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PHILIPPINE bonds will remain sluggish until the year
ends as the global credit crisis continues to bring risk
aversion to financial markets worldwide and as funds are
concentrated on stocks, bond traders said.
The
peso, on the other hand, is expected to move sideways
starting October, when inflation is expected to peak as
remittances come rushing in toward the holidays.
Marcelo
Ayes, head treasurer of the Rizal Commercial Banking
Corp., said the market is looking at a resistance level
of P47.30 to P47.50 per dollar and support between P46
and P45.50 per dollar.
“If you
ask everybody they’ll say the peso now is weak, but the
weakness will be sideways by the time the remittances
surge sometime next month....The economy will continue
to be supported by remittances and government spending,”
he said.
Ayes
said the bond market is expected to slow down for the
remainder of the year because funds are now concentrated
on Philippine stocks.
He said
the debt market is expected to pick up next year once
demand for consumer loans goes down as the effect of
inflation.
“Next
year, if demand for consumer loans go down, the banks
will go to the bond market….The government is under
spending. If they spend more, that will provide support.
Right
now, investments in the local financial market continue
to pour into local stocks.
The
Bureau of Treasury said earlier it is cutting government
borrowing for the remainder of the year since it has a
healthy cash position. Finance Undersecretary Roberto
Tan said, however, that borrowing is still an option.
A bond
trader from a major universal bank, which requested
anonymity, said trade remains “choppy.”
Should
the treasury bureau push through with the auctions,
banks are expected to continue demanding higher rates,
he said.
“Should
the auctions continue, there will still be demand but
the rates are still going to be high….And since it’s
nearing the fourth quarter, banks are already window
dressing,” the trader said. --Czeriza Valencia |
