PSE index rises as China cuts banks’ reserve ratios

SHARES improved on Tuesday after China’s central bank said it would cut banks’ reserve requirements to help prop up a slowing economy due to a fresh surge in coronavirus disease 2019 (COVID-19) cases.

The benchmark Philippine Stock Exchange index (PSEi) climbed by 41.63 points or 0.59% to close at 7,037.74 on Tuesday, while the broader all shares rose by 18.96 points or 0.50% to 3,742.92.

“The market rose on hopes [that] regional economic recovery of Asian emerging markets will get a lift from China’s looser central bank monetary policy intended to boost the economy from COVID-led lockdowns… The looser credit policy also helps to mitigate the adverse effects of hawkish US Federal Reserve tightening, ”First Metro Investment Corp. Head of Research Cristina S. Ulang said in a Viber message.

“Philippine shares were bought up as investors continued to keep an eye on surging rates and commodities. Macroeconomic data outside the country remained weak, while locally others are making bets ahead of the earnings season, ”Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.

“China’s March activity data broadly weakened on the worsened domestic COVID situation and escalation in restrictions,” Mr. Limlingan added.

China said on Friday it would cut the amount of cash that banks must hold as reserves for the first time this year, releasing about 530 billion yuan ($ 83.25 billion) in long-term liquidity to cushion a sharp slowdown in economic growth, Reuters reported.

The People’s Bank of China said on its website it would cut the reserve requirement ratio for all banks by 25 basis points, effective from April 25, but analysts said it might not yet be enough to reverse the slowdown.

China’s gross domestic product on Monday beat analysts’ expectations with a 4.8% increase in the first quarter from a year earlier, while data on March activity showed weakness in consumption, property and exports affected by COVID-19 curbs.

All sectoral indices ended in the green on Tuesday. Mining and oil gained by 256.36 points or 2.08% to 12,547; services went up by 26.72 points or 1.37% to 1,973.28; industrials improved by 79.70 points or 0.82% to 9,688.23; financials added 9.16 points or 0.55% to 1,658.79; holding firms rose by 26.31 points or 0.40% to 6,578.37; and property advanced by 1.78 points or 0.05% to 3,240.16.

Meanwhile, the MidCap index went up by 1.42 points or 16.60% to 1,184.74 and the Dividend Yield index added 8.22 points or 0.49% to close at 1,685.

Value turnover increased to P5.20 billion with 989.95 million shares changing hands on Tuesday from the P3.66 billion with 751.06 million issues seen on Monday.

Advancers outnumbered decliners, 102 versus 83, while 46 names ended unchanged.

Net foreign selling grew to P350.41 million from P198.13 million seen the previous trading day. – LMJC Jocson with Reuters

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