NET FOREIGN BUYING IN THE STOCK MARKET SURGED 86.2 percent to P46.56 billion in the first five months of the year from P25 billion a year ago, the Philippine Stock Exchange (PSE) reported.

Net foreign buying is a key indicator of investor interest in the stock market, which is computed by total foreign buying less selling within a given period.

The PSE said that total foreign buying from January to May this year almost doubled to P280.31 billion from the P141.2 billion posted in the corresponding period last year. Total foreign selling likewise expanded by 101.3 percent and reached P233.75 billion from P116.14 billion a year earlier.

The increase in foreign transactions coincided with the market’s record-breaking run in May. Stock prices, as tracked by the PSEi, started reaching new highs on May 18, when it closed at 3,449.18 points to erase the previous record high of 3,447.60 points set on Feb. 3, 1997.

The PSEi closed at 3,474.67 on May 31, or 16.5 percent higher than its level of 2,982.54 at the end of 2006. Last Friday, the PSEi closed again at a new record high of 3,671.29 points.

“The buildup of foreign investments is fueling the market’s record-breaking run,” said PSE president Francis Lim. “I am optimistic we can sustain the interest of foreign investors, as long as the country’s economic foundations remain solid, while our political leaders maintain their sense of maturity and sobriety.”

Other market indicators also reflected investors’ bullish sentiment.

Lim noted that, at the end of May 2007, total market capitalization hit the P8-trillion mark. The amount was 11.7 percent higher than the P7.17-trillion total market capitalization at the end of 2006.

Of the total, market capital of listed domestic companies reached P4.1 trillion, or 22.2 percent higher than its P3.35-trillion level at the end of 2006. Last month also marked the first time market capitalization of domestic listed companies hit the P4-trillion mark.

“Our market continues its advance as investors infuse more funds to our market,” Lim said. “This is shown by the dramatic surge in our value turnover.”

Total value turnover during the first five months of the year reached P499.78 billion, or 134.1 percent more than the P213.45-billion posted during the same period last year.

Average daily value turnover from January to May expanded by 138.7 percent to P4.85 billion from the P2.03 billion of last year.

“The continued interest of foreign investors will definitely play a key role in our bid to sustain the market’s drive to new highs,” Lim said. “But we want local investors to join so they can also enjoy the benefits from the market’s advance.

“I am, in fact, very happy to note that, while foreign transactions continue to go up, local buying posted a more impressive jump,” Lim said.

Based on PSE data, local buying for the first months of the year tripled to P219.5 billion from the P72.3 billion of the same period last year.

At the end of May, prices of 207 issues were up, those of 39 others were down, while prices of nine issues were unchanged compared to their levels at the end of 2006.