Global marts' woes to dictate direction of PSE

MANILA, Philippines - Global markets’ woes will continue to dictate the direction of the local stock market.

The PSE index rose 1.97 percent to close at 4,312.96 last week after brighter corporate news lifted US stocks and debt-ridden Italy found a way to fund itself at a bond auction.

The local market is seen to trade at lethargic pace as focus shifted to concerns over Italy’s borrowing costs on concerns that surging bond yields could stifle its fund-raising ability and further throw the euro zone.

“Outcomes in the European region will continue to cast a shadow on our market. Greece is looking at agreeing on who will lead the nation’s interim government. Italy is in talks of opting to have a unity government under Mario Monti, a former European commissioner, and also the possibility of early elections,” said AB Capital Securities noted.

AB Capital Securities said that while some stocks are now cheaper compared to their previous valuations, investors remain elusive. “We no longer see sharp volatility in our own market yet the prevailing uncertainty keeps investors’ feet cold and unmoving. The key lies on Europe - how the leaders, banks and bondholders of troubled nations will agree to take a pill that is obviously quite bitter to swallow,” AB Capital Securities said.

“Disagreements on share in losses, funding requirements, and other austerity measures prolong the crisis, spilling the weakness and troubles to even emerging economies. If they would come up with a solution soon, markets may find a more stable ground and gain momentum to fuel a recovery. Once steps in Europe are taken, economies may again start moving and rise up from the slump,” AB Capital Securities noted.