Investors seen shying away from equities market this week

By Zinnia B. Dela Peña
The Philippine Star 06/12/2006

The stock market is expected to remain lackluster this week as the high price of oil, rising interest rates and a depreciating peso affect investor sentiment, analysts said.

Last week, the main composite index PSEi fell 144.67 points or 6.28 percent to 2,159.50 on massive selloff triggered by fears of rising US interest rates and slower growth.

Dealers said investors are likely to track Wall Street and regional markets after foreign funds rushed out of risky assets amid concerns US interest rates will rise further.

Trading resumes Tuesday after a public holiday on Monday.

News that JP Morgan downgraded Philippine bonds from "overweight" to "neutral" also accelerated the local market’s drop. The downgrade, however, was influenced by concerns on the Bureau of Internal Revenues (BIR), seeking a lower collection target this year of P605 million from the original P675.4 billion.

Also affected was the peso-dollar exchange rate as the peso continued to weaken along with regional currencies on prospects of higher interest rates. The peso hit a low of 53.25 to the dollar. The peso is now 3.4 percent lower from last month and from the start of the year’s 53.062.

"The negative psychological impact of the massive sell off could remain imbedded on the minds of investors, who are expected to shy away from equities investments for the meantime. Adding to the negative sentiments is the fact that equities globally are experiencing a similar meltdown. The main problem is the uncertainties on the fate of interest rates both here and abroad," AB Capital Securities said in its weekly market report.

BPI Securities said the market is at a crossroads and could still go either way.

The Association of Securities Analysts of the Philippines, however, is bullish on the stock market, saying it may reach the 2,820 level because of stable inflation, continued economic expansion, the attainment of fiscal objectives and robust corporate growth.

ASAP said telecom, banking and conglomerate stocks would lead the growth.

 

http://www.philstar.com/philstar/NEWS200606120707.htm