possible vaccines vs. Covid-19, the spike in new Covid-19 cases could slow down the economic recovery, and recent increased tensions between US and China (the world’s biggest economies) that could also further slow down the global economy on top of Covid-19,” he added.

The peso is seen to trade between 49.15-49.30 on Thursday.

Ricafort said “any sustained break below the four-year major support of 49.20 could lead to further downside potential in the coming days/weeks (as an important gateway towards the 47-48 levels).” (PNA)

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