RP stocks rebound on bargain-hunting


Posted at Jul 04 2008 12:51 PM | Updated as of Jul 04 2008 08:51 PM

Stocks rebounded on Friday as investors sought bargains following the market's five-day losing streak but thin turnover showed cautious trading amid runaway inflation.

The composite index rose 29.37 points or 1.3 percent to 2,369.21.

The broader all-share index gained 12.50 points or 0.83 percent at 1,516.49.

Gainers beat losers, 60 to 31, while 48 stocks were unchanged.

A total of 1.04 billion shares worth only P1.9 billion were traded.

"This is just a relief rally because of the fact that the US market did not continue to come down after entering bearish territory. And after several days of decline, stock prices were already attractive to some investors," said Jose Vistan, AB Capital Securities research head.

However, Vistan said that the overall market sentiment remains dismal due to rising inflation.

"Investors are still cautious. High oil prices will continue to put upward pressure on inflation."

Before the opening bell, the government announced that annual inflation surged to a 14-year high of 11.4 percent in June, triggering worries that the central bank will raise its benchmark interest rates again.

This is the first time that inflation hit double digits since January 1999.

Prices of food rose 17.4 percent from 14.2 percent in May while the fuel, light and water index climbed at a slower pace of 7.6 percent from 8.2 percent. The Philippines imports nearly all its fuel requirements and has been considered as one of the world's biggest rice importer.

Oil prices continued to touch record highs on supply worries and the weakening dollar. In Asian trade Friday, New York's main oil futures contract, light sweet crude for August delivery, rose to P145.47 a barrel from its record close of $145.29 at the New York Mercantile Exchange.

Although the central bank sees inflation easing after the third quarter of this year, it said tightening of monetary policy was needed to temper demand-side pressures.

The central bank last raised its key interest rates on June 5 by a quarter-percentage point. It is expected to increase its rates again by at least 50 basis points on its July 17 meeting.

"The central bank will again be forced to adjust its rates. This has been a dilemma since it also has to take into consideration possible damage to the economy," Vistan noted.

Market heavyweight Philippine Long Distance Telephone Co. and top conglomerate Ayala Corp. led today's advance. PLDT closed up P15.00 or 0.6 percent at 2,345.00 while Ayala Corp. jumped P5.00 or 2.0 percent to P260.00.

Property giant Megaworld Cop. recovered P0.04 or 3.6 percent at P1.14 after tumbling 6.8 percent in the previous session.

Ayala-owned Manila Water Co. rose P0.25 or 1.4 percent to P17.75. The company had announced that it won a five-year, $15-million water supply management contract in Ho Chi Minh City in Vietnam.