Rally seen to continue on bullish sentiment

MANILA, Philippines - Local stocks are expected to open on a high note this week, backed by positive global news and inflow of fresh funds.

Last week, the Philippine Stock Exchange Index soared 3.32 percent to finish at a new record high 5,145.89, fueled by the strength of the US markets and improving local economic data.

Analysts said the market rally may just keep going on strong bullish market sentiment and sound economic fundamentals.

Global stocks surged last week, boosted by an unexpected jump in European exports in January and brightening US outlook.

With the main benchmark index hitting multiple highs, the PSE expects a flurry of activity in equity space with a record P197 billion estimated to be raised from share issuances.

PSE president Hans B. Sicat said the rosy outlook is anchored on the country’s strong macroeconomic fundamentals, robust remittance inflows, and a sustained low-interest rate environment.

In 2011, capital raised from initial public offerings, private placements, stock rights offerings, and follow-on offerings, rose 26.6 percent to a record P107.5 billion. The amount is 19.3 percent higher than the previous record posted in 2007.

Sicat said the Philippines, which has shown vigorous economic growth in the past two years, is ripe for a credit rating upgrade given the government’s efforts to boost revenue collection.

“Credit rating agencies give the Philippines a vote of confidence for an upgrade. This only goes to show that the market is a lot stronger,” Sicat said.

Given the turmoil in the euro-zone, investors have been scouring emerging equity markets in Asia, searching for investment opportunities offering greater returns.

“The Philippines has become an alternative investment destination for financial products given the stock market’s strong performance,” Sicat said.   

Sicat said he expects more companies to tap the equities market to fund their continued expansion due to a resurgent capital market and favorable economic climate.

Five companies went public in 2011, raising a total of P9.04 billion from the market. These were Megawide Construction, Puregold Price Club, Cirtek Holdings Philippines, Calapan Ventures, and Touch Solutions.

Philex Petroleum Corp., a unit of copper-gold producer Philex Mining Corp., listed by way of introduction.