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Friday, July 21, 2006
Shares jump with foreseen end to Fed rate increases
MANILA - Shares advanced sharply yesterday on expectations the cycle of United States interest rate hikes may soon end after the testimony of Federal Reserve Chairman Ben Bernanke.
The benchmark 30-company Philippine Stock Exchange index rose 65.83 points, or three percent, to 2,247.40, after shedding 0.5 percent last Wednesday.
Bernanke’s testimony to the Senate Banking Committee suggested that the Federal Reserve may be near the end of its two-year campaign to raise interest rates.
Local rates
In the Philippines, there are concerns the US economy and interest rates will impact local interest and exchange rates and may prompt the Bangko Sentral ng Pilipinas to raise its rates, lifting borrowing costs.
“Our house position is that the Fed (Federal Reserve) will stop raising rates at 5.25 percent, and I think that’s what the market is focusing on right now,” said ATR Kim Eng Securities research head Edgar Bancod.
Philippine Long Distance Telephone Co. was the most actively traded stock, rising 4.1 percent to P1,900, following the 2.1-percent gain made by the company’s American depositary receipts last Wednesday.
Other actively traded stocks included: Bank of the Philippine Islands, which rose 6.1 percent to P52; Ayala Land, up two percent at P12.50; call center operator Paxys, which gained 2.3 percent to P11; and Megaworld, higher by 2.9 percent at P1.42.
The rally came as no surprise given Wall Street’s overnight advance, which boosted the Dow Jones industrial average two percent and the Nasdaq composite index by 1.8 percent.
Recover
Bancod said the market still has a long way to go before it can completely recover the gains made earlier in the year. The main index fell to its lowest level so far this year at 2,034.49 in June, after rising to its highest level for the year at 2,602.46 in May.
The peso also strengthened yesterday, boosted by Bernanke’s comments.
The dollar closed at P52.290, down sharply from P52.745 last Wednesday. Total volume traded was $588.5 million. (AP)
For Bisaya stories from Cebu. Click here. (July 21, 2006 issue)
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