Stocks, peso start year with a bang

The local financial markets started the year with a bang yesterday as share prices soared to their highest mark since March 2001 and the peso gaining a hefty 23.50 centavos to close at 55.265 to the dollar.

The Philippine Stock Exchange (PSE) composite index climbed 3.12 percent or 44.97 points to close at 1,487.34. Yesterday was the first trading day of 2004 after an extended New Year’s break.

At the Philippine Dealing System (PDS), the peso gained 23.50 centavos to close at 55.265 from 55.500 recorded on Dec. 30, the last trading day of 2003.

Bangko Sentral ng Pilipinas (BSP) Governor Rafael B. Buenaventura said the recovery of the peso was not a surprise and should continue as the post-holiday pressures continue to ease.

However, Buenaventura said the peso was expected to become volatile again especially since the country was inching closer to the May elections.

"It wouldn’t come as a surprise if the peso becomes edgy again," he said.

Analysts said yesterday’s buying at the stock market was sparked by rosy profit hopes for Philippine Long Distance Telephone Co. (PLDT) and the planned purchase of a substantial stake in Equitable PCIBank by another bank.

"The market started with a bang," said Astro del Castillo, managing director of financial management firm First Grade Holdings Inc.

"Expectations that PLDT performed well in 2003 generated buying interest. News about Banco de Oro acquiring a stake in Equitable provided more excitement."

Analysts said positive sentiment in regional equities markets over the past few days spilled over to the local bourse, boosting interest in stocks that are expected to sustain a strong earnings performance in 2004.

The Phisix rose 41.63 percent in 2003 – behind Thailand, India and three other markets among Asia’s top performers – but foreign investors have been cashing out and fund managers are not keen on the Philippines this year with an election on May 10.

"We’re off to a good start for the year. We’re taking a cue from the strong showing of equities markets in the region and even in the US during the past few days," said Lawrence de Leon of Accord Capital Equities.

"There are expectations that emerging markets like the Philippines will continue to post gains this year on the back of a global economic recovery," he said.

PLDT, the country’s largest phone firm, rose 5.15 percent or P50 to P1,020, its highest level in nearly four years.

It was the most active stock, with turnover of P229 million, accounting for nearly 30 percent of the market’s total.

Butch Jimenez, PLDT vice president for media affairs, said yesterday the group likely met its 2003 net income target of P9.5 billion to P10 billion despite provisions for staff cuts and was on the way to " a sterling performance in 2004."

Equitable PCI Bank, the country’s third-largest lender, leapt P5 or nearly 15 percent to P38.50 after Banco de Oro Universal Bank said it planned to buy the Social Security System’s 25-percent stake in Equitable for P14 billion.

Banco de Oro – controlled by the family of retail tycoon Henry Sy that operates 17 shopping malls in the Philippines through SM Prime Holdings Inc. – rose 4.23 percent or 75 centavos to P18.50.

Total market turnover reached a relatively active P774.37 million. Gainers thumped losers 47 to 10 and there were 33 stocks unchanged.

Analysts said sentiment was also boosted by the looming strength of the administration party as President Arroyo filed her candidacy for May’s election yesterday with a popular senator, Noli de Castro, as her running mate.

"Many view the Arroyo-De Castro tandem as winnable. The opposition seems to be crumbling," AB Capital economic analyst Jose Vistan said. "I think the market, particularly foreign investors, seem to favor an Arroyo victory."

Del Castillo said he expected some mild profit-taking. "We see a technical correction considering the market is in an overbought condition," he said. "Market sentiment, however, remains positive and we see the next resistance level at 1,500."

Globe Telecom Inc., jointly owned by Philippine conglomerate Ayala Corp. and Singapore Telecommunications, rose 5.81 percent or P50 to P910.

Analysts view the telecoms sector as one of the bright spots in the Philippines, with revenues rising due a flood of text messages and voice calls in the run-up to the elections.

SM Prime Holdings, the country’s largest mall developer, rose 4.62 percent or 30 centavos to P6.80.

Gainers led losers 47 to 109, while 33 stocks were unchanged.

Volume fell to 195.96 million shares but value rose to P774.36 million from 885 million shares worth P660.64 million.

The all-shares index rose 17.54 points to 892.32 while the commercial-industrial index was up 62.37 at 2,247.60.

Property was up 13.22 points at 584.57 while mining rose 68.11 at 1,691.29. Oil was unchanged at 1.21 but the banking and financial services sector gained 16.81 to 455.88. – Reuters, AFP