Stocks extend rally
By Zinnia B. Dela Peña
The Philippine Star 05/09/2006
The stock market rose sharply higher yesterday, extending gains with a 118.93-point jump as optimism about the economy prompted foreign investors to gobble up local stocks.
Traders said sentiment was very positive on the back of an improving fiscal position while political tensions have eased of late, allowing investors to focus more fully on the market.
At the same time, foreign investor interest has become more pronounced as offshore names trawl through the region for any laggards among some of the best performing markets in the world over the past couple of years.
The composite index put on 118.93 points or 4.81 percent to close at 2,589.17 for the biggest single-day gain since Jan. 22,2001, when it put on 255.13 points or 17.56 percent. On Friday, the market had risen 4.22 percent.
The index has gained 23.5 percent since the start of the year, thanks to improving government finances, stable corporate earnings and low interest rates.
Banks and property stocks have been among the biggest gainers, helped by the Bangko Sentral ng Pilipinas (BSP) decision not to raise borrowing costs last week.
Turnover was strong at 3.42 billion shares valued at P5.3 billion. Gainers outnumbered losers 69 to 38 while 52 stocks ended unchanged.
There was some signs of rotational buying and selling as traders took profits on third-liners to switch to blue chips.
"We believe that the market is gaining on the back of improving sentiments on the Philippine equities market. After implementing major fiscal reforms and a concerted effort to improve corporate governance, foreign fund managers have been raising their country weighting on the
"They (investors) woke up and decided we deserve to be re-rated,’’ said Marvin Fausto, who helps manage $2 billion at Equitable PCI Bank. An "improving economy" is helping draw funds, he said.
The government’s budget shortfall has been shrinking due to a higher sales tax and concerns over the country’s political stability have eased after last week’s Labor Day demonstrations ended peacefully.
"The market is showing no signs of letting up. And with foreign funds leading the way, we should expect the market testing new highs," Vistan said.
Vistan, however, warned that the market may be ripe for correction anytime as most stocks have already reached overbought levels. "We wouldn’t be surprised if the market should correct any time. A healthy correction is long overdue and any negative event can easily be used as an excuse to take profits. Earnings will be a factor as we start the first quarter earnings reporting season," Vistan said.
Foreign funds focused on key index issues, namely Ayala Corp.,
Ayala Corp., the
PLDT closed at a new record high, gaining P130 or 6.12 percent at 2,255, on volume of 334,640 shares worth P750.66 million.
In its market report, BPI Securities said: "Long-term outlook for the market has never been rosier; it is unlikely that sentiments will fall in any significant way if ever a correction will ensue."
The market’s new resistance has been pegged at 2,600.
The first quarter corporate earnings season has also kicked off positively.
SM Prime Holdings Inc. which reported an eight percent increase in its net profit for January to March this year to P1.34 billion, gained 11 percent to P9.
Globe Telecom posted a net profit of P3.5 billion in the first three months of the year, mainly due to higher subscriber base.
As of the end of March this year, Globe’s wireless subscriber base stood at 13.2 million compared with only 12.4 million at end-2005.
Net service revenues went up five percent from a year earlier to P14.2 billion for the three months to March, but was three percent lower compared to the last quarter of 2005 due to the seasonal demand in the previous quarter.
Union Bank of the
| Bullish outlook |
Bank of America yesterday raised its 2006 economic growth forecast for full-year Philippine economic growth to 5.3 percent from 4.7 percent.
The government said last week the economy likely expanded more than 5.5 percent in the first quarter because of better-than-expected harvests.
Ayala, owner of the nation’s biggest developer and No. 2 banking and phone companies, surged P42.50, or 9.9 percent, to P472.50, its highest since at least 1987, when Bloomberg’s records begin.
Metropolitan Bank and Trust Co., the nation’s biggest lender, rose P4.50, or 11 percent, to P47. Class B shares of
Manila Electric Co., which allow overseas investors to own the nation’s biggest power retailer, rose P2, or 10.3 percent, to P21.50. Megaworld Corp., a builder of office and residential buildings, rose 22 centavos, or 13 percent, to P1.86. – with AFP
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