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LAST week: Despite a three-day work week, local share prices made a rebound after a string of good news that elated investors’ confidence, lifting the Philippine Stock Exchange index (PSEi) to its 24th historic high for the year. The bellwether index gained 328.76 points or 5 percent to 6,847.47 points, for another all-time high. Most of the gains were made on Wednesday after Fitch Ratings Agency upgraded the Philippines to investment-grade status of BBB.
This was further boosted after the National Economic and Development Authority said the country’s economy—as measured by the Gross Domestic Product—for the first quarter of the year may hit between 6 percent and 7 percent.
All other major indices gained, led by the Property index that increased by 6.7 percent to 2,831.61 points and the Services index which also gained 5 percent to 2,014.38
Among the gainers were Ayala Land Inc., which increased by 10 percent to P32.70 per share; Jollibee Foods Corp. which rose 9 percent to P126; and Manila Water Co. which was up by 9 percent to P40.
Gainers led losers, 99 to 56, while foreign funds became net buyers at P619 million on the average, reversing the previous week’s net selling of P756 million.
• This week: Local share prices are expected to continue their upswing following the ratings upgrade. Some analyst predict the PSEi may close “very near” to the 7,000-level mark.
“At this point, there is little argument to stay away from equities. Fixed-income returns are depressed and the sound economic picture encourages risk-taking,” Justino Calaycay Jr. of Accord Capital Equities said.
He said the market may sustain its upward trend if it breaks early into the 6,900- to 6,950-point level.
Freya May Natividad of 2Tradeasia.com said there are also expectations hat the other two major rating agencies—Moody’s Investors Service and Standard and Poor’s Ratings Services—may also upgrade the country’s ratings to investment grade anytime.
“An upgrade will help reduce the country risk premium weighting, allowing select listed firms with overseas bond exposures, to benefit from reduced interest rate on loans,” Natividad said.
“The zest in local equities is seen to prevail post-Easter, mainly due to positive reaction to Fitch’s investment-grade rating,” she said.
• Stock picks: Analysts said that investors will monitor the performance of television networks ABS-CBN Corp. and GMA Network Inc. on expectations that its revenues may increase this year as a result of the midterm elections scheduled next month. Television advertising revenues are traditionally stronger during election year, although the two giant networks say it only forms part of much-larger revenues as the Philippine economy continues its rise.
Investors are also monitoring the merger of the property development arms of the SM group into one big unit. The proposal was to merge SM Development Corp. (SMDC), which constructs residential condominiums, and privately held SM Land Inc. to SM Prime to create a full-service property business that develops and operate a chain of malls, condominiums, hotels, among others. Both SMDC and SM Prime are publicly listed but the latter was recently booted out of the PSEi and was replaced by casino operator Bloomberry Resorts Corp.
VG Cabuag
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