Philippine Stocks Enter Bull Market as Funds Bet on Growth RallyIan Sayson
Philippine stocks rose, boosting the benchmark index more than 20 percent from an August low, amid speculation a third year of economic growth exceeding 6 percent will attract foreign investors.
The Philippine Stock Exchange Index rose 0.8 percent to 6,892.18 at the close in Manila, entering a bull market after rallying 20.1 percent from its closing level on Aug. 28. Philippine Long Distance Telephone Co. advanced to the highest level since May 9, while Philex Mining Co. climbed to a one-week high. The peso strengthened for the first time in three days, adding 0.1 percent 43.85 per dollar.
The government said this week it’s keeping its economic growth target of 6.5 percent to 7.5 percent for this year, even after expansion slowed in the first quarter. Southeast Asia’s fifth-biggest economy capped its strongest two-year expansion since the 1950s in 2013. Overseas investors have purchased a net $589.8 million of Philippine shares since March 31, poised for the largest three-month inflow in five quarters.
“The Philippines remains attractive for international investors, as indicated by the flow of funds,” Jonathan Ravelas, chief market strategist at BDO Unibank Inc., said by phone. “Some investors are betting gross domestic product growth will accelerate from the first quarter.”
Standard & Poor’s raised the Philippines’s credit rating to investment grade in May, following a similar move by Moody’s Investors Service in October, boosting confidence that low borrowing costs will sustain growth.
Quarterly GDP growth will exceed 6.5 percent for the rest of the year, driven by a recovery in industry and services, Economic Planning Secretary Arsenio Balisacan said on June 23. Expansion slowed to 5.7 percent in the first three months of 2014, while inflation quickened to 4.5 percent in May, the fastest pace since November 2011.
Philex Mining Corp., the nation’s biggest metals producer, climbed 2.8 percent today. The company, which obtained clearance from the government earlier this month to resume operations at its Padcal mine after a toxic spill in 2012, said yesterday it may extend the mine’s life beyond 2020. BDO Unibank Inc. climbed 2.6 percent, the most since May 23.
International investors have bought a net $980.1 million of Philippine shares this year, compared with $678.4 million net inflow for 2013 and $2.55 billion for 2012, according to exchange data compiled by Bloomberg.
The benchmark measure is valued at 17.7 times projected 12-month earnings, the most expensive in Asia and 20 percent higher than its five-year average. The MSCI Emerging Markets Index trades at a multiple of 10.9.