SHARES are seen to firm up in the remainder of the week as investors cheer the Philippines’ credit rating upgrade from debt watcher S&P Global Ratings late on Tuesday, marking the first such move since 2013 to the highest grade in the country’s history.

The benchmark Philippine Stock Exchange index (PSEi) rose by 0.71% or 55.70 points to close at 7,952.72 on Tuesday.

This marks a 0.4% increase on a monthly basis, as well as the main index’s return to the 7,900 level since April 11.

“We expect investor optimism, particularly from institutional funds, to push share prices and trading volumes higher. Aside from the stock market’s positive reaction, we are also keen on seeing the medium- to long-term impact of this upgrade on the country’s economy and fiscal position,” PSE President Ramon S. Monzon said in an e-mail, reacting to the S&P rating upgrade.

S&P raised the Philippines’ long-term sovereign credit rating to “BBB+” from “BBB” on Tuesday — three notches above minimum investment grade and just a step away from single “A” grade — citing the country’s strong economic growth trajectory supported by solid government fiscal accounts, low public indebtedness and the economy’s sound external settings. The rating was also assigned a “stable” outlook, indicating the country is likely to maintain the grade in the next six months to two years since the economy is expected to remain strong over the medium term.

“I expect the PSEi to react positively to this news, especially now that the Philippines is one notch away from ‘A’ rating,” Timson Securities, Inc. Trader Jervin S. de Celis said in a mobile phone message.

“This should encourage foreign investors to pour in more investments into our market and this might be a reason for the bourse to revisit the 8,000 level this week or early next week.”

Unicapital Securities, Inc. Technical Analyst Jeff See also said the PSEi could retest 8,000 this week since it has been able to hold the 7,800 position.

In a text message, Mr. See also cited as drivers “[m]arket speculation on BSP (Bangko Sentral ng Pilipinas) will cut interest rates and lower bank reserves” when the Monetary Board holds its third policy review for the year on May 9.

“Companies will also be releasing their first quarter 2019 earnings by May.”

BSP Governor Benjamin E. Diokno, who assumed his post in early March, has cited the need to bring down banks’ reserve requirement ratio — which at an already-reduced 18% is still “really high” — and said cutting benchmark interest rates would be just a matter of timing.”

Mr. Diokno said last week that a rate cut will depend on key macroeconomic data, the outlook on El Niño’s impact on farms and oil price movements.

Meanwhile, a number of firms are scheduled to release their first-quarter earnings reports this week, including Metro Pacific Investments Corp., Aboitiz Power Corp. and Aboitiz Equity Ventures, Inc. — Arra B. Francia

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