Stock index hits new record high

PHILIPPINE share prices on Tuesday hit a fresh record high on the back of expectations of a possible rate cut, which is seen to boost economic activity in the country.

At the Philippine Stock Exchange (PSE), the composite index added 19.48 or 0.42 percent to an all-time high of 4,561.08, its highest close since August 1 when it finished at 4,550.53. Year-to-date, the PSE index (PSEI) gained 4.33 percent or 189.12 points.

The broader all- shares index gained 12.38 points or 0.40 percent to 3,106.43. Among all the sub-indices, only the mining and oil counters finished the day with losses, closing 0.62 percent lower.

Advancers led decliners, 100 to 57, while 42 stocks were unchanged. A total of 3.45 billion stocks worth P6.26 billion changed hands. Net foreign buying was at P1.11 billion.

“Momentum buying is still there because of the news of a possible ratings upgrade and loosening of monetary policy,” said Astro del Castillo, managing director at First Grade Finance Inc.

Local inflation hit an 11-month low in December, which may prompt the Bangko Sentral ng Pilipinas (BSP) to make a rate cut during its first policy setting meet next week.

BSP Governor Amando Tetangco had said that the central bank may ease monetary policy this quarter should Europe’s debt woes further weigh the country’s growth outlook.

Since May last year, the BSP has kept overnight borrowing and lending rates unchanged at 4.5 percent and 6.5 percent, respectively.

“A low interest rate environment encourages consumption and investments. The cost to borrow and invest is lower and this will boost economic activity in the country,” said Maria Arlysa Narciso of AB Capital Securities Inc.

At the half, the main index was up by as much as 0.97 percent or 43.96 points to 4,585.56, but this prompted investors to book profits for a much-needed technical pause.

“Some took cue from Europe, pending expectations on Germany and France’s potential meeting vote on the euro block’s debt concern,” said Freya Natividad, investment analyst at 2Tradeasia.com.

Intraday, the PSEI also hit a new high at 4,591.26 points, surpassing the previous record intraday level of 4,563.65 points posted on August 2.

Total market capitalization yearto-date stood at P8.82 trillion, up 1.41 percent from the P8.70 trillion level at end-2011.

Among best performers

“We continue to enjoy the bullish trend started last year when the PSEI was cited one of the best performing indices globally,” said Hans Sicat, PSE president and chief executive.

“We are seeing healthy trading activity behind the rise of the index and we hope the macro environment will continue to boost sentiment in the market,” he added.

Amid a low interest rate and manageable inflation environment, First Metro Investment Corp. (FMIC), the