EVAT, strong peso to push market significantly higher this yr — analysts

With the continued strengthening of the peso against the US dollar and the implementation of the expanded value-added tax (EVAT) law, the stock market is expected to perform significantly better this year than last year as investors start taking positions in anticipation of an improvement in the country’s fiscal position.

The stock market recently rose to its highest level in eight months as investors anticipate the country’s credit rating to improve as the EVAT law was fully implemented last month following the lifting of the freeze order by the Supreme Court.

"The smooth implementation of the EVAT law, coupled with early reports of good earnings for several companies, have boosted investor sentiment," said ATR Kim Eng (ATRKE) Securities president Lorenzo Roxas.

Roxas said the string of initial public offerings (IPOs) during the first half of 2006 could also spark interest from investors. "You have a few good IPO’s coming out during the first half of 2006. The timing as well could not have been better as world crude prices went down and overseas workers remittances helped strengthen the value of the peso," Roxas said.

Among the big-ticket IPOs expected next year are those of First Generation Holdings Corp. of the Lopez family and leading broadcasting firm GMA Network Inc.

Another development that could boost market sentiment is the continued appreciation of the peso vis-à-vis the US dollar.

The Bangko Sentral ng Pilipinas (BSP) said the peso has appreciated by 5.7 percent since the beginning of the year, with the foreign exchange rate touching a high of P53.16 to a dollar last Thursday, the highest in two years and seven months.

BSP Governor Amando Tetangco Jr. said the peso has shown relatively lower volatility compared with other Asian currencies, including the Japanese yen, the Thai baht and the Indonesian rupiah.

He also noted the healthy level of portfolio investments, which as of Nov. 25 was at a net inflow of $2.1 billion, and the sustained increase in remittances from overseas Filipino workers (OFWs).

ATRKE Securities is one of the country’s largest brokerage houses, with more than 15 years of experience in the Philippine equities market. Ranked third among brokers in value traded in 2004, ATRKE Securities has always maintained its confidence in the local stock market.

Showing its bullishness on the stockmarket, ATRKE Securities plans to open branches in strategic cities in the country in the next five years. It already has branches in Makati, Cebu and Davao.

ATRKE Securities provides financial research, sales and execution capabilities to institutional and retail clients both foreign and domestic. Its sales and research group, in particular, are well regarded in the industry. "Quality research continues to be a key differentiator among brokerage houses and we will continue to allocate resources into improving our research product," added Roxas.

ATRKE Securities is 100 percent owned by ATR Kim Eng Capital Inc., the largest independent investment bank in the Philippines. ATRKE Capital is known for its equity corporate finance, successfully completing major and pioneering capital and debt fund-raising transactions and financial advisory for some of the country’s leading corporations.