The Philippine stock market was propelled to one of its strongest months in November by THE Surge of good reports on coronavirus disease 2019 (COVID-19) vaccine candidates and increased third-quarter earnings of listed firms.
The Philippine Stock Exchange Index (PSEi) finished trade at 6,791.46 on Friday, down 136.29 points or 1.96% compared to the previous day.
Still the close of the PSEi for the month was 467.46 points or 7.39 percent higher than the finish of 6,324 in October. In observance of Bonifacio Day the market is closed on Monday.
“The month of November was the second strongest month in the local sector for the year in terms of 7.39 percent m/m (month-on-month), next to 7.84 percent m/m in October,” Philstocks Financial, Inc. Japhet Louis O. Tantiangco, Senior Research Analyst, said in a text message.
Another landmark this month for the PSEi was crossing the 7,000 mark, a number last seen in February until a lockout was placed to curb the escalating epidemic of coronavirus. When it broke through 7,035.48, the PSEi jumped as much as 349.63 points or 5.23 percent on Nov. 10. On Nov. 23, it also hit a peak of 7.178.62.
“The rally shown from Oct. 30 to Nov. 23 was powered by changes in our (gross domestic product/GDP) third quarter economy and some of our corporate statistics relative to their equivalents in the second quarter,” Mr. Tantiangco said.
In the third quarter, the Philippine GDP contracted by 11.5 percent, better than the historic 16.9 percent decrease recorded in the previous quarter. The economy has shrunk by 10 per cent year to date.
In the third quarter, corporate earnings of PSEi representatives have increased. Based on data from the Philippine National Bank, their combined earnings declined 38 percent year-on-year, higher than the 59 percent year-on-year decline of the second quarter.
The excitement brought on by the promising advances in COVID-19 vaccine candidates and the recent interest rate reduction by the central bank was another trigger for the market’s success in November, Mr. Tantiangco said.
In mid-November, the Bangko Sentral ng Pilipinas also suddenly reduced benchmark rates by 25 basis points to new record lows to mark its fifth rate cut this year to help the economy in the midst of the continuing pandemic and after the recent typhoons that hit the country.
However, last week when the index reported four straight days of downturn and dropped down to 6,700, the PSEi’s three-week rally saw its end.
“The demand rose by 14.87 percent from Oct. 30 to Nov. 23. . Eventually, while the underlying truth of a challenged local economy remains, the morale deteriorated, triggering the four consecutive days of decline we witnessed last week said Mr. Tantiangco.
He expects the support of the index this week to stand at 6,600 and resistance at 7,150.