Philippine stocks soar on high GDP growth, U.S. market gains

20:16, May 28, 2010      

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The Philippine market soared past the 3,200-level on Friday as most investors are euphoric over the surprising 7.3 percent growth of the local economy and the Dow Jones industrial index's surge on Thursday.

The bellwether Philippine Stock Exchange index soared by 3.4 percent or 96.10 points to close at 3,252.63. The broader all- share index gained 2.48 percent or 49.78 points to 2,049.38. The six sub-indices were up by more than two percent. Holding firms sector was the biggest gainer, jumping by 5.15 percent or 105.33 points to 2,150.02.

Advancers led decliners 94 to 26, while 46 shares were unchanged.

Justino Calaycay, an analyst from local brokerage Accord Capital Equities Corp., said local investors rode along with the Dow Jone's overnight advance. While most of them remains cautious, majority decided to position for the long term to take advantage of some undervalued issues.

"The index slipped 0.15 of a point at the opening bell before a strong rally pushed it past 3,200 and never looked back since. This is the market's biggest point gain since May 11 when it added 120.87 points or 3.85 percent higher from the previous day," Calaycay said.

Buyers flocked the U.S. market following a 14,000-drop in weekly initial unemployment claims and a marginal downward revision of first quarter gross domestic product estimates. Lending support was China's assurance that it will remain a long- term investor in Europe. This despite the Eurozone crisis.

The Dow Jones industrial average index jumped by 2.85 percent or 284.54 points to settle at 10,258.99 on Thursday.

DBP-Daiwa Securities, Inc. said the investors were encouraged to enter the local market after the Philippine government announced Thursday morning that the economy grew at a pace of 7.3 percent in the first quarter.

While investors were surprised by the positive developments, things however remain uncertain over Europe and this will continue to affect investors, Calaycay said.

But the developments overseas will be balanced out by positive earnings report by local firms. DBP-Daiwa Securities, Inc. said these companies"have entered a phase of sharp earnings growth in first quarter and are taking full advantage of boosts from larger capital expenditure and higher sales."

"Earnings upgrades may therefore pick up steam as year progresses. Such recovery is narrowing the downside for Philippine stocks, while we anticipate increased upside once external negatives play out," it said.

Most stocks in the 30-company index were scooped up after being sold heavily last week. Among the most actively traded issues are heavyweight Philippine Long Distance Telephone Co., Ayala Corp. and Energy Development Corp.

Source: Xinhua


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