PSEi posts solid gains on improved sentiment

The local stock market posted strong gains in August as sentiment improved amid increasing certainty about the current administration’s economic priorities and with listed companies reporting strong results in the second quarter.

The Philippine Stock Exchange (PSEi) rose 436.57 points or 6.9% so far this month to end at 6,752.50 on August 26 from the end of July close.

At the end of July, the PSEi index was up 2.6% month over month, while in June it was down 9.1%.

Michael Ricafort, chief economist at Rizal Commercial Banking Corp., said the PSEi index rose as market sentiment was supported by President Ferdinand “Bongbong” R’s first State of the Nation address. Priorities were echoed by the economic team, particularly the economic growth and financial management objectives in terms of Reducing the state budget deficit and the debt-to-GDP ratio (GDP).

“Overall, better corporate earnings or results supported market sentiment and overall valuations,” Mr. Rycafort said in a Viber message.

However, he warned that if the Russian-Ukrainian war continues, it may lead to increased volatility in the world fifinancial markets.

Louis A. said: Lemlingan, head of sales at Regina Capital Development Corp., said indicators such as signs of peak inflation in the US and good earnings reports also boosted the market.

“Philippine macro indicators and corporate earnings were also encouraging as higher commodity prices did not affect earnings as much as analysts had expected,” Lemlingan said in a Viber message.

“Despite the ‘Au-ghost’ month, the Philippines index is up nearly 400 points, indicating that the market is recovering well from the June slump,” said Mark Kippinson Lowd, head of online trading, Timson Securities, in a Viber message.

Ghost month is a period in the lunar calendar when some Asian investors refrain from making investments or making big decisions, resulting in low trading volumes. For this year, it is set July 29 – August 26.

“The main factors contributing to the strong market performance are signs of slowing inflation in the Philippines, lower-than-expected inflation in the United States, and a better-than-expected earnings report from companies, which boost investor confidence,” Mr. Lodd added.

Preliminary data from the Philippine Statistics Authority showed that the headline inflation rate in the Philippines rose to 6.4% in July from 6.1% in June and 3.7% a year ago.

The July inflation reading was the fastest since 6.9% in October 2018.

Meanwhile, US consumer prices slowed last month as gasoline prices fell sharply, adding to market sentiment that the US Federal Reserve may roll back its sharp interest rate increases.

The US consumer price index rose 8.5% year-on-year in July, slower than the 9.1% rise in June. – Justin Irish D

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