Philippine Stocks at Record as Peso Gains on Growth Optimism

Philippine stocks rose to a record and the peso approached a five-year high as corporate expansion plans from companies including Ayala Corp. boosted confidence in the nation’s economic and earnings growth.

The Philippine Stock Exchange Index climbed 1.9 percent to 6,435.98 as of 3:30 p.m. in Manila. The peso strengthened 0.3 percent to 40.585 per dollar, according to Tullett Prebon Plc. It reached 40.550 on Jan. 14, the strongest level since March 2008. Government bonds fell.

“This rally stands on firm ground,” said Paul Joseph Garcia, who helps manage the equivalent of $3 billion at Manila-based BPI Asset Management Inc. “Investors are willing to pay a premium for earnings visibility and future prospects.”

Investors have become more bullish on Philippine assets after the nation’s gross domestic product increased 6.6 percent last year, compared with 2011’s 3.9 percent pace. Overseas investors have bought a net $690 million of Philippine equities this year, almost double the level of purchases for the same period in 2012, exchange data show.

The Philippine Stock Exchange Index has jumped 11 percent this year, beating a 3 percent gain in the MSCI Asia Pacific Index. The rally pushed the Philippine gauge’s valuations today to 21 times reported earnings, the highest level in nine years, data compiled by Bloomberg show. The index is valued at 18.4 times estimated profit, the most expensive in the Asia-Pacific region after Japan, the data show.

Higher Volatility

The peso advanced peso advanced 1.2 percent in 2013, Asia’s third-best performance. One-month implied volatility, a measure of expected moves in the exchange rate used to price options, increased 20 basis points today, or 0.20 percentage point, to 4.5 percent. Hundred-day volatility on the Philippine Stock Exchange Index rose to 10.8, the highest level since Nov. 12.

The yield on 6.125 percent bonds due October 2037 increased three basis points to 5.281 percent, according to a noon fixing from the Philippine Dealing & Exchange Corp.

A government report tomorrow may show inflation quickened to 3 percent last month from 2.9 percent in December, according to the median estimate of economists in a Bloomberg News survey.

Ayala, owner of the nation’s biggest developer, advanced 4.1 percent to a record after Managing Director John Eric Francia said the company’s energy unit plans to investment as much as $200 million this year. San Miguel Corp., the country’s biggest food and drinks company, rose 4.6 percent to the highest level in a year as the company confirmed a Philippine Daily Inquirer report that it has set a $35 billion investment plan.

Philippine Long Distance Telephone Co., the nation’s biggest company by market value, increased 2.1 percent to the highest close since Jan. 21. The company expects to achieve its 2012 core profit guidance of 37 billion pesos ($9.1 billion), it said in a Feb. 1 statement after the market closed. The stock was the second-biggest contributor to the benchmark index’s gain today.

Metro Pacific Investments Corp. jumped 2.5 percent. The company has set a 36.3 billion peso budget this year for capital expenditure, Chief Financial Officer David Nicol said.

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