"As soon as the news came through that 50 United States personnel had arrived here, the index went up," DA Market Securities chairman Nestor Aguila said.
"If the end result is that they will neutralize (the Abu Sayyaf guerrillas) then the market is looking forward to that neutralization," he said.
An initial group of 50 American troops arrived in Zamboanga in Mindanao earlier this week with up to 660 set to come for training and military exercises with local forces.
The main index finished up 39.48 points, or 3.09 percent, at 1,317.39 points, its highest close this year, and highest closing level since Aug. 15 last year.
Traders said the expected economic recovery for the country later this year also boosted the market.
The strong turnover of P1.06 billion yesterday against P792.08 million on Tuesday, also raised hopes that the market can sustain its gains and stay above 1,300 points, traders said.
"If this level of liquidity remains in the market, why not?," Equitable PCI Trust portfolio manager Edison Yap said.
Yap agreed that the market was taking a pragmatic approach to the American troops despite misgivings voiced in some quarters about their presence.
"At the end of the day we just want these guys (the Abu Sayyaf) out of here," he said
He said foreign investors remained interested in the Philippines because of its relative underperformance against other regional bourses since the Sept. 11 attacks in US.
For locals, the diminishing returns available from fixed income instruments amid rapidly declining T-bill and bond rates, was enticing some players into equities.
Yap added, however, that with liquidity coming in "waves" there was no guarantee the upward surge would last long. "This market has got to rest, its going to have another breather," he said.
For his part, Harry Liu of Summit Securities said "the market is just anticipating a better economic picture this year than last year."
"President Arroyo has shown she can handle the economic situation and that she is trying to solve the problem at hand," he said.
Most blue chips were beneficiaries of yesterday’s buying spree with index heavyweight, Philippine Long Distance Telephone Co. up a hefty P35, or 7.14 percent, at P525.
"There is increased positivity that they can refinance their maturing obligations," Yap said, noting the renewed interest in emerging market debt issuances.
PLDT cancelled a planned bond issue last year because of unfavorable market conditions.
Properties shrugged off two days of weakness to move firmly higher, as investors again took a bullish view of their prospects amidst easier interest rates and expectations of more robust economic activity in the second half of the year.
‘Interest rates are quite low and it seems that people are looking for some avenue they can park their funds. In light of the bargain levels of almost all issues they took advantage of the share prices," said Manny Cruz of Mark Securities Corp.
Mall developer SM Prime Holdings topped turnover, rising 30 centavos to P6.90 on trades worth P140.6 million.
Ayala Land was up 10 centavos at P5.70 while second liner Filinvest Land bounced back from Tuesday’s profit taking to end up two centavos at P2.40.
The country’s largest power distributor Manila Electric Co. rose on talk that the Energy Regulatory
Commission would shortly make a decision granting the company a hike in its electricity rates.
Newspaper reports that a Congressional committee would make a decision as early as Wednesday on the implementing rules and regulations for the new power sector reform law, also helped underpin the gains.
The B-shares rose P2 to P38 while the A-shares were up 75 centavos to 24.75.