LOCAL stocks are seen to continue their upswing this week as risk appetite was lifted by indications that the US central bank was in no rush to raise interest rates.
Last week, the Philippine Stock Exchange index (PSEi) rallied by 288.3 points or 4.21 percent to close at 7,138.91.
Joseph Roxas, president of Eagle Equities Inc., said the market bias would still be to rise for the second straight week this week.
The latest minutes from the US Federal Reserve meeting showed that the central bank was in no hurry to lift interest rates.
“Chartwise, expect the market to range between the 6,900 and 7,300 levels in the week ahead,” said Jonathan Ravelas, chief strategist at
Banco de Oro Unibank. “A break above 7,300 could signal retests of the 7,500 to 8,000.”
For the last three weeks, Asian emerging markets have seen net foreign inflows. In the week of Oct. 7, there was $795 million in net foreign buying in the region, based on a Citigroup report.
An improved risk appetite arising from expectations that the US Federal Reserve will not increase interest rates soon has now opened a window of opportunity for corporations that need to tap the capital market, said Philippine Stock Exchange president Hans Sicat.
With the recovery in the markets recently, Sicat was hoping that corporate issuers would have a little more confidence to pursue their capital-raising activities.
When the US Federal Reserve did not raise its targeted interest rate in September due to the market turbulence in China, there was expectation that an interest rate adjustment was still on the table by December this year. But when the September US jobs data came out sluggish recently, investors pushed back expectations further and most no longer expect any interest rate rise for the rest of the year. The latest US Fed minutes confirmed such expectations that the higher interest rates would not come too soon.
“In that type of environment, actually in the short run, it opens up a window for issuers to price deals and do quick placements. Even the banks will be more confident that they will be able to price a deal,” Sicat said.
In a recent forum held by The Asset, BNP Paribas Investment Partners head of Asean equities Patrick Chang said his firm was still “bullish” on the Philippines. However, BNP Paribas’ investment recommendation was “neutral” due to valuation, which Chang said was expensive relative to the region. Doris Dumlao-Abadilla