Philippine Stocks Rise to Record; Metrobank, San Miguel Advance

Philippine stocks advanced, sending the index to a record after an unexpected slowdown in inflation, giving the central bank more room to lower borrowing costs. Bank of the Philippine Islands and Metropolitan Bank & Trust (MBT) Co. rose.

``Stable inflation supports the outlook that the central bank will keep interest rates low,'' said Jerome Gonzalez, who helps manage $65 million at Manila-based PhilEquity Management Inc.

San Miguel Corp. (SMC) rose after it confirmed talks for the possible sale of its dairy and juice business in Australia to Kirin Brewery Co. IPVG Corp. gained after the software maker and provider of back office services said it agreed to sell a stake to ING Bank NV's Manila branch, giving it funds for expansion.

The Philippine Stock Exchange Index (PCOMP) jumped 70.66, or 1.9 percent, to 3802.32 at the close in Manila, a record high. Today's gain is the biggest since a 2.4 percent surge on June 14.

Bank of the Philippine Islands (BPI), the nation's largest lender by market value, rose 1 peso, or 1.4 percent, to 72 pesos. Metropolitan Bank, the largest lender by assets, added 1.50 pesos, or 2.1 percent, to 72.50 pesos.

Philippine consumer prices rose 2.3 percent from a year earlier, after increasing 2.4 percent in May, the National Statistics Office said in Manila today. Economists expected a 2.5 percent inflation rate, a Bloomberg survey showed.

Central bank Governor Amando Tetangco said the recent inflation data ``casts a benign outlook'' and will be ``considered'' at the July 12 meeting on Philippine interest rates. The central bank has said it may cut interest rates if money supply growth slows and inflation stays low.

Low Interest Rates

In November, the central bank cut interest payments on overnight deposits exceeding 5 billion pesos to 5.5 percent and lowered the rate paid on amounts in excess of 10 billion pesos to 3.5 percent to push banks to lend. The benchmark has been held at 7.5 percent since October 2005.

``It's advantageous for the economy to keep interest rates low,'' Gonzalez said. ``The low interest rate environment has spurred demand for loans and consumer spending.''

SM Prime (SMPH) Holdings Inc., the nation's largest shopping mall operator, gained 1 peso, or 8.2 percent, to 13.25 pesos, its biggest gain in more than a year. Jollibee Foods Corp. (JFC), the No. 1 fast-food company, added 2.50 pesos, or 4.7 percent, to 55.50. Philippine Long Distance, the biggest phone company, climbed 30 pesos, or 1.1 percent, to 2720, the highest in more than five months.

Separately, San Miguel A shares, which are reserved for Filipinos, climbed 1.50 pesos, or 0.6 percent, to 75.50. Company President Ramon Ang said the largest Philippine food and drinks company may sell its unit in Australia to Kirin, confirming a report today by the Australian Financial Review.

`Hot' IPO

Class B shares of San Miguel, which have no ownership restrictions, jumped 3.50 pesos, or 4.2 percent, to 86.50 pesos, the highest in almost seven weeks.

IPVG rose 50 centavos, or 5.9 percent, to 9 pesos, bringing this week's gain to 29 percent. The company agreed to sell 41.67 million IPVG shares for 250 million pesos ($5.42 million), or 6 pesos a share, to ING Bank's local unit.

ABS-CBN (ABS) Broadcasting Corp., the nation's largest TV and radio network operator, climbed 1 peso, or 3.2 percent, to 32 on speculation demand for the stock will be boosted by rival GMA Network Inc.'s initial share sale.

``GMA's initial public offering is expected to be hot and it seems that sentiment is spilling into ABS-CBN,'' Gonzalez said. ABS-CBN shares could climb should GMA get a ``good price'' in its initial share sale, he said.

Shares worth 5.29 billion pesos were traded, 9.3 percent less than the three-month daily average. Gainers beat losers, three to one in the broader market. Forty seven stocks were unchanged.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

To contact the editor responsible for this story: James Regan at jregan8@bloomberg.net

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