Stocks seen to rise

Local stocks are seen to trade with an upward bias this week on strong risk appetite and as investors remain awash with cash.

The Philippine Stock Exchange index (PSEi) last week gained 85.41 points or 1.2 percent to close on Thursday at 7,287.29. Trading last week was shortened as Tropical Storm Mario shut down financial markets on Friday.

Banco de Oro Unibank chief strategist Jonathan Ravelas said the market’s rise was driven by ample liquidity notwithstanding the tapering by the US Federal Reserve of its monthly bond buying program to $15 billion from $25 billion. The Fed likewise released the guidelines to end the quantitative easing.

Last week, 14 of 17 Federal Reserve officials said they continued to believe the Fed’s first increase in near zero short-term rates would happen in 2015. Out of these, 11 projected the US central bank’s overnight target rate to rise to 1.375 percent or lower by the end of 2015 from near zero at present.

“Chart-wise, the risk remains at the break below 7,200 as the market is expected to range between 7,200 and 7,400,” Ravelas said. “A break below 7,200 could retest the 7,000 levels.”

Meanwhile, Ravelas said the peso would likely trade within the range of 44 to 44.50 against the US dollar this week. Last week, the peso closed at 44.42:41, weaker than the previous week’s 43.91 against the greenback.

The economist is closely watching whether the recent weather disturbance could affect economic prospects. Before “Mario” submerged many areas in the National Capital Region, the country’s second most important metropolis—Cebu—was under a state of calamity due to flooding.

“Weather disturbances could worsen the delays of PPP (infrastructure projects funded under the public-private partnership framework) and may further need to restudy our present conditions to address this,” Ravelas said. Doris C. Dumlao