Shares close higher on strong peso, lower inflation

Share prices closed 0.48 percent higher yesterday with investors buying into select stocks on the back of a strong peso, dealers said.

They said light volumes mirrored a generally cautious mood, with many investors on the sidelines watching developments in the political arena as lawmakers re-opened inquiries into allegations of election cheating against President Arroyo.

The main index, which rose for a second day, was also edged up after the central bank said this year’s inflation may be less than forecast, raising confidence interest rates won’t rise.

The Philippine Stock Exchange composite index rose 10.18 points to the day’s high of 2,113.60. It hit a low of 2,098.89. Volume was 676 million shares worth P1.7 billion. Losers beat gainers 41 to 34, while 49 stocks were unchanged.

"With the central bank expecting inflation lower than the initial forecast, that sends a message that current low rates will be maintained, making real estate development attractive,’’ said James Lago, head of research at Westlink Global Equities.

Bangko Sentral ng Pilipinas Governor Amando Tetangco said yesterday that inflation this year would range 7.6 percent to 7.7 percent, compared with the previous 7.6 percent to 7.9 percent forecast, because of easing oil prices and the gains in the peso.

The peso rallied to a 28-month high of 53.68 to the dollar, aided by the continuing flow of remittances from Filipinos working overseas.

ING Financial Markets Research said in a note that the peso looks set to end the year at 53.50 to the dollar, given strong inflows, which could push the Philippine currency up to 52 levels next year.

"The optimism in the foreign exchange market spilled over into equities," said Lawrence de Leon of Accord Capital Equities.

He said some investors may have also begun window-dressing their portfolios ahead of the new year.

Dealers said the peso’s strength is good news for companies with dollar-denominated debt, such as the Philippine Long Distance Telephone Co. (PLDT).

PLDT, the most actively traded stock, rose P5 to P1,790.

Ayala Land Inc. was up 30 centavos at P9.70.

Food and beverage conglomerate San Miguel Corp.’s A-shares, limited to Filipinos, fell 50 centavos to P64. Its B-shares, available to Filipino and foreign investors alike, rose P1 to P87. – AFP