The stock market soared yesterday, the first trading day of the year, amid investor hopes for a brighter year following a horrific 2008 that sent markets across the globe into a tailspin.
Taking its cue from markets overseas which soared on expectations of a recovery in the US economy this year, the PSEi surged 101.84 points, or 5.4 percent, to close at 1,974.69 yesterday. All sub-indices went up, led by the holding firms sector, property and industrial firms as bargain hunters positioned on select stocks.
“We’re playing catch-up,” Ricardo Puig, an analyst at ATR-Kim Eng Securities said, noting the recent gains in other Asian markets and Wall Street since the local bourse closed on Dec. 24.
A total of 639 million shares worth P1.44 billion changed hands with advancers leading decliners 78 to 16 while 23 were unchanged.
Joseph Roxas, president of Eagle Equities, said the thin trading volume despite the Index’s surge indicate weak risk appetite. “Investors remain cautious... because most of the news is still bad,” Roxas said.
Investment stock portal 2traddeasia.com said the rally was aided in part by coordinated efforts from central banks worldwide to trim interest rates and help cushion an expected global economic weakness for 2009.
The peso gained 36 centavos to settle at 47.160 to $1 from the previous close of 47.52 to $ on December 24.
Among the actively-traded gainers were Philippine Long Distance Telephone Co. (PlDT) which rose P5 to end at P2,115, Globe Telecom up P10 to P760, PNOC-EDC up P0.04 at P1.90, Ayala Corp. which inched up P4 to close at P209, Iremit up P0.75 at P4.95, Bank of the Philippine Islands up by P1 at P38.50 and Megaworld up P0.02 at P0.66.
Jun Calaycay of Accord Capital Equities Corp. said expectations of an even slower December inflation, which is projected to hit 8.8 percent, could have also boosted investor sentiment.
“Yesterday’s upside may also be seen as a recognition of both fundamental under-valuations of listed companies’ counters and such having recently established multiple-year lows alongside the main index as well as major and neighboring market measures.
Stock markets in the United States, Europe and much of Asia soared in anticipation of the meeting between President-elect Obama and House Speaker Pelosi to discuss the proposed economic stimulus package to jumpstart the US economy.
Obama, who assumes office on January 20, has pledged to resuscitate the slumping American economy by creating 2.5 million jobs by 2011.
Calaycay said while the stock market had a good start, there are still some problems facing the country that might dampen investors’ apetite. “Caution remains on the trading table. Expectations of still deteriorating earnings up to the first semester of 2009 will be a constant dampener to the emergence of new confidence in the marketplace,” he said.
AB Capital Securities’ Maria Arlysa E. Narciso said government spending should be raised to boost market and economic activity in the country and also as a way of providing employment and improving the economy’s growth.
“ Remittances, which comprises a significant chunk of the GDP should be tracked this year. The projected growth in remittances this year is 10 percent at best. While the rest of the world nearly crumbled on the onset of the global financial crisis, it is expected that the Philippines can still get through the difficult times,” Narciso said.
Wall St enjoys upbeat start to 2009
NEW YORK (AP) — Wall Street started the new year with a big rally Friday, as investors, brushing aside a disappointing report on manufacturing, sent the Dow Jones industrials up more than 250 points and to their first close above 9,000 in two months.
All the major indexes shot up more than six percent for the week.
The Institute for Supply Management said its manufacturing activity index fell to the lowest level in 28 years in December. But the market held to its recent pattern of taking bad economic news in stride, a pattern that began to emerge after it touched multiyear lows on Nov. 20. Investors tend to look anywhere from three to nine months into the future when they make their moves.
“Over the last month you’ve started to see a change in sentiment and this certainly advances that,” said Carl Beck, partner at Harris Financial Group in Richmond, Virginia.
Economic data have been terrible for months and investors have shown little surprise even as some readings fell well short of economists’ already low expectations.
The ISM, a trade group of purchasing executives, said Friday its manufacturing index fell to 32.4 in December from 36.2 in November. Economists polled by Thomson Reuters had expected a reading of 35.5; a figure below 50 indicates contraction.
Wall Street’s move higher comes amid light trading after the New Year’s holiday. Modest volume can lend buoyancy to the market as upbeat buyers have reason to come out and those with less conviction stay home.
The final session of the week follows a terrible year for investors. The Dow fell 33.8 percent in 2008, its worst performance since 1931.
Still, the market’s move higher was welcome.
“We like to see the markets shrug off the bad news. That typically is a sign that we’re forming a bottom,” said Eric Thorne, an investment adviser at Bryn Mawr Trust.
The Dow rose 258.30, or 2.94 percent, to 9,034.69, finishing the week up 6.1 percent. The blue chips last closed above 9,000 on Nov. 5, when they stood at 9,139.27.
Like the Dow, broader stock indicators also advanced for the third straight session. The Standard & Poor’s 500 index rose 28.55 percent, or 3.16 percent, to 931.80, its highest close since Nov. 5. The Nasdaq composite index rose 55.18, or 3.50 percent, to 1,632.21.