Philippine stocks up on bargain hunting, strong fundamentals

by Kristine Jane R. Liu

The Philippine stock market on Wednesday bucked the more-than-hundred-point overnight drop of the U.S. market as investors remain bullish on the local equities following the strong performance of the local economy in the first quarter.

Foreign investors, who used to be net sellers, were also seen slowly accumulating the battered stocks, providing further support to the market.

The benchmark Philippine Stock Exchange index on Wednesday rose by 0.7 percent or 22.94 points to 3,289.56, while the broader all- share index gained 0.59 percent or 12.25 points to 2,074.80.

The trading volume reached 1.31 billion worth 3.71 billion pesos (79.8 million U.S. dollars). Foreign investors were net buyers for the third time this week with 399.53 million pesos (8. 59 million U.S. dollars).

Advancers led decliners 56 to 40 while 62 stocks did not move. Of the six counters, only the service sector lost its value.

"We were expecting the local equities to correct because of the Dow but for the past three days, we have noticed that there is already foreign accumulation," Elizabeth Abadillo, an analyst of Angping and Associates Securities, Inc., said in an interview.

But local fundamentals are strong and the 7.3 percent growth of the local economy in the first quarter suggests that Philippines can withstand the Euro crisis should this deteriorate, she added.

"The Philippines remains fundamentally sound. The current retraction in the PSEi was owed to concerns on the debt problems in Europe and the conflict between North Korea and South Korea," said Ignacio Soriano, analyst at Papa Securities Corp.

Aside from the first quarter growth of the local economy, Ignacio noted that other macro-indicators are also up. Exports remain healthy and first quarter corporate earnings are higher than expected.

Analysts said bullish fundamentals prompted both foreign and local investors to engage in small bargain hunting especially since some stocks remain at their oversold levels.

"Hopefully, in the coming days there will be positive developments overseas so that the local market will be able to sustain its rally," Abadillo said.

Energy shares weighed down the U.S. market on Tuesday. The Dow Jones industrial average lost 1.11 percent or 112.61 points to 10, 024.02.

Locally, stocks in the 30-company index closed mixed. Heavyweight Philippine Long Distance Telephone Co. was sold down after rallying during the past days. Ayala Land, Inc. and top lender Banco de Oro Unibank, Inc. extended their rallies.

Source: Xinhua