Philippine stocks entered the bull market Monday, rising more than 20 percent from June and sending the benchmark index to its highest level in two and a half years.
The benchmark Philippine Stock Exchange index pierced through the 7,400 level as investors cheered the Bangko Sentral ng Pilipinas’ move to significantly reduce banks’ reserve requirement ratio (RRR).
The index surged 164.93 points, or 2.27 percent, to close at 7,417.25, the highest since February 2022. The wider all-shares Index reached 3,958.02, up by 62.40 points, or 1.60 percent.
“The benchmark index continued its very bullish momentum to close at its highest level since February 2022 on the back of BSP’s significant reduction of the reserve requirement ratio and strong foreign fund flows,” China Bank Capital managing director Juan Paolo Colet said.
Colet said, however, the market is now technically overbought, which could indicate that a technical correction could happen “very soon”.
Rizal Commercial Banking Corp. chief economist Michael Ricafort said the reduction in RRR would increase banks’ loanable funds by roughly P400 billion.
This will help increase demand for loans/credit which in turn would boost the domestic economy. This also means more funds that could be invested in the financial markets such as bonds and other fixed-income investments.
Financial sector rose 3.69 percent, followed by services which went up 2.01 percent. Holdings firms rose 1.95 percent, while property and industrial climbed 1.72 percent and 1.07 percent, respectively. Mining and oil dropped 0.01 percent.
Value turnover reached P8.23 billion Monday. Foreign investors were net buyers, with inflows reaching P1.77 billion.
Bank of the Philippine Islands was the index’s top gainer, surging 5.06 percent to P139.20, while Converge ICT Solutions Inc. was the main index laggard, falling 2.67 percent to P16.80.
