PSEI ends at record high

THE MAIN local stock index surged to a new all-time high close of 5,375.52 on Wednesday on ex- pectations that the Bangko Sentral ng Pilipinas would cut interest

rates further.

The main-share Philippine Stock Exchange index gained 26.84 points or 0.5 percent. Its closing level topped the previous record finish of 5,369.98 posted last July 5 but is still below the alltime intra-day high of 5,403.16 seen last July 4.

“It’s still mostly liquidity,” said Jose Mari Lacson, head of research at stock brokerage Campos Lanuza and Co., noting however that the volume was much lower compared to when the stock market was posting all-time highs in July.

But light trading did not come as a surprise as the China and South Korea markets were still on a holiday break.

Lacson said that if the Bangko Sentral ng Pilipinas BSP relaxes monetary settings to curb peso appreciation and sterilize flows, this would drive more money to the stock market. “Right now, it’s a question of expectation, which is a more powerful factor than the actual change [in rates],” he said.

The BSP’s overnight borrowing rate is currently at a record-low level of 3.75 percent.

Despite recent hints of an ending “dovish” or monetary easing cycle, the BSP may slash interest rates one more time to curb sharp peso appreciation and temper speculative capital flows, Citibank’s chief Asia-Pacific economist Johanna Chua said on Tuesday.

Chua said the BSP may slash key interests by another 25 basis points or pursue other measures like a reduction in the reserve requirement for banks or the release of funds locked up in special deposit accounts.

The PSEi’s upsurge was led by holding firms, which went up by 1.06 percent. The financial, industrial and property counters also contributed gains.

On the other hand, the mining and oil counter fell by 1.29 percent while the services sub-index was also slightly in the red.