Foreign buying lifts PSEi to near 8-month high
STOCKS soared anew to a near eight-month high to close the week with strong gains, as oil prices plunged and foreign funds returned to the local market in a big way.
The bellwether Philippine Stock Exchange index (PSEi) surged 86.24 points or 1.11% to end at 7,841.99, its highest finish since settling at 7,845.49 on Aug. 26, 2016. The benchmark index reached an intraday peak of 7,908.97 before profit-taking kicked in.
The PSEi concluded the week with a gain of 2.36%. Year to date, this pushed the main gauge’s return to 14.64%.
The wider all-shares index climbed 37.30 points or 0.81% to 4,673.40, extending its weekly increase to 2%.
“It was a very significant rally that certainly surprised investors. We’re the outlier given the weakness in other markets,” Victor F. Felix, equity analyst at AB Capital Securities, Inc., said in a telephone interview.
Most Asian stocks lost ground on Friday following the decline in commodity prices overnight.
Oil prices dropped to five-month lows, bringing down the price of a barrel below $45 for the first time since Organization of the Petroleum Exporting Countries (OPEC) reached a landmark agreement in November to cut production.
“As a huge net importer of oil, the country was perceived to have benefit from the sudden drop in crude prices. Oil (was) down 5%, hit by expectations for a recovery in Libyan crude production and rising US output (that) weighed heavily on the energy sector,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said in telephone interview.
As a result, mining and oil tumbled 128.40 points or 1% to 12,610.98, bucking the strength of the broader market.
“Net foreign buying was higher than average possibly because risk appetite of investors in the US is less, given the high valuation and political uncertainty,” AB Capital’s Mr. Felix said.
Net foreign buying accelerated to P1.47 billion from P21.98 million in the previous session.
Property advanced 73.35 points or 2.15% to 3,487.56 and financials went up 19.79 points or 1.04% to 1,926.95 to lead the advance in the stock market.
Holding firms added 62.62 points or 0.79% to 7,955.49; services rose 12.47 points or 0.77% to 1,632.51; and industrial improved by 63.31 points or 0.55% to 11,484.67.
Gainers beat losers 107 to 93, while 40 issues were unchanged.
Value turnover doubled to P14.58 billion, from P7.52 billion on Thursday, after 2.03 billion shares changed hands.
“We’ve gained so much this week. The market’s overbought so we might see some weakness with the market hovering between 7,550 and 7,750,” Mr. Felix said.