Heavy bargain hunting fuels market recovery

MANILA, Philippines - Oversold stocks were too tempting for both domestic and overseas investors, prompting heavy bargain hunting in the local bourse yesterday.

The benchmark Philippine Stock Exchange index (PSEi) surged 5.7 percent or 329.88 points, allowing the main index to climb back to the 6,000-territory at 6,118.94. It is the largest single-day climb of the index since August 2007.

The spike snapped a five-day losing streak for the bellwether index. It also brought the PSEi back to a winning year, with a year-to-date gain of 5.3 percent from the 5,812.73 closing in 2012.

“Prices were at the basement levels already since the slide on Tuesday. These are seductively low prices,” Astro C. del Castillo, managing director of First Grade Finance Inc., said in a phone interview.

“Against a backdrop of solid fundamentals that have not changed even amidst the volatilities in the past weeks, the declines have served to put some stocks at attractive prices. I think this is what we saw yesterday with the strong recovery of the market,” said PSE chairman Jose T. Pardo.

Del Castillo said the fresh wave of confidence from the rebound in markets abroad helped the bounceback.

On Tuesday, Wall St. focused on strong home price reports, pushing the Dow Jones industrial average to 14,760.31 (+0.7 percent) and the Standard & Poor’s 500 index to 1,588.03 (+1 percent).

In Asia, Hong Kong’s Hang Seng index (+2.43 percent), Singapore’s Straits Times (+0.45 percent) and Jakarta Composite index (+3.75 percent) posted hefty gains.

Locally, all counters were in the green, led by holding firms that rallied 6.91 percent or 351.75 points to 5,443.69.

“The causes for the Philippines’ impressive growth continue to persist and should remain strong moving forward,” Pardo said.

Investors abroad flocked the market, with net foreign buying hitting P1.21 billion.

Turnover eased to P9.63 billion from P12.97 billion on Tuesday. For the first time this week, advancers outplayed decliners, 146 to 34, while 30 stocks did not change.

Notable gainers were SM Investments (+6.37 percent), PLDT (+3.32 percent), Universal Robina Corp. (+8.06 percent) and Ayala Land Inc. (+7.41 percent).

Moving forward, Del Castillo said the main index will likely consolidate and stabilize at the 6,500 level.