ECB Bond Buying Takes Market To New Highs

The ECB’s announcement of a new bond buying program lifted investor sentiment across the globe with robust gains in Europe and Wall Street the previous night and similarly strong earnings for Asian bourses this afternoon.

The PSEi jumped 51.21 points, or 0.99%, erasing the week’s losses to end the week positively at 5,201.32. Most sectoral indices ended in the green with property surging 2.44% as ALI (+3.61%), SMPH (+2.50%), and MEG (+1.83%) were bought up by value hunters.

Services, financials, industrials, and holding firms also finished strongly posting gains of 1.36%, 0.98%, 0.81%, and 0.77% respectively. Only the mining sector ended negatively as index heavyweight PX dropped 8.32% as issues regarding its Padcal mine tailings leak continue. Market breadth was positive with advances trumping declines 104 to 51 and 43 stocks unchanged. Value turnover increased to Php5.20 billion.

The country’s gross international reserves (GIR) stood at US$80.8 billion as of end-August, 1.3% higher than the posted GIR in July worth US$79.8 Billion. This was largely driven by foreign currency deposits by the Treasurer of the Philippines (TOP), foreign exchange operations and central banks’ earnings from investments overseas, and revaluation gains on gold holdings.

However, the inflows were compensated by the government’s payments for maturing foreign exchange obligations and foreign currency withdrawals by authorized agent banks (AABs).

Local bond yields closed flat during today’s trading session, with the short and longer tenors both dropping 1.1 basis points while the belly of the curve was up 1.6 basis points on the average.

The Philippine peso advanced against the greenback after Pres. Mario Draghi backed ECB’s unlimited bond-buying program to eliminate fears of euro breakup. The local currency gained 19 centavos to close the week at 41.680.

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