Stocks surge after GDP report, BSP rate hike decision

Local stocks posted their biggest intraday gain in seven weeks yesterday as sentiment was buoyed by the announcement of a robust 6.8 percent GDP growth in the first quarter and the decision by the monetary board Thursday to raise the benchmark rates of the Bangko Sentral ng Pilipinas to contain rising inflation.

The main Philippine Stock Exchange index jumped 181.11 points or 2.39 percent to close at 7,752.11 as share prices rose across the board although volume remained thin at 673.23 million shares worth R5.69 billion. Advancers swamped decliners, 11680, with 49 issues unchanged.

“The bears appear to have taken some time off leaving the floor to the bulls. Yet, concerns still linger on whether today's surge – surprisingly coming at an approach of a long weekend break owing to Monday's election - as value flows, the closest metric of participation, continues to be relatively thin,” said Philstocks Financials Inc. Head of Research Justino Calaycay Jr.

He noted that, “the advance was broad based with all sectors posting gains. This even as a sitting Chief Justice was ousted by her peers in the High Chamber. The day's optimism could be reflective of the previous day's GDP report and, ironically, the BSP's rate action.”

The Philippine central bank raised its benchmark interest rate by 25 basis points after marketclose on Thursday, for the first time in more than three years, to contain inflationary pressure amid strong economic growth.

"Most analysts were citing that recent inflation figures have in a way signalled that the BSP (Bangko Sentral ng Pilipinas) might be behind the curve, so it was viewed positively by the markets today," said AB Capital Securities Senior Equity Analyst Lexter Azurin.

Calaycay added that, “corporate profits, though still short of our forecast of 20 percent growth year on year, have lent a glimmer of hope for investors long seated at the sidelines.”