Thursday, 12 November 2009

Peso may rise to 44, Phisix to hit 3,600

by Roderick T. dela Cruz
Manila Standard
With Bloomberg

The Philippine peso is seen to rise further against the US dollar during the election year of 2010, with political risks becoming less of a factor in foreign exchange and equities in the country.

“Political risk is becoming less and less of a concern,” Paul Raymond Favila, president of the Money Market Association of the Philippines, told reporters in a news briefing at Traders Hotel in Pasay City yesterday.

The Philippine equities index, meanwhile, may rise to a record in 2010 with energy, property and mining stocks gaining the most from low interest rates, a pickup in consumer demand and economic growth, ING Investment Management Ltd. said.

The manager of the three best performing Philippine equities funds this year is holding more energy, property and mining shares than the allocation in the benchmark index, said Paul Joseph Garcia, chief investment officer at ING’s Manila unit. He’s reducing holdings of consumer, banking and telecommunications stocks.

The Philippine Stock Exchange Index may climb to 3,600 in 2010 as economic growth accelerates to 3.2 percent and corporate earnings increase between 15 percent and 20 percent, Garcia said. Macquarie Group Ltd. said last week the benchmark may reach a new high in the second half.

Favila, who is also a director of Citi N.A., said none of the presidential candidates who have the highest likelihood of winning worries the market. “The Philippines has matured economically and politically,” he said.

The trend, he said, began in 2001, when not even the subsequent protest rallies and coup attempts against the administration affected the market as much as during the Marcos or Aquino years.

However, he said the market would still watch the continuity of economic policy and stability under the next administration.

The stock index has rallied 60 percent this year, the third best performer in Southeast Asia after Indonesia and Vietnam, on expectation record-low interest rates and a 15-percent increase in government spending will help ease falling exports amid the global recession. The measure closed at a record 3,873.50 on Oct. 8, 2007.

Dalmacio Martin, senior vice president of Banco de Oro Unibank Inc., said there was a general consensus among bankers that the peso would be stronger in 2010, especially against the greenback.

“Most of the [investment] houses we talked to were saying that the peso will appreciate to about 44 to 46 against the dollar next year,” Martin said.

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