The 30-company main composite index rose by 21.40 points at 1,088.46 points on volume of P495.29 million It was the second day of gains after Thursday’s 3.21 percent rise and took the index to the highest level since Oct. 4, 2001.
For the week, the index rose 5.33 percent or 55.12 points.
Analysts said follow-through buying in select blue chips, led by Manila Electric Co., continued as President Arroyo returned from a US visit on Friday morning and gave details of forthcoming US investments and aid in the country.
"The carryover positive sentiment propped up the market. First, there was the September budget deficit which was better than expected. Then, we have these investment pledges and military aid from the US. It also helped that we were coming from oversold levels," said AB Capital Securities stock analyst Jose Vistan.
The Relative Strength Indicator (RSI) of the main composite index closed at 80.754 points. A level of 70 points indicates the market is overbought and 30 points shows it is oversold.
Of the stocks traded yesterday, 58 issues rose, 13 declined and 34 were unchanged.
The President said there was renewed interest in the Philippines from US businesses.
"American business says that the Philippines is back on their radar screen," Mrs Arroyo said.
She said the Cerberus group led by former US Vice President Dan Quayle will provide up to $1 billion to support mass housing programs.
She also said AIA, one of the biggest finance companies in the US will raise $200 million to invest in the local stock market– a move which stock analysts said should shake the depressed local market out of the doldrums.
"Investors continued to view the market positively, with sentiment boosted by the President’s successful trip to the US," said BPI Securities investment analyst Spencer Yap. "Prices are low enough to warrant accumulation," Yap said.
Vistan said he expected the market to continue its uptrend next week with the news of the tamer September budget deficit seen likely to push down Treasury bill rates at the government auction, which should add more positive sentiment to the market.
"News of the better-than-expected deficit will push down T-bill rates, and that should help the stock market. It will sustain its rally with some moderate corrections along the way," he said.
Asiasec Equities stock analyst Oliver Plana said the new support level for the index was at 1,080 points and resistance at 1,120.
Other analysts said investors have apparently discounted the conflict in Mindanao, opting to focus on selected stocks with stronger growth prospects for the coming year.
Lending support to the market’s sentiment were the continuing drop in oil prices, the improving situation in the US and the gains in the US-led attack in Afghanistan, and the assurance of support to the government by the current leaders of the Moro National Liberation Front (MNLF).
Meralco B-shares, the session’s most actively traded stock, gained P2 at P29.50.
"Meralco was one of the more oversold stocks so it became an attraction," said Asiasec’s Plana.
Filinvest Land Inc., which has a strong niche market in the low-cost housing sector, extended recent gains on the view that it would be a major beneficiary of any sale of government held mortgages to New-York based Cerberus Partners, analysts said.