Stock market advances; Jollibee, AC Energy rise

The stock market rose slightly Thursday in step with the rest of Asia as concerns about a collapse of troubled property giant Evergrande receded for now.

The Philippine Stock Exchange Index added 24.55 points, or 0.4 percent, to 6,915.28 on a value turnover of P6.5 billion. Gainers beat losers, 105 to 79, with 58 issues unchanged.

Jollibee Foods Corp., the biggest fast-food chain, advanced 3.8 percent to P203.40, while construction supply retailer Wilcon Depoat Inc. climbed 5.1 percent to P30.

AC Energy Corp. of the Ayala Group gained 3.1 percent to P11.18, while sister and major property developer Ayala Land Inc. rose 2.4 percent to P33.65.

The rest of Asian markets rose Thursday as investors cheered a Federal Reserve plan to begin scaling back its ultra-loose monetary policy soon.

Hong Kong was among the lead advancers as it reopened after a midweek break to catch up with news that Evergrande had agreed a plan to repay interest to its domestic bondholders, soothing worries of a default that have raised talk of a hammer blow to the Chinese economy.

And while Wednesday’s statement was vaguely worded—not detailing how much and when it would pay—it was grasped as a much-needed positive sign. Attention is now on what it plans to do about repayments to offshore bondholders, which are due Thursday.

Observers pointed out that even if it fails to meet its obligations, the firm still has 30 days to come up with the cash. However, they will be keeping an eye on how it deals with those dollar-denominated notes.

“International investors will watch closely for new developments and for any state reaction, and assess how contagious it can be for the rest of the economy,” Bernard Shaw, an Asia bond syndicate banker at Daiwa Capital Markets Singapore, said.

Hong Kong rose more than one percent, with Evergrande surging about 30 percent briefly before easing back slightly—though its shares are still down more than 80 percent this year. There were also gains for other property developers as well as banks that have exposure to the firm. Shanghai was also in positive territory, helped by an infusion of $17 billion into financial markets by the People’s Bank of China.

Sydney also added one percent, while Mumbai and Singapore were up even more. Wellington, Taipei, Bangkok and Jakarta were also higher. Tokyo was closed for a holiday. 

Justin Tang, of United First Partners, said the Wednesday announcement “displayed that maintaining bond solvency was still on the agenda for Evergrande and also raised hopes for investors that creditors are to an extent open to resolution”.

“The read-through is that an orderly restructuring/negotiation is still on the cards for other onshore and offshore creditors and could buy the time Evergrande so desperately needs.”

The positive start to the day followed a rally of around one percent for all three main Wall Street indexes, where investors also welcomed a Fed statement on tapering its vast bond-buying program.

The central bank said it expects to “soon” be ready to start the wind-down of stimulus put in place at the start of the pandemic that has been a key driver of the global economic and equity rebound. With AFP

Topics: Evergrande , Philippine Stock Exchange Index , Jollibee , AC Energy rise
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