(UPDATE)
Shares close higher on bargain-hunting
By Rocel Felix
Thomson Financial
First Posted 13:21:00 05/09/2008
Trading was cautious throughout the session, with investors opting to wait for the next batch of earnings reports before making any big moves, hoping the numbers would be strong enough to support a sustainable rally despite persistent concerns over rising inflation.
Investors also digested economic data released earlier by the government, which showed Philippine exports fell 6.8 percent in March from a year ago due to weak global demand for electronic products. For the first quarter, overall exports rose a modest 2.7 percent, providing a clue about how the economy performed during the period.
"There's not much action today. There are a lot of reasons for investors to be cautious," said Lawrence de Leon, analyst at Accord Capital Equities.
Manila's 30-company composite index closed up 18.80 points or 0.7 percent at 2,779.42, after moving between 2,759.01 and 2,787.61. The benchmark index was up 2.1 percent from the previous week.
The broader all-share index gained 9.09 points or 0.5 percent at 1,732.77.
There were 68 advancers, 26 decliners, while 65 stocks ended flat.
A total of 1.2 billion shares worth P3.5 billion changed hands.
"We can expect some follow-through buying in the early part of next week as stocks have become attractive, but then the market will go back to fundamentals. We may see some more consolidation, depending on economic data and earnings reports," said Francisco Liboro, president of PCCI Securities.
Index leader Philippine Long Distance Telephone Co. inched up 0.2 percent to P2,595.00.
Power distributor Manila Electric Co. (Meralco) closed up 5.2 percent at P71.00, rebounding from a sell-off earlier this week after at least two brokerages downgraded the stock. The downgrades were made amid mounting political pressure on the power distributor to lower its tariffs and after one of its major shareholders sought a change in management.
"The selling in Meralco was overdone and it (the stock) is very attractive at its current price," said Jose Vistan Jr. research director At AB Capital Securities.
Credit Suisse said earlier it had downgraded Meralco to underperform from neutral with a new target price of P55.00, down from P84.00 previously, citing "heightened political pressure to control electricity prices."
Given this pressure from the government, Credit Suisse cut its earnings forecasts for Meralco on the assumption that the company would be unable to raise its rates until the first half of 2009.
Macquarie Research Equities lowered its target price for Meralco to P78.00 from P108.00, downgraded the stock to neutral, and removed it from its list of top picks in the Philippines.
Macquarie said the Government Service Insurance System's (GSIS) push for a change in management "introduces an element of uncertainty."
GSIS, the pension fund of government employees and owner of a 24-percent stake in Meralco, has been complaining about a lack of transparency in the fund's management.
($1 = P42.60)
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