Market Observer

Global and local stocks continue to perform well

Thanks to positive news of a COVID-19 vaccine

FWD Investment Team

The road to full economic recovery is still slow but news of possible vaccine keeps everyone optimistic.

Global stocks continued to be optimistic on positive COVID-19 vaccine news and a stronger 6.9% growth industrial data from China. Since last week, two companies have announced more than 94.5% efficacy rate for the vaccine: Pfizer and BioNtechand Moderna. Investors are now waiting for the progress and results of J&J and AstraZeneca.

The road to full economic recovery, however, is still slow, with the long vaccine trade still live and a risk to an impending rotation from technology to value is now becoming evident. Risks of the resurgence of cases remains with high cases seen in Europe and the US, where deaths from the coronavirus surpassed 250,000. From Friday, S&P -0.48%, MSCI ACWI +0.69%, Dow -0.14%.

Philippine Stocks

Local stocks went up on Wednesday and is now averaging 6,993 since the announcement of Pfizer. It had a healthy correction and moved sideways on profit taking. This pullback is extremely beneficial for the market’s uptrend as it relieves pressure. It may continue even lower in the coming sessions to test support at 6,700. Investors continue to be optimistic that the Philippine economy would recover before the year ends. Towards the end of the week, we may see some profit-taking and maintain the trend sideways.

PSEi+1.18% from Friday, -9.77% YTD, and +52.52% since March 19, 2020.

Philippine Bonds

The Bangko Sentral ng Pilipinas (BSP) scales down government bond purchases as the market stabilized following disruptions earlier in the year due to the pandemic. The amount of bonds bought by BSP in the secondary market has fallen to 12.8% of the total volume in September to October, it said in an emailed response to questions. The ratio was about 19.7% in June to October, it said on Tuesday.

“Normal market activity returned as investor confidence has been restored,” BSP said, citing sufficient liquidity in the market. While market conditions have improved, the central bank said there is still a need to keep its accommodative policies until economic activities can resume full operations, which it said will depend on an effective treatment for Covid-19. The Philippine peso drifts lower as investors wait on the BSP’s decision on the interest rate on weaker-than-expected 3Q GDP and effects of Typhoon.

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