Philippine market extends gain on blue chips buying

Screen grab of Philippine Stock Exchange index as of December 20, 2011 01:01:00 PM from pse.com.ph

MANILA, Philippines—The local stock barometer extended gains on Tuesday as the market snapped up selected blue chips still led by the Philippine Long Distance Telephone Co. (PLDT) and the ShoeMart (SM) stocks.

The main-share Philippine Stock Exchange index added 24.06 points, or 0.56 percent, to close at 4,342.18, aided by the services counter, which surged by 1.64 percent on the back of gains eked out by telecom stocks PLDT, Globe Telecom and Digitel.

Value turnover was high at P20 billion, including some P11 billion worth of block transactions on tycoon Henry Sy’s conglomerate SM Investments at P550 per share.

“For the last two weeks, we’ve been experiencing foreign buying, which was, however, negated by some selling of local investors. But despite the fact that US markets are not strong, local markets continue to surge. I think one of the reasons is the recent upgrade in credit outlook. Foreign players are counting on the possibility that we’ll have an upgrade on sovereign credit in the near term,” said AsiaSec Equities chief strategist Manny Cruz.

Overnight, the Dow Jones Industrial Index gave up 100.13 points, or 0.84 percent, to finish at 11,766.26, still weighed down by debt concerns in the eurozone.

Last week, credit watcher Standard & Poor’s put the Philippine government on a “positive” credit watch, suggesting the possibility that it could upgrade within the next 12 to 24 months its debt rating, currently at two notches below investment grade.

Aside from the optimism created by the PLDT-Digitel consolidation, Cruz said telecom stocks were trading favorably due to prospects of a very good dividend yield. “That’s why institutional long-term funds are accumulating,” he said.

The most actively traded stocks were SM Investments, SMDC and PLDT. SM Investments and SMDC were up by 0.46 percent and 3.9 percent, respectively, to P550 and P6.94. PLDT shares surged further by 2.3 percent to close at P2,592, which is now very near its 52-week high.

In the case of SM Investments, Cruz said the market was upbeat on all subsidiaries, making this holding firm a more attractive alternative compared with other listed conglomerates.

Apart from the services counter, the industrial, holding firm and property counters rated marginally higher, offsetting the decline of the financial and mining/oil sub-indices.

Trading activity was still concentrated on selected blue chips. Despite the overall index advance, the 71 advancers were still outnumbered, though only slightly, by 79 decliners. Forty stocks were unchanged.

Metrobank, Digitel, AGI, Globe, URC, AEV and SM Prime also traded higher.

On the other hand, the PSEi’s gains were tempered by the decline of EDC, MPIC, Ayala Corp. and BPI. Other stocks like FLI, Puregold and Lepanto A (open only to local investors) also faltered.