Net foreign buying on stock market soars to P25B

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Posted: 1:21 AM | Jun. 08, 2006

Inquirer with XFN-Asia

NET FOREIGN buying on the stock market in the January-May period ballooned to P25 billion, more than double the P11.9 billion recorded in the same period last year, the Philippine Stock Exchange (PSE) said Wednesday.

Total foreign buying surged 35.0 percent year-on-year to P104.61 billion in the January-May period, compared with a 25.3-percent growth in total foreign selling to P116.14 billion, the exchange said.

"I believe this is a vote of confidence in the country's economic health," PSE president Francisco Lim said.

He said foreign buying was boosted by the government's resolve to enforce a law that has expanded the value-added tax (VAT), its main measure to bridge its budget deficit and put its finances in order.

Heavy selling was seen following reports on the possibility of suspending the VAT on petroleum products and electricity, which started in November, Lim said. Foreign buying recovered after the government clarified its position on the issue.

Lim said the stock market had enough momentum to push stock prices higher and boost trading volumes.

Noting other favorable trends in the market, Lim said stock prices, as tracked by the PSE index, rose 9.5 percent to 2,296.11 points in January-May from 2,096.04 in the same period last year.

The value turnover jumped 8.6 percent to P213.45 billion from P196.47 billion.

Total market capitalization -- the value of total stocks traded -- climbed 14.2 percent to P6.8 trillion from P5.95 trillion, mostly in the financial sector, where market capitalization rose 13.3 percent to P4.8 trillion.

The services sector had P643.3 billion in market capitalization, up 17.1 percent.

The mining and oil sector posted the biggest increase of 50 percent in market capitalization to P47.4 billion from P31.6 billion.

The daily value turnover averaged P2.03 billion as against P1.56 billion in January-May 2005. Telecommunications companies accounted for P565.6 million, up 30 percent from P434 million.

On Wednesday, share prices closed sharply lower and extended Tuesday's losses, with broad-based selling following Wall Street's retreat overnight.

Investors there were worried US interest rates would rise further as the central bank fights inflation, dealers said.

The composite index finished down 71.38 points, 3.12 percent, at 2,218.42, its lowest level since May 23, when it settled at 2,264.36.

The broader all-shares index retreated 33.41 points to 1,400.87.

Losers dwarfed gainers 85 to 13, with 30 stocks unchanged.

Volume was a lean 696.4 million shares worth P1.42 billion.

Inflation worries in the US, which may prod the Federal Reserve to tighten its monetary stance further, shook regional markets.

"Just like other emerging markets, the Philippines has been adversely affected by these global worries," Summit Securities president Harry Liu said.

First Grade Holdings Inc. managing director Astro del Castillo said the sell-off "could be a second wave of portfolio realignment among fund managers" following a similar selldown two weeks ago although volume traded on Wednesday was thinner.

But the sharp fall in share prices may soon see bargain hunters stepping in, dealers said.

"It's possible to see a rebound later this week or early next week," said Liu of Summit Securities.With INQ7.net