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Philippine Stocks Drop Most in Asia on Valuations: Manila Mover

Traders work on the trading floor of the Philippines Stock Exchange in Makati City in Manila. Photographer: Brent Lewin/Bloomberg
Traders work on the trading floor of the Philippines Stock Exchange in Makati City in Manila. Photographer: Brent Lewin/Bloomberg

March 14 (Bloomberg) -- Philippine stocks fell for a fourth day, sending the benchmark index to its longest losing streak in three months, after valuations advanced to a nine-year high.

The benchmark Philippine Stock Exchange Index sank 1.2 percent to 6,694.71 at the 3:30 p.m. close 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. Bank of the Philippine Islands, the nation’s biggest lender by market value, lost 4 percent, the biggest decline since Jan. 31.

“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.”

Alliance Global Group Inc., operator of the nation’s biggest casino, fell 1.6 percent to a one-week low. Philippine Long Distance, Aboitiz Equity Ventures Inc. and Aboitiz Power Corp. traded ex-dividend today, contributing to more than half of the index’s 81.85-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.

Fundamentals ‘Bullish’

The gauge has dropped 2 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 after Thailand.

“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 is 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.

Shares in the Philippine stock index are valued at 19.2 times projected 12-month earnings. The MSCI Emerging Markets Index trades at 10.6 times.

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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