Bank of the Philippine Islands (BPI) advanced 1.8 percent, rounding off its biggest weekly gain in seven after the Securities and Exchange Commission (SEC) approved the lender’s merger with Prudential Bank.
The Philippine Stock Exchange Composite Index gained 32.88, or 1.6 percent, to 2111.46 at the noon close in Manila, taking the week’s gain to 3.1 percent. The measure is 15.8 percent higher this year, lifted in part by new taxes that will trim the state deficit and debt.
"Assuming there is no major disruption on the political front, the index can easily climb to 2,500 next year," said PJ Garcia, Chief Investment Officer at ING Investment Management Philippines Inc. "The downside risk for us will be politics."
Attempts by President Arroyo’s opponents to unseat her after allegations that she rigged last year’s presidential polls, coupled with the suspension of a new tax law, sent the main stock index tumbling to a six-month low on July 6. The tax law took effect in November, helping the index climb 7.1 percent since then.
"This market is not for those who don’t have the stomach for volatility,’’ said Garcia. He said he preferred Philippine banks and property companies in 2006 because of the prospects of bigger earnings.
The Philippine Stock Exchange Composite Index is Southeast Asia’s biggest gainer this year after the Jakarta Composite Index, which rose 16.1 percent. Its longest rally before today was a six-day climb that ended Nov. 3.
Bank of the Philippine Islands, the nation’s largest lender by market value, added P1, or 1.8 percent, to 56. It gained 3.7 percent this week. Ayala Corp., which controls the bank, gained P10, or 3.2 percent, to P320, taking this week’s gain to 4.1 percent.
The SEC in a meeting approved the merger of BPI with the smaller Prudential Bank, which will increase earnings for the bigger lender.
PLDT rose P40, or 2.3 percent, to 1815, a six-week high. It ended the week four percent higher, its biggest weekly gain in six. Pilipino Telephone Corp., a mobile phone unit of the company, rose 5 centavos, or 1.5 percent, to P3.50.
Moody’s yesterday said it raised Philippine Long Distance’s long-term foreign-currency debt rating to Ba2, two levels below investment, citing the company’s improving finances. The change in rating, which will help reduce borrowing costs, affected $1 billion of debt, Moody’s said. – Bloomberg