RP economic prospects lift stocks, peso

Positive economic prospects boosted the financial markets yesterday, with the stocks and the peso rising strongly after the government reported that the economy’s second quarter growth rate was the fastest in seven quarters.

The Philippine Stock Exchange (PSE) Index surged 61.64 points, or 2.8 percent, to 2,256.48 at the noon close, rounding out a four-day, 9.2 percent climb. The PSE closed at its highest since June 6.

At the Philippine Dealing System (PDS), the peso continued to strengthen against the dollar, gaining another 32 centavos to close at 52.66 from Monday’s close of 52.98 to the dollar.

"We are pretty optimistic with the outlook for the Philippines," said Paul Garcia, who helps manage about $946 million at ING Investment Management Philippines Inc. "A resilient economy is one of the reasons."

The economy probably grew "near" six percent in the three months ending June on higher output, Economic Planning Secretary Romulo Neri said.

The government is aiming to boost growth to between 5.5 percent to 6.2 percent this year to create jobs and lift income.

"The exchange rate is determined by market forces and today we saw that the market is very relieved," Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco Jr said. "We are also seeing inflows so that supported the strengthening of the peso."

Tetangco said that the stock market also picked up, indicating that foreign investments are returning after the concerns over the impending increase in US interest rates last week.

"Now people are again looking at our fundamentals and realizing that we have strong numbers," Tetangco said. "Our fiscal position has improved significantly, we have a healthy balance of payments surplus and economic growth is on track," he added.

‘Window of opportunity’

The PSE main index has tumbled 13 percent since May 8, when it closed at its highest in almost seven years. The slump was triggered partly by concern that rising US interest rates will slow global growth and trim demand for emerging market assets, including the country’s stocks.

"The panic opened a window of opportunity,’’ said Garcia, who expects the main index to climb to as high as 2,700 this year.

"Now is a good time to put cash to work and scoop up those stocks that became unduly cheap during the downturn."

Ayala Land, the country’s largest builder, added 50 centavos, or 4.2 percent, to P12.50, a four-week high. Bank of the Philippine Islands (BPI) , the country’s largest lender by market value, gained P1.50, or 3.1 percent, to P50.50, the nation’s largest phone company, jumped P100, or 5.3 percent, to P1,975, rounding out a four- day, 15 percent gain.

Ayala Corp., owner of the nation’s largest builder, the country’s biggest bank by market value and the second-largest Philippine mobile phone company, advanced P15, or 4.1 percent, to P385.

The stock has tumbled 19 percent since May 8.

Metropolitan Bank & Trust Co., the nation’s biggest lender by assets, gained P1, or 2.9 percent, to P35.50, bringing its four-day gain to 15 percent.

Philippine National Bank (PNB) , a lender owned by the

country’s richest tycoon, Lucio Tan, rose 50 centavos, or 1.5 percent, to P33.50. The bank said it would sell P3 billion of bonds, two percent lower than it planned initially, to boost its capital.

Shares valued at P1.44 billion traded yesterday, 23 percent less than the six-month daily average. Gainers edged losers 47 to 25, with 64 stocks unchanged.