Phl stocks rally as Spain's banks get lifeline

MANILA, Philippines - Local stocks rallied sharply yesterday as investors welcomed news that euro zone ministers agreed to lend Spain’s banks up to 100 billion euros ($125 billion).

The Philippine Stock Exchange index (PSEi) jumped 81.78 points or 1.64 percent to close at 5,075.85, tracking a similar surge in Asian equities, which snapped a five-week slump as US markets finished on a positive note.

Value turnover amounted to P10.66 billion.

Market breadth was positive with gainers outnumbering losers 103 to 43 while 42 issues remained unchanged. All sectoral indices ended in positive territory with the mining and oil counter recording a 366.23-point increase.

At the foreign exchange market, the peso break into the 42 to 1 level yesterday, gaining 35 centavos to close at 42.92 due to the general weakness of the   dollar amid talks of Spanish bank bailouts.   

The local currency hit an intra-day high of 42.90 to $1 and an intra-day low of 43.12 to $1.

Volume at the Philippine Dealing and Exchange Corp. (PDEX) was steady at $976.7 million   from Friday’s $967.05 million.

The rescue for Spain’s banks follows bailouts for Greece, Ireland and Portugal since 2010.

“Previous rescue fund pledges to Portugal, Ireland and Greece have reached €386 billion. Europe’s fiscal debt woes have been the major drag on markets worldwide. Fears of the contagion spreading across the region, if and when Greece defaults or worse, leaves the common currency region, have left investors on edge,” said Accord Capital Equities Inc.’s Jun Calaycay.

Spain is in its second recession in three years and its economy is seen to falter by 1.7 percent this year.

 Calaycay, nevertheless, believes that the local market’s fundamentals remain strong even as President Aquino’s popularity rating dipped to its lowest since he assumed office in 2010.

“We do not expect any major shocks coming from the political field to shake market confidence even as posturings for elective offices in mid-2013 begins to heat up going into the second semester of the year,” Calaycay said. – With Lawrence Agcaoili