Megaworld Corp. (MEG) shares climbed to a 17-month high in Manila, leading gains among property companies, after central bank Governor Amando Tetangco said interest rates will remain low and indicated a further cut is possible.
Megaworld, a builder of residential and office towers, rose 4.4 percent to 2.39 pesos at the noon trading break, the biggest gainer in the 14-member Philippine Stock Exchange Property Index (PPROP), bound for the highest close since April 27, 2011. The industry gauge added 0.6 percent, heading for a record close based on data going back to October 1994. Filinvest Land Inc. (FLI) climbed 3 percent, heading for the highest since May 4. Empire East Land Holdings Inc. (ELI) increased 2.4 percent.
Tetangco said price growth in the Philippines this year and in 2013 will remain within the central bank’s target, giving monetary authorities space to keep interest rates low. Inflation slowed to 3.6 percent last month, from 3.8 percent in August, the National Statistics Office said today. The central bank held the overnight borrowing rate at a record-low 3.75 percent last month and holds its next policy meeting on Oct. 25.
“Real estate demand is supported by the low interest-rate environment,” said Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO) “Easing inflation allows interest rates to stay low, and low interest rates allow for more economic expansion.”
The benchmark Philippine Stock Exchange index climbed for a fourth day, adding 0.6 percent. The Asian Development Bank raised on Oct. 3 its forecast for Philippine economic growth this year to 5.5 percent, from 4.8 percent, and cut its outlook on inflation to an average 3.5 percent, from an earlier estimate of 3.7 percent.
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