Share prices snap two-day skid as T-bill rates fall

Share prices closed 1.39 percent higher yesterday as investors snapped up stocks after Treasury bills fell to record lows, dealers said.

Investors inevitably flocked to the higher-yielding equities market with Treasury bill rates declining to all-time lows at Monday’s auction, thanks to the government’s improving fiscal condition and a better economic outlook.

“Funds are shifting into equities because returns from fixed-income assets are becoming unattractive,’’ said Jenny Ting of BPI Asset Management Inc. “Low interest rates also lead to more economic activities because it would encourage consumers and companies to borrow for spending and expansion.”

The Philippine Stock Exchange index gained 46.28, or 1.4 percent, to 3,375.31 at the close of trading, ending a two-day, 1.5-percent slide that pulled it off a more than 10-year high.

The main stock measure is less than 100 points away from its record 3,447.60 reached on Feb. 3, 1997. The measure has advanced 13 percent this year, Asia’s fifth-biggest gainer after benchmarks in Vietnam, China, Pakistan and Malaysia.

The broader all-share index jumped 32.38 points to 2,143.09.

Gainers trounced losers 107 to 31, while 42 stocks ended unchanged.

Volume amounted to 3.7 billion shares worth P4.1 billion.

“Investors are shifting to the equities market given the low interest rates,” said Astro del Castillo of First Grade Holdings Inc.

“If this goes on, this will further boost the equities market,” he said.

The yield of the Philippine benchmark Treasury bill, which lenders use to price loans, fell to a record low at a regular auction Monday, declining to 2.885 percent from 3.008 percent at the Feb. 5 sale. The yields on the 182-day bill and the 364-day bill also fell to record.

“Sentiment is being boosted with the prospects of interest rates remaining low for a longer period, especially since the government has also gone into bond swaps that would stretch maturities of its loans, this means greater flexibility in managing its debt,” said Chelsea Dipasupil of RCBC Securities Inc.

Ting also said that the stronger peso is encouraging investors to put more money into the Philippines as the appreciating currency provides an additional gain from stocks. — AFP