Stocks hit 3-yr high, peso up as GMA widens lead

Stocks vaulted to a three-year high and the peso recovered against the dollar yesterday as the financial markets cheered strong gains on Wall Street and a voter poll showing President Arroyo clearly ahead in the race towards the national elections on May 10.

The Philippine Stock Exchange composite index gained 41.12 points to 1,589.40, the day’s high and the highest level since March 8, 2001 when the index hit 1,589.57.

At the Philippine Dealing System, the peso appreciated as dollar inflows provided a cushion that abated the technical correction earlier in the week, closing at P55.75 to the dollar, from P55.84 to $1 on Thursday.

Index heavyweight Philippine Long Distance Telephone Co. (PLDT) led gainers in the equities market as investors bought into the country’s dominant phone firm after its American Depository Receipts traded in New York leapt 6.3 percent to $20.20 on Thursday.

Analysts said Wall Street’s advance and the hefty gain in PLDT helped sustain confidence following Monday’s decision of the California Public Employees’ Retirement System (CalPERS) not to withdraw its investments in the Philippines.

"Investors took their cue from Wall Street, PLDT and news that President Arroyo has widened her lead in the presidential race," said Gomer Tan of Regina Capital Development Corp.

A new Social Weather Stations survey, conducted on April 10 to 17, showed President Arroyo with 35.3 percent support and a lead of more than four points over film star Fernando Poe Jr.’s 30.8 percent.

Its previous poll in late March had Poe with a statistically insignificant lead of 32 percent to Arroyo’s 31.4 percent.

Businessmen have largely favored Arroyo over Poe whose qualifications they question as he is a high-school drop-out with no experience in government.

"We continue to believe (the market’s rise) is signaling an (Arroyo) victory in the May 10 elections, the market-friendly outcome," ING Financial Markets said in a daily note.

Analysts also see Arroyo, a trained economist, offering continuity in economic reforms.

"The market favors the current administration," said Astro del Castillo, managing director at First Grade Holdings.

"It seems the market’s run-up is already a vote of confidence for Arroyo and the recent survey galvanizes the belief that the economic programs could be sustained in the next six years," he added.

For its part, the Bangko Sentral ng Pilipinas (BSP) said it expects the peso to remain stable provided no more internal or external shocks would impact on investor confidence and perception.

Although the presidential elections is not until May, the BSP said the campaigns have taken on a rhythm that could be described as routine, with no jarring events to fuel speculation of continuing instability.

According to traders, however, the market showed mild optimism about the latest survey results that placed President Arroyo ahead of her main rival, Fernando Poe Jr.

But regardless of who wins the presidency, traders said the peso and bond markets would recover dramatically after the elections once the political uncertainty over leadership has been removed.

However, some foreign banks said the peso could plummet to as low as P57 to the dollar should the elections become unstable and discredited.

The BSP said earlier that the peso could recover to P54 to the dollar but foreign banks were even more optimistic, saying that the peso could bounce back to the early 2003 level of P52 to the dollar.

The peso has already begun recovering since this week, appreciating to as high as P55.66 to the dollar for the first time since January when the currency started dipping to record lows almost every week.

The peso had lost some ground and closed previously at P55.81 to the dollar but regained its footing after hitting a low of P55.84 in yesterday’s trading.

The market opened yesterday with the peso trading at P55.84 to the dollar but the currency continued to trade within a narrow range, appreciating to P55.70 to the dollar before closing at P55.75.

The BSP said there were inflows from exporters and overseas Filipino workers who are anticipating expenses ahead of the school enrollment in June.

At the PSE, advancers led decliners 40 to 10, with 45 stocks unchanged.

A total volume of 248.98 million shares worth P926.4 million changed hands yesterday, higher than the 184.4 million shares worth P572.01 million turnover on Thursday.

The broader all-shares index was up 14.69 points at 977.92, the commercial-industrial index rose 75.20 to 2,519.00, property was up 6.24 at 546.00 while mining rose 26.66 at 1,435.27. Oil was unchanged at 1.18 and banking and financial services rose 5.98 to 440.53.

"Investors are upbeat about first quarter earnings given that a number of companies are declaring cash and stock dividends," Regina Capital’s Tan said.

Among selected stocks, PLDT rose P75 to P1,150, its highest close since July 1999, on volume of 211,930 shares.

The company expects to report first-quarter results in early May and there is widespread expectation it will announce a sharp rise in profits, boosted by its mobile phone unit Smart Communications.

SM Prime Holdings rose 10 centavos to P6.10 while Globe Telecom gained P60 to P955.

Manila Electric Co. (Meralco) saw its B shares, which are open to foreigners, remain unchanged at P30 while its A shares rose 25 centavos to P20.