Philippine stocks seen testing new highs
Local share prices could test record highs this week with momentum supported by the central bank’s recent decision to keep rates at record lows to sustain economic growth.
After ending the week at a five-week high, the benchmark Philippine Stock Exchange index (PSEi) is seen testing higher ground, also partially due to the coming fourth-quarter holiday season.
The PSEi surged 2.33 percent week on week to close at 5,322.47 on Friday. “Local monetary authorities’ move to maintain benchmark interest rates will help build momentum, especially with the start of the fourth quarter,” brokerage 2TradeAsia.com said.
In a weekly note, the firm said lower interest rates would be positive for listed firms’ income statements as debt servicing was kept low.
“This is also conducive to capital expenditure (capex) strategy, especially for those that ventured into high-growth, capital-intensive initiatives. Property firms are also likely to benefit with the extension of flexible payment terms,” it added.
The optimism was also fueled by the US Fed’s call in the middle of the week to hold another bond purchase plan. Part of the support came from Germany’s ratification of a 500-billion euro bailout fund.
The firm said traders should see a recovery from the recent consolidation especially after the PSEi managed to keep its head above the 5,200 level.—Paolo G. Montecillo