Stocks rebounded Monday, after the Trump administration’s plan to roll back financial regulations sparked a rally in global bank shares.
The Philippine Stock Exchange index, the 30-company benchmark, advanced 67 points, or 0.9 percent, to close at 7,294.40. This pushed up total gains this year to 6.6 percent.
The heavier index, representing all shares, also picked up 22 points, or 0.5 percent, to settle at 4,397.60, on a value turnover of P8.2 billion. Advancers led losers, 97 to 91, while 48 issues were unchanged.
All sectoral indices, except mining and oil, advanced, while 13 of the 20 most active stocks ended in the green, led by developers Philippine Realty & Holdings Corp. which surged 36.4 percent to P0.90 and Arthaland Corp. which jumped 21.7 percent to P1.40.
Megaworld Corp., the property arm of tycoon Andrew Tan, gained 5 percent to P3.82, while food manufacturer Universal Robina Corp. rose 2.8 percent to P166.50.
Online brokerage firm COL Financial Inc. said the PSEi could return to 8,100-point level this year if the key economic policies by the Duterte administration, such as tax reforms and increased infrastructure spending were implemented.
COL Financial chief technical analyst Juan Barredo said in a news briefing the market under a strong scenario could trade between 7,700 and 8,100 levels within the year.
Barredo said on a weak scenario, the bellwether could go back to 6,500 level. “The local market may have to keep its wide band [6,500 – 8,130] open for the time being as investors may be driven to act on the moment when key policy changes or reforms are made or re-molded. But some strong technical points have been sighted that could justify the higher-low base of 6,500 or thereabouts holding good support,” Barredo said.
COL Financial head of research April Lynn Tan said investors should take advantage of the current market condition to accumulate stocks. “While the changes that the Duterte administration wants to implement are painful in the short term, they will have a favorable impact over the long term. The government needs to implement tax reforms to raise enough funds to meet its goal of increasing disbursements from around 18.2 percent of GDP in 2016 to around 20.2 percent of GDP in 2019, led by the growing share of capital outlays from 4.5 percent of GDP in 2016 to 6.3 percent of GDP in 2019,” Tan said.
Meanwhile, most Asian markets rose as investors tracked a record on Wall Street fueled by a better-than-expected jump in US jobs, while financials were boosted by Donald Trump’s review of trading regulations.
While the week has started on a positive note, investors are on edge as they try to assess how a Trump presidency will affect the global economy following his outbursts against trade deals and accusations Japan and China were manipulating their currencies.
New York’s main indexes provided a positive lead Friday, with the Dow bouncing back above 20,000 points and the Nasdaq hitting an all-time high after figures showed 227,000 new jobs were created in January.
Tokyo ended 0.3 percent higher, while Hong Kong added 0.7 percent in the afternoon and Shanghai closed up 0.5 percent. Seoul added 0.2 percent while Taipei, Manila and Jakarta also pushed up but Sydney ended 0.1 percent lower.
Among the big winners were banks as traders cheered Trump’s order to review key reforms enacted after the 2008 financial crisis.
The announcement was the first step towards scaling back tougher regulations on the banking industry, with Trump having promised to cut red tape to try to fire up the world’s top economy.
In Japan Mitsubishi UFJ Financial Group rallied 3.4 percent, HSBC jumped 0.7 percent in Hong Kong and Sydney-listed National Australia Bank put on almost one percent.
On currency markets the dollar continues to face pressure on concerns about Trump. The soft growth in wages overshadowed the upbeat jobs reading and analysts warned the unit could fall further.
Greg McKenna, chief market strategist at CFD and FX provider AxiTrader, said: “If the US dollar is at risk of a break lower, that means the yen, the euro, the Australian dollar, and of course the Mexican peso which has surged recently, could all surge.” With AFP, Bloomberg