The stock market: Soaring, soaring still

By Patricia de Leon, GMANews.TV After finishing 2006 with a bang, the local stock market is expected to soar even higher in 2007, boosted by investor interest in firms within capital-intensive firms, and a generally positive outlook on the Philippine economy. Equities analysts say that in 2007, the Philippine Stock Exchange composite index has potential to beat its 2,982.54 point-closing value for 2006, and rise to within 3,500, barring any shocking economic or political upheavals. "Momentum continuity is expected, with very minimal risks at the macroeconomic front," Grace Cerdenia, managing director of online trading firm 2TradeAsia said. Both 2TradeAsia and local lender Banco de Oro said the equities market could rise up to 3,500 in 2007, a 17 percent premium to 2006’ closing price. The positive outlook for equities is supported by lower interest rate forecasts for the coming year. Banco de Oro chief market strategist Jonathan Ravelas said increasing peso strength and lower inflation support a low interest rate scenario, which would make yields from the stock market more attractive to investors. "For 2007, our forecast for the benchmark 3M T-bill is to range between 4.50 - 5.50 percent, with a full year average of 5.00 percent," Ravelas said. Only political uncertainties revolving around the May 2007 national elections could cause a pause in the interest rate downtrend, Ravelas said. In the coming year, Cerdenia said the best plays would be energy, infrastructure and mining-related stocks. Cerdenia said the low interest rate scenario and strong local currency would give a much needed boost to these capital hungry sectors. "Stable interest rates and the peso's strength augur well for capital-intensive industries such as energy/power, infrastructure and mining/exploration. Market participants will check for supportive legislative and executive measures to help propel growth in these industries, synchronized with the administration's plan to support growth via increased public spending," Cerdenia said. Among listed firms which could have a major presence in 2007 are alternative fuel maker Chemrez Technologies, which is expected to benefit from the recent passage of the Biofuels bill. DMCI-Holdings Inc. and Metro Pacific Investments Corp. also have an eventful future in 2007. A joint venture between the two firms has recently acquired a controlling stake in Maynilad Water Services Inc., a concessionaire that supplies water to the east zone of Metro Manila. — GMANews.TV