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Philippine stocks seen to rise

/ 03:47 AM April 29, 2013

The local stock index may retest recent record highs past 7,100 this week on the back of upbeat first-quarter corporate earnings reports, month-end window-dressing and record-low interest rates.

Last week, the Philippine Stock Exchange index gained 0.98 percent to close at 7,025.44 on Friday. The index is nearing the all-time peak of 7,120.48 seen last April 22.

Joseph Roxas, president of Eagle Equities, said the market has the strength to revisit all-time highs this week. It was even possible that it might be breached, he added.

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“Chartwise, continue to see the market to range between the 6,750-7,300 levels in the week ahead,” said Jonathan Ravelas, chief strategist at Banco de Oro Unibank. “However, profit-taking activities near the recent tops could occur.”

The fresh 25-basis-point rate cut sanctioned by the Bangko Sentral ng Pilipinas in its special deposit accounts (SDAs) is also seen boosting risk appetite. Even if just a small portion of funds currently locked up in SDAs shift to equities, fund managers said the impact would be significant. More than P1.9 trillion in excess funds is currently locked up in these SDAs.

Dealers said that while local valuations have been stretched out, liquidity has been driving prices even higher.

On Friday, the Dow Jones industrial index was marginally higher (+11.75 points or 0.08 percent) after a weaker-than-expected 2.5-percent growth in the US economy in the first quarter, slower than the expected pace of 3 percent, raising concerns on how the world’s biggest economy could cope with spending cuts and higher taxes.—Doris C. Dumlao

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