Philippine stocks rose, snapping a three-day decline, on speculation the central bank is closer to cutting rates after government bond yields reached new lows.
Ayala Land Inc. and Bank of the Philippine Islands rose.
The yield on the 91-day Treasury bill, which banks use to price loans, fell to its lowest ever in a government auction yesterday after trading closed. The 182-day and 364-day bills also set records.
"The sharp drop in Treasury bill rates comes amid the government's improving fiscal position, the slowdown in inflation and stronger economic fundamentals,'' said Gilbert Lopez, an analyst at Macquarie Securities Corp.'s Manila unit. "These ingredients support the likelihood of a cut in rates."
The Philippine Stock Exchange Index gained 20, or 0.7 percent, to 2972.32 at the close of trading Tuesday. It slid 2.3 percent in the previous three days. The measure slumped 1.5 percent Monday, its biggest decline since October 17.
The 91-day Treasury bill yield fell to 3.795 percent in yesterday's auction. Bids worth P33.5 billion ($688 million) were submitted for the P4.8 billion of Treasury bills the government put on sale, National Treasurer Omar Cruz said.
"Lower rates are positive for the market overall,'' Lopez said. "The best way to play this is through the property sector.''
Ayala Land Inc., the nation's most profitable builder, gained 25 centavos, or 1.6 percent, to P15.75. C&P Homes Inc., a Philippine builder of homes, added 6 centavos, or 4.4 percent, to P1.42, its biggest gain since October.
The Property Index, a measure made up of the nation's 12 biggest publicly traded real-estate companies, jumped 21.68, or 1.7 percent, to 1318.40, ending a two-day, 1.9-percent loss.
Belle Corp., a builder of a residential resort south of Manila, rose 4 centavos, or 3.5 percent, to P1.20, its highest since November 24. Empire East Land Holdings Inc., a home builder, advanced 1 centavo, or 1.6 percent, to P64, its highest since August 1999.
Share sales
Filinvest Land Inc., which is selling up to 5.4 billion common shares to raise funds for expansion, gained 12 centavos, or 7.1 percent, to P1.82 pesos, its biggest gain since September 27.
The company said it raised P80 million from the sale of preferred shares to majority owner, Filinvest Development Corp.
"The drop in Treasury bill rates will have a positive impact on Filinvest Land's share sale,'' said Astro del Castillo, managing director of First Grade Holding Inc., a financial management and advisory company in Manila. "It supports the outlook that there will be demand for property projects that Filinvest Land will build with the proceeds.''
Filinvest Development gained 45 centavos, or 10 percent, to P4.80, after gaining 24 percent in the previous seven trading days. Tuesday's gain is the stock's biggest climb since April 21.
Bank of the Philippine Islands, the nation's largest lender by market value, added P1, or 1.6 percent, to P65.50 on expectations that lower rates will lead to an increase in lending to consumers and companies.
"The dip in Treasury bill rates has preempted the Bangko Sentral ng Pilipinas (BSP)," Tony Nafte, senior economist at Credit Lyonnais Securities Asia Ltd., said in a note Tuesday. "With yields this low, it now makes sense for the banks to increase lending rather than buying Treasury bills."
The BSP in a meeting in December held its overnight rate at 7.5 percent for deposits of up to P5 billion and kept lower payments for higher amounts to spur bank lending. The central bank will meet later this month to review the policy rate.
Metropolitan Bank & Trust Co., the nation's largest lender by asset, advanced P1, or 1.9 percent, to P53, a seven-week high. Banco de Oro, which will become the nation's third-largest lender by assets after it integrates its operations with Equitable PCI Bank, gained 50 centavos, or 1.1 percent, to P45.50.
"Expect banks to steer deposit and lending rates lower and look for expanding credit growth over the coming months," Nafte said.
Shares worth P2.87 billion were traded, 18-percent more than the six-month daily average. Gainers outnumbered losers 58 to 46, with 56 stocks unchanged in the broader market. (Bloomberg)
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