Local stocks rose Tuesday on positive investors’ sentiments following President Ferdinand Marcos Jr.’s second State of the Nation Address Monday and ahead of the US Federal Reserve’s policy meeting.
The PSE index, the 30-company barometer of the Philippine Stock Exchange, climbed 29.86 points, or 0.45 percent, to close at 6,661.11, while the broader all-shares index rose 13.67 points to 3,540.38.
Analysts said investor sentiments turned positive after the Marcos administration promised to sustain the growth of the domestic economy and on expectations the US Federal Reserve would continue its policy tightening.
“The market widely expects the Fed to raise rates by 25 basis points,” Regina Capital Development Corp. head of sales Luis Limlingan said.
Value turnover remained thin at P3.86 billion.
Meanwhile, Hong Kong led a surge across Asian markets Tuesday after China’s leaders pledged fresh measures to boost the nation’s stuttering economy, building on optimism that central banks were nearing the end of their rate-hiking cycle.
With data in recent months showing growth stuttering and business activity slowing, Beijing has come under pressure to provide much-needed support, particularly for the vast property sector.
Despite a series of announcements and minor interest rate cuts, investors have been largely disappointed by the policy response from authorities, with very few concrete measures being unveiled.
However, top leaders on Monday signaled a fresh push to get the post-Covid recovery back on track, particularly the troubled property sector, which accounts for a major part of the world’s number-two economy.
After a meeting, the 24-person Politburo recognized “the current economic operation is facing new difficulties and challenges” and agreed they must “implement precise and effective macroeconomic regulation, strengthen countercyclical regulation and policy reserves.”
The meeting, headed by President Xi Jinping, also called for efforts to expand domestic consumption and “adjust and optimize real estate policies in a timely manner”, according to state broadcaster CCTV.
“The overall stance remains in a pro-growth mindset, but the focus is more forward-looking with an increased emphasis on addressing structural challenges (i.e. local government debt) to facilitate longer-term sustainable growth,” said Erin Xin at HSBC.
The announcement “keeps a supportive tone, which can help provide some support for the recovery and it may provide some boost to market sentiment”, she added.
While it was nowhere near the blockbuster spending plans seen in the past, the news gave investors a boost, with Hong Kong jumping nearly four percent thanks to a rally in real estate companies and tech giants.
Among the standout performers were developers Country Garden and Sunac, which piled on at least 17 percent each. The two firms are among several struggling under the weight of massive debts that have sent shivers through the industry.
“Investors now believe the Politburo meeting sets an encouraging tone for more substantial and comprehensive policy easing down the road,” said SPI Asset Management’s Stephen Innes.
“Why is it different this time? Because the lawmakers acknowledged the problem. And to fix any problem, you must acknowledge there is a problem.”
And Jizhou Dong, at Nomura Holdings, noted that confidence was lifted by the fact there was no use of the often-repeated message that “housing is for living in but not for speculation”, which had been a key part of policy-making since 2016, Bloomberg News said.
Shanghai climbed more than two percent, while Mumbai, Sydney, Seoul, Singapore, Taipei, Manila and Jakarta also rose, though Tokyo and Wellington dipped.
London was flat, while Paris and Frankfurt were in the red.
The prospect of a boost to demand from China’s measures also lifted oil prices on Monday, with both main contracts jumping more than two percent, though they inched slightly lower in afternoon Asian trade on Tuesday.
However, Kiyong Seong at Societe Generale added: “Overall, the Politburo fell short of so-called ‹bazooka stimulus’.
“I don’t expect a sustained impact on the market unless there is a series of strong concrete steps.”
The advances followed a positive performance on Wall Street, where the Dow chalked up an eleventh-straight gain, its best run since 2017.
US markets are enjoying a strong 2023 so far as investors grow increasingly confident the Federal Reserve will make this week’s expected rate hike its last, after more than a year of tightening.
Falling inflation and figures suggesting the country’s economy remained in rude health have fanned hopes that officials can bring prices under control without causing a recession.
A broadly positive earnings season so far has also lifted spirits on trading floors, while investors will be keeping a close eye on releases this week from Google owner Alphabet, Facebook parent Meta and Microsoft.
The European Central Bank’s policy decision is also on hand, with some observers predicting it is close to bringing the curtain down on its own tightening campaign.
Its gathering comes after news that eurozone economic activity shrank at its fastest rate for eight months in July owing to cuts in manufacturing. With AFP