BPI sees upbeat stock trades, stable rates this week

MANILA, Philippines - The Bank of the Philippine Islands (BPI) is forecasting an upward bias in the country’s equity market this week (July 22 to 26).

It likewise anticipates that the Bangko Sentral ng Pilipinas (BSP) will maintain interest rates on Thursday.

In a report released by the bank’s asset management group, it said that optimism remains high on the back of solid macroeconomic fundamentals and a low interest rate environment.

The reassuring report of US Federal Reserve (US Fed) Chairman Ben Bernanke helped calm the global markets.

“However, speculations that the BSP might raise its inflation expectations for the year could dampen market sentiment. Next week, the trading range is between 6,500 to 6,700,” the BPI report said.

On the local fixed income market, the report said that it expects sideways trading with a slight upward bias as investors begin to cash in on gains following last week’s rally.

The report said that it expects range-bound trading as market players await the outcome of the Monetary Board meeting on July 25.

“Moreover, investors will continue to be watchful over the developments on the global economic front, underscored by key economic data releases from the US as these will drive the timing of the US Federal Reserve’s decision to taper down its quantitative easing,” it added.

The local equities market sustained its uptrend from last week buoyed by China’s second quarter economic growth, which came in line with market estimates, before correcting last Tuesday as investors cashed in on profits made during the five-day rally. 

The market then focused on Bernanke’s semi-annual congressional testimony where he emphasized that the asset-purchase program would be responsive to economic developments and is unlikely to be wound down soon – affecting the market positively. 

At the last day of the week, however, the index traded lower after San Miguel Corp. (SMC) sold P17.3 billion worth of Meralco shares at a 10.7-percent discount to Thursday’s close in order to fund SMC’s expansion in oil and gas. 

Week-on-week, the index gained 46.81 points, or 0.71 percent, to close at 6,621.02.

For the week, foreigners were net sellers at P7.27 billion.