News Analysis: Philippines, Asian stocks on rise as investors more confident on regional economy

Along with the bourses of the other Asian emerging economies, Philippine stocks rose to new heights on Tuesday as investors' confidence on the region's economy remains bullish.

The Philippine Stock Exchange index (PSEi) rose for the eighth day on Tuesday, hitting an intra-day high of 8,136.97, before closing at 8,098.68, up by 44 points, or 0.6 percent from the previous day's trading.

This was the first time in PSEi's history that the indexes breached the 8,000 mark which, analysts believed, is an affirmation of investors' confidence on the country's macro- economic fundamentals.

"Closing above the 8,000 level is significant as it reinforces the favorable view investors have on our market. We are optimistic that the positive local developments and upbeat outlook on listed firms will provide more upside potential for the index," PSEi President and Chief Executive Officer Hans Sicat said.

Jonathan Ravelas, chief market strategist of Banco de Oro, the country's largest bank, said that given the lack of negative news, the market may still try to test the 8,100 to 8,250-point levels in the near term. But he warned that with its steady rise, the market may be susceptible to some profit-taking in the coming days.

Other Southeast Asian stock markets also rose on Tuesday. Malaysia's main index was up 0.57 percent, on track for a fourth straight gain; Singapore was up 0.48 percent, having hit 3,476.20, the highest since December 2007; and Indonesia added 0.71 percent, extending Monday's gain.

Philippine economic managers said that the easing of the country's inflation rate has also been a factor in the rise of the local stocks.

Inflation rate in March eased to 2.4 percent from the 2.5 percent in February, giving the Bangko Sentral ng Pilipinas (BSP), the country's central bank, the flexibility to keep interest rates steady at the current rate.

"At the moment, the view is that the stance of monetary policy remains appropriate but we are ready to make adjustments as and if warranted," BSP Governor Amando Tetangco told the media on Tuesday.

Data from the Philippines Statistics Authority showed that prices of housing, water, electricity, gas and other fuels, transport and communications posted negative growth in March.

The National Economic and Development Authority (NEDA), the country's top economic policy-making agency, said that lower food prices, especially rice and meat, also pulled down inflation during the month.

"Inflation remained low and stable in the first three months of the year in line with expectations over the policy horizon, which is likely to support consumption growth," NEDA Director General Arsenio Balisacan said.

According to Balisacan, the relatively stable Philippine peso, given the country's strong external position on the back of strong remittances from overseas Filipino workers, rising foreign direct investments and adequate international reserves have contributed to stable domestic prices.

On a related development, the Philippines ranked as the most resilient among emerging market economies in 2014 indicating it has the strongest macroeconomic backing to withstand global financial pressures, according to a U.S. think tank.

The U.S.-based non-profit research group, the Center for Global Development, said in February that from 2007 or the pre-global crisis to 2014, the Philippines' rating in the resilience indicator jumped from seventh place of a list of 21 EMEs to No. 1.

According to the author, Liliana Rojas-Suarez, the indicator shows a country's macroeconomic resilience and its capacity to withstand tougher external shocks, and the higher the value indicator, the stronger it will be against global pressures.

Rojas-Suarez attributed the Philippines' resilience to the pre- crisis period measures implemented by the government to ensure that domestic fundamentals are solid enough to buck another global financial crisis.

Based on the resilience indicator, the Philippines is first- ranked with a value indicator of 0.74 followed closely by South Korea with 0.71. In third place is China with 0.58, followed by Chile and Thailand with 0.53 and 0.34 scores, respectively.

The top three ranked countries are in Asia while the two countries with the lowest ranking are in Latin America -- Argentina with -2.08 and Brazil with -0.35-- the 21st and 15th place respectively, in the 21 EMEs list.

"Most of the highest rankings were concentrated in Emerging Asia (with) the Philippines and Korea (as) the strongest countries, " Rojas-Suarez said. Endi