PSEi books weekly gain amid trade war worries

THE MAIN INDEX posted gains last week, after a unit of one of the country’s largest conglomerates announced its plan to raise as much as P142 billion through a follow-on offering.

The 30-member Philippine Stock Exchange index (PSEi) surged 2.41% to finish at 7,766.47 last week, despite closing Friday with a 0.48% decline or 37.56 points. The property and industrial sectors lifted the index, with gains of 3.5% and 2.6%, respectively. Daily average turnover advanced by 22% to P6.8 billion.

“Markets all over the world are flat this week as investors are worried about the escalating trade war between the US and China but not here in the Philippine Stock Exchange… Ramon Ang’s companies SMC (San Miguel Corp.) and FB (San Miguel Food and Beverage, Inc.) were our biggest gainers this week after FB disclosed that they will be conducting a follow-on offer,” Eagle Equities, Inc. Research Head Christopher John Mangun said in a weekly market report.

FB said in a prospectus dated Aug. 22 that it plans to sell up to 887 million common shares, with an over-allotment option of up to 133.05 million common shares, priced at up to P140 each. This will allow the company to comply with the minimum public ownership rule of 10%, as its current public float is at 4.12%.

Should the secondary offering push through this year, this will be the largest fund-raising activity the country has seen.

Shares in FB soared 15.12% to P92.10 each at the end of trading last Thursday, Aug. 23. The stock continued to gain 4.23% to P96 apiece on Friday, or higher by 18.7% week on week. Shares in parent SMC likewise firmed up 7.38% to P171.80 each or 16.5% higher than its closing price in the week before.

Net foreign outflows reached P493 million last week. Mr. Mangun noted that the continued exit of foreign funds from the market, albeit at a slower pace, indicates the hesitation among foreign investors.

“This tells me that foreign investors are still weighing the pros and cons of investing in our market as the fundamentals of our economy remain intact,” he said.

Global equity markets rose on Friday after Federal Reserve Chairman Jerome Powell said the US central bank’s policies are best to keep the economy humming, spurring new highs on Wall Street, while oil surged on signs Iran sanctions may crimp worldwide supply.

The benchmark S&P 500 stock index notched its longest bull market, closing above its previous January high, after Mr. Powell’s comments at a meeting of central bankers reaffirmed expectations of an interest rate hike in September and perhaps again in December.

On Wall Street, the Dow Jones Industrial Average rose 133.37 points or 0.52% to 25,790.35. The S&P 500 gained 17.71 points or 0.62%to 2,874.69 and the Nasdaq Composite added 67.52 points or 0.86% to 7,945.98.

For the week, the S&P gained 0.87%, the Dow added 0.47% and the Nasdaq jumped 1.66%. • with