Index surges 57 pts as investors cheer gov’t crackdown

After plunging to a six-month low stocks rallied yesterday as investors gave their vote of confidence on the Arroyo administration’s decisive acts in thwarting a mob rebellion, analysts said.

"The market took positively the demonstration of firmness by President Arroyo in dealing with the rebellion," PCCI Securities and Brokers Corp. research head Gonzalo Bongolan said. "Such decisiveness has long been desired by the market and the investing public."

At the end of trading, the main index leaped 57.04 points or 4.14 percent to 1,435.88. It was the biggest gain for the Phisix in more than three months, or since President Arroyo formally assumed office last Jan. 22.

It was a complete reversal from Monday’s hammering as 59 stocks advanced, as against 11 decliners and 17 unchanged issues. Turnover also improved to P765 million, the highest in two months.

Blue chip Philippine Long Distance Telephone Co. (PLDT) was among the most active stocks, closing P10 higher at P700, in step with the 20-centavo gain to $13.50 posted by the company’s American Depository Receipts in New York Tuesday.

James Lago, research head of Westlink Global Equities, said the fear that the Philippine situation might go the way of neighboring Indonesia, where violent protest riots against the government of President Wahid continue, has been quashed thus ending the parallelism.

"Market investors lauded the efforts of the Arroyo government – from the dispersal of the Malacañang rioters, the declaration of a state of rebellion, to the arrests of several political figures identified with the opposition – as a step in the right direction in as far as bringing back stability to the country," he said.

Bongolan said investors now have the impression that Arroyo is in full control of the situation and that the destabilization efforts would not succeed.

"Given that, we can then proceed with the business of economic recovery and implementing the government’s agenda for reform," he said.

Coincidentally, Bongolan said the market was technically oversold, meaning prices have gone down to attractive levels, that it was ripe for a rebound. This is in addition to the resilience of the US economy, which led to gains in Wall Street that trickled down to markets overseas.

Lago said the major support level of 1,372 has not been breached even during the height of the latest People Power revolt. If the market would break through the resistance level of 1,490, he pointed out, then the downtrend bias would likely be reversed.

Lago likened the situation to the 1987 coup attempt during the time of President Aquino when the market withstood the highly bearish sentiment of investors and eventually recovered with an extended bull run that lasted until another coup d’ etat was attempted on Dec. 1989.