052307: RP stocks extend record gains

By Ian C. Sayson

Bloomberg

PHILIPPINE stocks rose, sending the benchmark index to a record for a third day. Metropolitan Bank & Trust Co. advanced after borrowing costs declined, and Ayala Land Inc. climbed to its highest in almost 11 years. “Low-interest rates encourage companies and consumers to borrow and that is good for financials such as banks,” said Patrick Manaloto, who helps oversee about $4.7 billion at BPI Asset Management Inc. in Manila. “Property companies can also gain because low interests rates are positively correlated with real estate.” Manila Electric Co. (Meralco) jumped to its highest in almost 13 years after First Philippine Holdings Inc. said it may more than double its stake in the power distributor to 47 percent to retain management control. Deutsche Bank AG raised its price target for Meralco. The Philippine Stock Exchange index added 38.69, or 1.1 percent, to 3505.03 at the close. The measure climbed for the seventh straight day, its longest winning streak since the 11-day advance that lasted until November 3. The measure is up 18 percent this year, Asia’s sixth-best performer after benchmarks in China, Vietnam, Malaysia, Pakistan and Singapore. The Philippines’ benchmark borrowing cost fell at the government’s regular bond auction Monday, with the yield on the 91-day Treasury sliding to 2.996 percent from 3.044 percent at the previous auction of similar-maturity debt on April 30. The yield of the treasury is used by banks to price loans. Separately, central bank Governor Amando Tetangco said Monday after trading closed that interest rates are at an “appropriate” level and that the gains in the peso helped contain inflation.   Banks gain BANK of the Philippine Islands, the nation’s largest lender by market value, gained P1.50, or 2.2 percent, to P70, a three-month high. Metrobank, as the nation’s largest lender by assets is known, added P1.50, or 2.3 percent, to P66.50, its highest close in almost three months. Ayala Land, the nation’s largest builder, climbed 25 centavos, or 1.6 percent, to P15.75, its highest since September 2, 1996. Megaworld Corp., a builder of residential and office buildings, added 10 centavos, or 2.4 percent, to P4.20, its highest since July 23, 1996. “Low-interest rates are generally good for equities because they could lead to less attractive returns for fixed-income assets, encouraging a shift into stocks,” BPI Asset’s Manaloto said.   ‘Battle for control’ MERALCO’S class A shares, or equity reserved for Filipinos, climbed P4.5, or 5.1 percent, to P93.50, the highest close since October 19, 1994. The government plans to sell its 29-percent stake in the utility in the second half of the year. First Holdings has an 18-percent stake in the company. “A battle for control could benefit the share price,” Giovanni de la Rosa, analyst at the Manila unit of Deutsche Bank, said in a note published Tuesday. “Meralco has access to customers accounting for more than 50 percent of the country’s electricity consumption; this could be valuable to a strategic investor.” Meralco’s Class B shares, which have no ownership restrictions, gained P4.50, or 5 percent, to P94, extending a three-day, 16-percent advance. Separately, de la Rosa said Manila Electric’s Class B shares may rise to P100 in the next 12 months, compared with a previous P70 forecast, on the possibility that its “core profit” may double after an initial draft ruling on the utility’s application for a rate adjustment.   First Holdings profit FIRST Holdings fell 50 centavos, or 0.6 percent, to P81, ending a three-day, 12-percent advance. The company said Monday after trading closed that its profit this year will fall to P3 billion compared with a record P8.7 billion in 2006. Benpres Holdings, which owns 43 percent of First Holdings, jumped 40 centavos, or 9.6 percent, to P4.55, its biggest gain since February. The stock closed at its highest since July 13, 2000. Benpres chairman Oscar Lopez said Monday after trading closed that Benpres may this year complete a plan to reorganize debts, which it started negotiating with creditors in 2002. Shares worth P7.31 billion were traded, 66 percent more than the six-month daily average. In the broader market, gainers outnumbered losers 63 to 46, with 57 stocks unchanged.

 

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