GMA move to revitalize economy boosts stocks

The stock market closed at its highest level in nearly two months yesterday as investors cheered President Arroyo’s vow to revitalize the economy.

The 30-company Philippine Stock Exchange (PSE) index ended up 22.99 points, or 2.2 percent higher, at 1,058.30, its best close since Nov. 15 last year when it ended at 1,058.71 points.

Turnover rose to 437.3 million shares worth P746.8 million compared to 356.67 million shares worth P333.64 million traded on Thursday.

"The market appears to be reacting favorably to the steps being taken by President Arroyo in laying down GMA move... From B-1

the policy framework to ensure a revitalized economy by the end of her term in 2004," A&A Securities research head Astro del Castillo said.

Mrs. Arroyo announced earlier she would not run for president in 2004 and would focus instead on fixing the economy during the remainder of her term.

The President signed into law yesterday the special purpose asset vehicle (SPAV) bill which provides incentives for asset management companies (AMC) to relieve banks of billions of pesos of bad loans. Central bank officials expect asset sales by October.

"The bill signing, and (President Arroyo’s) previous announcement not to run in 2004, gives hope for some that the president will have an active, direct focus on what should be done for the country," said Harry Liu of Summit Securities.

PSE president Ernest Leung said that the signing of the SPAV law would boost the stock market, which slid 149.67 points or 12.8 percent last year.

"The premise here is that banks that are burdened with (non-performing assets) are not able to provide loans to accommodate business demands because of the regulations that they have to set a portion of their resources" for loss provisions, Leung said.

With the law helping to address risks they have been worried about, banks will be encouraged to ease their lending policies and accommodate the credit demands of the economy, he added.

The President pledged to stamp out graft, cut business costs, spend money on infrastructure and boost key sectors such as power and mining.

"These are plans she has indicated previously. It’s really a matter of implementation, if she can accomplish what she promises," said Oliver Plana, an analyst at Asiasec Equities Inc.

Blue-chip Philippine Long Distance Telephone Co. was among the most actively traded stocks, closing P25, or 8.6 percent, higher at P317.50.

"This early, foreign fund managers are now trying to fill up their baskets, and PLDT may be one of the blue chips they want to invest in," said Del Castillo.

"PLDT was one of the worst performing stocks last year, but it appears it has reached bottom."

In 2002, PLDT shares fell 35 percent, outpacing the 13 percent loss suffered by the main index.

The stock was weighed down by a struggle for control of the country’s largest telecommunications company, which began in June when tycoon John Gokongwei Jr. agreed to take control of PLDT from Hong Kong’s First Pacific. PLDT’s management successfully thwarted Gokongwei’s plan.

Banking issues led yesterday’s rally as expected, with Bank of the Philippine Islands up P1.50 to P37.

Metropolitan Bank and Trust Co. ended 50 centavos up to P31.

"A lot of stocks are trading at pretty attractive levels. It’s bargain hunting," Plana said.

"It’s partly a result of liquidity because liquidity has no place to go to at the moment, " he added.

Traders said the market’s upward momentum may be extended next week, with resistance at the 1,080 mark.

Utility firm Manila Electric Co’s B shares advanced 8.7 percent or P1 to P12.50 ahead of an imminent announcement of the energy regulatory body’s decision on the firm’s rate hike petition.

The firm’s A shares rose 50 centavos or 5.49 percent to end at P9.60.