The stock market extended its rally Tuesday along with the rest of Asia on hopes that China’s economic engine Shanghai will ease its weeks-long lockdown and gradually reopen businesses, though analysts caution against any long-term relief.
The Philippine Stock Exchange Index jumped 92.54 points, or 1.4 percent, to 6,594.66 on a value turnover of P7.3 billion. Gainers beat losers, 109 to 88, with 50 issues unchanged.
Ayala Group issues led gainers after a sell-off last week. Conglomerate Ayala Corp. rose 3.4 percent to P675, while unit and major property developer Ayala Land Corp. advanced 3.7 percent to P29.45.
SM Investments Corp. of the Sy Group climbed 3 percent to P832, while Megaworld Corp., the biggest lessor of office spaces, increased 2.9 percent to P2.80.
Meanwhile, Hong Kong led a rally across Asian markets Tuesday.
Much of Shnaghai’s 25 million has been under lockdown since April as Beijing attempts to stamp out an Omicron-fuelled virus surge under its strict zero-COVID policy.
Vice Mayor Chen Tong said Sunday that the city would gradually reopen businesses starting this week.
Though no details were given and residents were still in their homes on Tuesday, Asian markets have cheered over the announcement.
“Hopes that the Shanghai lockdowns will ease, along with the ensuing supply chain disruptions, have been enough to lift Asian equities as well, which are staging a modest bounce,” said Jeffrey Halley of OANDA.
Hong Kong rose by more than 3 percent, while the mainland’s two indices—the Shanghai Composite Index and Shenzhen Composite Index—closed higher.
Singapore, Seoul, and Sydney were also in the green all day.
Tuesday’s rally coincides with the third day in a row that Shanghai has recorded no COVID-19 cases outside of its quarantine facilities, Halley said.
“We should continue watching the headline ticker for daily Omicron cases. Most especially, in Shanghai, where if literally one case appears again, any relief rally in Chinese markets could disappear in a puff of smoke.”
The impact of Beijing’s zero-COVID strategy on the world’s second-largest economy was revealed Monday when official data showed that retail sales and industrial production in April on-year had slumped to their lowest levels in more than two years.
World markets have also been roiled by surging inflation and Russia’s war in Ukraine—leaving investors jittery.
“Markets remain in fight or flight mode while rolling the dice on recession odds,” Stephen Innes of SPI Asset Management said.
“Investors’ hopes remain elevated that yesterday’s worse than expected Chinese outruns could prove to be a ‘whatever it takes’ moment, and local policymakers will step hard on the stimulus pedal.”
China has announced measures to help young people find jobs, with the urban unemployment rate at its highest in over two years, and officials have lowered the mortgage rate for first-time homebuyers as well.
In commodities trade, wheat prices soared to a record after major producer India banned its export because of a heatwave hitting production.
New Delhi said the move was needed to protect the food security of its 1.4 billion people in the face of lower production and steep global prices. With AFP