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Wednesday, December 12, 2012

PSEi breaches 5,800 on foreign buying

The PSEi on Tuesday hit record high anew, closing beyond the 5,800 mark for the first time, lifted by strong foreign buying.
The PSEi climbed by 1.29 percent or 73.96 points to close at 5,831.5 points – the 37th record high in the year-to-date – while the broader all-share index rose 0.87 percent or 32.31 points to 3,728.7 points.
Nearly 5.84 billion shares valued at P7.08 billion were traded. 
Gainers outnumbered losers at 87 to 83, while 47 stocks were unchanged. 
“The increase in the local bourse was mainly because of liquidity and optimism for next year,” said Astro del Castillo, managing director at First Grade Finance Inc.
Del Castillo said foreign fund managers “are already positioning for next year” on the back of rosy earnings prospects.
Foreign funds have placed a “premium on the Philippines” due to the strong economic growth posted in the third quarter, said Angping & Associates Securities research head Juan Rafael Supangco.
Foreign managers bought over P4.1 billion worth of stocks, while they sold some P3.8 billion worth of shares in the local market, PSE data showed. 
While most stocks are “a little too expensive,” Del Castillo said “it's a given due to the liquidity of the market.
“Other markets in Asia are also increasing, but the Philippine Stock Exchange is leading regional markets,” he noted. 
The PSEi is the strongest in the region gaining over 37 percent  year-to-date, followed by Bangkok's SET and Jakarta's Bursa Efek which have so far soared by 28 percent and 15 percent, respectively, Supangco added. 
On reports that the local bourse is overpriced, Supangco said, “If you just look at the valuation, cheaper talaga yung ibang countries. I think... (fund managers are) putting a premium on growth.
Supangco noted that the PSEi's 2013 forward price-to-earnings or P/E ratio is at 16.53 times, which means means investors are willing to pay 16.53 more for every peso of next year's earnings.
But Supangco said “prospects for the Philippines is good. In terms of valuation, companies are already reflecting their 2013 value...
“[The] stock market is always forward looking. Investors look towards the future,” he added. 
In a statement, PSE president and CEO Hans Sicat said the new record affirms positive investor sentiment toward the Philippines. 
“Moving past the 5,800 level in a matter of weeks reinforces the view that investor confidence in our market is also at an all-time high,” he said. 
Sicat noted that improvements in advanced economies will help buoy the market. “While positive local developments have definitely served us well, an improvement in the outlook for the US, Eurozone and Chinese economies should help fuel more upside,” he said. 
Analysts, however, expect a slight correction in the coming days before the PSEi heads for the 5,900 mark. 
The PSEi took a breather Monday as investors cashed in on gains, following the last record high at 5,794.2 points on Friday. — VS, GMA News

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