PHILIPPINE DAILY INQUIRER - August 25, 2009

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Stocks post biggest single-day gain on rosy global outlook

Local stocks yesterday posted their biggest single-day gain this year as global risk appetite surged on expectations that the world was now coming out of the worst downturn seen since the Great Depression.

The main-share Philippine Stock Exchange index rallied 5.11 percent to close at 2,859, led by the property sector whose counter jumped 6.2 percent. All sub-sectors were up as P4.9 billion worth of shares changed hands as 97 advancers edged out 18 decliners and 46 unchanged stocks.

The counter for holding firms was up 5.4 percent so were the financial service as well as mining and oil sub-indices which rose 4 percent, 4.1 percent and 2.7 percent, respectively.

Index heavyweight PLDT accounted for the biggest volume of yesterday’s buying sprees while the following completed the roster of 10 most actively traded stocks; Meralco, Megaworld, Ayala Land, Alliance Global Group, Ayala Corp., Filinvest land, Metrobank, Bank of the Philippine Islands and SM investment Corp.

“Coming off a long weekend and looking toward another long weekend, the local stock market had its best day of the year. Investors came back to positive developments from the US and bought aggressively,” said Prince Anthony Yeung, and analyst at AB Capital Securities.

Eli Remolona, a global Filipino economist currently based in Hong Kong as chief representative of the banks for international settlements (BIS), yesterday said his personal view was that the global economy was on the mend given the various fiscal and monetary stimulus packages put in place by various governments.

“But the global financial system is still quite weak, which means the banks and financial institutions have to repair themselves and that means their contribution to the economy will be very weak and so the [global] economy will have to fix itself with the help of consumption by the people and households and trade,” he said.

Remolona, who had worked for the World Bank and the Federal Reserve Bank of New York, was in town to receive the BPInoy award given by the Ayalas’ bank of the Philippine Islands each year to outstanding global Filipino achievers.

The economist said Asia was leading the way in terms of the stimulus package, particularly China and also noted that the Philippines was among the few countries that had so far managed to post a positive economic growth this year.

“It will be a U-shaped [global] recovery but the right said of the U is flatter than the left side of the U. In other words, recovery is there but it’s going to be rather weak until the financial systems can fix themselves” he said.

AB Capital’s Yeung said the optimism in the stock market yesterday was pent up given the shortened trading week last week.

Favorable comments from the chides of the US Federal Reserve and the European Central bank that suggested that the global economy was bottoming out cheered stock markets across the globe. The US Dow Jones Industrial index ended last week at its year-to-date high while both the NASDAQ and S&P 500 ended above crucial resistance levels. But Yeung said there was a growing sense of fear that the markets were hitting “overbought” levels.

There seems to be a lack of catalyst for the markets, both local and foreign, to move convincingly in either direction. The main catalysts for this week would be the 9second quarter GDP (gross domestic product) repots of the US and the Philippines,” Yeung said.