* Philippine shares close at around 2-1/2-month high
* Philippines is Asia's best performing market so far
* Analysts warn rally may not sustain, Duterte factor a risk
(Adds share performance, updates levels)
By Enrico Dela Cruz and Neil Jerome Morales
MANILA, Jan 10 Philippine shares jumped to their
highest in more than two months on Tuesday, extending a run of
gains driven by bargain-hunting foreign investors that have made
it Asia's best performing market so far this year.
Despite the index's climb above 7,000 points for the first
time in almost a month, analysts sought to temper expectations
of a sustained rally, warning the volatility that marked the
nation's stocks and led to declines last year, could return.
Data from the Philippine Stock Exchange show net foreign
buying of 1.8 billion pesos ($37 million) in the first five
trading days of 2017.
Thursday's net foreign buying of 727.9 million pesos was the
biggest since Oct. 19 last year when net foreign buying hit
nearly 1.1 billion pesos.
Investors cheered economic growth prospects at home and an
extended post-election rally on Wall Street, setting aside
domestic concerns, particularly the political risk that
President Rodrigo Duterte's erratic behaviour could unleash.
Duterte, who began a six-year term on June 30, is facing
allegations of human rights violations for his bloody war on
drugs and criticism for his foul-mouthed outbursts at its close
ally, the United States, and some big donors and investors.
"The Duterte factor, that's on the backburner," said Luis
Limlingan, managing director at brokerage Regina Capital
Development Corp in Manila.
From being one of the most battered markets in the region
last year, the Philippines currently leads a rally in Southeast
Asia with a nearly 8 percent gain so far. Philippine stocks were
the third worst performing in Asia in both dollar and peso terms
in 2016, behind those of China and Malaysia
Singapore shares are up over 4 percent, followed by
Vietnam shares with a more than 3 percent gain. Other
Southeast Asian markets are up less than 2 percent.
On Tuesday, the Philippine share market ended up 1.2
percent at 7,364.34 points, its highest close since Oct. 28,
"Investors see value in Asia," said Helen Go Oleta, Trust
Trading head at Rizal Commercial Banking Corp in Manila, citing
their interest in Philippine assets in particular, such as
dollar-denominated and peso-denominated securities and the peso.
First Metro Investment Corp, the investment arm of the
Philippines' second-largest lender in asset terms, the Metrobank
Group, expects the key index to reach 7,500 points this year,
with conglomerates, consumer, retail and banking as its
BDO Capital and Investment Corp set a more conservative
forecast of 7,300 by year-end.
The peso has risen about 0.5 percent this week, recovering
from 8-year lows seen in the latter part of 2016 on expectations
of firmer U.S. interest rates which sent the dollar higher and
on fears that Donald Trump's protectionist stance could hurt
Asia's export-reliant economies.
But the sustainability of such gains is uncertain.
"Caution will be there," RCBC's Oleta said. "We need to put
in defensive trading because there are a lot of things
happening: the Brexit, elections in Europe."
($1 = 49.4650 Philippine pesos)
(Reporting by Enrico dela Cruz and Neil Jerome Morales; Editing
by Jacqueline Wong)