The Philippine stock market as reflected by the PSE index (PSEi) exceeded expectations and outperformed many of its peers in Asia amid a global economy struggling to emerge from the recession of 2008 to 2009.

The benchmark PSEi added 1,148.46 points in 2010 to close at 4,201.14 points, 37.6 percent higher than its end-2009 level and making it the third best performing index in Asia at yearend.

PSEi vs. Select Asian Indices, 2010

The first quarter of 2011 put a cap on the bullish trend in 2010 after the market was hit by a slew of external factors such as the crises in the Middle East and North Africa, high commodity prices, and rising interest rates. On the brighter side, the PSE's decline mirrored a healthy consolidation phase after a remarkable performance last year.

By the end of the first quarter, the benchmark index began to pick up on the back of positive corporate earnings and renewed investor confidence. The stock market’s surge was further highlighted by increasing volumes that continued to drive more participation and higher demand for equities.  Since the 2010 second half surge up to the present, trading volumes managed to hit record highs, with daily turnover averaging P5.6 billion per day, eclipsing the P5.5 billion-mark set in 2007.

On August 1, 2011, the PSEi rose to a fresh all-time high at 4,550.53 points behind renewed investor confidence and positive economic developments in the US.

Sector Indices

All PSE sector indices registered positive growth in 2010. The holding firms sector was the biggest gainer, with its index surging by 110.3 percent. This was followed by the industrial sector, which grew by 56.0 percent; property sector, by 47.0 percent; financials sector, by 43.5 percent; mining and oil, by 29.6 percent; and services sector, by 5.4 percent. The broader all-shares index meanwhile increased to 3,006.42, a 56.7 percent improvement from 1,918.64 a year earlier.

As of end-July 2011, five sector indices posted higher levels year-to-date led by the mining & oil index with an impressive gain of 62.6 percent. The financials, holding firms, industrial, and property indices followed increasing by 6.6 percent, 6.2 percent, 4.7 percent, and 1.2 percent, respectively. The services index on the other hand, slightly retreated by 0.8 percent year-to-date. Meanwhile, all-shares index grew by 3.9 percent. 

Market Activity

Trading Transactions

The total value of trades in 2010 posted a remarkable expansion that surpassed the P1-trillion level. Total value turnover grew by 21.5 percent to P1.21 trillion from P994.15 billion a year earlier. This was the second highest total value turnover recorded since trading activity hit the P1.34 trillion level in 2007. As of end-July 2011, total value turnover was posted at P782.14 billion.

Average daily turnover on the other hand, rose to P4.95 billion in 2010, a 20.5 percent increase from P4.11 billion the previous year. As of end-July 2011, average daily value turnover was posted at P5.32 billion, with a year-to-date gain of 7.5 percent.

Foreign Trading

Foreign investors cornered 38.0 percent of trading activity in 2010, significantly lower than the percentage share recorded in the past four years, indicating the growing participation of local investors. As of end-July 2011, foreign investors accounted for 39.9 percent of trading in the market.

Total transactions netted a buying of P35.62 billion in 2010, an increase of 138.8 percent than P14.92 billion the previous year. Total foreign buying amounted to P477.38 billion, while total foreign selling came in at P441.76 billion. As of end-July 2011, foreign investors were net buyers at P24.31 billion.

Market Capitalization

Total market capitalization (MCAP) reached P8.87 trillion in 2010, a 47.0 percent growth from P6.03 trillion the previous year. Domestic MCAP, which excludes foreign firms Sun Life Financial Inc. and Manulife Financial Corporation, rose by 72.5 percent to P6.89 trillion from P3.99 trillion.

As of end-July 2011, total MCAP was recorded at P9.14 trillion while domestic MCAP was posted at P7.27 trillion.