INQ7 MONEY - BREAKING NEWS
August 04, 2006
Updated 14:55:18 (Mla time)
Cecille Yap
Xinhua Financial News Service
(UPDATE) SHARE prices closed higher for the second straight session, lifted by hopes that the central bank may decide to keep its benchmark interest rates steady in the medium-term after inflation fell to a two-year low last month, dealers said.
Buying of blue chip companies set to report second quarter earnings next week also continued, helping the main index into positive territory, although the extent of buying was less than in recent days as some counters are now seen close to being over valued, they said
The composite index ended up 5.05 points or 0.21 percent at 2,362.60, after trading between 2,356.60 and 2,372.20.
It ended 1.4 percent percent higher for the week.
The broader all-shares index gained 1.74 points to 1,452.29.
Gainers beat losers 59 to 32, while 59 stocks were unchanged.
Volume reached 5.12 billion shares worth 1.34 billion pesos.
The National Statistics Office reported before the market opened that year-on-year inflation eased to 6.4 percent last month from 6.7 percent in June, coming in at the lower end of the central bank's projected range of 6.3-7.0 percent.
It was the lowest annual inflation rate since June 2004 when it stood at 5.4 percent.
"The possibility of domestic interest rates rising has declined after recent data point to a decelerating trend in inflation. This should be good for the economy as a whole and for companies who have huge debts, or those who plan to borrow for expansion," Accord Capital Equities analyst Lawrence de Leon said.
Central bank governor Amando Tetangco said the tamer inflation data would allow the monetary authority to keep interest rates on hold. However, he said upside risks such as oil prices, remained, and would continue to be closely monitored.
The Philippine central bank has kept its overnight borrowing rate at 7.50 percent and overnight lending rate at 9.75 percent since October last year despite continuing monetary tightening in the US and elsewhere in the world. They were raised by a total of 75 basis points in 2005.
DBS in a note to clients said the central bank will likely keep its key rates steady for the rest of the year and may even cut the same in the first quarter amid easing inflation.
Trading this week has been volatile with the main index swinging to an 11-week high on Monday before succumbing to two days of profit-taking and then bouncing back in the last two sessions of the week.
Dealers said the market may post further gains early next week.
"We will likely see follow-through buying next week as the market pushes forward to the 2,400 resistance mark," de Leon said.
Top-traded Philippine Long Distance Telephone Co rose 30 pesos or 1.45 percent to 2,095 pesos on 86,540 shares ahead of its second-quarter earnings report on August 8.
Conglomerate Ayala Corp and unit Ayala Land Inc succumbed to profit-taking after rising ahead of their earnings reports next week.
SM Prime Holdings Inc gained 0.10 peso or 1.23 percent to 8.20 pesos after the mall operator reported a 9-percent rise in its second-quarter net profit on the back of a double-digit rise in rental revenues.
Manila Electric Co rose after President Gloria Macapagal-Arroyo said electricity rates within its franchise will drop by an average of 0.52 peso per kilowatthour after the distributor bought more of its requirements from the wholesale electricity spot market which opened in late June. Lower rates may lead to higher consumption, dealers said.
Meralco A, restricted to local investors, gained 0.25 peso to close at 15.75 pesos. Meralco B, which foreigners can buy, was up 0.25 peso at 25.
Globe Telecom Inc advanced 10 pesos to 1,020. An official of the company said recently that the firm's net profit in 2006 will likely exceed last year's earnings of 10.3 billion pesos given its strong first-half performance.
(1 dollar = 51.58 pesos)
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