Saturday, 17 July 2010

RP stocks seen to surpass records this year

By IAN C. SAYSON (Bloomberg)
Manila Bulletin

The Philippine stock index will extend a 30-month high and reach a record this year after remittances accelerated and the central bank kept interest rates unchanged, the nation’s biggest foreign-owned stock broker said.

The benchmark will rise to 3,900 in 2010 as economic expansion gathers pace through next year, said Alex Pomento, a strategist at Macquarie Group Ltd.’s Manila unit. Banks and builders will beat the index as record-low borrowing costs and increased repatriation of funds from overseas Filipinos drive demand for loans and homes, he said.

“Faster growth means stronger corporate earnings, robust loan growth and a buoyant property market,” Pomento said in an interview. Macquarie handled 11 percent of Philippine stock trades last month, the most among foreign brokerages.

The Philippine Stock Exchange Index has risen 14 percent this year, the second-best performer among the 12 biggest Asia Pacific markets. The measure has retreated 0.8 percent from a 30-month high on July 14, and remains 11 percent below its all-time high of 3,873.50 on Oct. 8, 2007.

Remittance growth quickened to 6.5 percent in May, the first acceleration in five months, the central bank said Saturday. It kept the benchmark interest rate at 4 percent and cut its inflation forecast for this year to 4 percent from 4.7 percent and lowered it to 3 percent from 3.6 percent for 2011.

Investors should “overweight” property and banks, Pomento said. Ayala Land Inc., the largest builder, and Megaworld Corp., the fourth-biggest developer, are among his most recommended stocks this year. Other picks are Banco de Oro Unibank Inc., the biggest bank by asset, Bank of the Philippine Islands, the No. 3 by assets, and Alliance Global Group Inc., owner of Megaworld and the largest Philippine casino.

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