Bargain hunting lifts PSE, but solid leads awaited

INVEST0RS bought bargain stocks on Monday, allowing the Philippine Stock Exchange index (PSEi) to finish 61.53 points or 0.78% higher to close at 7,943.75.

Harry G. Liu, president of Summit Securities, Inc., described the main index’s performance as a continued sideways movement in the absence of any “major catalyst.”

“Wala lang news na kakapitan para lumusot sa 8,000 (There was no news to hold on to for PSEi to break past 8,000),” he said. “It has been going sideways.”

Yesterday, all the indices turned in positive results. The broader all-shares index moved up 28.06 points or 0.59% to finish at 4723.21.

All sectors recorded modest gains, with holding firms taking the lead with a 94.95-point rise or 1.22% rise to 7,834.49. Industrials followed, climbing 116.24 points or 1.05% to 11,158.48. Property stocks increased by 28.24 points or 0.76% to 3,744.94. Financials rose by 4.22 points or 0.21% to 1,930.25. Services edged up 1.37 points or 0.07% to 1,748.44, while mining and oil inched 5.41 points or 0.04% higher to 12,465.65.

But decliners outnumbered advancers at 102 versus 91, while 49 issues finished unchanged. Value turnover was at P7.09 billion, about four times less than Friday’s P29.07 billion.

Foreign funds sold more shares than they bought, resulting in a net selling of P165.86 million worth of stocks, a reversal from their P606.89- million net buying on Friday last week.

“All we need is something so positive that will [make the PSEi] break the 8,000 level,” Mr. Liu said, adding that once that point is breached, the rise “will be very fast.”

He added that the Bangko Sentral ng Pilipinas’ (BSP) monetary policy direction “is not going to be very concerning.”

But for Luis A. Limlingan, business development head at Regina Capital Development Corp., the BSP’s pronouncement is awaited by the market, which he said resumed its bargain-hunting mode yesterday after Friday’s sharp sell-off.

“With various regional central banks discussing their later monetary policy, attention is now shifting focus to our own BSP, which will meet later in the week,” he said.

Mr. Limlingan said many are expecting the central bank to leave policy rates unchanged, keep the overnight reverse repurchase rate at three percent, the overnight deposit rate at 2.5% and the reserve requirement ratio (RRR) at 20%.

He said he continues to expect the BSP to raise policy rates twice, by 25 basis points each time, this year. He added his expectation had been pushed back for the first rate hike to the third quarter “and into the term of the new BSP governor.”

“At this stage we do not expect an RRR cut as domestic liquidity continues to grow at a healthy pace, the banking system remains flush with liquidity in excess of reserve requirements and the economy is growing at a healthy pace with inflation moving up significantly over the past year,” he said. —