Stocks seen to continue upward trek this week

By Zinnia B. Dela Peña
(www.philstar.com)

MANILA, Philippines - The local stock market is expected to continue trekking higher this week given a surge in investors’ appetite for riskier equities.

Stocks rose for the fourth straight week last week, gaining 72.42 points or 3.1 percent week on week to 2,389.31, the highest close for the PSEi since October 2008.

“Barring any significant negative headline overseas, the market may continue with its upward thrust early this week, driven mainly by a ‘liquidity-driven’ rally. Domestic institutional fund managers are bound to adopt ‘return-maximization’ on their portfolio, given unappetizing yields available from fixed-income investment securities,” said stock portal 2tradeasia.com.

2tradeasia.com said “second- as well as third-liner plays might be in the loop, especially the ones supported by growth opportunities for the second semester this year.”

The market’s immediate support was pegged at 2,350 while resistance was set at 2,400-2,420.

AB Capital Securities Inc. attributed the market’s significant growth to the favorable performance of markets overseas with the benchmark Dow Jones Industrial Average continuing to hold support above the 8,200-level despite the rise in Treasury yields and mortgage rates.

Heading the pack of market winners last week was SM Investments Corp., the linvestment holding firm of the family of retail tycoon Henry Sy.

The market continued to show strength in spite of the dismal growth of the country’s gross domestic product which was limited to 0.4 percent in the first quarter this year, largely due to the huge drop in merchandise exports as well as lower consumer spending.

Last week, the central bank slashed its policy rates by 25 basis points to a 17-year low, thus reducing the overnight borrowing rate to 4.25 percent and the lending rate to 6.25 percent.