Philippine central bank sends stocks soaring with surprise rate cut

MANILA - Philippine shares led emerging Asian markets on Friday, surging 2.5 percent after the country's central bank delivered a surprise cut in interest rates to shore up a domestic economy struggling after months of on-off coronavirus restrictions.

The region's foreign exchange markets were largely higher, with new steps from the Bank of 

Thailand to stem gains for the baht seeing little success. The currency rose almost half a percent in morning trade.

Equity markets across Asia were up across the board, with Singapore gaining over 1 percent, as an improved global mood and the region's relative success in controlling the COVID-19 pandemic encourages investment.

Most of the region's emerging stock markets were set to post weekly gains of around 2 percent.

The Philippine central bank fuelled gains in Manila by cutting another 25 basis points off its main interest rates on Thursday, bringing them to a new low of 2.0 percent.

"Loose monetary policy could be good for stock valuations and could drive a further rally for local bond yields," said Jennifer Lomboy, a fixed income fund manager at First Metro Asset in Manila.

The Philippine stock index hit its highest since late-February, while the peso edged 0.2 percent higher.

Analysts and investors were unimpressed with the Thai central bank's announcement of easier rules for investing in foreign currencies and securities, its latest move to try and halt the baht's rise. 

The bank, which held off on an outright cut in interest rates on Wednesday, has warned again of the damage the baht's strength can do the economy after a more than 3 percent jump in the currency this month. 

"The measures seem to be more of the same old, same old, which is to encourage outflows," Kobsidthi Silpachai, the head of capital markets research at Kasikornbank said, arguing that the heart of the problem is high taxation. 

"Since excise taxes on imported goods are high, it suppresses imports, which makes the current account surplus even higher, which leads to a strong baht," he said. "We have seen many years of monetary measures... we need to try fiscal measures like tax reforms."

Bank Indonesia also surprised by cutting rates this week, by 25 basis points to 3.75 percent, dimming the appeal of its high-yielding local bond market.

The central bank governor said the rupiah, which dipped 0.2 percent on Friday, was still undervalued. The currency has been one of the outperformers among the region's emerging markets, climbing over 3 percent this month.

"We expect a possible rate cut in the near-term for as long as the rupiah remains on its current appreciation bias," said Nicholas Mapa, a senior economist at ING.

-reuters-

PH shares too expensive - Credit Suisse

MANILA - Credit Suisse on Wednesday said Philippine shares are still too expensive.

Right now, with the Philippine Stock Exchange index (PSEi) at 7,000, Philippine shares are trading at an average price to earnings ratio of 18 to 19 times, meaning investors are paying roughly 18 times what the company earns per share.

That is one of the most expensive in the region.

Credit Suisse said many investors are waiting for the price-earnings (PE) ratio to fall to 15 times and below.

"You can achieve that drop two ways, either through a price correction or through improved corporate earnings. The one theme over the next six months for the Philippines, I think, and this is where you are going to get positive surprises, is in corporate earnings, whether it be through consumer companies, because I think domestic consumption will remain strong, or through companies that benefit from these low commodity prices," said Robert Parker, senior advisor for investment strategy and research at Credit Suisse.

A local broker estimates the PSEi would need to fall 1,400 points to get to a 15 price earnings ratio--a 20 percent drop.

Counting on rising earnings may be difficult because earnings growth has been mostly disappointing.

COL Financial says two-fifths of the 56 listed companies it covers reported weaker than expected profit in the first half.

Meanwhile, a Philippine broker said the fall in PE doesn't have to be so big, estimating a PE of 16 to 17 would already be attractive. -- ANC

source: www.abs-cbnnews.com

Philippine shares off record close

BANGKOK - The Philippine main index slipped on Thursday from the previous session's record closing high, while energy shares underperformed in Southeast Asia as investors cashed in for quick gains amid oil market volatility.

Oil prices fell on Thursday, extending big losses logged in the previous session as record high inventories in the United States coupled with concern over global demand cut short a four-day rally.

The Philippine composite index ended down 0.5 percent at 7,674.24. It hit a record closing high of 7,716.06 on Wednesday.

Energy Development Corp and First Gen Corp fell amid foreign-led selling, stock exchange data showed.

In the region, losers and actively-traded stocks included Singapore's Keppel Corp, Malaysia's Tenaga Nasional Bhd, Thailand's PTT Exploration and Production Pcl and Indonesia's Perusahaan Gas Negara.

In Jakarta, palm oil shares outperformed the broader market, led by a 3.5 percent jump in Astra Agro Lestari.

Malaysian palm oil climbed almost 5 percent on Thursday, buoyed by hopes that top producer Indonesia's plan to increase biodiesel subsidies would make blending profitable.

source: www.abs-cbnnews.com

Philippine shares snap losing streak after Moody's upgrade

BANGKOK - Philippine shares rose on Friday as investors cheered a sovereign credit rating upgrade by Moody's, while other markets in the region were range-bound as a further drop in crude oil prices kept sentiment cautious in most part.

The Philippine main index traded up 1.1 percent at 7,147.19, after its fifth straight fall on Thursday to the lowest close since Oct. 28.

The gain trimmed the index's loss so far on the week to 0.5 percent. Most regional markets posted weak performances on the week, amid losses in shares of oil-related firms and a tumble in crude oil prices.

Moody's Investors Service upgraded its rating on the Philippines by one notch to Baa2 from Baa3 with a stable outlook, citing a decline in the Philippines' debt burden and structural improvements in fiscal management.

Shares of BDO Unibank jumped 2 percent after Moody's upgraded long term ratings on the bank along with three others.

Thai SET index erased early gains and fell.

Investors bought beneficiaries of weak oil prices with brent crude continuing its march downwards and dropping to a 5-1/2-year low of $63 a barrel, bringing this week's losses to more than 8 percent.

Shares of airline firms outperformed the broader Thai market, led by Nok Airlines , Asia Aviation and Bangkok Airways. Shares of energy firms extended their losses, led by PTT Exploration and Production.

"The rebound may remain fragile as pressure from energy counters would continue to weigh on the market," strategists at broker Phillip Securities wrote in a report.

The SET index is on track for a weekly loss of almost 5 percent, after three weeks of gains, due to heavy selling in energy shares.

Indonesia's index eked out a small gain, with banking shares, including Bank Rakyat Indonesia and Bank Mandiri, edging higher after the central bank kept its policy rate at 7.75 percent as expected.

source: www.abs-cbnnews.com