By Ian C. Sayson
Bloomberg
Philippine stocks fell the most in eight months, posting the biggest drop among markets included in global benchmarks. Philippine Long Distance Telephone Co. (PLDT) and Ayala Corp. fell from all-time highs as investors judged recent gains excessive given the outlook for earnings.
“The market has to take a pause somewhere,” said Jerome Gonzalez, who helps manage about $40 million at PhilEquity Fund in Manila. “This is a healthy pullback. We aren’t seeing any excesses that come with a rally. Share prices can’t just keep on climbing.”
The Philippine Stock Exchange Index plunged 112.37, or 3.4 percent, to 3162.82 at the close, its biggest slide since May 23. The drop pared gains this week to 2.5 percent.
PLDT, the nation’s most profitable publicly traded company, fell P165, or 5.9 percent, to P2,630. Friday’s drop snapped a six-day, 16 percent jump that lifted the stock to a record.
Ayala, the nation’s third-largest company by market value, fell P15, or 2.4 percent, to P610, ending a four-day, 6.8 percent advance. Ayala is trading at 23 times prospective earnings, compared with a valuation of 17 times for the main stock index.
Manila Electric Co.’s Class A shares, equity reserved for Filipinos in the nation’s largest power retailer, lost P3, or 4.2 percent, to P68.50, sliding from its highest since February 2000. Its Class B shares, which have no ownership restrictions, lost P3, or 4.1 percent, to P69.50. Manila Electric shares are trading at 55 times earnings.
Market Retreat
THE index closed Thursday at its highest since March 11, 1997, following a six-day, 7.7 percent rally. That’s the second-biggest gainer in that period among 82 global stock benchmarks tracked by Bloomberg News.
Friday’s fall was triggered in part by the declines in the Standard & Poor’s 500 Index and the Dow Jones Industrial Average, according to Jonathan Ravelas, market strategist at Banco de Oro in Manila. Both US measures tumbled the most since November after energy and pharmaceutical companies reported quarterly results that disappointed investors and existing home sales dropped more than economists forecast.
“Friday’s retreat is what the market has been looking for,” said Ravelas. “There has been a significant shift from risk-free assets to stocks and this is a good reminder of the risks associated with stocks.”
Interest Rates
BANKS and property stocks fell after the central bank Thursday kept its key interest rate unchanged, signaling policy makers are still concerned over inflation.
Bank of the Philippine Islands, the nation’s most profitable lender, fell P2, or 2.8 percent, to P69.50, its biggest decline in more than a month. Metropolitan Bank & Trust Co., the nation’s largest lender by asset, fell P3 pesos, or 5 percent, to P57, its largest drop since August 2.
Ayala Land Inc., the nation’s largest builder, fell 75 centavos, or 4.5 percent, to P16, its biggest loss since August 2. Robinsons Land Corp., the nation’s second-largest shopping mall operator, lost 50 centavos, or 3.1 percent, to P15.75. after climbing 6.6 percent Thursday.
Shares worth P3.78 billion were traded, 39 percent more than the six-month daily average. Losers outnumbered gainers 89 to 32, with 43 stocks unchanged in the broader market.
DMCI Holdings Inc., the nation’s largest construction company, fell 20 centavos, or 2.8 percent, to P6.90, rounding a 6.8 percent four-day loss on speculation earnings per share will fall. The company may sell as much as 2.5 billion of stock this year for expansion, according to its president, Isidro Consunji. Petron Corp., the biggest of the nation’s two oil refiners, rose 10 centavos, or 2.4 percent, to P4.20 after USB AG’s Philippine unit reiterated its buy rating for the stock.
The drop in global crude prices, which have declined 29 percent in the past six months, could trigger an increase in Petron’s earnings, Jody Santiago, head of research at USB’s Philippine unit, said.
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