Index surges to highest level in nearly 7 years

Published by rudy Date posted on April 7, 2006

Share prices rose for a third day, lifting the index to its highest close in almost seven years after the government said its deficit in the first quarter was probably lower than earlier forecast.

Philippine Long Distance Telephone Co. (PLDT), International Container Terminal Services Inc. (ICTSI), and Security Bank & Trust Co. jumped to their highest closes on record, sending the index to its highest since Aug. 27, 1999.

The Philippine Stock Exchange Index added 22.47, or one percent, to 2,220.37 at the noon close, extending a two-day, 0.4 percent gain.

“A lower deficit than what the market has priced in is good for sentiment,’’ said Eduardo Banaag, an equity fund manager at Manila-based First Metro Investment Corp.

The first-quarter deficit was probably lower than the government’s P72 billion estimate for the period, indicating a “stable” fiscal position and sending “a strong signal” that the budget will be balanced by 2008, Finance Undersecretary Gil Beltran said. Beltran said the government may post a surplus this month as individuals and companies pay taxes.

PLDT, the countrys largest phone company, surged P40, or 2.1 percent, to P1,975, its biggest gain since Feb. 15. SM Prime Holdings Inc., its largest shopping mall operator, added 10 centavos, or 1.3 percent, to P7.90, after climbing 2.6 percent in the past two days.

The government has raised taxes to help it trim the budget deficit this year to P125 billion, a seven-year low. It is also betting the additional taxes will help it trim P3.9 trillion of debt, swollen by eight years of budget deficits.

Optimism over the government’s improving finances helped the yield on the two-year bond fall to 7.12 percent on April 3, the lowest since Bloomberg began tracking the two-year securities. The peso has also strengthened, gaining 3.8 percent against the dollar this year, the fourth-biggest gainer among Asian currencies.

“The investment story continues to improve in the Philippines,” Chris Wood, regional strategist at CLSA, said in a report today. “The Philippines is on the brink of a virtuous cycle with the peso having already appreciated and the sovereign bond spread having already declined.”

Ayala Corp., owner of the country’s second-largest lender by assets, its largest property developer, and second-biggest mobile phone company, rose P5, or 1.4 percent, to P357.50. ICTSI, its largest non-government port operator, gained P1, or 8.5 percent, to a record P12.75, as it had its biggest gain since Jan. 17. – Bloomberg

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July


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ly – International Plastic Bag Free Day
 
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Monthly Observances:

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