Philippine stocks fell from a record as valuations soared to a nine-year high.
Philippine Long Distance Telephone Co., the nation’s biggest company by market value, sank 2.6 percent from a four-month high. SM Investments Corp., the second-most valuable, dropped 1.5 percent from a record. Rizal Commercial Banking Corp. climbed to 16-year high.
The Philippine Stock Exchange Index lost 1.1 percent to 6,104.90 at the 3:30 p.m. close of trading in Manila, snapping a three-day rally. The gauge is trading at 17.5 times estimated earnings, the second-most expensive in Asia Pacific after Japan.
“After the sharp rally, investors are entering a phase of reality check,” Astro del Castillo, managing director at Manila-based First Grade Finance Inc., said by phone today. “The market is waiting for confirmation that valuations are supported by earnings.”
The Philippine benchmark index traded yesterday at 19.9 times reported profits, the highest level since the end of 2003, according to data compiled by Bloomberg. The gauge has rallied 5 percent this year, compared with the MSCI Asia Pacific Index’s 2.6 percent gain.
Earnings per share for companies in the 30-stock Philippine benchmark index are forecast to grow 12.6 percent this year, compared with 10.3 percent in 2012, according to estimates compiled by Bloomberg.
Philippine Long Distance snapped a three-day rally that drove the stock yesterday to the highest since Sept. 12, sending its valuation to a record 20.4 times reported earnings. SM Investments is trading at 25.5 times, also an all-time high.
Rizal Bank advanced 4.6 percent to the highest close since Feb. 7, 1997. The stock is trading at 1.82 times price-to-book, compared with the Philippine Stock Exchange Financials Index’s 2.5 multiple.
“A lot of investors are taking notice of the stock because it’s cheap and attractively valued,” RJ Aguirre, analyst at Macquarie Group Ltd.’s Manila unit, said by phone today.