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Philippine Stocks Rise Most in a Year as Consumer Shares Rally

June 18 (Bloomberg) -- Philippine stocks rose the most in 13 months after funds sent home by overseas Filipinos grew more than expected and UBS AG said domestic consumption is continuing its “growth momentum.”

SM Investments Corp., owner of the nation’s biggest grocery and department store operators, rose 4.2 percent. Philippine Long Distance Telephone Co., owner of the nation’s largest mobile phone services provider, jumped 2.8 percent. Alliance Global Group Inc. gained 4 percent after the Philippine Daily Inquirer reported that the nation’s gaming revenue may reach $2.5 billion this year.

The Philippine Stock Exchange Index climbed 2.8 percent to 6,518.77 at the close of trading in Manila, the biggest gain since May 17, 2012. The gauge has rebounded 6.6 percent since sinking to a five-month low on June 13. Funds sent home by Filipinos, which account for 10 percent of the economy, grew 6.1 percent in April from a year earlier, central bank data showed yesterday. That beat the 4.1 percent median estimate in a Bloomberg survey.

“Positive sentiments brought about by better-than-expected remittance growth is helping sustain the market rebound,” said Astro del Castillo, managing director at First Grade Finance Inc. in Manila. “The positive consumer outlook by UBS reinforces expectations that spending will remain resilient.”

The Philippine Stock Exchange Index has rallied 12.2 percent this year and closed at a record 7,392.20 on May 15 as economic growth accelerated to 7.8 percent in the first quarter, the fastest pace in almost three years. Two upgrades in the nation’s sovereign debt rating to investment grade helped drive the gauge’s valuation to a record of 20.8 times 12-month estimated earnings.

Fed Stimulus

The measure has lost 12 percent from its May peak after U.S. Federal Reserve Chairman Ben S. Bernanke’s comment on May 22 that policy makers could consider reducing the pace of monetary stimulus triggered a selloff by overseas investors. The Philippine index plunged 6.9 percent last week, the sharpest loss since September 2011, after data showed exports shrank more than expected in April and unemployment for the three months through April climbed to a three-year high.

“The market is still trying to rebound from an oversold condition,” Juanis Barredo, chief technical analyst at Financial Group Inc., the largest Philippine online stock brokerage, said today.

Earnings at the nation’s consumer sector companies are forecast to grow 17 percent in the next two years, boosted by double-digit sales growth, according to a UBS report today.

“Established brands with extensive distribution networks, sound strategies and a good track record on execution will be the winners,” Chesca Bugia Tenorio, a UBS analyst, wrote in the report. “Overall consumption growth is evident in the food-manufacturing and restaurant segments.”

Jollibee, Robina

SM Investments climbed to 1,045 pesos. Puregold Price Club Inc., the nation’s second-largest grocery and hypermarket store operator, jumped 4.5 percent to 37.50 pesos. Jollibee Foods Corp., the country’s biggest restaurant operator, climbed 2.8 percent to 140.80 pesos. Puregold was raised to buy from sell while both SM Investments and Jollibee were raised to neutral from sell at UBS, according to today’s report.

Universal Robina Corp., the maker of snack food and bottled iced tea, rallied 8.2 percent to 119 pesos, the sharpest gain since Nov. 16, 2011. SM Prime Holdings Inc., the nation’s biggest shopping mall operator, climbed 3 percent to 16.96 pesos.

SM Development Corp. jumped 5.5 percent to 7.92 pesos, leading an advance among homebuilders. Overseas Filipinos account for 40 percent to 50 percent of new home sales, the Philippine unit of CB Richard Ellis said on June. 5.

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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