May 17 (Bloomberg) -- Philippine stocks fell the most among Asian emerging markets, extending a decline from a record, after valuations surged and on speculation first-quarter economic growth will weaken.
Universal Robina Corp. fell 2.2 percent, the most since April 23, after Credit Suisse Group AG wrote in a report today that it’s among stocks that may lead a decline of as much as 8.4 percent in the Philippine benchmark index. SM Prime Holdings Inc. and Alliance Global Group Inc. dropped at least 2.3 percent. Asia United Bank rose as much as 11 percent on its trading debut.
The Philippine Stock Exchange Index fell 0.4 percent to 7,279.87 at the close in Manila, paring a sixth straight weekly gain to 0.2 percent. The gauge climbed to an all-time high on May 15, pushing valuations to 20.9 times projected 12-month earnings, almost twice the MSCI Emerging Markets Index’s multiple. The government reports first-quarter gross domestic product growth data on May 30.
“After a good run, the market is susceptible to a correction,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “Its valuation, historically and relative to the region, is expensive. Concerns that first-quarter economic growth may be weaker are further fueling the prospects of a correction.”
The Philippine index may decline to 6,700, Credit Suisse Group AG analyst Alvin Tan wrote in a note dated today. Stocks such as SM Investments Corp., Ayala Land Inc. and Universal Robina that have become “overvalued” may lead the drop, he wrote. Since 2009, Philippine stock market corrections have “lasted at most two months and by about 11 percent,” according to the note.
“While we remain positive over the market’s medium- to long-term prospects, a correction is likely to happen shortly,” Tan wrote.
First-quarter GDP growth may be 4.5 percent, according to Tan, who cited weakening electricity sales, government revenue, exports and remittances. That compares with the 5.8 percent mean growth estimate of nine economists in a Bloomberg survey.
The $225 billion Philippine economy grew 6.6 percent last year, more than economists estimated, as government spending, consumption and investment rose. The Bangko Sentral ng Pilipinas left its benchmark interest rate at a record-low 3.5 percent in January. The authority cut last month the rate it pays on so-called special deposit accounts, which hold about $46 billion, to spur lending.
The benchmark index has surged 45 percent in the past 12 months as economic growth beat estimates, the central bank kept interest rates at a record low and Fitch Ratings and Standard & Poor’s granted the nation its first investment-grade credit ratings.
Universal Robina, the country’s biggest bottler of iced tea, fell to 127.9 pesos. Ayala Land Inc., the nation’s largest property developer, sank 1.7 percent, the sharpest loss since May 2.
SM Prime, the nation’s largest shopping mall operator, dropped 2.7 percent. SM Investments Corp., billionaire Henry Sy’s holding company, slid 0.8 percent, ending a six-day rally. Alliance Global, which owns the operator of Manila’s biggest casino, declined 2.3 percent to the lowest close since May 9.
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