Share prices closed higher yesterday, buoyed by gains in select blue chips Philippine Long Distance Telephone Co. (PLDT) and Manila Electric Co. (Meralco).
PLDT rebounded with investors looking at the merits of the management changes at the country’s biggest telecommunications company while Meralco jumped on reports that the government will likely push ahead with the sale of its nearly 30- percent stake in the power distributor in 2008.
Investors shrugged off Wall Street’s weak performance Monday on renewed worries over the subprime mortgage crisis and focused on the likelihood that the US Federal Reserve will cut interest rates next week to boost the US economy.
Manila’s composite index finished up 17.57 points or 0.5 percent at 3,644.45, near the day’s high of 3,648.68. The broader all-share index gained 7.94 points or 0.4 percent at 2,215.40.
Gainers beat losers, 62 to 44, while 69 stocks ended flat.
A total of 1.6 billion shares worth P3.8 billion changed hands.
Analysts said fresh worries about the US housing market raised hopes the Fed will trim key interest rates again when it meets on Dec 11.
The Fed has slashed its benchmark rate by a total of 75 basis points at the last two meetings in September and October.
But those cuts may not be enough to boost a flagging US economy.
On Monday, Federal Reserve Bank of Boston President Eric Rosengren said he expects the crisis in the subprime mortgage sector to get worse before it gets better.
Separately, San Francisco Fed President Janet Yellen warned that housing problems could hurt consumer spending.
“Investors are expecting the Fed to cut rates next week and the local central bank may follow suit,” said James Lago, research head of Westlink Global Equities.
The Bangko Sentral ng Pilipinas (BSP), will hold its last meeting on interest rates for the year on Dec. 20.
It last cut its key rates by 25 basis points on Nov. 15, two weeks after the Fed lowered its federal funds rate by 25 basis points.
Investors also sought stocks with attractive valuations, said Nestor Aguila, president of DA Market Securities. — Technistock