MANILA, Philippines (4TH UPDATE) - The Philippine Stock Exchange index (PSEi) reached another milestone on Monday morning, breaching the 6,500 level for the first time.
The PSEi reached 6,500.08 up 0.64% or 41 points as of 10:30 a.m., amid a traditional Chinese lion dance performance on the trading floor to celebrate the Lunar New Year.
As of 12 noon, the main index pulled back, ending the morning session at 6,482.10, up 0.36% or 23 points.
However, stocks quickly retreated in the afternoon, falling back below the 6,500 level. The PSEi ended the day in the red, closing at 6,458.01 down 0.01% or 0.66 points.
The main index's rise has some wondering if it has risen too much too fast. The PSEi has had 15 record highs so far this year.
The PSEi has already hit the 6,500 level this month, when earlier online brokerage COL Financial's target was 6,500 by the end of this year.
COL Financial head of research April Lee Tan said investors looking for higher yields continue to turn to stocks as interest rates will likely remain low.
"If you look at it based on technicals, it does look like it did rise quite a bit too fast. There is reason to be concerned because of valuations. If we compare the PSEi's valuation today compared to the valuations in the past 10 years, we are really at the high end of the range. We're also trading at the highest valuations compared to our regional peers, relative to US and Europe. I guess the surprise is why hasn't it corrected. I think one of the reasons we have not corrected is significant liquidity flows. We're seeing a continuation on the risk on trade," she told ANC.
Tan sees a correction in the market soon. "Maybe we will see a correction because people who made money could take profits but it's not going to be a reversal, but just a correction. We're seeing 6,100 as a support level, technically," she said. - With ANC