Local stocks bounce back on Dow rally

Share prices reversed a five-day slide yesterday following two straight days of hefty gains on Wall Street, but traders were unconvinced that the market had seen its bottom.

The main index jumped 27.84 points, or 2.81 percent, to end at 1,017.87, just a shade lower than the intra-day high.

It dipped below 1,000 points on Wednesday for the first time since 1991 and fell further on Thursday.

But traders said prospects of weak corporate earnings in the third quarter remained a concern and could weigh on the market in the coming sessions.

Investors snapped up oversold blue chips such as Philippine Long Distance Telephone Co. (PLDT), which before Friday was trading at nearly 10-year lows, Ayala Land Inc. and Bank of the Philippine Islands (BPI).

"A lot of the stocks are at very, very oversold levels. We just took our cue from the Dow and Nasdaq, it was just a technical rally," said Vanessa Lim, fund manager of United Coconut Planters Bank-Trust with funds of close to P30 billion.

"It’s too early to assume that this will be the start of the turnaround. We have to see in the next few days if it will be sustained and if volume will continue to increase," Lim said.

"You can say it was a dead cat bounce," said KGI Securities vice president Fitzgerald

Aclan in describing the market’s rally. A dead cat bounce refers to a sharp rise in share prices after a severe decline.

But despite the gains, the main index is still below its pre-Sept. 11 attack levels. For the week, the index was down 70.57 points, or 6.48 percent.

Turnover climbed to P582.87 million against Thursday’s P458.2 million. There were only eight losers against 54 gainers and 22 unchanged issues.

"There was a steep decline so this is just a technical rebound. The main source of the bullishness was the consecutive rises in the Dow, we were swept along with that," said Erico Claudio, research head of Worldsec International Securities.

The Dow’s gains in its last two sessions brought it back to levels before the attacks on the United States.

PLDT, the country’s largest phone firm, added P10 or 2.9 percent to P350 and was the top traded issue in the market. However, the stock is still down 35.8 percent from its pre-attack level.

Top real estate firm Ayala Land climbed 20 centavos or 5.4 percent to P3.90 pesos while mall developer SM Prime Holdings rose 30 centavos or 6.25 percent to P5.10.

Oil refiner Petron Corp . gained six centavos or 5.4 percent to P1.18. Oil refiners lowered prices of their petroleum products on Thursday, partly lifting sentiment in the market which has been looking for positive cues.

Traders said the market’s initial resistance is around the 1,030 to 1,050 levels.

Enrique Santa Ana, associate director for sales of DBS-Vickers Securities, said the market is likely to recover from its lows in a slow uptrend.

Don Malabanan of A and A Securities Inc. said yesterday’s rally was expected after market losses in the past five sessions pushed the composite index to 10-year lows.

He said some investors may be waiting for the release of earnings figures for the three months to September later this month to get clearer trading cues.