Philippine stocks gained the most in Asia and government bonds rose on speculation the nation will win an investment-grade rating next year after Standard & Poor’s raised its credit outlook to positive.
S&P, which ranks the Philippines BB+, the highest junk level, cited improved governance and public finances for the revision as official data showed Dec. 19 that tax revenue climbed to a record. President Benigno Aquino signed a law yesterday that will raise excise duty on cigarettes and alcohol, which Finance Secretary Cesar Purisima said will generate an additional 34 billion pesos ($826 million) in 2013.
“We had pretty good news yesterday with S&P’s upgrade from neutral to positive,” said Jill Singian, a bond portfolio manager at Bank of the Philippine Islands in Manila. “It’s giving a lot of support to buying interest but players will not make a bold move today. We are going into a long weekend.”
Local financial markets will be closed on Monday and Tuesday for the Christmas holidays.
The Philippine Stock Exchange Index climbed 0.5 percent, the biggest advance among Asian benchmark gauges today, to close at 5,823.94 in Manila. JG Summit Holdings Inc. led the advance, climbing 3.2 percent, the most in a month. SM Prime Holdings added 2.2 percent, rising for a third day.
The yield on the 6.125 percent notes due October 2037 declined two basis points, or 0.02 percentage point, to 5.64 percent, according to prices from Tradition Financial Services. The rate advanced two basis points this week and has dropped 28 basis points since the securities were issued in October.
The peso was little changed at 41.075 per dollar, compared with 41.073 yesterday and 41.09 at the end of last week, according to Tullett Prebon Plc. The currency has appreciated 6.7 percent this year, the second-best performer in Asia after the South Korean won.
Bangko Sentral ng Pilipinas will announce measures next week to manage capital inflows, Deputy Governor Nestor Espenilla told reporters in Manila late yesterday.
One-month implied volatility, a measure of expected moves in the exchange rate used to price options, was unchanged at 4.4 percent today and this week. It fell 335 basis points this year.