Philippine Stocks and Peso Currency Gain High

By Joann Santiago

Local stocks and the peso registered another record-high close Thursday, bolstered by Standard & Poor’s rating upgrade on the Philippines to one notch shy of investment grade at ‘BB+’.

The composite index went up by 15.26 points or 0.29 percent to 5,369.98 from 5,354.72 points Wednesday. Its previous record high was last Tuesday’s 5,365.7 points.

Relatively, the all shares index expanded by 0.44 percent or 15.45 points to 3,518.30 points from the previous day’s 3,502.85 points.

Performance of the sectoral indices improved in the afternoon session with only the holding firms ending the day on the red at 4,561.54 points, down by 1.37 points or 0.03 percent.

Advancers led decliners at 91 to 59 while 50 stocks were unchanged.

Value turnover reached P5.2 billion after 2.41 billion shares changed hands.

As this developed, PSE President and Chief Executive Hans B. Sicat issued the following statement:

“The latest sovereign credit rating upgrade from S&P, which brings the Philippines closer to investment grade, allowed our main index to withstand the general downward trend in the region and register another record high.

“Certainly, this is very good news for our market, and further reinforces the stability and positive direction of our economy.”

Accord Capital Equities Corporation analyst Justino B. Calaycay Jr. said the upgrade “is a vote of confidence on the strength of the domestic economy and a validation of the efforts the Aquino government at fiscal discipline.”

He explained that “the upgrade opens access to lower cost funds from the international credit market, making it easier to the government to raise capital it may need to finance growth-oriented projects.”

“What’s more important in the upgrade are the reasons that gave justification to it. The economy has become stronger fundamentally, and less vulnerable to external shocks — an important factor in the current environment of fear from a possible European contagion,” he said.

“As a consequence, investors have increased risk-appetite, selectively buying stocks with an eye to further improvements in both macro-economic and firm specific second quarter numbers,” he added.

Similarly, the local unit registered a fresh four-year high close at 41.68 to a dollar from day-ago’s 41.83. The previous record was on Tuesday at 41.72.

Its opening level of 41.60 is also the unit’s strongest trade for the day, same as the previous day’s levels, while weakest stood at 41.73 resulting to a 41.68 average for the currency.

Volume of trade reached US$ 808.1 million, lower than the previous day’s US$ 1.2 billion.

BDO chief market strategist Jonathan Ravelas said Thursday’s performance of the peso against the dollar is primarily due to the upgrade of the country’s credit rating.

“The upgrade confirms what Fitch has already said. NG focus on building growth and improving its finances are on track,” he said in an mobile phone message.

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