Share prices and the peso advanced yesterday  as the market lauded the US Fed’s rate cut Thursday dawn. 

The Philippine Stock Exchange index  was up 46.26 points to 7,202.16, a 0.65 percent hike. 

The broader All Shares index was up 23.72 points or 0.62 percent to 3,871.68.

Gainers edged losers 112 to 78 with 62 stocks unchanged. Trading turnover reached P8.16 billion.

The peso closed at P55.61 to the dollar, up from 55.72 on Wednesday. 

The currency opened at 55.88 and hit a high of 55.56 and a low of 55.92. Trading turnover reached $1.99 billion.

Luis Limlingan, managing director at Regina Capital and Development, said the market closed above the 7,200- mark “buoyed by the Fed’s first rate cut in four years.” 

Colfinancial.com said investors should consider taking profit in the current run-up of share prices as the market celebrates the start of a rate cut both in the US and locally.

Investors should also stick to defensive issues as the US “could suffer from a recession and a

bear market and the Philippines could suffer from a contagion,” Colfinancial.com added.

It said the PSEi has been up 10.8 percent since end-June, outperforming Standard and Poor’s (S&P 500) 3 percent uptick.

Colfinancial.com, however, noted a greater likelihood that the market will go down instead of up in the near term, now that the Fed pivot has begun.

“Historically, Fed rate cuts were usually followed by bear markets. 

While it will be hard for Philippine stocks to avoid a contagion from a possible recession and bear market in the US, Colfinancial.com hopes that any potential decline will be shallower, and the recovery will be faster compared to US stocks.

“Aside from the diminishing risk of forex losses because of the weaker dollar resulting from a Fed pivot, other reasons why foreign investors could continue turning to Southeast Asian stocks include the region’s stronger economic growth outlook,” it said.

It also said the gross domestic product (GDP) growth of most countries in Southeast Asia is expected to be faster than that of the US this year and next year, with the Philippines projected to deliver the second fastest growth at 5.8 percent and 6 percent in the next two years.

All Southeast Asian markets currently trading significantly below their 10-year average price to earnings ratio (P/E), Colfinancial.com added.

“The PSEi index is trading at 11.3x P/E which is 1.7 standard deviations below its historical average P/E multiple of 15.7x. In contrast, the US’ S&P 500 index is trading at 21.2x P/E which is 1.5 standard deviations above its 10-year historical average P/E of 18.2x,” it said. 

Yesterday, most actively traded International Container Terminal Services Inc. was down P1.20 to P402.80. Ayala Corp. was up P7.50 to P678.50. BDO Unibank Inc. was up P3.20 to P3.20 to P160.40. SM Investments Corp. was down P1 to P964. SM Prime Holdings Inc. was up P0.60 to P33. Universal Robina Corp. was up P1.55 to P99.05. Bank of the Philippine Islands was up P2.60 to P128.20. Metropolitan Bank and Trust Co. was up P1.10 to P75.40. Ayala Land Inc. was up P0.05 to P36. DigiPlus Interactive Corp. was down P0.26 to P18.30.