Philippine Stocks Rebound From 8-Month Low on Economic Expansion

Philippine stocks rallied from an eight-month low, sending the index to its biggest gain in two months, after second-quarter economy growth beat estimates.

SM Investments Corp. (SM), owner of the nation’s top shopping mall operator, and International Container Terminal Services Inc. (ICT), the country’s biggest port operator, jumped more than 4 percent. Philippine lenders rallied after a Macquarie Group Ltd. report released yesterday rated the sector overweight. GT Capital Holdings Inc. and LT Group Inc. jumped 13 percent after the bourse said they will be added to the benchmark index.

The Philippine Stock Exchange Index (PCOMP) climbed 3.6 percent to 5,944.21 at the close in Manila, the most since June 26 and ending a two-day slump that sent the measure yesterday to the lowest level since Dec. 18. The nation’s economy expanded 7.5 percent in the second quarter, official data showed. That beat the 7.2 percent median of estimates in a Bloomberg News survey.

“This a strong figure that should support a solid macroeconomic picture for the Philippines,” said Allan Yu, vice president at Metropolitan Bank, the nation’s third-largest money manager with $8.3 billion under management.

The Philippine stock index slumped 6.9 percent in the previous two days on concern local protests over discretionary government budgets will hamper state spending and phasing out of monetary stimulus by the U.S. will spur capital outflows. Foreigners pulled a net $128.5 million from shares yesterday, the most since Oct. 12 and the eighth straight day of sales.

The Philippine stocks index has slumped 10.5 percent this month. The economy expanded more than 7 percent for a fourth straight quarter, withstanding a regional slowdown that has prompted policy makers in Thailand, Malaysia and Indonesia to cut growth estimates.

‘Support Prices’

“This will help support share prices and give investors reason to differentiate Philippines from other countries in the region,” Metropolitan Bank’s Yu said.

The PSE gauge is valued at 16.3 times estimated earnings for the next 12 months, down from a 20.8 peak on May 15. Still, that’s the highest level among 21 developing-nation stock indexes tracked by Bloomberg. The MSCI Emerging Markets Index has a multiple of 9.8 times.

The PSE gauge’s 14-day relative strength index sank to 23.7 yesterday, the lowest since Sept. 26, 2011, and below the 30 level that some traders take as signal an asset is oversold. Ten of the 30 members on the index had a RSI of less than 30 yesterday, the highest proportion since June 25, according to data compiled by Bloomberg. Five of the members reached new 52-week lows, also the most in two months.

“This is a technical rebound,” Alex Pomento, Philippine strategist at the Macquarie’s Manila unit, said by phone. “The market is now picking up on stocks that provide value after a bad battering the past two days.”

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

To contact the editor responsible for this story: Michael Patterson at mpatterson10@bloomberg.net

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