Stock Index Breaches 6,400-Mark

MANILA, Philippines --- Investors' appetite for bluechips at the local bourse and backed by good macroeconomic numbers pushed the benchmark Philippine Stocks Exchange Index (PSEi) to breach the 6,400-mark to close at an all-time high of 6,435.98, up by 117.37 points, or 1.86 percent, from Friday's 6,318.61.

It was the 14th record close for the index in 2013. The index is now 11 percent up from left year's close. Market players and analysts expect the PSEi to move within a 6300-6500 range in the near-term.

Trading was brisk with all the sub-indices in the green with 3.13 billion shares changing hands valued at P11.18 billion.

"Good news continues to feed the market bulls," said Astro del Castillo, managing director of stock brokerage house First Grade Holdings, referring to the strong performance of the domestic economy, which grew at 6.6 percent for the whole of 2012.

"We're now praying for a healthy correction for the market," added Del Castillo, noting the market's steady rise.

Aside from the good macroeconomic fundamentals with the strong domestic economic growth, the low interest rate regime prevails following the decision of the Bangko Sentral ng Pilipinas (BSP) to tweak down the interest rate of the special deposit accounts (SDAs) to 3.0 percent, unleashing liquidity in the system.

Market players said the SDA effective rate of 2.4 percent opens the "liquidity flood gate," some of which showed its way to and was absorbed in the stock market.

The main index was up 2 percent to 6,447.31 during the early morning trade. Among the gainers in the morning session were property companies Ayala Land, SM Development Corp. and Robinsons Land Corp.

Analysts cited expectations of better corporate earnings and improving economic conditions as the driving force in the renewed buying interest in equities from investors.

Most blue-chip companies were announcing record capital expansion programs, lead by PLDT, Meralco, San Miguel, Ayala Group, Megaworld, Alliance Global and Metro Pacific Investments.

Jonas Ravelas, chief market strategist of Banco de Oro, said the market is upbeat as investors want to start the Chinese New Year on a positive note.

He added that the market rally can be sustained if the government increases spending on infrastructure.

"The most important thing that could sustain the Philippine story and eventually the investor sentiment in the market is that we get to see a lot more stories of continued government spending, particularly on infrastructure, the main highlights to show competitiveness. Right now the government has improved its fiscal position with the increase in revenues from sin taxes.

Gainers outnumbered losers, 130-50, with 35 issues unchanged.

Advancers are led by BDO Unibank, the country's largest bank by assets, up 4.1 percent at P81.80; oil refiner Petron Corp., up 7.5 percent at P12.30 and; conglomerate Ayala Corp., up 4.1 percent at P574.

PSE President and CEO Hans B. Sicat noted that the phenomenal performance of the market in January is continuing this month.

"The month of January was phenomenal for the market, and we could not have asked for a better start to 2013. It's fair to expect this rally will continue given the recent slew of good news triggered by the economy's stellar performance in 2012," Sicat said.

"This rally stands on firm ground," said Paul Joseph Garcia, who helps manage the equivalent of $3 billion at Manila-based BPI Asset Management Inc. "Investors are willing to pay a premium for earnings visibility and future prospects." (With reports from Bloomberg and Dow Jones)

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