The PSEi, which tracks the performance of the country’s 30 largest and most actively traded stocks, slumped 0.27 percent to 7,155.90 by the closing bell today.
The weaker close comes against a broader backdrop of recovery, partly driven by anticipation of further interest rate cuts by the Bangko Sentral ng Pilipinas.
Blue chips continue to dominate
Large-cap movers continued to dominate, led by International Container Terminal Services Inc. (-0.25 percent), Ayala Corp. (+1.67 percent), SM Investments Corp. (-0.52 percent), DigiPlus Interactive (-6.73 percent), and Ayala Land Inc. (+2.71 percent).
Foreigners were net buyers to the tune of P773.84 million, data from the stock exchange showed.
How sustainable is the rally?
Abacus Securities’ research head Nicky Franco said the 1,000-point run-up from the June 21 low was driven by just seven large-cap stocks: SM, SM Prime Holdings, BDO Unibank, ICTSI, ALI, AC, and Bank of the Philippine Islands.
“The market concentration is fine for now. Rallies will usually start with the biggest caps and rotate to smaller ones,” Franco told InsiderPH.
He said the PSEi can trend higher if the 7,000-7,100 level holds.
“[T]he rally should have legs on the back of low valuations and BSP’s easing cycle plus RRR [reserve requirement ratio] cuts,” he said.
Rotation to smaller-cap stocks?
Franco believes this cycle will likely repeat as it has in the past.
“The question is whether or not the rotation will happen, so we’ll have to wait and see. But I think the rotation will come because foreign funds have been consistent buyers. Today will be the 27th day of net foreign buying out of the last 28 days,” he said.
Miguel R. Camus has been a reporter covering various domestic business topics since 2009.
