Philippines stocks boosted by deficit hopes, PLDT leads

Philippines stocks rose more than 2 percent on Tuesday after the government said its $3.5 billion annual budget deficit could be cut sharply by an expected revenue boost from higher import tariffs on oil and new tax measures. The Philippines aims to cap its deficit this year at 197.8 billion pesos ($3.5 billion) and targets a shortfall of 184.5 billion pesos or 3.6 percent of gross domestic product in 2005.
Arroyo said late on Monday evening in a speech that the deficit could be trimmed by about 60 billion pesos by early next year on additional revenues from recent power hikes, higher taxes on imported oil, and more revenues from new bills being considered by Congress.
Energy Secretary Vincent Perez said the government will raise import tariffs on crude soon to 5 percent from 3 percent to boost revenues and help cut the budget shortfall.
"The key bills in Congress are in the last stages of deliberation so that eased worries of a ratings downgrade from foreign agencies," said AB Capital analyst Jose Vistan.
"President Arroyo's announcement of a huge cut in the deficit by next year cheered sentiment."
The main index closed 2.59 percent or 45.08 points higher at 1,787.89 points. It was the market's highest close since November 9. The market is up 24 percent so far this year.
Value turnover rose to 890 million pesos from Friday's 880.4 million pesos.
Gainers outpaced losers 41 to 18, led by dominant phone firm Philippine Long Distance Telephone Co (PLDT) which reported record profits in the third quarter. The country's largest phone firm was up 3.1 percent or 40 pesos at 1,330 pesos.
Second-ranked Globe Telecom Inc, which is jointly owned by Ayala Corp Singapore Telecommunications, rose 2.06 percent or 20 pesos to 990 pesos.
Ayala Corp, the country's biggest conglomerate with interests in banking, telecommunications, and property, was up 4.76 percent or 30 centavos at 6.60 pesos.
Vistan said the market may continue its rally this week as investors price in an improvement in the government's budget shortfall, one of investors' biggest worries about the Philippines.
Moody's Investors Service said last week it had placed the Philippines on review for a possible downgrade due to doubts on the government's ability to rein in its budget deficit.
"Also, the market is supposed to be strong during this period as investors start positioning on stocks that are expected to report rosy full-year profit results like phone leader PLDT," Vistan said.