Tuesday, 2 June 2009

Philippine share prices rally to eight-month high

AFP and Kristine Jane R. Liu
BusinessWorld
http://www.bworldonline.com/BW060209/content.php?id=131

SHARE PRICES closed 2.9% higher yesterday, at an eight-month high, on prospects of further domestic policy easing, dealers said.

The Philippine Stock Exchange index added 69.34 points to close at 2,458.65 while the all-shares index gained 30.72 points to 1,598.59.

There were 85 gainers, 43 losers and 42 unchanged.

Turnover amounted to 3.95 billion shares worth P3.78 billion pesos.

"There was excess liquidity in the system because of the rate cut and it is finding its way into the market," Astro del Castillo, managing director at First Grade Holdings, told Dow Jones Newswires.

"Also, things are looking up, particularly for consumer spending ahead of next year’s elections."

The central bank cut rates by 25-basis points last week, bringing its overnight borrowing rate to a new 17-year low of 4.25%. It has indicated there is still room to cut rates, given the 0.4% gross economic product growth in the first quarter.

For Maria Arlysa E. Narciso of AB Capital Securities, Inc., "investors... are hanging on to the sentiment we can go higher or the trend has changed."

She said the market’s sustained rallies are not normal considering the economic outlook remains bleak.

Looking forward, she said, chances are high the market will see a steep fall, especially if there is negative news significant enough to have a big impact.

"The market is badly calling for a correction. We do not think this is normal and it is surprising the market continues to climb despite the negative news," Ms. Narciso said.

Harry G. Liu of Summit Securities, Inc. said the stable economic numbers and the steady peso are keeping the local market afloat. Technical indicators, he said, are pointing to the market testing the 2,500 levels.

"Everyone is hanging on the US market. If it continued to climb last night and went above the 9,000 level despite General Motors Corp. filing for bankruptcy [yesterday], the local market will likely take the cue [today]," Mr. Liu said.

Mr. Liu said the worst, including the possibility of the economy falling into a recession, seems to have been discounted by investors.

Still, the analyst warned, investors should not immediately jump into the conclusion the market has made a turnaround.

The market, he said, is just experiencing a medium-term upside recovery after slumping by 1,600 in October 2007.

"Some economic numbers are still not good and it will take awhile for the market to revert to a bullish trend [but] as long as market activity remains steady, the market will recover," Mr. Liu said.

All six subindices rallied yesterday, led by property shares that surged by 5.84% or 48.53 points to 878.27.

Mining and oil stocks added 4.41% or 242.59 to 5,736.49 while financial companies gained 4.4% or 25.16 points to 596.35.

Holding firms climbed by 1.6% or 22.66 points to 1,432.35 while industrial stocks rose by 1.44% or 45.75 points to 3,208.95.

The service sector rallied by 1.35% or 17.08 points to 1,278.50.

Andrew Tan-led property company Megaworld Corp. shot up by 13.68% or P0.13 to P1.08.

Sy-led Banco de Oro Unibank, Inc. added 6.06% or P2 to P35, while Metropolitan Bank & Trust Co. surged by 5.88% or P2 to P36.

Ayala Land, Inc. gained 5.74% or P0.50 to P9.20, while sister firm the Bank of the Philippine Islands climbed by 5.68% or P2.50 to P46.50.

Index heavyweight Philippine Long Distance Telephone Co. advanced by 0.67% or P15 to P2,225, while Manila Electric Co. rose by 2.6% or P3 to P118.

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