Local stock market leads Asia in growth performance in Jan-Feb

The Philippine Stock Exchange (PSE) emerged as the best performing bourse in Asia during the first two months of the year with the main composite index growing 14.1 percent to 2,079.99 from only 1,483.18 in end-December last year.

In February alone, the composite index surged 596.81 points or 40.24 percent as foreign fund managers continued to take notice of the Philippine equities market as an alternative investment site.

Trading volume surged by more than 2,218 percent in February at 82.1 billion shares as compared to only 3.54 billion shares in the same month a year ago. As a result, value turnover increased by 191.65 percent to P40.5 billion from only P13.9 billion a year earlier.

"The recent months indeed have been eventful for the Philippine stock market but there should be no room for complacency. The bigger challenge now is the follow through, that is how we, players in the capital market as well as government, will sustain this achievement," PSE president and chief executive officer Francis Lim said.

Trailing behind the PSE for the January to February period is the Korean Stock Exchange which grew 12.9 percent. On third place was the Stock Exchange of Thailand with a growth rate of 11 percent. The Indonesian Stock Exchange landed fourth with its benchmark index growing 7.4 percent.

The stock exchanges of Hong Kong and Bursa Malaysia, on the other hand, posted declines.

Last year, the PSE was the second-best performer among its neighbors, with the composite Index climbing 26.4 percent or 380.5 points at 1,822.83 from 1,442.37 in 2003.

The PSE attributed the bullish sentiment to the string of good news – the higher-than-expected GDP growth, the concrete measures undertaken by government to address the fiscal deficit such as the enactment of the sin taxes and lateral attrition laws, the strengthening of the peso, the Supreme Court decision opening up the mining industry to foreigners and the series of positive news at the corporat front.

Analysts said the market’s rise was also due to the peso’s recovery on the back of huge fund inflows amid an improving economic environment.

Another factor that led investor confidence in the market in the first two months of the year was the decision of the California Public Employees‚ Retirement System (CalPERS), the largest pension fund in the US with assets reaching $172 billion, to retain the Philippines on its list of permissible investment destinations.

CalPERS, which has an estimated $85-million worth of portfolio investments in the Philippines, was particularly impressed with the government’s reforms on the fiscal front.