(STAR) The stock market surged to a two-month high yesterday with the key index rising by more than 100 points on hopes the Bangko Sentral ng Pilipinas (BSP) will cut its key interest rates next week, analysts said.

At the Philippine Dealing System (PDS), the peso gained 16 centavos to settle at 45.010 from Wednesday’s close of 45.170 to the dollar as most Asian currencies gained ground against the dollar on hopes that the US Federal Reserve will further ease monetary policy.

“The financial market has found renewed optimism on prospects for corporate earnings and the domestic economy this year,” said Lawrence de Leon of Accord Capital Equities.

“There’s speculation the BSP wil cut interest rates next week,” he said. The BSP will hold a policy meeting on Oct.4.

De Leon said investors remained largely unperturbed by domestic political developments.

A Senate investigation is underway on a controversial telecommunications deal worth $330 million between the government and China’s ZTE Corp.

At yesterday’s trading, all sectoral indices rallied, with Wall Street’s overnight gains and positive economic indicators at home also boosting investor confidence, traders said.

At the close, the Philippine composite index was up 101.76 points or 2.9 percent at 3,577.51, its highest level for the day and best finish since July 26, when it finished at 3,659.68.

The broader all-share index jumped 59.81 points or 2.8 percent to 2,222.80.

But property stocks outperformed all other sectors, with investors also betting on a cut in key interest rates when the Philippine central bank holds its policy-setting meeting on Oct 4.

Prakash Sakpal, an economist at ING Bank said the BSP has flagged the possibility of a rate cut following the US Federal Reserve’s move to cut its benchmark rate by a hefty 50 basis points last week.

“We see a 50-50 chance of a 25 basis point rate cut at next week’s policy meeting of the BSP.

Telecomunications giant Philippine Long Distance Telephone Co. (PLDT) extended its record run for the second straight day on its bright earnings prospects and attractive valuation. At yesterday’s trading, PLDT finished up P95 or 3.3 percent at P2,940, after hitting a new all-time high of P2,945 in late trade.

Also among the day’s biggest gainers was Metropolitan Bank & Trust Co, the country’s biggest bank by assets, which rose P1.50 or 2.8 percent to P55.

But shares in property developers took the center stage, with the property sub-index rising 70.23 points, or 4.6 percent, to 1,606.20. Expectations that homebuilders’ earnings will further improve as the outlook for the domestic economy remains rosy also pushed prices of property stocks higher, de Leon said.

There were 96 gainers and 25 decliners, while 47 stocks were flat. A total of 4.7 billion shares valued at P5.9 billion changed hands.

Shares in Ayala Land, the country’s largest property developer, rose 50 centavos to P16.50. San Miguel A shares were steady at P50.

A total of 4.7 billion shares valued at P5.9 billion changed hands.

At the PDS, total trading volume amounted to $671 million on an average rate of 45.063 to the dollar. The peso opened strong at 45.130 before hitting a high of 45 and a low of 45.160 to $1. — AFP

Chief News Editor: Sol Jose Vanzi

All rights reserved