Philippine stocks fell for a fourth day, poised for the longest losing streak in three months, after valuations climbed to a nine-year high.
The benchmark Philippine Stock Exchange Index (PCOMP) sank 1.5 percent to 6,672.91 at the noon break in Manila, the biggest loss among Asian markets. The measure jumped 17 percent this year through March 11 on expectations the nation will win an investment-grade sovereign rating, interest rates will stay low and economic growth will accelerate. That pushed valuations to 21.9 times reported earnings, the highest since December 2003. Philippine Long Distance Telephone Co. (TEL), the biggest company by weighting on the index, dropped to a one-month low.
“The valuation looks too high,” Garry Evans, global head of equity strategy at HSBC Holdings Plc, said in a phone interview today. “While the story is a good one, there’s a limit to how much you can pay. It’s about the most expensive in the world.”
Bank of the Philippine Islands, the nation’s biggest bank by market value, lost 3.4 percent, heading for the biggest decline since Jan. 31. Alliance Global Group Inc. (AGI), operator of the nation’s biggest casino, fell 3 percent, poised for a one- week low. Philippine Long Distance, Aboitiz Equity Ventures Inc. and Aboitiz Power Corp. trade ex-dividend today, contributing to half of the index’s 103.65-point drop.
The measure has surged 292 percent since October 2008, making it the world’s biggest equity bull market. That’s at least 135 percentage points more than every other bull market in emerging and developed nations, data compiled by Bloomberg show.
The gauge has dropped 2.4 percent this week, bound for the biggest weekly loss since July. The measure has advanced 15 percent this year, the biggest gain among major emerging nations in Asia.
“We have been leading gains in Asia for some time, so people are bound to take some money off the table,” Mark Canizares, who helps manage $1.5 billion as head of equities at Manulife Philippines, said by phone from Manila. “This an opportunity to re-enter the market at attractive levels because fundamentals still support a bullish outlook.”
Philippine gross domestic product is forecast to grow as much as 7 percent this year as President Benigno Aquino’s government boosts spending to a record and seeks more than $17 billion of infrastructure investments, Economic Planning Secretary Arsenio Balisacan said on Jan. 31. The economy grew 6.6 percent in 2012 and 3.9 percent in 2011.
The nation’s credit rating, now at the highest speculative grade, will probably be upgraded in the first half, central bank Governor Amando Tetangco said in a Bloomberg Television interview on Jan. 25. Standard & Poor’s raised its outlook on the Philippines to positive from stable on Dec. 20, citing economic growth and the stability of Aquino’s administration.
The Bangko Sentral ng Pilipinas may cut interest rates on central bank deposits at a meeting today. The authority may keep its benchmark overnight borrowing rate at a record low 3.5 percent, according to analysts in a Bloomberg survey.
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