Local stocks and oil prices are seen to stabilize by yearend to their levels at the start of 2008 despite the lingering threat of double-digit inflation, a ranking regional executive of the American International Group (AIG) said.
AIG Investments managing director Wilfred Son Keng Po said while inflation has been depressing the Asian and Philippine markets due to external pressures caused by global oil and commodity prices, domestic prices have been moving downwards as demand has been weakening.
He said oil demand has waned down two percent while the price of oil in the world market has dropped to near $112 per barrel from a peak of around $147 in July.
“Fundamentally, it should settle down where it was at the start of the year, in the range of $95 to $105 per barrel,” the AIG executive said.
AIG is one of the largest global financial and insurance institutions. Its Philippine unit is the Philippine American Life and General Insurance Co. (Philamlife).
Po also noted the dollar has been gaining strength over the past few weeks, which will continue to add downward pressure on oil and commodity prices.
Likewise, Po said the Philippine Stock Exchange composite index is currently at its consolidation level and will likely stabilize as the economy remains fundamentally sound and fresh investments have started trickling in.
“While foreign money has been selling off the emerging markets recently, there are a lot of local institutional money as well as local retail money entering the market. These should be a good base building for the market,” he added.
But he advised investors to remain on the defensive despite the windows of opportunities in the market.
Po said preference remains with high-cash yield stocks and the blue chips such as Ayala Corp., Globe Telecom, SM Investment Corp., SM Prime Holdings, Philex Mining Corp., International Container Terminal Services Corp., Bank of the Philippine Islands, Manila Water Corp., PNOC Energy Development Corp. and the Philippine Long Distance Telephone Co.