The main index rose to its highest level in more than three months as local and foreign investors picked up shares on increasing optimism over the Philippine trade recovery together with the economic upturn. This marked the third consecutive day that the PSEi posted a gain and the index’s return to the 6,200 level since July 8’s 6,285.50 finish.
The local bourse managed to close above the 6,200 level as investor sentiment remains optimistic over the economic reopening of the country.
While Metro Manila mayors have previously said they want the existing lockdown status to last until the end of the year, the government has started issuing exemptions to current quarantine rules to accommodate more business sectors to reopen.
On Wednesday morning, the Department of Tourism said it will allow hotels to operate at full capacity even under the current lockdown status, which used to limit them to a skeleton workforce.
Another driver of the market’s growth was the return of foreign investors to net buying. After 28 straight days of net foreign selling.
Positive sentiment carried over to the Philippine market after negotiations on a new round of fiscal stimulus in the United States looked like making some progress.
House Speaker Nancy Pelosi said she was optimistic over a stimulus package, though flagged Senate GOP leader Mitch McConnell as a likely stumbling block to getting a deal over the line before the U.S. election.
McConnell previously expressed little desire to back a large stimulus package, preferring to roll out a $500-bil skinny relief bill. The Senate GOP, however, failed to garner enough votes to advance Wednesday as Democrats voted against the legislation.
The latest remarks on a deal come amid mostly positive news on the vaccine front.
The Philippines may only see a significant rise in foreign tourist arrivals starting late 2021 or early 2022 as uncertainty over the pandemic continues, Fitch Ratings said.
Fitch Ratings said gradual travel recovery next year would be led mostly by domestic tourism.
While the Philippines and other countries may seek to build on existing travel corridors and adopt broader regional travel bubbles, a meaningful pickup in inbound international tourism flows may take time, perhaps not until late 2021 or 2022, Fitch said.
Some domestic travel has restarted as Boracay welcomed tourists and the Ilocos Region opened a “tourism bubble” exclusive to the region. Baguio City will start welcoming visitors from Metro Manila, Cagayan Valley, and Central Luzon starting Oct. 22.
The Philippines’ relatively low dependence on inbound tourism flows (compared, say to Thailand, which is closer to 12% of GDP) should limit the overall economic impact of a temporary loss of such spending, although businesses and workers in the tourism sector will still feel the hit.
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