The penultimate trading day for the year saw the stock market hit a new all-time high and the peso return to the P49 to $1 level, which analysts attributed to factors such as window-dressing and positive economic developments.
The bellwether Philippine Stock Exchange index added 44.18 points or 0.52 percent to close at 8,535.09, its highest since hitting 8,523.07 last November 6.
The index rose to as high as 8,571.46 during intra-day trading.
The broader All Shares, meanwhile, rose by 0.45 percent or 22.19 points to finish at 4,963.70.
“Both Philippine and US stocks finished higher on their last trading sessions as window dressing is now underway,” a Regina Capital Development Corp. analyst said.
“The Philippines broke ground as it zoomed past the 8,500 level resistance … to reach a new all-time high,” he added.
This was echoed by IB Gimenez Securities research head Joylin Telagen who said that this “was caused by investors’ repositioning of stocks ahead of year-end window dressing.”
Window dressing is a strategy used by portfolio managers to rebalance a fund’s performance before presenting it to clients.
Only the holding firms sector recorded losses on Thursday, declining by 0.16 percent.
Volume turnover was thin with only 764 million issues valued at P6.4 billion changing hands
Advancers led deciners, 107 to 105, while 38 issues were unchanged.
The peso, meanwhile, finished the day at P49.98:$1, gaining 6 centavos from Wednesday in its strongest close since June 19’s P49.91:$1.
Bangko Sentral ng Pilipinas (BSP) Governor Nestor Espenilla Jr. told reporters that this was due to a “combination of strong remittance and equity inflows as well as US dollar softness over uncertainty of impact of US tax legislation.”
Personal remittances rose to $2.55 billion in October based on latest data, up 9.7 percent year-on-year and recovering from September’s five-month low of $2.44 billion.
Espenilla also said that “domestic fundamentals remain attractive” and were “lately reinforced by the Train approval,” referring to the just-signed Tax Reform for Acceleration and Inclusion law that provides for increased personal income tax exemptions in return for higher taxes on fuel and car sales, among others.
Weighing in on the peso’s rise, Bank of the Philippine Islands Vice-President and lead economist Emilio Neri Jr. warned that the currency’s strength was “unsustainable and largely a result of what looks like a temporary tightness in domestic liquidity arising from the recent RTB (retail treasury bond) issuance of the BTr (Bureau of the Treasury).”
The Treasury bureau earlier this month raised P255.4 billion—more than eight times the amount initially considered—from its latest retail bond offering.
“The market also appears to be to pessimistic about the expansionary impact of the US tax reform package,” Neri continued.
The currency, he said, should see a correction toward the P51:1 level by February 2018, if not earlier.
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