Vaccine news give stocks a shot in the arm to reach 9-month high

MANILA, Philippines — Stock investors disregarded a lower than expected economic performance in third quarter, soaring past the 7,000-mark to a near 9-month high as optimism grew that a coronavirus vaccine was within reach. 

The Philippine Stock Exchange index surged 5.23% to close at 7,035.48 points on Tuesday, completing a one-week rally that saw the bourse at its highest level since February 24’s 7,187.44. Since October 29, PSEi has gained 12.6%. 

The broader all-shares index likewise rose, albeit at a slower 3.42% to end trading at 4,096.47.

All subindices ended in the green, led by holding firms that gained 7.1%, followed by property (6.95%), financial firms (3.35%), services (1.74%), industrial (0.63%) and mining and oil segments (0.26%).

“Local shares soared after Germany-based BioNTech SE and Pfizer Inc. announced that their COVID-19 vaccine candidate achieved “success” in the first interim analysis of a Phase 3 study,” Luis Limlingan, managing director at Regina Capital Development Corp., a brokerage, said in a commentary.

The news overnight from drug-makers showed 90% efficacy on combatting the deadly virus that put global economic activity to a standstill this year. The effect of lockdowns and restrictions remained largely felt even with economies reopening, with the Philippines reporting early in the day that gross domestic product fell 11.5% year-on-year.

The latest GDP print was worse than poll consensus that would have wanted contraction to be more tempered at single digits, but Limlingan said the result was “barely a factor” on the PSEi “since over and done focus now is really vaccine.”

Indeed, bets surged so much so that some traders took time to process orders. Among them from COL Financial Group Inc., another brokerage, announced on early trading hours that “high volumes in the Philippine market” were causing “slower processing speeds” in their servers. It was not until 11:15 a.m. that the situation normalized.

Across Asia, the global rally cheering vaccine development was also evident. Tokyo’s Nikkei 225, which on Monday busted through a 29-year high, added 1.1% in trading. Markets in Hong Kong and Shanghai went up 1.2% and 0.1%, respectively.

In other markets, oil prices dipped after Monday’s surge, while the safe-haven yen edged back slightly though it was still well off its levels just above 103 to the dollar earlier Monday. At home, the peso lost 12.5 centavos away from its over 4-year high to close at 48.27 to a dollar.

Meanwhile, gold, considered a safe haven in tough times, struggled to claw back after losing 5%. 

“This offers a ray of hope that the market did not hesitate to take advantage of. Investors’ reaction…is in line with our expectations of what would happen if there are signals that some normality can return to our lives,” Tai Hui at JP Morgan Asset Management said in a note to clients.

Back at home, Tuesday’s rally only marked a continuation of last week’s steady climb that saw PSEi recover losses from lockdowns last March. That was credited to the Philippines’ declining number of daily coronavirus cases, which at one point last week reached a 3-month low, although partly because of low testing.

“Hopefully, we'll see the index to sustain its uptrend at least for the week, but could be extended more, as investors are gradually coming back to play equities given the current charm of the market,” said Arielle Santos, also of Regina Capital. — with AFP