Market seen to continue upward trend this week

Given a shortened trading week, the stock market may continue its upward trek amid renewed hopes of a US economic recovery.

Last week, the main composite index gained 12 percent or more than 200 points to close at 1,971.57 as investors welcomed President-elect Barack Obama’s announcement of his economic team.

Maria Arlysa E. Narciso of AB Capital Securities said investors’ attention will be on the transition of power and responsibility in America’s presidency. “The policies that Barrack Obama plans to implement come January will significantly affect major and emerging economies. As such, markets have notably tracked down the developments in the US’ political arena,” she said.

Investors are also expected to keep a close watch on other developments overseas, particularly in Mumbai, India where over 100 people were killed and at least 200 wounded following coordinated terrorist attacks. Thailand will also be a concern for the region as tens of thousands of Bangkok protesters closed down the capital’s international terminal.

However, Accord Securities’ Jun Calaycay said there are signs that the global downturn has begun to take its toll on the local economy given announcements made by some corporations that they would implement a freeze in hiring for the first quarter of 2009.

 “If businesses defer on the expansion of personnel, it can only mean that they are seeing little or no growth in demand next year. Nonetheless, their preference to shovel funds into capital expenditures gives us an indication of how they view things over the medium- to long-term,” Calaycay said.

Calaycay said while pump prices of fuel have been going down, this has yet to translate to lower commodity prices.

The country’s gross domestic product (GDP) growth during the first nine months of the year stood at 4.6 percent, a far cry from the full-year 7.2 percent in 2007 and even slower than the 5.5 percent in 2006.

Next year’s target is pegged at 4.1 percent to 5.1 percent

Sun Life Financial Philippines chief investment officer Michael Manuel believes that the country remains resilient in spite of tough business conditions. However, concerns will continue to linger as the market is in the process of “test-driving” again.