Stocks rally, hit 19-month high

MANILA, Philippines – Share prices rallied yesterday, pushing the composite index to its highest level in 19 months, as an upbeat Wall St. and continued interest in select blue chips lifted investor sentiment, dealers said.

The 30-company Philippine Stock Exchange index (PSEi) gained 81 points or 2.78 percent to close at 2,996.71 while the broader all-shares index added 1.86 percent to 1,866.25.

Turnover was heavy with 6.94 billion shares worth P5.18 billion changing hands. There were 88 gainers against 33 losers, while 50 stocks were unchanged.

Maria Arlysa E. Narciso of AB Capital Securities Inc. said the market’s strong performance was influenced by the continued run-up of Philex Mining shares, rising 14.28 percent yesterday to a record high P18, and the sustained play on Manila Electric Co. (Meralco) – both involved in a fierce tug-of-war for control among their major shareholders.

“Though the index has been moving sideways for more than month, recent activities in stocks such as Philex and Meralco have been pushing the PSEi to advance. Without such influences, the index could have moved at a more normal pace,” Narciso said.

Earlier reports indicated that former Trade Minister Roberto V. Ongpin and state pension fund Government Service Insurance System have been accumulating shares in the country’s biggest and most profitable mining firm in anticipation of a possible bidding war between First Pacific Co. Ltd. of Hong Kong and San Miguel Corp. president Ramon S. Ang.

Metro Pacific Investment Corp. (MPIC), the local flagship of First Pacific, continued its downward spiral, falling 7.14 percent as investors expressed concern over a deal to purchase the Lopez family’s 6.7 percent stake or half of its holdings in Meralco for P300 a share. MPIC closed at P2.60 yesterday.

MPIC initially offered to pay less than P200 per share for the Lopezes’ shareholdings. GSIS – a minority stockholder in Meralco – threatened to sue MPIC if it insists on not making a tender offer for the remaining shares held by minority shareholders in the power distribution giant.

Meralco closed at P210 apiece or 6.6 percent up from its previous value. Also, Narciso said the market was also buoyed by the rally in the US markets, with the Dow Jones storming to its highest level in more than a year, driven by higher prices for gold, oil and other commodities as well as low interest rates.

Ending at 10,226, this was the Dow’s best close since Oct. 3 of last year. “The US market’s performance was encouraged by the G20 decision to continue pouring in stimulus since economies have not yet fully recovered. Investors took the risk and began a buying spree last night. Though it seemed good at first, providing stimulus packages may also have after effects. The dollar’s value fell as this decision could mean inflation in the next few years,” Narciso said.

She, however, believes the local market still has room for growth. “Following a long term uptrend, the PSEi has not turned overbought yet. Investors are still waiting for earnings report from other companies and economic indicators on how the year will end. Though earlier earnings reports showed improved health, investors remained cautious. As a whole, there was not much aggressiveness in the market’s movements,” she said.

Philstar

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