MANILA, Philippines (UPDATE) - The Philippine Stock Exchange index soared to a new high on Monday morning, breaching the 6,900 level for the first time.
Philippine stocks surged past the 6,900 level on euphoria over the country receiving its first investment grade rating last Wednesday. The main index stood at 6,919.98 up 1.06% or 72 points at 12 noon.
Among the gainers in morning trade were Ayala Corp. (up 3.18%), SM Investments (up 4.84%) and BDO Unibank (up 0.56%).
Fitch Ratings on Wednesday said it raised the Philippines' credit rating to investment grade, the country's first. The move is expected to boost investment and lift the Philippines' long-term growth potential.
Most brokers see gains to continue in the short-term.
"If we're loking at the short-term, a week or a month. But definitely, let's view it from a longer-term perspective, I think earlier this year, a lot of analysts, including our company, have said that we're quite confident we will hit 7,000. But with the investment grade upgrade, the likelihood of this happening is much stronger because with the upgrade," April Lee-Tan, COL Financial head of research, told ANC.
"With the upgrade, I'm sure we'll be attracting more foreign investors to come in. Those funds who used to not look at us, will actually now start looking at the Philippines. Another driver would be it would lead to lower interest rates," she added.
In its market outlook, 2TradeAsia said the positive effects of the credit rating upgrade "might keep sentiment afloat for the rest of the week, reinforcing optimism on the country’s economic health."
Metrobank also said it expects continued momentum from Wednesday's rally. "Expect momentum from last Wednesday to carry-over to today, as investors have yet to fully digest and incorporate the country’s first-ever investment grade rating, given that markets were closed last Thursday and Friday," it said.