Stocks post gains, but peso hits 10-month low
By Elizabeth Sanchez-Lacson, Doris Dumlao
Philippine Daily Inquirer
First Posted 02:45:00 07/05/2008
MANILA, Philippines—The stock market Friday shrugged off concerns brought on by a galloping inflation and looming hike in interest rates, posting gains of 1.25 percent at the end of the trading day.
The Philippine Stock Exchange index (PSEi) rose 29.37 points, or 1.25 percent, to 2,369.21. The all-shares market edged up 12.5 points, or 0.83 percent, to 1,516.49.
The peso closed at 45.45 to the dollar Friday after hitting a 10-month low of 45.70 during trading.
Property stocks were the biggest index gainers, rising 4.4 percent, or 34 points, to 806.2.
Value turnover hit P1.9 billion with 1.04 billion shares changing hands.
Brokers said property stocks, which typically react negatively to prospects of higher interest rates, were the biggest gainers after they posted dirt cheap prices.
“Property stocks were virtually a fire sale,” said Joseph Roxas, president of Eagle Equities Inc. “They were sold down heavily before. They’re very cheap now.”
Condominium and office building developer Megaworld Corp., which was the third most active stock Friday, rose 3.6 percent to P1.14. Recently, Megaworld reached a 52-week low of P1.06.
Alliance Global Group Inc., the holding firm of tycoon Andrew Tan, which owns 42 percent of Megaworld, rose P0.04 or 1.6 percent to P2.50.
Ayala Land Inc. jumped P0.40, or 4.8 percent, to P8.80, after hitting a 52-week low of P7.90 recently.
SM Prime Holdings Inc. also rose P0.40 to P7.00, a gain of 6.0 percent, after hitting a 52-week low of P6.30 a share recently.
“Double-digit inflation was already expected,” said Astro del Castillo of First Grade Holdings. “The market was hardly surprised. The current candy prices of most stocks encouraged buying activity today. Expect this as short-lived. The bears continue to feed on bad news, especially record high oil prices.”
Paul Joseph Garcia, chief investment officer at ING Investment Management Philippines, said the stock market also cheered the overnight bounce in the US market. Wall Street gained 75 points, or 0.65 percent, on listless trades ahead of the Independence Day holiday.
On the currency market, the peso hit a 10-month low of 45.70 to the dollar in intra-day trade.
Currency dealers said the central bank’s aggressive intervention pulled the currency back up to close at 45.45 to the greenback.
They said the market sold down the peso on reports that inflation had surged to a 14-year high of 11.4 percent in June, but the central bank unloaded dollars at P45.60-P45.70 each. They said the market saw a good opportunity to lock in gains, thereby allowing the peso to close slightly stronger than Thursday’s rate of 45.50 to the dollar.
The peso, now Asia’s second worst-performing currency after to the South Korean won, would have fallen deeper if not for the central bank intervention, currency traders said.
Some traders said the central bank accounted for as much as half of the day’s trading volume of $847.8 million.
The peso ended 2.2 percent lower this week from last week’s close of 44.46 to the dollar.
Since the start of the year, the peso has dropped by about 9.2 percent against the greenback, wiping out nearly half of the gains it made last year. With editing by INQUIRER.net
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