August 28, 2022

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PSEi posts strong gains on improved sentiment

THE LOCAL BOURSE posted robust gains in August on improved sentiment amid increased certainty about the economic priorities of the current administration and as listed firms posted strong second-quarter results.

The Philippine Stock Exchange index (PSEi) has gone up by 436.57 points or 6.9% so far this month to end at 6,752.50 on Aug. 26 from its end-July close.

At end-July, the PSEi gained by 2.6% month on month, while in June, it dropped by 9.1%.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the PSEi rose as market sentiment was supported by the first State of the Nation Address of President Ferdinand “Bongbong” R. Marcos, Jr. “as it covered a lot of economic-related priorities and reiterated the economic team’s earlier signals, especially economic growth targets and fiscal management in terms of reducing the country’s budget deficit and debt-to-GDP (gross domestic product) ratio.”

“Generally better corporate earnings or results also supported market sentiment and overall valuations,” Mr. Ricafort said in a Viber message.

However, he warned that if the Russia-Ukraine war drags on, it could lead to increased volatility in global financial markets.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said indicators such as signs of peaking of inflation in the United States and good earnings reports also boosted the market.

“Philippine macro indicators and corporate earnings were also encouraging as the elevated prices of goods did not affect profits as much as analysts expected it would,” Mr. Limlingan said in a Viber message.

“Despite the month of ‘Au-ghost,’ the Philippine index has soared nearly 400 points, indicating that the market is recovering well from the June slump,” Timson Securities, Inc. Head of Online Trading Marc Kebinson L. Lood said in a Viber message.

The ghost month is a period in the Lunar calendar when some Asian investors refrain from making big investments or decisions, resulting in lower trading volumes. For this year, it was set on July 29 to Aug. 26.

“The main factors that contributed to the market’s strong performance are signs of slowing inflation in the Philippines, a lower-than-expected inflation print in the United States, and a better-than-anticipated earnings report from companies, which boosts investor confidence,” Mr. Lood added.

Philippine headline inflation rose further to 6.4% in July from 6.1% in June and 3.7% a year ago, preliminary data from the Philippine Statistics Authority showed.

The July inflation print was the fastest since the 6.9% logged in October 2018.

Meanwhile, consumer prices in the US decelerated last month as gasoline prices dropped sharply, raising market sentiment that the US Federal Reserve may dial back its aggressive interest rate hikes.

The US consumer price index climbed by 8.5% year on year in July, slower than the 9.1% rise in June. — Justine Irish D. Tabile