STOCKS  CLIMB TO  SEVEN-YEAR  HIGH

MANILA, OCTOBER 20, 2006
(STAR) Stocks climbed to their highest in more than seven years yesterday on speculation higher dividends will boost demand for the country’s shares and after the government said the economy probably grew faster in the third quarter.

Bank of the Philippine Islands (BPI) gained following reports the bank will pay a record special dividend.

Philippine Long Distance Telephone Co. (PLDT) rose on prospects of rising dividend payments after it said it has up to $800 million a year in free cashflow.

"This highlights that some Philippine companies are very strong generators of cash,’’ said Robrina Go, head of equities at UBS Securities Philippines Inc. ``Investors are attracted to rising dividends.’’

The Philippine Stock Exchange Index surged 50.62, or two percent, to 2597.15 at the noon close, its highest close since July 13, 1999.

Economic Planning Secretary Romulo Neri said that gross domestic product (GDP) probably grew at least 5.5 percent in the third quarter. The government said earlier this year that 2006 growth may not exceed 5.5 percent partly because of higher oil prices.

BPI added 1 peso, or 1.8 percent, to 56, its first gain in 10 days.

The bank, also known as BPI, said earlier yesterday that it will pay a record P2.7 billion or P1 a share, in special dividends this year. The lender, which paid a regular dividend of P1.65 a share earlier this year, also said it sold its 100 percent stake in FEB Savings Bank.

The proposed payout would put BPI’s dividend yield over a 12- month period at 3.4 percent, compared with an average payout ratio of 2.5 percent for stocks on the index.

Ayala Corp added P10, or 2.1 percent, to P492.50, its biggest gain in nine days. The company has paid P8 a share in dividends this year, double the amount it distributed in 2005.

PLDT jumped P70, or 3.2 percent, to P2,265, its highest close in almost three weeks. The company said yesterday that it aims to boost its dividend payout to 70 percent of profit in 2007, compared with 60 percent this year.

SM Investments Corp., which raised this year’s dividend payment by 34 percent, gained P7.50, or 2.8 percent, to P275, a record. Globe Telecom Inc., which increased its dividends in the past three years by an average of 53 percent, rose P15, or 1.4 percent, to P1,115.

"Rising dividends are always good for stocks,’’ said Jerome Gonzalez, who helps manage $20 million at Manila’s PhilEquity Fund. ``Yields go up when dividends rise adding to the potential price appreciation of stocks.’’

Yesterday’s climb extended the main stock index’s rise this year to 24 percent, Southeast Asia’s biggest gainer after the Jakarta Composite Index’s 35 percent climb.

UBS Securities’ Go said the nation’s main stock index will probably climb to 3200 in the next 12 months on optimism that a 5.8 percent expansion in the economy next year will raise earnings growth to 17 percent, compared with about six percent to seven percent this year.

"We are very optimistic with next year’s prospects,’’ said Go. "We expect earnings growth to accelerate on the back of an improving economy.’’

Shares worth P2.49 billion, 20 percent more than the six-month daily average, traded. Gainers edged losers, 88 to 15, with 55 stocks unchanged in the broader market.

JG Summit Holdings Inc. rose 20 centavos, or 2.7 percent, to P7.50, a five-month high. Cebu Air Inc., the company’s wholly-owned airline, said yesterday that its domestic market share has overtaken bigger rival Philippine Airlines Inc.

Cebu Air may also add 10 more new narrow-bodied aircraft to its fleet in 2007 to expand its routes, JG Summit President Lance Gokongwei said.

"Despite the short-term hiccups preventing the market from breaking out of its consolidation range, investors remain generally bullish about the country’s economic prospects," Accord Capital Equities analyst Lawrence de Leon said.

"The peso is strong and the central bank may cut key interest rates soon.

"We ended just a few points shy of the key 2,600-point level, which indicates that these positive economic factors are not being ignored totally despite recent pullbacks."

PLDT president Napoleon Nazareno said Tuesday the company was considering raising its dividend payout to 70 percent of core earnings by next year, from 60 percent this year.

SM Investments Corp extended gains adding P7.50 to P275.

Globe Telecom Inc., which increased its dividends in the past three years by an average of 53 percent, rose P15, or 1.4 percent, to P1,115.

"Rising dividends are always good for stocks,’’ said Jerome Gonzalez, who helps manage $20 million at Manila’s PhilEquity Fund. ``Yields go up when dividends rise adding to the potential price appreciation of stocks.’’

Yesterday’s climb extended the main stock index’s rise this year to 24 percent, Southeast Asia’s biggest gainer after the Jakarta Composite Index’s 35-percent climb.

UBS Securities’ Go said the nation’s main stock index will probably climb to 3,200 in the next 12 months on optimism that a 5.8- percent expansion in the economy next year will raise earnings growth to 17 percent, compared with about six percent to seven percent this year.

"We are very optimistic with next year’s prospects,’’ said Go. "We expect earnings growth to accelerate on the back of an improving economy.’’

Shares worth P2.49 billion, 20 percent more than the six-month daily average, traded. Gainers edged losers, 88 to 15, with 55 stocks unchanged in the broader market.

JG Summit Holdings Inc. rose 20 centavos, or 2.7 percent, to P7.50, a five-month high. Cebu Air Inc., the company’s wholly-owned airline, said yesterday that its domestic market share has overtaken bigger rival Philippine Airlines Inc.

Cebu Air may also add 10 more new narrow-bodied aircraft to its fleet in 2007 to expand its routes, JG Summit President Lance Gokongwei said.

"Despite the short-term hiccups preventing the market from breaking out of its consolidation range, investors remain generally bullish about the country’s economic prospects," Accord Capital Equities analyst Lawrence de Leon said.

"The peso is strong and the central bank may cut key interest rates soon. – AFP


Chief News Editor: Sol Jose Vanzi

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