Positive economic outlook props up share prices

PHILIPPINE share prices on Wednesday posted back- to- back gains on optimism that the domestic economy will remain resilient amid overseas woes.

At the Philippine Stock Exchange, the composite index added 33.20 points or 0.71 percent to close at 4,715.64, while the broader all- shares index gained 13.76 points or 0.43 percent to 3,189.23.

A total of 5.83 billion stocks worth P7.47 billion changed hands. Advancers led decliners, 117 to 52, while 34 stocks were unchanged.

“The market seems to be gaining momentum given the so- called favorable environment locally and the possible softening of the rates which can perk up the economy,” said Astro del Castillo, managing director at First Grade Finance Inc.

This is further supported by the government’s commitment to implement its infrastructure projects and pump prime the economy, he added.

Weak government spending has contributed to an anemic economic growth of 3.7 percent in 2011 against the previous year’s 7.6 percent.

Despite a surprise drop in US consumer confidence, investors remained upbeat given the outflow of good news from Europe, the principal source of risk and negative volatility.

“Local participants rode on institutional fund’s reaction to Europe’s accord where euro members are ordered to follow stricter budget discipline to contain their financial crisis,” said Freya Natividad, invest-

ment analyst at 2Tradeasia. com.

“Since the euro members are able to make a deal to contain their sovereign crisis, we’re moving to a more stable market,” Natividad added.

The main index established a historic high of 4,747.90 last month coupled with improved activity as daily averages in terms of volume, value, trades and traded issues were all above yearon- year levels, said Jun Calaycay of Accord Capital Equities Corp.

“The optimism that sent prices higher remain valid as we begin the second month of trades. Even as the 2011 earnings season officially lies a month or two down the line, anticipations of sustained profitability of market leaders will make market heavyweights favorites for bargain hunters,” he added.

Considered laggards in the fourth quarter of the year, blue chips are headed for a reversal at the start of the year as fund managers accumulate these stocks given the rosy outlook for the Philippine economy.

Overnight, the Dow Jones industrial average ended the session down 19.83 points or 0.16 percent at 12,633.89.