PH stock market rebounds 3.5% after valuations sink to decade-low levels

The Philippine benchmark index bounced from a more than five-year low, as investors picked up shares that had been hit hard in the recent slide.

The PSEi, still down over 11 percent this year, climbed 194.77 points or 3.49 percent to close at 5,779.12 on Monday. 

PSE valuations at more than 10-year low

Rastine Mackie D. Mercado, research director at Chinabank Securities, said investors saw valuations that were cheap enough to enter after a period of persistent selling.

Rastine Mercado 

Chinabank Securities research director 

“We think the strong performance of the equity market, alongside the relatively better breadth of the rally reflects improved buying appetite amid bargain-hunting—especially as forward P/E valuations neared over decade-lows last Friday—and softening selling pressure,” he said in an email to InsiderPH.

Stock indices recover

Buying spilled across major sectors, with financials, industrials, holding firms, property, and services all ending in the green.

International Container Terminal Services Inc. led the session as its shares closed at P560, up 3.13 percent, followed by SM Investments Corp. at P685, up 1.18 percent, and Metropolitan Bank & Trust Co. at P64.50, up 3.95 percent. Bank of the Philippine Islands finished at P105, rising 6.06 percent, while Ayala Corp. ended at P417, up 3.73 percent to round out the top five most active stocks.

What’s next?

“From a technical standpoint, today’s rally paves the way for a continuation move tomorrow – which could lead to a test of the 5,830 resistance level,” Mercado said.

“While it remains to be seen whether the sub-5,600 level is already the near-term trough, we think that expectations of sustained earnings growth into next year should continue to support valuations,” he added.