PSE index breaches 3,800, tests all-time high

MANILA, Philippines - Local share prices bucked yesterday the general downtrend in the Asian region to extend its winning streak for a seventh session in a row.

The main index of the Philippine Stock Exchange rose 29.31 points to close at 3,804.73, just a few points shy of its historical high.

Analysts said the rise was contributed mostly by blue chips like conglomerate Ayala Corp., property developer Ayala Land Inc., and banking heavyweights, Bank of the Philippine Islands and Metropolitan Bank and Trust Co.

Based on PSE data, the index’s closing level was the highest since Oct. 19, 2007 when it closed at 3,819.75. Yesterday’s advance brings the market’s gains to 6.8 percent in the last seven sessions, making it the local stock market’s longest winning streak since May 2009.

The PSE recorded an all time high last Oct. 8, 2007 at 3,873.50.

Traders said investor sentiment continues to be upbeat, with many maintaining the view that the country’s strong fundamentals will drive up corporate earnings.

At this rate, they said the main index could hit the significant 4,000 mark by the end of the year.

Market breadth was positive, with advancers beating decliners 97 to 43, while 37 issues finished unchanged.

A total of 2.11 billion shares worth a hefty P6.12 billion changed hands.

Other blue chips were snapped up by investors, including conglomerate SM Investments Corp. which surged by three percent to P505.

“We continue to be buoyed by global investor optimism. The PSE is encouraged by these favorable global market trends as a testament to the steps and reforms we have undertaken to boost the market,” PSE President and Chief Executive Officer Val Antonio B. Suarez said.

The PSE continues to undertake several initiatives to broaden the market’s breadth and dept including the introduction of new investment products and the successful roll-out of a new trading system last July.

Meanwhile, gold prices settled at a record high Tuesday following renewed worries about European banks and the global economy.

Gold for December delivery added $8.20 to settle at $1,259.30 an ounce after reaching $1,261.60 earlier in the day. Its record high settlement price was $1,258.30 an ounce, although it has reached an intraday high of $1,266.50 an ounce. Both occurred in late June.

Some analysts believe gold could rise even higher in the months ahead as investors use the asset as a hedge against riskier bets and as more people buy gold during the fall festival season in India.

IG Markets analyst Dan Cook speculated gold could reach $1,295 an ounce to $1,300 an ounce this fall. He noted gold prices have risen in September in all but three of the past 15 years.

Investors focused on reports that raised concerns about the global economy.

European Union finance ministers acknowledged the recovery remains fragile, and news reports said European banks may have more risky government debt on their books than previously disclosed.

A Wall Street Journal report claimed European “stress tests” of 91 banks in July understated some lenders’ holdings of potentially risky debt. The Financial Times said Germany’s top 10 banks will have to raise as much as euro105 billion ($135 billion) to meet new capital requirements.

“Against that backdrop, I think you’ll continue to see strong investment demand for gold as a hedge,” CPM Group analyst Carlos Sanchez said.

The combined report also hit other commodities, which ended the day on a mixed note.

In metals contracts for December delivery, silver slipped 3.5 cents to settle at $19.914 an ounce and copper lost 2.95 cents to $3.4705 a pound.

September palladium fell $7.45 to settle at $521.60 an ounce and October platinum settled down $4.80 at $1,556.30 an ounce.

Energy contracts were mixed.

In October contracts on the New York Mercantile Exchange, benchmark crude fell 51 cents to settle at $74.09 a barrel; heating oil added 1.7 cents to $2.0743 a gallon, gasoline rose 1.34 cents to settle at $1.9329 a gallon and natural gas lost 2.7 cents to settle at $3.852 per 1,000 cubic feet.