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LOCAL share prices could be pegged back as investors take profits
this week following a strong upturn inspired by positive domestic
economic news, and Wall Street’s rise, dealers said last Friday.
“The market will remain upbeat on the back of
the good [domestic] economic numbers that came out recently. But
given the gains posted this week, we could expect some profit-taking
along the way,” said Lawrence de Leon of Accord Capital Equities.
The Bangko Sentral ng Pilipinas (BSP) trimmed
its key rates by 25 basis points after the government announced that
the economy grew by 7.3 percent in 2007, the best performance in 31
years.
The half point cut in US interest rates this
week “has somehow eased some of the volatility in the global
markets,” said Jose Vistan of AB Capital Securities.
However James Lago of Westlink Global Equities
warned, “our outlook for the medium term is still generally
bearish because that is the way global markets are.”
He added: “Investors [are] still looking at
foreign developments, not local developments.”
For the week to February 1, the composite index
rose 1.8 percent or by 56.67 points to 3,294.08 points.
Average daily volume fell to 1.88 billion shares
from 2.26 billion shares last week. Average daily value over the two
weeks was unchanged at P4.38 billion.
UBS raises growth forecast
In a research note, UBS Investment Research
revised its full year growth forecast for the Philippines after its
record expansion last year.
The investment bank said the country’s gross
domestic product (GDP) would grow 5.5 percent this year, higher than
the earlier five percent estimate. This however remains lower than
the low end of the government’s target of 6.1 percent to 6.7
percent.
UBS said robust growth represents a much better
base for the economy to navigate the tough external environment this
year. “It does not change the assumption that the country’s
growth will moderate in the face of the recessionary conditions in
the US and significantly below trend growth in Europe,” UBS said.
It said the BSP will be more concerned about
future developments in growth, inflation and the currency when it
makes its decision.
“We still look for 100 basis points in
BSP cuts this year if the Fed lowers rates to 2.25 percent as we
expect,” it said.
The projections do not include the effects of
the proposed P75 billion stimulus package, UBS said. “The impact
of this [stimulus package] on 2008 growth will depend on the timing
of implementation, but it does represent meaningful upside potential
to our 2008 real growth forecast,” it said.
-- AFP and Chino S. Leyco
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