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PHILIPPINE stocks rose close to a record with metal
producers led by Philex Mining Corp. climbing after gold
and copper prices increased.
Ayala
Corp. paced decliners on speculation that four
consecutive weeks of gains have made some shares in the
benchmark expensive relative to earnings.
“Investors are buying mining shares because of the
prospects of good earnings brought about by higher metal
prices,” said Tynee Tan, who helps manage about $1
billion at Rizal Commercial Banking Corp. in Manila.
“Some are taking their gains on the blue chips that have
reached records during the market’s recent run-up.”
The
Philippine Stock Exchange Index rose 37.18, or 1
percent, to 3,861.38 at the close of trading in
Manila,
less than 15 points away from the record reached on
October 8.
Philex,
the nation’s largest metal producer by market value,
surged P1.10, or 13 percent, to P9.30, its biggest rise
since June 2006.
Class A
shares of Lepanto Consolidated Mining Co., which are
reserved for Filipinos, added 2 centavos, or 5.7
percent, to 37 cents, the highest since May 2006. Its
Class B shares, which have no ownership restrictions,
rose 2 centavos, or 5.3 percent, to 40 cents.
Gold for
immediate delivery rose 0.4 percent to $752.40 an ounce
as of 12:12 p.m. in Manila, after increasing 2.2 percent
in the previous four days. Copper for delivery in
December on the Shanghai Futures Exchange gained 0.9
percent to 67,420 yuan ($8,964) a ton in Shanghai.
The
Mining and Oil Index posted the biggest advance among
the six industry groupings in the stock exchange Monday,
surging 7.1 percent to 8,208.26.
A weaker
US dollar will also sustain demand for precious metals
like gold, helping boost earnings of companies that
produce the commodity, according to Tan.
Higher
oil prices also increase the attractiveness of precious
metals as a hedge against inflation, she said.
Oil rose
3 percent last week to $83.69 a barrel. The price of the
fuel for delivery in November last traded 0.1 percent
lower at $83.58 in after-hours trading in New York.
Separately, the peso was near the strongest in seven
years against the US dollar, trading earlier Monday at
P44.065.
“The US
dollar isn’t a safe haven anymore and some investors are
turning to precious commodities like gold to store
value,” Tan said. “The high oil price is also a plus for
precious metals such as gold.”
Ayala
Corp., the third-largest company by market value, lost
P15, or 2.5 percent, to P575, after advancing 25 percent
in the previous five weeks. SM Investments Corp., the
second-largest by market value, decreased P2.50, or 0.6
percent, to P405.
Ayala is
trading at 24 times estimated earnings in the next 12
months while SM Investments is at 21 times, making these
more expensive than the main stock benchmark. The
Philippine Stock Exchange Index is at 19 times estimated
earnings.
Shares
worth P5.21 billion ($118 million) were traded, 5.6
percent less than the six-month daily average. Gainers
beat losers 72 to 46, with 51 stocks unchanged in the
broader market.
Meanwhile, in a separate report datelined Manila,
Bloomberg said that the Philippine Stock Exchange Index
may rise to 4,500 in the next 12 months, 18 percent more
than previously forecast, boosted by a strong peso and a
possible rate cut in the US, UBS AG said in a note to
clients Monday.
A strong
peso will help lower the Philippine government’s cost of
servicing its overseas debts while a rate cut in the US
gives the local central bank room to keep interest rates
low, Jody Santiago, a Manila-based UBS strategist, said.
UBS
previously predicted the main Philippine stock benchmark
to rise to 3,800 in 12 months.
“A
strong peso helps control inflation and lowers the
government’s debt in peso terms,” said Tynee Tan, who
helps manage about $1 billion at Rizal Commercial
Banking Corp. in
Manila. “It supports our bullish sentiment for stocks.”
The
Philippine Stock Exchange Index climbed to a record last
week and has advanced 30 percent this year, making it
the third-best performer among benchmarks in Southeast
Asia.
Adjusted
for the gains in the peso against the US dollar, the
measure has climbed 44 percent this year.
The peso
has risen 11 percent against the dollar this year,
boosted in part by rising money sent home by Filipinos
working abroad and overseas investors’ demand for
Philippine stocks. It was near the strongest in seven
years against the dollar, trading earlier Monday at
P44.065.
The
peso’s rise helped cap the higher cost of oil, which has
to be imported to meet the Philippines’ needs, and
contained inflation at 2.6 percent in the first nine
months of the year compared with the central bank’s 2007
target of 4 percent to 5 percent.
The
strong currency lowers the value of the government’s
overseas debt in peso terms and that could help the
nation win a debt ratings upgrade, according to Jody
Santiago, Manila-based UBS strategist.
--Bloomberg |
