Philippine Markets: 23 August 2011

23 August 2011 

USD/PhP:          42.325                        PSEi:             4375.39                        + 84.28 

USD/JPY:           76.67                        PFINC:                   987.00                        + 4.10 

EUR/USD:         1.4477                        BDO:                  58.55                        unch 

GBP/USD:         1.6547                        BPI:                  59.00                        1.60 

PDSTF3M:         1.1085                        MBT:               71.75                        - 1.25 

Prices as of  4:00pm                        Source: Bloomberg, Reuters 

Local stock index firms up amid bargain-hunting 

By: Doris C. Dumlao 

Philippine Daily Inquirer 

MANILA, Philippines—The local stock index rallied back to the 4,300 level on Tuesday as investors saw an opportunity to hunt for bargains as offshore markets stabilized on hopes that the US Federal Reserve may take more action to avert a US recession. 

The main-share Philippine Stock Exchange index added 84.28 points or 1.96 percent to finish at 4,375.39. 

All counters were up but the upswing was still led by mining/oil, followed by services whose sub-indices jumped by 3.94 percent and 2.67 percent, respectively. 

Turnover was heavy at P6 billion. Despite the overall index gain, there were only 67 advancers which were outnumbered by 78 decliners while 39 stocks were unchanged. This was because the biggest trades focused on large-cap stocks. 

Lepanto “A” (open only to local investors), PLDT, SM Investments, Lepanto “B” (open to both local and foreign investors), Philex, Ayala Land, AGI and SM Prime led the index higher. 

While mining stocks like Lepanto continued to benefit from a surge in gold prices to a new record high of $1,900 per ounce, there was a renewed play on index heavyweight PLDT as the Aug. 26 extended deadline for the telecom giant to close a deal to take over Digitel drew near.  The PLDT share price surged by 3.9 percent to P2,430, moving closer to the P2,500 per share share-swap pricing that will enable PLDT to acquire a majority stake in Digitel, assuming the regulatory obstacles are cleared. 

Gus Cosio, president of First Metro Asset Management, noted that apart from the nearing deadline on the Digitel transaction, the stock went on ex-dividend on Tuesday. That means that whoever owns the security on the date will get the dividend payment. 

This brought PLDT’s total pay-out this year to P122 which comes out to a yield of 9.5 percent per annum, Cosio said.  “This is a cheap stock to punt given the further enhanced value should the merger pushed through,” he said. 

Non-PSEi stocks ORE, Premiere and Manila Mining A and B also gained in heavy trade. 

On the other hand, there was profit-taking on San Miguel, Boulevard Holdings, Zeus Holdings, Metrobank and Security Bank. 

“My thoughts continue to be that our market is all right.  A number of stocks represent safe plays for investors with a six-month to one-year horizon.  It may be time to be bold.  If we see good GDP (gross domestic product) numbers,” he said. 

Firmer trading on Wall Street also provided a positive tone for the local market on Tuesday. The Dow Jones Industrial Index was up by 37 points or 0.34 percent overnight – stabilizing after four weeks of losses – on hopes that the US Fed may have something up its sleeves to perk up the fragile US economy. 

BDO UNIBANK, INC. 

Jonathan Ravelas

Chief Market Strategist

(632) 858-3145