Stocks rose for a second day, although traders remain on edge over the economic outlook as global central banks ramp up interest rates to fight inflation.
The PSE index, the 30-company benchmark of the Philippine Stock Exchange, climbed 62 points, or 1 percent, to close at 6,520.80 Wednesday, as five of the six subsectors advanced, led by mining and oil.
The broader all-share index went up 35 points, or 1.05 percent, to settle at 3,419.83 on a value turnover of P6 billion. Gainers outnumbered losers, 103 to 68, while 46 shares were unchanged.
Seven of the 10 most active stocks ended in the green, led by Apollo Global Capital Inc. which surged 33 percent to P0.036 and PLDT Inc. which rebounded 5 percent to P1,250.00.
PLDT fell 31 percent in the prior eight trading days on speculation of an impending management shakeup. The Securities and Exchange Commission also called for an investigation on PLDT trading ahead of the company’s announcement it incurred P48-billion capital expenditure overrun in the past four years.
PLDT said it would fully cooperate with the SEC, the Philippine Stock Exchange and the Capital Markets Integrity Corp. on their inquiry into PLDT’s elevated CAPEX and the investigation into the trading activities on PLDT shares just before the disclosure was filed with the PSE.
The company said it is gathering all the information requested by CMIC but needed to understand the range of issues involved and the extent of the matter. “Until this information is complete, any announcement would have been premature to the detriment of the public shareholders,” it said.
PLDT reiterated that it had not unearthed fraudulent activities in relation to the CAPEX overrun and agreed to make the necessary disclosures if this changes in the future. “Furthermore, the business and the outlook for the business continue to remain healthy,” it said.
Meanwhile, Asian markets were mixed Wednesday after plunging the day before in response to the shock Bank of Japan decision to shift away from its ultra-loose monetary policy.
The move to allow yields on certain government bonds to move in a wider band was seen as a precursor to a possible interest rate hike next year, finally bringing the central bank in line with others around the world.
Tuesday’s announcement sent the yen soaring from above 137 to the dollar to just above 130—its strongest since August—while it also rallied against other peers including the euro. And it managed to hold on to most of the advances on Wednesday.
Some observers say the Japanese unit could strengthen further to around 120, saying it remained relatively cheap, having tumbled for most of the year against the dollar owing to the divergence of Fed and BoJ policies.
“It would be safe to assume that the BoJ shift will likely fuel further yen strength on repatriation flows as local bond yields rise,” Stephen Innes of SPI Asset Management said in a note.
“Effectively the BoJ pivot is the equivalent of quantitative tightening, which should lead real long-term rates to increase.”
Regional markets mostly edged back up after a painful sell-off, though fears that borrowing costs will continue to rise globally next year were keeping any rally in check.
Tokyo fell again after dropping more than two percent Tuesday, while there were also losses in Shanghai, Mumbai, Singapore and Seoul. Hong Kong, Sydney, Wellington, Taipei, Bangkok and Jakarta all rose.
The surprise move came as investors were already suffering following hikes by the US Federal Reserve and European Central Bank last week, and warnings by officials that rates would likely go higher than initially expected.
The tightening measures, aimed at bringing decades-high inflation under control—have fanned speculation that the world economy will be tipped into a recession.
“Tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly,” said Deutsche Bank analysts.
National Australia Bank’s Ray Attrill added that Tuesday’s “tweak has, whatever the BoJ [and government] will have us want to believe, been interpreted as putting the writing on the wall for a policy shift next year.
“It is also seen as signifying a formal end to tolerance/desirability of yen weakness.”
Traders are also keeping an eye on China as it quickly reopens after almost three years of a zero-Covid policy of lockdowns and mass testing that hammered the world’s number two economy.
However, there is a worry about the immediate impact of a spike in infections, with hospitals struggling, pharmacy shelves being stripped bare and crematoriums overwhelmed.
“Though unspoken, it is well understood that policymakers have decided to accept a sizeable Covid wave,” said Innes. With AFP