PHILIPPINE STOCKS @4,200+ POINTS, WILL SURGE ANEW BY 2011

Erle Frayne D. Argonza

Asian bourses continue to perform excellently, and the Philippines is a contributor to this bullish trend. In the past year, there were some junctures when the bourses did dip a bit, but never too dip as not to be able to surge back ahead. The bourses reflect the optimal growth patterns in Asia and are bound to replicate the feat in 2011.

By the start of 2010, I was of the opinion that the Philippine stock exchange will trade very bullishly, that it will eventually breach the all-time best record of 3,600+ points achieved during the era of the Ramos presidency yet. True enough, it did breach the 3,600 points and ended up at 4,200+ points by end of December 2010.

To recap, 2,000 points is the bourse’s psychological break point in my beloved Philippines. Quite a barometer of the economy’s health, the stock index says that the economy here is faltering when the bourse crashes below the 2,000 point barrier and stay down there for many months. At some time in 2009, that incident happened, though fortunately for the country the stock index climbed back past the 2,000-point threshold quickly.

Being among the Asian countries that have learned to insulate themselves from global economic downturns and great recessions, the Philippines did bounce back right away and saw the index breach the 3,000-point level in the first semester of 2010. This trend alone is cause enough for great hope for the coming months and years in this country.

With ‘smart money’ leaving the North due to stagnation and recession, it wasn’t long before the Ph bourse soon felt such ‘manna from heaven’ getting invested into its stock options. With that happening, the stocks meteorically ascended the 4,000-point level in the 2nd semester, and was optimistically forecast to reach 4,600+ points by certain quarters.

Witnessing the pattern of periodic decreases amid a general trend of sharp climb, I did raise eyebrows over the mega-optimistic forecast. I was already happy to see the 3,600+ points breached, but a 4,600 point conclusion is far from achievable in 2010. And so, true to my intuitive forecast, it settled at 4,200+ points, or just 200+ points beyond the new barrier of 4,000 points.

As big ticket projects are now on the pipeline for negotiations and implementation soon, we can expect investments to surge upwards more sharply this 2011. This will be reinforced further by the upgrading by Moody’s of the country’s investment grade from “stable” to “positive” just as soon as the new year commenced.

An offshoot of the optimism in the investment field will be entry of more players locally to purchasing stocks in the new IPO options opened to the public. Furthermore, ‘smart money’ from overseas will inflow into the local bourse and capital markets, thus ensuring another year of surge in the stock index.

This time around, I will be among those who will accept a forecast of the Philippine bourse breaching the 4,600+ points at the end of 2011. Granted that fairness in the stock trading and surety of regulatory mechanisms will be stronger this year, the Philippine bourse will perform excellently again this year and facilely breach that new forecast level.

[Philippines, 13 January 2011]

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