Philippine Stocks Advance Most Since 2008 as Valuations Tumble

Philippine stocks rallied, sending the benchmark equities index to its biggest gain in almost five years, after valuations tumbled to a seven-month low.

The Philippine Stock Exchange Index (PCOMP) jumped 5.7 percent to 6,118.94 at the close of trading in Manila, the largest advance since Nov. 25, 2008. The gauge entered a bear market yesterday after falling more than 20 percent from a record 7,392.20 set on May 15. The slump erased $65 billion in market capitalization from the nation’s shares.

“Valuations have reached reasonable and attractive levels that are hard to pass up,” said Allan Yu, who helps manage $10 billion at Manila-based Metropolitan Bank & Trust Co. Still, “the market will remain volatile as investors remain concerned over the U.S. tapering its stimulus and the slowdown in China.”

The index traded at 16.1 times projected 12-month earnings yesterday, the cheapest since Nov. 23, down from a record 20.8 times on May 15. That compares with the MSCI Emerging Markets Index’s 9.4 times. The Philippine gauge’s 30-day volatility climbed to 42.7 today, the highest since December 2008.

The 14-day relative strength index for half of the measure’s 30 stocks has dropped to less than 30, a level some investors see as a signal that shares are poised to rise. Eight stocks are at 52-week lows, the most since September 2011.

Jollibee Foods Corp. (JFC), the nation’s largest restaurant operator, climbed 9.9 percent. Manila Water Co., which services half of the capital, jumped 12 percent, the steepest climb since Nov. 3, 2008.

‘Good Time’

SM Investments Corp. (SM), owner of the nation’s biggest bank by assets and the largest shopping mall operator, jumped 6.4 percent, the largest gain since Feb. 2, 2012. Ayala Land Inc. (ALI), the country’s largest property developer, climbed 7.4 percent, the sharpest rise since Sept. 9, 2010.

Philippine stocks slumped from a record as overseas investors sold shares after Federal Reserve Chairman Ben S. Bernanke said on May 22 the central bank could consider paring stimulus if the U.S. employment market showed sustainable improvement. Higher money-market rates in China this month signaled tighter liquidity may hurt the nation’s growth outlook.

Foreign funds sold a net $42.9 million of Philippine shares yesterday, extending this month’s sell-off to $387.3 million, heading for a record monthly outflow. Overseas investors have still purchased a net $1.35 billion of local stocks this year.

It’s a “good time” to start buying as stocks may be “bottoming out,” Eduardo Francisco, president at BDO Capital Corp., one the nation’s biggest arrangers of bond and share sales, said by phone today.

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

To contact the editor responsible for this story: Darren Boey at dboey@bloomberg.net

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