Local financial markets paused for a holiday break on Monday in celebration of the Philippines’ 114th year of independence.
Elsewhere across the region, however, trading was subdued as the earlier optimism on the bailout of Spanish banks waned. Spanish bond yields crept higher as investors were jittery over the details of a proposed aid package for Spanish banks.
“The respite from the weekend news was indeed short-lived. The selling pressure on risk assets overnight is likely to sustain into Asian hours (today), with no first-tier data out from the region,” said Frances Cheung, an analyst at Credit Agricole CIB.
“Warning from a rating agency that India may lose its investment-grade credit rating could dampen market sentiment further, despite the expected rebound in industrial production following exports from India,” Cheung said.
She said the threat of a possible downgrade seemed valid, with India’s twin deficits. As a comparison, she noted that Indonesia, which was one notch below investment grade, maintained more encouraging external positions, while the growth potentials are similar between India and Indonesia.
On Monday, the Philippine Stock Exchange index closed 81.78 points, or 1.64 percent, higher at 5,075.85. The main index is widely expected to test the 5,100 this week.—Doris C. Dumlao