Philippines share prices closed 2.99 percent higher on Thursday, following tame inflation data which bolstered hopes the central bank would trim its key interest rates soon, dealers said.
Expectations of a rate cut along with another rally on Wall Street overnight eased investor worries on the damage wrought on the economy last week by Typhoon Xangsane, they said. The composite index was up 74.24 points at 2,561.06 having traded between 2,561.89 and 2,486.82 points.
The broader all-share index rose 38.67 points to 1,572.16. Gainers led losers 78 to 23 with 49 unchanged. Turnover totalled 2.1 billion shares valued at 7.8 billion pesos (156 million dollars), which included block sales of shares of Robinsons Land Corp, following its stock offering.
The peso averaged at 50.04 to the dollar in mid-day trade. Consumer prices rose an average 5.7 percent in September, the slowest inflation rate since mid-2004, reflecting the impact of a strong peso and lower oil prices, data from the National Statistics Office showed. "The sustained easing of inflation may prompt the central bank to lower interest rates, which is good for the economy.
"The rally on Wall Street also bolstered sentiment," said Ron Rodrigo of Unicapital Securities. Central bank governor Amando Tetangco said the downward trend in inflation "gives us flexibility in our monetary policy, which we will again review next month."
"We expect the Philippine central bank to hold rates unchanged in the November 2 monetary policy meeting, although there is a moderate risk of a rate cut at end-2006 should the Fed decide to lower its key rates in the fourth quarter," United Overseas Bank of Singapore said in its latest quarterly outlook.
Robinsons Land, the most actively traded stock, jumped one peso to 14.00 pesos. Company president Lance Gokongwei said they managed to raise about five billion pesos from the recent stock offering, which will partly fund the capital expenditure budget of 15 billion pesos over the next two years.
Philippine Long Distance Telephone Co rebounded from recent losses, closing 60 pesos higher at 2,225.00 pesos. Ayala Corp rose 20 pesos to 472.50 pesos and unit Ayala Land Inc was up 50 centavos at 14.25 pesos. Food and beverage firm San Miguel Corp's A-shares advanced 50 centavos to 65.50 pesos and its B-shares rose one peso to 77.50 pesos.