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PSEi ends higher in November on vaccine hopes

By Denise A. Valdez, Senior Reporter

THE WAVE of positive news on coronavirus disease 2019 (COVID-19) vaccine candidates and improved third-quarter earnings of listed companies pushed the Philippine stock market to one of its best months in November.

The Philippine Stock Exchange index (PSEi) ended Friday’s trading at 6,791.46, down 136.29 points or 1.96% against the previous session.

Still, the PSEi’s close for the month was higher by 467.46 points or 7.39% than October’s finish of 6,324. The market is closed on Monday in observance of Bonifacio Day.

“The month of November has been the second best month of the local market for the year so far as it rallied by 7.39% m/m (month-on-month), next to October’s 7.84% m/m,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

Another milestone for the PSEi this month was hitting the 7,000 mark, a level last seen in February before the imposition of a lockdown to contain the worsening coronavirus outbreak. The PSEi jumped as much as 349.63 points or 5.23% on Nov. 10 when it broke through 7,035.48. It also reached a high of 7,178.62 on Nov. 23.

“The rally seen from Oct. 30 to Nov. 23 was driven by the improvements in our third quarter economy (gross domestic product/GDP) and some of our corporate figures compared to their second quarter counterparts,” Mr. Tantiangco said.

Philippine GDP contracted by 11.5% in the third quarter, better than the record 16.9% decline posted in the previous quarter. Year to date, the economy contracted by 10%.

Corporate earnings of PSEi members also improved in the third quarter. Their aggregate earnings fell 38% year-on-year based on data from the Philippine National Bank, better than the second quarter’s 59% year-on-year drop.

Another catalyst for the market’s performance in November was the optimism brought by the positive developments on COVID-19 vaccine candidates and the central bank’s latest interest rate cut, Mr. Tantiangco said.

The Bangko Sentral ng Pilipinas also unexpectedly reduced benchmark rates by 25 basis points to fresh record lows in mid-November to mark its fifth rate cut this year to support the economy amid the ongoing pandemic and following the recent typhoons that hit the country.

However, the PSEi’s three-week rally saw its end last week when the market posted four consecutive days of decline and fell back to 6,700.

“From Oct. 30 to Nov. 23, the market surged by 14.87%. Eventually, the optimism waned while the fundamental reality of a challenged local economy remains, causing the four straight days of decline we saw this past week,” Mr. Tantiangco said.

This week, he expects the market’s support to be at 6,600 and resistance at 7,150.

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