Stocks surge 5.11% fuelled by US rally

MANILA, Philippines - Philippine stocks surged 5.11 percent higher yesterday fuelled by strong gains in the US and European markets as optimism mounted that the global economy is getting back on its feet after the worst recession in decades.

At the Philippine Stock Exchange (PSE), the 30-company composite index surged 139 points to close at 2,859.18 while the all-shares index jumped 3.79 percent to 1,810.36.

Yesterday’s gain was the biggest single day increase since Jan 5, 2009.

“Foreign investors are turning bullish on the Philippines given expectations that there will be growth in the second quarter and that economic prospects are better in the second half of the year,” said Astro del Castillo, managing director of First Grade Holdings Inc.

Across Asia, the upbeat start to the week came after US stocks rose to fresh 2009 highs on Wall Street Friday in response to bright housing data and Federal Reserve chief Ben Bernanke’s comments that global recovery prospects ‘’appear good.’’ recent sharp falls sparked by fears of overheating calmed investors’ nerves across the region.

Analysts said investors take their cue from Wall Street where the Dow Jones Industrial Average surged 1.67 percent on Friday to finish at 9,505.96, posting a fourth straight daily gain.

Yesterday’s trading at the PSE produced   97 gainers against 18 losers and 46 that were unchanged.

At its current level, analysts said the local index looks poised to make another assault at this year’s high. Buying was broad based as 30 of the 32 index stocks were up with the others unchanged. Turnover amounted to 2.42 billion shares worth P4.25 billion.

“We are playing catch up. We were closed on Friday,” so the Philippine market is only reacting to the run-up on Wall Street on Monday, said Jose Vistan of AB Capital Securities Inc.

“The Dow Jones (index) made a new 2009 high,” on Friday. “That strong run-up pulled Asia up as well,’’ Vistan said.

Philippine Long Distance Telephone Co. (PLDT) jumped 4.78 percent to P2,520 while the Manila Electric Co. rose 12.24 percent to P220.

Alliance Global Group Inc. rose 9.3 percent to P4.70, the highest in 19 months, after Credit Suisse raised its target price on the stock to P4.16 from P1.85.

Benpres Holdings Corp.,the company with investments in media and power, climbed 1.4 percent to P3.65   after saying it bought back $260 million of debt from its biggest creditor, reducing its total debt to $70 million. Benpres said it paid Avenue Asia Group $169 million for the debt, or a discount of 35 percent.

Megaworld Corp., the country’s third-largest builder rose 15 percent to P1.42, the most it has gained since May 5, after Credit Suisse raised its price target on the stock. Credit Suisse lifted its target price on Aug. 21 for Megaworld to P1.42 from 87 centavos on better-than-expected second-quarter profit.

Metro Pacific Investments Corp.,the Philippine unit of Hong Kong-listed firm First Pacific Co. Ltd. advanced 5.3 percent to P6 after the Philippine STAR reported a group including Metro Pacific and Harbour Centre Port Terminals got a contract to modernize and develop the Philippines’ oldest port terminal Manila North Harbor.

Meanwhile, oil prices rose in Asian trade bolstered by improved investor sentiment amid widespread hopes for a global economic recovery, analysts said.

 “Sentiment remains broadly supportive of commodities including oil in anticipation of an economic recovery,” said David Moore, a Sydney-based commodity strategist with the Commonwealth Bank of Australia.

New York crude prices scaled new 2009 highs last week, rising above $74 Friday on a weak greenback, an improved US macro-economic outlook and positive eurozone data.