Index hits new high on upbeat earnings reports

MANILA, Philippines - The local stock market stormed into another new all-time high yesterday, closing at its intra-day peak of 4,476.01 as upbeat corporate earnings reports buoyed investor sentiment.

The Philippine Stock Exchange index surged 17.27 points or 0.39 percent, bucking the general decline in other Asian markets.

Total value turnover amounted to P5.73 billion, almost P600 million more than the year-to-date average.

Advancers outpaced losers 104-45 with 41 issues unchanged.

Twelve issues broke into new 52-week highs led by Global Estate Resorts Inc. (P2.90) and East Asia Power Corp. (3.93).

At least three stocks hit the roof price or 50 percent higher than the previous close – East Asia, Boulevard Holdings, Zeus Holdings and Vitarich.

“Although the market moved to yet another record closing level, the obvious shift of activity to third liners invites caition. While it gave investros cheer an decent quick-term profits in Monday’s trades, we may see only a handful managing to sustain the run through the next couple of weeks, said Jun Calaycay of Accord Capital Equities Inc.

“As first and second liners recede to the background of investors’ interest, it may be well worth taking a second look at these issues and take appropriate positions heading into the earnings season. We believe that funds will slowly begin to shift to these counters as momentum faces in the short-run plays. Recent history gives fair warnings in instances when speculative activity rises as soon as the market hits higher levels.” Calaycay added.

Calaycay said the PSEi will be testing the 4,500 mark with support still at 4,430.

Worries about Europe’s banking woes and debt problems in the US dragged down some Asian stock markets and limited gains in others on Monday.

Crude oil hovered near $97 and the dollar strengthened against the euro while falling slightly against the Japanese yen.

The results of stress tests on European banks that were released after the close of trading Friday overshadowed the start of this week’s trading in Asia.

The results did little to reassure investor confidence in the continent’s shaky financial sector, revealing that eight of 90 European banks flunked tests aimed at revealing how they would fare in another recession. Another 16 barely passed.

Investors are also unsettled by the inability of U.S. politicians to work out a deal to avoid a debt default before a deadline that is just two weeks away.

“Looking ahead, sovereign debt worries in the U.S. and Europe and a pickup in second-quarter U.S. earnings data are going to compete for traders’ attention,” said Ben Potter, a research analyst at IG Markets in Melbourne, Australia. “The only real certainty in the coming days is that there is likely to be volatility as the market grapples with these major issues.”

Francis Lun, managing director of Lyncean Holdings in Hong Kong, said that market reaction is “quite negative” to the stress test results. “It really shows that it would be a long time before Europe can solve its problem,” he said.

South Korea’s Kospi fell 0.6 percent to 2,131.47 and Australia’s S&P/ASX 200 was less than 0.1 percent lower at 4,470.

The Shanghai Composite Index was down 0.1 percent at 2,817.18 while Hong Kong’s Hang Seng edged up 0.2 percent to 21,919.65.

Elsewhere, benchmarks in Taiwan and New Zealand fell while those in Singapore and India rose. Markets in Japan were closed Monday for a national holiday.

Chinese banks that are listed in Hong Kong fared better than the rest of the market because investors were continuing to be optimistic about the sector after Agricultural Bank of China Ltd. announced last week that it expected first-half profit to rise 45 percent.

Agricultural Bank of China rose 3.8 percent, Industrial and Commercial Bank of China rose 1.6 percent and China Construction Bank Corp. rose 1.7 percent.

On Wall Street on Friday, stocks avoided having their worst week in nearly a year after a late rally.

The Standard and Poor’s 500 stock index finished with a gain of 7.27 points, or 0.6 percent, to 1,316.14. The Dow Jones industrial average added 42.61 points, or 0.3 percent, to 12,479.73. The Nasdaq composite rose 27.13 points, or 1 percent, to 2,789.80.

In currencies, the euro fell to $1.4064 from $1.4136 late Friday. The dollar weakened to 79.00 yen from 79.11 yen.

Benchmark oil for August delivery was down 8 cents to $97.16 a barrel in electronic trading on the New York Mercantile

Exchange. Crude rose $1.55 to settle at $97.24 on Friday. —AP