PSEi seen hitting 7,000 pts

MANILA, Philippines - The Philippine Stock Exchange index (PSEi) is seen testing the unprecedented 7,000-point level in the near term following the  country’s elevation to investment grade status, analysts said.

The five-percent or 318.76-point surge in  the PSEi   to an all-time high of 6,847.47 last Friday from a week ago will likely be followed this week, they said.

“The zest in local equities is seen to prevail post-Easter, mainly due to positive reaction to Fitch’s investment grade rating,” said Freya Natividad, investment analyst at brokerage firm 2Trade-Asia.com.

Justino B. Calaycay Jr., analyst at Accord Capital Equities Inc., said the opening trades, if it breaks into the 6,900-level, will be critical in restoring and sustaining the bullish trend.

Natividad said the ratings upgrade will jack up optimism on the country’s macro-economic health and resilience.

On Wednesday, Fitch Ratings upgraded the Philippines’ sovereign ratings to investment grade, citing “resilient economic growth” and fiscal reforms.

Higher credit score translates to lower borrowing costs and increased valuations for stocks of Philippine companies.

Natividad said the market is awaiting similar upgrades from international credit raters Standard & Poor’s and Moody’s.

“Hopefully, the other rating agencies will follow suit so we can start seeing more investors participate in the growth of our listed companies and the economy,” said PSE president and CEO Hans B. Sicat.

Positive leads will also come from abroad particularly in the United States.

Natividad said that barring negative sequel stories from the euro zone, the improving vote of confidence on the US economy will sustain investor confidence.

For this week, Natividad said index-linked stocks particularly those benefiting from improved economic environment will lead the ascent.

2TradeAsia pegged the immediate support level at 6,800 and resistance at 6,900 to 6,950.

Year-to-date the PSEi has jumped 17.8 percent or 1,034.74 points. The main index has also recorded new closing highs by a total of 24 times so far this year.