Philippine stocks' early gains fade as inauguration euphoria ends
MANILA, Philippines – Shares in the Philippines pulled back on Thursday, June 30, as investors booked profits in stocks that had jumped when Rodrigo Duterte took his oath as the 16th president of the Philippines.
"Local markets are optimistic on new Philippine leader as his change is expected to shift the country's growth rate to a higher path through focus on agriculture, infrastructure, and peace and order," said Jonathan Ravelas, chief market strategist at BDO Unibank, in a mobile phone reply.
The Philippine Stock Exchange index (PSEi) on Thursday noon time closed at 7,980.75 – an all-time intraday high for the year.
"However, high valuations could limit the market's rise and prompt some profit taking," Ravelas added.
When trading closed, the PSEi inched down 2.28 points or 0.03% to close at 7,796.25. (READ: Investors in mining panic over Gina Lopez appointment)
This is while the All Shares index surged 53.84 points or 1.15% to 4,720.65 on Duterte's inauguration day.
BPI senior research officer Nicholas Mapa shared the same findings, saying the run-up in the early session may have been tied to optimism about Duterte, who vowed to improve spending on infrastructure.
Euphoria fades, profit taking starts
"The sell-off could be traced to healthy market correction after market surged in the previous session…All in all, the market may have been ripe for some profit taking after surging in early trading, on top of two straight sessions of substantial gains," Mapa added.
Among the sectors, the services index was the biggest gainer at 16.21 points or 0.98% to 1,664.04.
The biggest loser is the holding firms index, losing 46.92 points or 0.61% to 7,610.43.
"The market was euphoric today because of the Duterte inauguration. But there was a resistant, so the market saw profit taking. This is a technical reaction over the fast run-up in the early session," Harry Liu, president of brokerage firm Summit Securities Incorporated, said in a phone interview.
Liu is hopeful that the market will see a new record-high later on when Duterte announces pro-business action plans and policies.
In April 2015, the PSEi reached an all-time high of 8,127.48.
"Hopefully, we will see new record high later on, something above 8,100. We will let it pass first. Once we know Duterte's specific action plans and policies, that is when investors will decide whether they will really buy or sell," Liu said. – Rappler.com