Index advances on positive economic news

Index advances on positive economic news

The Philippine Star 01/26/2006

Shares advanced for a second session yesterday as investors focused on a narrower than expected 2005 budget deficit and the general downtrend in commercial banks’ nonperforming loans.

The benchmark 30-company Philippine Stock Exchange Index rose 9.12 points, or 0.4 percent, to 2,112.49, after gaining 0.2 percent Tuesday.

AB Capital Securities analyst Erwin Balita said sentiment has improved, partly on expectation of an eventual credit rating outlook moving forward.

He said the government was on the right track after it reported earlier this week a P146.5-billion budget deficit for 2005, short of the target of P180 billion.

"On the corporate side, banks’ NPLs have improved since September, so we believe this is good for the overall economy," said Balita.

The market, however, failed to sustain much of its gains by the time trading ended.

Blue chip Philippine Long Distance Telephone Co. was the most actively traded stock, up 2.6 percent at P1,795, in step with the 2.1- percent rise in the company’s American depositary receipts in New York Tuesday.

Traders said the stock may have also gained on expectation that Hong Kong’s First Pacific, which has a controlling interest in PLDT, is keen on acquiring shares in a company that holds a substantial interest in the Philippines’ largest telecommunications group.

Ayala Land rose 2.5 percent to P10.25, after The Philippine Star reported Wednesday the Ayala group was looking into expanding its mall operations, which are under Ayala Land, to India.

First Philippine Holdings lost 6.7 percent to close at P48.50, possibly in reaction to some concern over the initial public offering of its unit, First Gen.

PLDT drove the rebound after a report major shareholder First Pacific of Hong Kong planned to increase its stake in the Philippines’ largest telecommunications firm, dealers said.

"Renewed foreign interest in PLDT is a vote of confidence not just in the company but also in the economy," said Nestor Aguila of DA Market Securities.

He said Asian equities markets are making a comeback after being shaken last week by a spike in oil prices and fraud allegations surrounding Internet firm Livedoor in Tokyo.

"They have now settled down and have gotten back their composure although some risks still remain," Aguila said.

AB Capital Securities research head Jose Vistan said investors have also started to take positions before the two percentage-point increase in the 10-percent value-added tax rate on Feb. 1, which is seen to further boost the government’s finances. – AP, AFP