Stocks maintain rise as BSP holds rates

Philippine shares sustained their gains on Friday after the central bank decided to maintain record-lows interest rates and due to the stock exchange’s plan to require companies to have stabilization funds.

The Philippine Stock Exchange index (PSEi) rose 64.4 points or 0.89% on Friday to close at 7,297.66, while the broader all shares index went up by 15.48 points or 0.40% to 3,851.59.

“Positive market action today is spillover effect of yesterday’s BSP (Bangko Sentral ng Pilipinas) steady policy rate that tended to temper the sudden hawkish market messaging of the US Federal Reserve on its policy tack going forward,” said Cristina S. Ulang, First Metro Investment Corp. Head of Research in a Viber message.

The BSP on Thursday decided to keep borrowing costs at record lows to continue supporting the economy even as inflation risks lean toward the upside.

Meanwhile, the US central bank has signaled three rate hikes in the cards next year.

The Fed would end its pandemic-era bond purchases in March and pave the way for three quarter-percentage-point interest rate hikes by the end of 2022 as the economy nears full employment and the US central bank copes with a surge of inflation, Reuters reported.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort noted that the market sentiment was supported by the Philippine Stocks Exchange’s (PSE) proposal to require a stabilization fund for initial public offerings (IPO).

PSE President and Chief Executive Officer Ramon S. Monzon said on Thursday that the exchange was considering to require firms to have a stability fund worth between 10% to 15% of the base offer of their IPO or follow-on offering.

This is after the issue with Medilines Distributors, Inc., whose shares dropped 30% when it debuted on the PSE’s main board last week, despite its offer being 2.5

times oversubscribed, due to its lack of stabilization fund.

Meanwhile, most sectoral indices increased on the last trading day of the week, except for mining and oil, which dropped 52.62 points or 0.57% to 9,114.93; and industrials, which slid 1.81 points or 0.01% 10,387.57.

On the other hand, holding firms climbed 102.71 points or 1.46% to 7,130.89; property increased 27.77 points or 0.86% to 3,229.64; services gained 16.29 points or 0.81% to 2,018.75; and financials advanced 1.62 points or 0.10% to 1,621.92.

Value turnover plunged to P14.47 billion with 3.08 billion issues switching hands on Friday, from the P87.52 billion with 2.92 billion shares traded the previous trading day.

Decliners beat advancers, 92 against 89, while 47 names closed unchanged. Net foreign buying was at P333.22 million, down from the P79.44 billion recorded on Thursday.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan pegged the PSEi’s next resistance level at 7,475. — Marielle C. Lucenio