MANILA, January 14, 2005 (STAR) By Des Ferriols  -  The local financial markets rallied yesterday, with the peso closing to its strongest finish in more than five months and the stock market surging by 44.54 points to settle at 1,865.11 points.

At the Philippine Dealing System (PDS), the peso continued to gain more ground against the dollar, closing at 55.670 to $1 on strong dollar inflow arising from Kirin Brewery’s acquisition of another 10 percent of San Miguel Corp. (SMC).

Yesterday’s closing rate was the peso’s strongest finish since Aug. 12 last year.

At the Philippine Dealing System (PDS), the benchmark 30-company Philippine Stock Exchange Index rose by a strong 44.54 points, or 2.5 percent, at 1,865.11, after shedding 1.4 percent Wednesday.

A positive corporate outlook also helped drive the market’s advance, traders said.

"The outlook for corporate profits is very good, so without any bad news in the headlines, fund managers felt secure enough to pick up one or two blue chips," said AB Capital Securities research director Jose Vistan.

Substantial gains made by the peso against the dollar also helped fuel the market’s rally, traders said.

"Foreign equity inflows are helping the peso, partly because of the positive outlook for corporates," Vistan said. "And the weaker dollar helps companies, as it makes borrowing abroad less expensive.

The Bangko Sentral ng Pilipinas (BSP) said the peso is finally moving in tandem with the rest of the region.

"At least now, we are going in the same direction as the rest of the region, even if these are baby steps." BSP Governor Rafael B. Buenaventura said.

The BSP chief said he expects the peso to remain relatively strong in the first half of the year.

The peso hit an intraday high of 55.610 and a low of 55.785 to $1. Total transactions hit a record $371.50 million. Investors are starting to position

They said investors were also positioning themselves in stocks expected to report strong profits for 2004, and were buoyed by positive economic news such as a sharp rise in November exports and the current strong showing of the peso.

Turnover at the stock market was 1.67 billion shares valued at P1.59 billion from 1.77 billion shares worth P1.23 billion on Wednesday.

The broader all-shares index fell 10.13 points to 1,156.48. Gainers beat losers 61 to 12, with 43 stocks unchanged.

"Some investors are already taking aggressive positions on select blue chips, especially those where the share prices remain cheap but are expected to deliver strong growth in profits relative to the others," said Citiseconline.com analyst Mark Alan Canizares.

He said the market was poised to test its recent near-five year high of 1,879.20 in the coming sessions.

"We went through a very deep decline yesterday and the market sharply rebounded on account of the relatively good economic releases, a fairly strong peso and the robust performance of some blue chips in 2004," Unicapital Securities analyst Elena Ponceca said.

PLDT was the most actively traded stock, up P30 or 2.27 percent at P1,350.

Dealers said aggressive buying emerged after the stock had fallen sharply in recent days.

A statement by PLDT chairman Manuel Pangilinan – that the country’s largest telecommunications carrier expected to report a 2004 net profit higher than its target of P24 billion – also boosted sentiment towards the stock.

Bank of the Philippine Islands was up 50 centavos at P53.50.

Ayala Land gained 40 centavos to P7.70, while parent Ayala Corp. rose 40 centavos to P7.10. SM Prime was up 20 centavos at P8. Globe Telecom rose 30 pesos to P930.

San Miguel B shares, available to foreign investors, was down P1 to P78 s and San Miguel A, limited to local investors, was unchanged at P58. – AFP

Reported by: Sol Jose Vanzi

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