Stocks rise to 10-year high on upbeat economic outlook

Share prices closed 2.38 percent higher yesterday to levels last seen just prior to the Asian crisis 10 years ago amid upbeat investor outlook for the economy, dealers said.

The Philippine Stock Exchange Index jumped 78.43, or 2.4 percent, to 3,379.37, its highest close since Feb. 10, 1997. The main stock measure is less than a hundred points from its record close of 3,447.60, a level it reached on Feb. 3, 1997.

Some analysts and fund managers expect the index to climb to 3,500 this year.

Meanwhile, the broader all-share index rose 49.44 points to 2,127.55.

Gainers overwhelmed losers 107 to 24, while 50 stocks were unchanged.

A total of 4.9 billion shares worth P5.8 billion changed hands.

"The continuing flow of good news and the technical breakout above the 3,300-point level (yesterday) encouraged investors to buy more stocks," said Astro del Castillo of First Grade Holdings.

"We’re overbought and we expect to consolidate, but it’s so hard to stop the raging bulls," Del Castillo said, adding he sees the next resistance level at 3,400 points.

"But given the market’s 4.5-percent gain in the past two sessions, the bulls need to take a rest."

The market got a lift as the country’s investment rating was raised by advisers to the California Public Employees Retirement System, the largest US pension fund.

"This will draw more funds into the market,’’ said Jerome Gonzalez of PhilEquity Management Inc. "CalPERS is a big fund and fund managers follow each other like a herd.’’

Stocks also tracked Wall Street, which posted a new record close after the US Federal Reserve chairman Ben Bernanke damped speculation that US interest rates will rise. Higher US interest rates will make riskier investments like emerging markets, including the Philippines, less appealing.

"Bernanke’s statement supports the outlook of a low interest rate environment,’’ said Jan Bertulfo, who helps manage about $1 billion at Rizal Commercial Banking Corp. "Investors have again found the appetite for equities.’’

"This means that the US economy continues to be strong despite perceptions of a slowdown," said Ron Rodrigo of Unicapital Securities.

Top-traded Philippine Long Distance Telephone, or PLDT, rose P55 to P2,620 while Ayala Corp. advanced P20 to P660.

Banks outperformed the market, with Metropolitan Bank and Trust gaining P3 to P68 and Banco de Oro adding P2.50 to P64. – AFP