• Second investment grade status for Philippines to drive stocks

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    By Madelaine B. Miraflor Reporter

    With debt watcher Standard & Poor’s (S&) Ratings Services giving the Philippines its second investment grade rating, the possibility that the local stock market will trade within record high levels again starting today is now seen as feasible.

    In a statement, S&P said on Thursday afternoon that it has raised its sovereign credit ratings for the Philippines to ”BBB-/A-3” from “BB+/B,” adding that the outlook is stable.

    At the same time, S&P’s raised its long-term Southeast Asian regional scale rating on the Philippines to “axA-“ from “axBBB+,” as well as the transfer and convertibility assessment of the country to “BBB” from”BBB-.”

    ”The upgrade on the Philippines reflects a strengthening external profile, moderating inflation, and the government’s declining reliance on foreign currency debt,” S&P’s Credit Analyst Agost Benard said in the debt watcher’s report.

    Freya Natividad, analyst at 2TradeAsia.com, said in a phone interview that given this latest upgrade on the country’s economic status, the market may ascend above 7,100 points today.

    Should the local benchmark index get a boost from S&P’s upgrade, the chance that it would breach the 7,120.48-point record is also possible.

    Natividad also said that, the companies that have large capital and those are undergoing expansion are the ones that will be benefiting more from the upgrade status.

    Astro del Castillo, First Grade Finance managing director, on the other hand, said that the S&P’s rating upgrade for Philippines signifies another vote of confidence for the country.
    “Given the recent two investment grade ratings, the country is now really in a different ballgame. We are now a serious player in the global arena,” he said.

    Natividad also reiterated that the upgrade also moved confidence on the equities market to a higher level. After taking a pause for holiday on Wednesday, the Philippine Stock Exchange resumed with a slight increase, rising by 0.32 percent, or 22.43 points to 7,093.42.

    According to Jonathan Ravelas, BDO Unibank Inc. chief market strategist, the market was right in anticipating the second upgrade as investors continue to see stable macroeconomic numbers as well as stable inflation supportive of low rates.

    Navidad, on the other hand, said that there was just repositioning within the market, since investors took advantage of the decline in Wall Street.

    The wider all-shares index was in a sideways trend, ending with a 0.34-percent advance, or 14.86 points to 4,424.59. Although there were some sub-indices that declined, majority of the sectors still managed to end in the green.

    Services rose 1.47 percent, or 30.14 points to 2,078.48, followed by industrial, which grew 0.53 percent, or 56.43 points to 10,806.75.

    Holding firms also improved, gaining 0.33 percent, or 21.04 points to close at 6,389.04, while financials went up a bit by 0.02 percent, or 0.41 points to 1,826.09. Mining and oil, however, fell 297.49 points, or 1.46 percent to 20,025.49, while property was down 0.84 percent, or 24.69 points to 2,895.80.

    Advancers still outnumbered decliners, 103 to 68, while 36 shares were unchanged.

    Some of the top actively traded stocks on Thursday are SM Investments Corp., Alliance Global Group Inc., ABS-CBN Holdings Corp., Ayala Land Inc., Philippine Long Distance Telephone Co., Universal Robina Corp., LT Group Inc. Ayala Corp., Metropolitan Bank and Trust Co., and BDO Unibank Inc.

    For today, immediate support is 7,050, while resistance is at 7,170.

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