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Stock market seen sustaining uptrend

By Jenniffer B. Austria | Apr. 29, 2013 at 12:01am
Share prices are expected to sustain the upward trend this week on bright prospects both here and abroad, according to analysts.

Accord Capital Equities Corp. trader Justino Calaycay said the market might test the latest all-time high level after Moody’s Analytics labeled the country as the region’s “rising star” last week.

“The recent branding of the Philippines as a ‘rising star’ convinces onlookers even more that the future for the domestic economy at large and for equities in particular shows an ability to withstand the risks introduced by and challenges confronting the global economy,” Calaycay said.

Calaycay said Moody’s Analytics’ positive outlook on the economy would raise the country’s hope for a second investment grade rating, after the one given by Fitch Ratings last month.

Moody’s Analytics is a sister company of debt watcher Moody’s Investors Service.

The recent move of the Bangko Sentral to reduce rates it pays on special deposit accounts will also make the local equities market more attractive, analysts said.

Calaycay said while the market was ripe for technical correction, the dip would likely come after the earnings season.

Analysts said a big correction could also invite heavy and more aggressive buying from investors.

The Philippine Stock Exchange index breached the 7,000-point level anew last week, closing at 7.025.44 on Friday, as the market welcomed the new round of SDA rate cut.

SDA are fixed-term deposits of banks and their trust departments with the central bank, with maturities of one week, two weeks and one month. This is the third time SDA rates were cut, following reductions of 50 basis points each in January and March.

Value turnover at the local stock market reached P9.6 billion with 30 more stocks posting advances than those that declined.

“Minus the block sales, the value turnover reached P9.3 billion, an improvement of the last couple of days but still a tad lower than the averages that pushed the market to previous record highs,” Calaycay said.

The Bangko Sentral kept overnight policy rates unchanged at 3.5 percent and 5.5 percent for borrowing and lending, respectively.

However, the rate on SDAs was further reduced by 50 basis points to 2 percent across all tenors.

SDA rates were reduced by an aggregate 150 basis points over the past 12 months as the Bangko Sentral sought to push funds toward the real economy to support the growth momentum.
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