Market seen to continue mild run

The market is expected to carry over this week its positive momentum gained from last week’s mild run although it may be susceptible to profit-taking as some stocks are close to being fully valued, analysts said.

Last week, the main composite index breached its key psychological resistance level of 3,000, mainly on bullish economic prospects.

Analysts expect a higher economic growth hovering between 5.5 percent and six percent, a stronger peso, stable interest rates and inflation.

The peso continued to gain strength given higher remittances from overseas Filipino workers (OFWs) and low corporate demand for the greenback.

The peso ended 2006 at 49.03 to the dollar, a gain of 8.28 percent from the 2005 close of 53.09.

For 2007, the government has forecast interest payments would go down by 6.4 percent to P318.2 billion from last year’s programmed level of P340 billion.

"With investors still bullish on the market amid an upbeat outlook for the economy, we may see some follow through buying this month. This is also consistent with what investors call the ‘January effect’. This is a general increase in share prices during the month of January," said AB Capital Securities.

Positive sentiments over economic prospects this year should help maintain the upbeat mood for the medium to long term, AB Capital Securities said.

"With the economy revving up and corporate earnings on the mend, all signs point to another bullish 2007.

Political uncertainties will hound the market during the first half of the year. However, it may not likely have a strong impact on the stock market as investors have learned to adapt to political developments," an analyst at a local brokerage house said.

Analysts said the anticipated influx of additional liquidity in the financial system within an election year, coupled by supportive expectations that corporate earnings recovery would ensue for most economies are widely expected to support the Phisix’s further rise.

Investors are seen to build up their positions due to the positive outlook for corporate earnings in 2006 and 2007.

Meanwhile, the Philippine Trust Company has made a tender offer for all outstanding Philippine Bank of Communications (PBC) shares at P30 per share. Deadline for shareholders to sell their shares to PTC is on Jan. 17.

Filinvest Land Inc.’s planned offering is scheduled for late January. It will offer 6.96 billion common shares in both international and domestic markets.

The offer price, to be announced by Jan. 20, will be based on the volume weighted average price for certain trading days, subject to a discount of up to 10 percent. A trading halt on the shares will be implemented from Jan. 22 to Feb. 5, 2007.