Wednesday, 11 November 2009

Philippine index may rise to record in 2010, ING says

Jun Cruz
Business Mirror

THE Philippine equities index may rise to a record in 2010 with energy, property and mining stocks gaining the most from low interest rates, a pickup in consumer demand and economic growth, ING Investment Management Ltd. said.

The manager of the three best-performing Philippine equities funds this year is holding more energy, property and mining shares than the allocation in the benchmark index, said Paul Joseph Garcia, chief investment officer at ING Manila. He’s reducing holdings of consumer, banking and telecommunications stocks.

The Philippine Stock Exchange index may climb to 3,600 points in 2010 as economic growth accelerates to 3.2 percent and corporate earnings increase between 15 percent and 20 percent, Garcia said. Macquarie Group Ltd. said last week the benchmark may reach a new high in the second half. The measure rose 2.8 percent to 2,996.71 at the noon close yesterday, a 19- month high.

“Anything better than those numbers and we could see the index hitting a new record,” Garcia said, adding that ING prefers “names that will benefit most from low interest rates and the ongoing economic recovery.”

ING forecast a 1.4-percent economic growth and 8-percent earnings growth this year, he said. The government has forecast economic growth to range between 0.8 percent and 1.8 percent this year, after expanding 4.6 percent in 2008.

The Philippine stock index has rallied 60 percent this year, the third best-performer in Southeast Asia after Indonesia and Vietnam, on expectation record-low interest rates and a 15-percent increase in government spending will help ease falling exports amid the global recession. The measure closed at a record 3,873.50 on October 8, 2007.

Energy Development Corp., the largest Philippine producer of geothermal energy, and Philex Mining Corp., the nation’s biggest metals company, are among power and materials-related stocks that ING has been acquiring, Garcia said.

The ING Philippine High Conviction Equity Fund, the nation’s best performer with a 101-percent gain this year, had 22 percent of its portfolio invested in Philex and Energy Development at end-September. Among the nation’s developers, ING owns shares of Ayala Land Inc., Megaworld Corp., Robinsons Land Corp. and SM Prime Holdings Inc., as a new law allowing real estate investment trusts next year will boost these stocks, Garcia said.

Ayala Land and Megaworld, the two biggest Philippine homebuilders, will also gain on expectations demand for homes will increase as economic growth accelerates and the central bank is expected keep interest rates low, he said.

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