Alliance Global Group Inc. and San Miguel Corp. led the Philippine Stock Exchange Index's rally to a record as some investors bought shares of companies trading at a discount to the benchmark gauge.
Alliance Global, which has investments in casino, liquor and fast food, rose to a record. San Miguel, the nation's largest food and drinks company, climbed the most since November 2011 after it was reported the company may sign an agreement this month with the government for a Manila rail project. Megaworld Corp., a builder of office and residential towers, rose more than 6 percent.
Alliance Global rose 3.2 percent to 17.34 pesos, heading for the highest close based on prices going back to April 1999. The stock is trading at 13.6 times estimates for 2013 earnings, data compiled by Bloomberg show.
''Alliance's undemanding valuation makes it a cheap, good alternative consumer play,'' Alex Pomento, head of research at Macquarie Group's Manila unit, said by phone today.
San Miguel, which is valued at 11 times profit, increased 3.3 percent to P108.90, bound for the sharpest gain since Nov. 16, 2011. The company is still waiting for a notice from the finance department on the rail project, President Ramon Ang said in a mobile-phone text message.
The Philippine Stock Exchange Index climbed 1 percent to 6,031.30 as of the noon trading break in Manila, poised for its fourth straight record close. Speculation the government will keep borrowing costs low has pushed the gauge's valuation to 17.2 times estimated earnings, or a 56 percent premium to the MSCI Emerging Markets Index.
''A lot of investors are positive and very optimistic of the nation's prospects this year and some stocks are catching up in terms of valuation,'' Mark Canizares, head of equities at Manulife Philippines, said by phone. ''Stocks that lag in valuations are being bought up on anticipation there's more room for the market to go up this year.''
The benchmark index may climb to 6,800 this year, driven by a 20 percent expansion in earnings, Manila-based First Metro Investment Corp. said in a statement today. The measure rose 33 percent in 2012, its fourth-straight year of gains, as the nation's economic growth accelerated and the central bank cut its benchmark rate four times to a record low 3.5 percent.