Builders Lead Philippine Stock Gains on Interest-Rate Outlook
Philippine property stocks rose to a record, leading gains in the nation’s equities, as a BusinessMirror report fueled speculation the government will keep borrowing costs low.
Megaworld Corp. (MEG), a builder of residential and office towers, climbed 2.9 percent to 2.87 pesos as of 12:22 p.m. in Manila, heading for the highest close since Feb. 4, 2008. The Philippine Stock Exchange Property Index rose 1.8 percent to a record, beating a 1.6 percent gain in the broader Philippine Stock Exchange Index. (PCOMP)
There are no indicators showing the property industry is heating up, BusinessMirror reported today, citing Bangko Sentral ng Pilipinas Deputy Governor Diwa Guinigundo. Guinigundo can’t be reached in his office for comment. The central bank approved on Nov. 28 measures to broaden monitoring of banks’ real-estate financing to protect against excesses that may lead to a financial crisis.
“The absence of a property bubble gives further support to the outlook that the central bank can keep the low interest-rate environment,” Jonathan Ravelas, chief market strategist at Manila-based BDO Unibank Inc. (BDO), said by phone today. “Signs of a bubble could prompt the central bank to siphon liquidity and one way of doing that is by increasing interest rates.”
The central bank cut its benchmark rate four times in 2012 to a record low 3.5 percent, to boost growth and has said it has room for more reductions.
Ayala Corp. (AC), owner of the nation’s biggest developer, gained 3.4 percent to 542 pesos, heading for a record close based on prices going back to January 1987. Ayala Land Inc. (ALI), its property unit, rose 1.1 percent to 26.95 pesos.
Ayala Corp., which trades at 22.7 times estimated profit, is a cheaper alternative than Ayala Land as a Philippine property play, Ravelas said. Ayala Land is valued at 34.7 times, data compiled by Bloomberg show.
SM Prime Holdings Inc. (SMPH) and Sta. Lucia Land Inc. rose at least 3 percent, the biggest advances in the Philippine property index. Century Properties Group Inc. (CPG), a developer of high-end residential towers, gained 2.1 percent.
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