THE VOICE OF BUSINESS IN NORTHERN MINDANAO

Thursday, September 30, 2010

Morning Brief: 30 September 2010

Meralco consumers may see drop in power bills

CONSUMERS OF power distributor Manila Electric Co. may expect their power bills to further decline in October.

The cost of electricity that Meralco sources from independent power producers (IPPs) continued to drop, the distribution utility explained.

IPP power rates fell by an average of 12 centavos per kilowatt-hour, with Quezon Power Philippines Ltd. (QPPL) registering the biggest reduction of almost 26 centavos per kWh.

The rates of Meralco’s two other IPPs—the 1,000-megawatt Sta. Rita and the 500-MW San Lorenzo natural gas-fired power plants—also decreased by 9 and 6.5 centavos per kWh, respectively.

The reduced rates are expected to spur a drop in generation charges, which currently accounts for about 60 percent of a customer’s average monthly power bill. This charge goes directly to the distribution utility’s power suppliers and not to Meralco.

The reduction in IPP rates is largely due to the higher capacity factor of all three IPPs, resulting in lower fixed cost per kWh. Capacity factor, or dispatch, refers to the capacity of these facilities to provide electricity, Meralco said in a statement.

For the supply month of September, the capacity factor of QPPL, Sta. Rita and San Lorenzo reached 96.7 percent, 92.3 percent and 96 percent, respectively.

Meralco stressed that if the IPP plants’ dispatch levels would go any higher, or yield higher electricity output, a further drop in power rates could be expected. The IPPs have consistently been the distribution utility’s cheapest source of power in the past four months.

Aside from the IPPs, Meralco also sources electricity from the National Power Corp. (Napocor) and the wholesale electricity spot market (WESM).


ASEAN-5 growth seen easing in 2011

THE ASEAN-5 economies -- which includes the Philippines -- will likely see this year’s strong growth moderate in 2011 as the effects of stimulus measures recede, a Standard & Poor’s subsidiary said.

Writing in a "guest opinion," analysts from Mumbai-based CRISIL Ltd. said the Philippine economy -- which grew by 7.9% in the first half -- would likely end 2010 up 4.8-5.3%, easing to 4.2-4.7% the following year.

The forecasts compare to the government’s targets of 5-6% for this year and 7-8% for 2011, and are also among the lowest compared to the outlooks for neighboring Indonesia, Malaysia, Thailand and Vietnam.

ASEAN-5 growth, CRISIL said, has been stronger than expected, buoyed by a mix of policy actions. The speed of the recovery from the global downturn, however, varies from country to country and Vietnam and Malaysia were seen as leading the ASEAN-5 pack.

Vietnam is expected to end 2010 with 6.3-6.8% growth, followed by Malaysia with 6.0-6.5%; Indonesia, 5.7-6.2%; Thailand, 5.5-6.0%; and the Philippines, 4.8-5.3%.

"In 2010, we expect average first-half growth for the ASEAN-5 to reach 7.9%, before dropping back to about 4.8% for the second half," the report’s authors said. "The weaker second-half outlook is due to the waning impact of inventory restocking off a weak base, fiscal stimulus withdrawal and monetary policy tightening."

"The Philippines remains the laggard of the group as private demand is yet to gain a stronghold. Broadly, we expect the impressive recovery of first-half 2010 to wane somewhat by year-end and further moderate in 2011 as the effects of fiscal and monetary stimulus withdrawal set in," they said.

CRISIL’s ASEAN-5 growth forecasts for 2011 are as follows: Vietnam, 6.7-7.2%; Indonesia, 5.8-6.3%; Malaysia, 4.8-5.3%; the Philippines, 4.2-4.7%; and Thailand, 3.8-4.3%.

National Economic and Development Authority Deputy Director-General Augusto B. Santos rejected the S&P unit’s 2011 outlook, saying the government’ 7.0-8.0% target was achievable via the public-private partnership (PPP) program.

"PPP will start by first quarter next year. Definitely it will affect our growth," Mr. Santos said in a telephone interview.

Some P128 billion worth of PPP projects will be up for tender next year out of an estimated P740 billion worth set for implementation over the next six years.

Victor A. Abola, an economist from the University of Asia and the Pacific, agreed with Mr. Santos, saying : "They (the opinion writers) are not considering the investments that will come next year because of PPP. And those are not coming from the US, it’s coming from the East Asia."


U.S. Stocks Retreat on Concern Over Europe Debt, Bank Profits

U.S. stocks fell, trimming the best September rally for the Standard & Poor’s 500 Index since 1939, amid concern that Europe’s debt crisis will worsen and the profit outlook for banks and retailers is deteriorating.

JPMorgan Chase & Co. and Wells Fargo & Co. declined more than 1.1 percent, pacing losses in financial companies. Urban Outfitters Inc. slumped 8.4 percent as Hennes & Mauritz AB, Europe’s second-largest clothing retailer, said third-quarter profitability missed analysts’ estimates. Benchmark indexes fluctuated earlier as energy stocks rallied on higher oil prices and Hewlett-Packard Co. advanced 2.2 percent after its earnings forecast topped estimates.

The S&P 500 fell 0.3 percent to 1,144.73 at 4 p.m. in New York. The Dow Jones Industrial Average declined 22.86 points, or 0.2 percent, to 10,835.28.


Treasuries Fall as Federal Reserve Officials Question Quantitative Easing


Treasuries dropped, pushing the yield on the 10-year note higher for the first time in three days, as Federal Reserve policy makers cast doubt on an increase in debt purchases by the central bank.

Bonds fell as Philadelphia Fed President Charles Plosser said he opposes more monetary expansion to support the economy in part because he sees “little risk” of deflation. Boston Fed President Eric Rosengren said further large-scale purchases of securities would depend on the outlook and incoming data.

“The Fed speakers today are more balanced,” said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York. “They don’t have enough information yet. They need to see more data. It’s still a question mark.”

The yield on the benchmark 10-year note rose 4 basis points, or 0.04 percentage point, to 2.51 percent at 5:24 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 dropped 10/32, or $3.13 per $1,000 face amount, to 101 1/32.

The 2-year note yield increased 1 basis point to 0.44 percent, compared with the record low of 0.41 percent reached on Sept. 22. The 10-year note yield dropped earlier today to 2.45 percent, near the lowest since Aug. 25.


Crude Oil Advances to Seven-Week High as Fuel Supplies Drop Unexpectedly

Crude oil rose to a seven-week high after a U.S. government report showed unexpected declines in supplies of gasoline and distillate fuel as refiners cut operating rates to the lowest level since April.

Oil gained 2.2 percent as total petroleum supplies fell the most since March and gasoline demand increased by the largest amount since February. A Chinese purchasing managers’ index showed manufacturing accelerated for a second month in the world’s fastest-growing oil-consuming country.

“Not only are things looking better in the U.S., but we’re also seeing emerging markets such as China continue to heat up,” said Sean Brodrick, a natural resource analyst with Weiss Research in Jupiter, Florida. “This is a bullish force in the market.”

Crude for November delivery rose $1.68 to settle at $77.86 a barrel on the New York Mercantile Exchange, the highest closing price since Aug. 11. The price ranged from $75.60 to $78.13.


Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Wednesday, September 29, 2010

Power Interruption GUIDE in the CEPALCO Area for Oct. 4 to 11, 2010 [None on Saturday & Sunday]

29 September 2010


Power Interruption GUIDE in the CEPALCO Area

Due to NGCP’s Continuing Mindanao-wide Power Supply Curtailments

Period Covered : Oct. 4 to 11, 2010 [None on Saturday & Sunday]


Relative to the continuing power supply curtailments imposed by the National Grid Corporation of the Philippines [NGCP] all over Mindanao, CEPALCO has again scheduled rotating brownouts within its service area lasting for about 2 hours and 30 minutes per area. According to NGCP, the power supply shortage is due to the maintenance outage of NPC’s Pulangi 4 [Unit 1] and Agus 6 [Unit 1] hydro electric plants; non- operation of Therma Marine’s two power barges and reduced capabilities of some other NPC hydro plants.



Please find below the load shedding schedule / guide [2 hours & 30 minutes DAILY rotating brownouts] within the CEPALCO service area for the period Oct. 4 to 11, 2010 [none on Saturday & Sunday]. Again, CEPALCO would like to caution customers that the actual switch off and switch on time may vary from the announced schedule depending on the actual load curtailment levels imposed by NGCP on CEPALCO on a day to day basis.



Time of Brownout

Dates:

Oct. 4 & 7

Dates:

Oct. 5 & 8

Dates:

Oct. 6 & 11

9:30am to 12noon

Charlie 4

Charlie 2 and

Carmen 3

Tango 2 and

Pueblo 2

12noon to 2:30pm

Tango 1

Carmen 1 and

Carmen 2


Charlie 1

2:30pm to 5:00pm

Tango 2 and

Pueblo 2

Charlie 4

Charlie 2 and

Carmen 3


5:00pm to 7:30pm


Charlie 1


Tango 1

Carmen 1 and Carmen 2



AREA COVERAGE

CHARLIE 1:

  1. Greater portion of the City Poblacion along and bounded by Hayes St., Mortola St., JR Borja St. including S.Daumar St. up to corner JR. Borja St., Aguinaldo St. up to corner Justo Ramonal St.,
  2. Along Pabayo St.; including portions of C. Pacana St., JR Borja St., Gomez St., C.Taal St., T.Neri St., Abejuela St., Hayes St. and Gaerlan St. from Pabayo St..
  3. Hayes St. from corner A.Velez St. towards City Hall area & Burgos St., along T.Chavez St. from Burgos St. up to Tiano Bros. St. - including portions of Tiano Bros. St., Rizal St., Capistrano St. from Hayes St.; and; Dolores St..
  4. Along Burgos St. from T.Chavez St. up to corner Gomez St. including portions of Abejuela St., T.Neri St., Cruz Taal St. and Gomez St. from Burgos St..
  5. Surroundings along Mabini St. from corner A.Velez St. towards Capistrano St. up to corner Gomez St. including portions of Tiano Bros. St. from Mabini St.; Yacapin St. from Capistrano St. towards Burgos St.; and; C.Pacana St., JR Borja St. and Gomez St. from Capistrano St.
  6. Along Pabayo and T. Saco Streets from Dolores towards Clementino Chaves St. up to 15th-26th St., Nazareth.
  7. Greater portion of Macasandig, all of Tibasak, all the way to Taguanao.


CHARLIE 2:

  1. Portions of T.Chavez St. from Corrales Ave. up to Tiano Bros. St. including portions of A.Velez St from Hayes St..
  2. Along Hayes St. from Camaman-an towards V.Roa St. up to corner J.Ramonal Ext., including Pinikitan, Adela, Balangiao area, Quirino St. and Yacapin Ext.; portions of Macasandig, XU Grade School areas.
  3. Along J.Ramonal Ext. from Sto. Niño, Cogon towards V.Roa St., R.Chavez St. up to Corrales Ave. corner A.Luna St.; D. Velez St & Yacapin St., JR Borja Sts between V. Roa St. and Mortola St.(PNB/Everbest) towards Daumar Sts. To Yacapin Ext. up to Doña Nieves St.
  4. Along Corrales Ave. towards FICCO, Nazareth, including Yacapin Street Towards Capistrano St.,
  5. Greater portion of Nazareth; greater portion of Ramonal Village. From Hayes-12th Sts up to T.Saco-14th Sts. T.Saco-6th Sts.,14th-21st Sts., and 15th-21st Sts.







CHARLIE 4:

  1. Portions of Camaman-an near and including towards Manto to the San Jose and St. Vianney Seminaries, greater portion of Camaman-an proper towards Bontong, Bolonsori up to Upper Camaman-an and Hayes Subdivision including Tipolohon.
  2. Part of Limketkai Center, Lapasan including Mc Donalds, PNB and Allied Bank.
  3. Along Recto Ave. from corner Agora Road towards Maharlika Bridge including Coca-Cola Plant & Osmeña Ext.. up to Gaabucayan St.
  4. Portion of A.Luna St. towards all of Mabulay Subdivision including portion of the Provincial Capitol and Provincial Hospital Area.
  5. Medical Center area along and bounded by Capistrano St., Echem St. up to corner Akut St., A.Velez St., and Recto Ave.(UCCP side), including all of Consolacion.
  6. Corrales Ext. from Gaabucayan St. towards most of PPA area.
  7. J.Pacana St. from Recto Avenue towards all of Macabalan area.
  8. All of RER Subdivision Phases I & 2 including Dolores compound; towards Fortune Express Shop along Maharlika Highway; including all of NHA-KSS Subdivision and portion of Bayabas near Manila Broadcasting Radio Station to Capisnon area.
  9. Greater part of Bulua from Bulua Rotonda towards all of Iponan.
  10. Greater part of Patag including Calamansi Drive, Apovel subdivision, Terry Hills subdivision and Anhawon, Bulua area.


CARMEN 1:

  1. Greater portion of Carmen along Lirio St., from Trinity St., towards Oak St., Max Suniel St., Vamenta Blvd, up to cor. Jasmin St. including Waterlily St. and the Carmen market area.
  2. Along Mabolo St. from Lirio St. towards corner Rosal St. including portion of Marigold St. .
  3. Portions of Carmen: vicinities along Vamenta Blvd. from Fernandez St. towards greater part of Ilaya including Zayas St. up to Callos-Elloso St.: portions of Ipil St. and Mahogany St. from Fernandez St.; and; Seriña St. from COA towards Gumamela Ext.St., Guani Coliseum (former O.Roa’s) and Maharlika Police Station.
  4. All of Macanhan, Carmen towards all of Lower Balulang.


CARMEN 2:

  1. Portions of Carmen along Yacal St. towards Lirio St., Vamenta Blvd., Waling-waling St. upto GSIS area including Ferrabrel St., Mango St. and portion of Rosal St. and Marigold St.
  2. All of Kauswagan proper including Fairlane Village and portion of Capisnon, Bonbon and Bayabas.
  3. Isla de Oro.
  4. Along Montalban St. from near Tiano Bros. St. towards Burgos St., del Pilar St. and Magsaysay St. including portions of Macahambus St. and Abellanosa St. from Burgos St..
  5. Portions of A.Luna St. from corner Corrales Ave.; towards vicinities along A.Velez St. upto corner Mabini St. including portion of: Makahambus St. from A.Velez St. and Tiano Bros. St. from Macahambus St.


CARMEN 3:

  1. Portions of Carmen: along vicinities of Villarin St. towards portion of Canitoan-Pagatpat Road; including St. Mary’s Academy (formerly Cathedral School of Technology), Golden Village, City Hospital-DOH Area, COWD reservoir and Seriña St. from Villarin St. down to Madonna and Child Hospital.
  2. M.Suniel St. from Villarin St. down towards portion of Mabolo St.; including Matilde Neri St., Dabatian St. and Cagayan de Oro College area; and; portion of Lirio St. area.
  3. Portions of Upper Carmen towards Dagong including SM CITY; PRYCE HOTEL; SPUM & SEARSOLIN.


PUEBLO 2 :

  1. Portions of Upper Carmen, Upper Balulang and all of Brgy. Lumbia including; PNR Sawmill, Shop and transmitter; Pueblo de Oro, Camella Homes, Xavier Estates, Xavier Heights, Xavier High School, La Buena Vida, Frontiera and Montana subdivisions; CAA-BAT Lumbia Airport & Rio Verde.


TANGO 1:

  1. Portions of Natumulan down to Casinglot, Tagoloan.
  2. All the Barangays of Bugo, Puerto, Tin-ao, Agusan, Tablon, Baloy, Cugman, Gusa, and greater portion of Lapasan.
  3. Portions of Lapasan-Camaman-an road from Recto Ave. towards Limketkai Commercial Center including Grand Caprice Restaurant.
  4. All of Osmeña St. and portion of Cogon Market Area (JR Borja side and Yacapin side) including Roxas St. towards portion of JR Borja St.
  5. Upper Gusa, Indahag, Malasag, FS Catanico and Balubal.
  6. Agora Market area including Gaabucayan St.
  7. Corrales Ext. from corner Recto Ave. up to Gaabucayan St.
  8. DMPI plantation, MENZI Agri, etc.


TANGO 2:

  1. Portions of Natumulan, greater Tagoloan proper, all the Barangays of Baluarte, Pulot, Sugbongcogon, and Gracia, Tagoloan
  2. All the Barangays of Sta. Cruz, Mohon, Sta. Ana, and Sto. Rosario, Tagoloan including Kimaya, Villanueva.
  3. All of Villanueva and Jasaan, Misamis Oriental.


We hope all CEPALCO customers & the public in general will be guided by this announcement. Thank you.


Released by:


Marilyn A. Chavez

Senior Manager

Customer & Community Relations Dept.


Philippines Markets: 29 September 2010

29 September 2010

USD/PhP: 43.88 - 0.22 PSEi: 4111.05 - 12.78
USD/JPY: 83.64 PFINC: 938.78 - 4.15
EUR/USD: 1.3605 BDO: 60.40 - 0.10
GBP/USD: 1.5828 BPI: 54.60 - 0.40
PDSTF3M: 4.1750 MBT: 70.60 - 1.25
Prices as of 4:00pm Source: Bloomberg, Reuters

RP stocks dip on profit taking
By Doris Dumlao
Philippine Daily Inquirer


Local stocks dipped slightly on Wednesday as investors pocketed gains from previous day's rallies. The main-share Philippine Stock Exchange index shed 12.78 points or 0.31 percent to finish at 4,111.05. All indices succumbed to profit-taking except for the mining sector.

www.inquirer.net

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Morning Brief 29 September 2010

Upgrade secured by RP

Country in ‘white’ list of tax standard-compliant states

THE PHILIPPINES has been raised to the "white list" of countries complying with an Organization for Economic Cooperation and Development (OECD) tax information sharing standard.

"The Philippines today moved up to the list of jurisdictions that ‘have substantially implemented the internationally agreed tax standard’," the OECD yesterday said in a statement.

The announcement came shortly after Finance Secretary Cesar V. Purisima, who is in the United States, signed Revenue Regulations (RR) 10-2010 that will be used to implement Republic Act (RA) 10021 or The Exchange of Information on Tax Matters Act.

RR 10-2010 will still have to be published in a newspaper of general circulation before taking effect 15 days after.

BusinessWorld reported last Monday that Finance and tax bureau officials were finalizing RA 10021’s implementing rules in time for a September 29 to 30 meeting in Singapore of the Global Forum on Transparency and Exchange of Information for Tax Purposes. The forum monitors compliance with the OECD tax standard among OECD and non-OECD member states.

The country landed on the OECD’s list of tax havens last April 2, 2009 and was transferred to the "grey list" after it pledged to uphold the standard. RA 10021 became law in March this year.

"The Philippines has a network of more than 30 treaties that provide for exchange of information in tax matters. Until now, however, domestic legal restrictions prevented its tax authorities from obtaining and exchanging certain types of information ... The new law and regulations remove these restrictions, thus enabling many of the Philippines’ existing treaties to meet the international standard," the OECD said in the statement.

Internal Revenue Commissioner Kim S. Jacinto-Henares, whose agency is tasked with implementing RA 10021, said money flows "would now be easier." Ms. Jacinto-Henares is currently attending the Global Forum meet.

Revenue Regulations 10-2010 expounded on the provisions of RA 10021, particularly on Section 3, which gave the Bureau of Internal Revenue (BIR) commissioner the authority to look into bank deposits upon the request of a foreign tax authority.

A Finance official said there were "misinterpretations" on a provision that states tax information may be given to foreign authority "provided that such information would be used for tax assessment, verification, audit, and enforcement purposes."

This has been clarified in the rules, which state "the BIR is likewise authorized to use, for tax assessment, verification, audit and enforcement purposes, any such information" requested.


Imports grew to $4.68B in July; trade deficit eases to $2.69B

THE COUNTRY’S import bill grew 16.2 percent year-on-year to $4.68 billion in July, increasing for the ninth straight month, National Statistics Office said Tuesday.

Total external trade—the combined value of outbound and inbound goods—in the seven months to July reached $59.14 billion, an increase of 31.6 percent from a year ago.

This kept the trade balance in favor of the rest of the world with the Philippines incurring a deficit of $2.69 billion, down from $3.87 billion in the same period last year.

The July imports were also up 11 percent from $4.21 billion in June.

A strong inflow of goods from abroad, which indicates a similar movement in exports in succeeding months, is considered a good sign for a country like the Philippines, which relies heavily on foreign supplies of electronics inputs for its biggest source of export revenues.

NSO documents showed that electronic products accounted for 34.9 percent of total imports in July, with the value rising 2.4 percent year-on-year to $1.63 billion. Semiconductor devices and parts made up 27.6 percent of all electronics shipments, racking up $1.29 billion in bills.

The operation of modern electronic devices such as computers, cell phones, transistors, solar panels, diodes and integrated circuitsdepend on semiconductor materials. Silicon is widely used in the production of commercial semiconductors.

Electronics imports in July increased 12.9 percent from $1.45 billion in June.

July shipments of mineral fuels, lubricants and related materials—which represented the second biggest group in terms of value—jumped 17.8 percent to $719 million.

Transport equipment, the country’s third largest import for the month increased 27.7 percent to $260.86 million. In fourth were industrial machinery and equipment, which jumped 36.7 percent to $211.65 million. This was followed by metal ores and scrap, which rose 89.4 percent to $200.56 million.


U.S. Stocks Fluctuate as Walgreen Rally Offsets Confidence Drop

U.S. stocks advanced, erasing most of yesterday’s drop, as Walgreen Co. led a rally in consumer- staples and health companies and investors speculated the Federal Reserve will buy more debt to safeguard the economy.

Walgreen, the largest U.S. drugstore chain, jumped 11 percent as earnings topped estimates. Pfizer Inc. and Johnson & Johnson paced gains in health-care shares as the Supreme Court agreed to hear an appeal by pharmaceutical companies seeking to block thousands of public hospitals from suing over a federal discount-drug program. Monsanto Co. slid 8.1 percent on concern its SmartStax corn seeds aren’t performing as well as predicted.

The Standard & Poor’s 500 Index climbed 0.5 percent to 1,147.70 at 4 p.m. in New York after tumbling as much as 0.9 percent. The Dow Jones Industrial Average climbed 46.10 points, or 0.4 percent, to 10,858.14.


Treasuries Rise as U.S. Auction of Five-Year Notes Draws Record Low Yield

Treasuries gained as the government’s $35 billion sale of five-year notes drew the lowest yield since the government began quarterly offerings of the securities in 1976.

The yield on the current five-year debt fell to the lowest level in almost two years as a drop in consumer confidence spurred speculation that the Fed will increase purchases of Treasuries to support the economy. The securities were auctioned today at a yield of 1.260 percent, compared with the 1.276 percent average forecast in a Bloomberg News survey of 8 of the 18 primary dealers obligated to participate in U.S. debt sales.

“You have new pieces of uncertainty, with the Fed and quantitative easing 2 priced in,” said Sean Simko, who oversees $8 billion at SEI Investments Co. in Oaks, Pennsylvania. “With the volatility in the marketplace, you’re going to see the Treasury market well-bid.”

The current five-year note yield dropped 6 basis points, or 0.06 percentage point, to 1.23 percent at 4:18 p.m. in New York, according to BGCantor Market Data. The price of the 1.25 percent security maturing in August 2015 gained 9/32, or $2.81 per $1,000 face amount, to 100 3/32.

The yield touched 1.22 percent, the lowest level since Dec. 17, 2008, the day after the Fed cut its target lending rate to zero to 0.25 percent. Yields on two-year notes dropped 2 basis points to 0.43 percent, compared with the record low of 0.41 percent reached on Sept. 22. Benchmark 10-year note yields slid 6 basis points to 2.47 percent.


Crude Oil Trades Near Three-Day Low on Gasoline Supply Gain, Weak Demand

Oil traded near a three-day low in New York after reports showed an increase in U.S. gasoline stockpiles and lower demand for the fuel, adding to signs of slowing economic growth.

Futures declined yesterday as MasterCard, the second- biggest payments network company, reported gasoline demand declined for the fifth time in six weeks. The American Petroleum Institute said inventories of the fuel rose by 3.02 million barrels last week. An Energy Department report today may also show supplies climbed.

“Demand is relatively weak and we have more than sufficient supply,” said James Williams, an economist at WTRG Economics, an analysis and research firm for energy companies based in London, Arkansas. “Inventories are in good shape, so there is no fundamental reason for oil prices to keep rising.”

The November contract traded at $76.22 a barrel, up 4 cents in electronic trading on the New York Mercantile Exchange at 8:51 a.m. Sydney time. Yesterday it lost 34 cents, or 0.4 percent, to $76.18, the lowest close since Sept. 23. Prices are down 4 percent for the year.


Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Tuesday, September 28, 2010

Philippines Markets: 28 September 2010

28 September 2010

USD/PhP: 44.10 + 0.20 PSEi: 4123.95 + 1.24
USD/JPY: 84.23 PFINC: 942.94 - 5.69
EUR/USD: 1.3400 BDO: 60.50 + 0.30
GBP/USD: 1.5797 BPI: 55.00 - 0.20
PDSTF3M: 4.1635 MBT: 71.85 - 1.15
Prices as of 4:00pm Source: Bloomberg, Reuters

RP stocks remain slightly higher despite early profit-taking

Local stocks closed marginally higher on Tuesday as a late-session resurgence in risk-taking reversed losses from an early wave of profit-taking.
The main-share Philippine Stock Exchange index added 1.24 points or 0.03 percent to 4,123.95.

Investors remained optimistic on local equities despite an overnight decline in Wall Street, which sent the Dow Jones Industrial Index 48.22 points or 0.44 percent lower to 10,812.04.

The industrial sector led the day's modest gains, taking up the slack in the financial, holding firms, property and mining/oil counters. The services sub-index was unchanged.

www.inquirer.net

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001

Monday, September 27, 2010

Philippines Markets: 27 September 2010

27 September 2010

USD/PhP: 43.90 - 0.19 PSEi: 4122.83 + 44.05
USD/JPY: 84.17 PFINC: 948.62 + 6.31
EUR/USD: 1.3462 BDO: 60.20 + 0.20
GBP/USD: 1.5815 BPI: 55.20 + 1.10
PDSTF3M: 4.2365 MBT: 73.00 + 1.25
Prices as of 4:00pm Source: Bloomberg, Reuters



Stocks end 1.08 percent higher

MANILA, Philippines (Xinhua) – The Philippine market finished 1. 08 percent higher today. The bellwether Philippine Stock Exchange index added 44.05 points to 4,122.83, while the broader all-share index gained 1.34 percent or 34.18 points to 2,584.87 Trading volume reached 4.79 billion shares worth 6.61 billion pesos (149.97 million U.S. dollars). There were 90 advancers and 71 decliners while 30 shares did not move.

Source: www.philstar.com

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Friday, September 24, 2010

“AMERICAN SHOWCASE 2010” BRINGS THE BEST OF AMERICA TO CAGAYAN DE ORO AND MINDANAO

The U.S. Embassy’s Commercial Service Office in Manila organized the “American Showcase 2010 at the Oro Best Expo.” The largest exhibition ever organized in the growing business districts of Cagayan de Oro and Northern Mindanao, American Showcase 2010 featured 15 U.S. companies at the ORO Best Expo located in The Atrium-Limketkai Center, Cagayan de Oro City from September 16-18, 2010.

The American Showcase 2010 highlighted the products and services offered by the 15 U.S. exhibiting companies: Amway Philippines LLC, Cargill Philippines, Cisco Systems, Inc., Citibank/Citibank Savings, Cooper Industries, Dunkin Donuts, Hewlett Packard Philippines, IBM Philippines, Getcre8ive (a delegate of Getty Images), Grainger, Oracle Philippines, OSG Ship Management Manila, Inc., Salvtug Group of Companies, Snap On Tools, and Stevens-Henager College. CalEnergy Philippines also participated as an event partner.

The American Showcase also provided business visitors free seminars on “Doing Business with the U.S.A.” on September 16. U.S. Deputy Chief of Mission Leslie Bassett, and other speakers addressed the seminars on topics such as “The U.S. Commercial Service Role in Promoting U.S. Business in the Philippines;” “Express Transportation: Keys to Modernization of Global Trade Practices,” and “U.S. Business Visa Requirements.” On September 17 and 18, the exhibiting U.S. companies offered free product/technology presentations.

Cagayan de Oro is an important market for U.S. companies outside of Manila. The U.S. Embassy works with these U.S. firms to strengthen U.S.-Philippine business ties and to showcase the best of America in the Philippines. This event was presented in cooperation with the Cagayan de Oro Chamber of Commerce and Industry Foundation (Oro Chamber).

For business partnerships and other product inquiries, please contact the individual U.S. companies:

  • Amway Philippines, L.L.C
  • Cargill Philippines
  • Cisco Systems
  • Citibank N.A./Citibank Savings
  • Cooper Industries
  • Dunkin Donuts
  • Hewlett Packard Philippines
  • IBM Philippines
  • Getcre8ive, a delegate of Getty Images, Inc.
  • Grainger
  • Oracle Philippines
  • OSG Ship Management Manila Inc.
  • Salvtug
  • Snap On Tools
  • Stevens-Henager Colleges

Philippines Markets: 24 September 2010 (as of 12:00pm)

24 September 2010

USD/PhP: 44.05 (as of 12:00pm) PSEi: 4078.87 + 11.44
USD/JPY: 84.52 PFINC: 942.31 - 3.20
EUR/USD: 1.3346 BDO: 60.00 - 0.40
GBP/USD: 1.5683 BPI: 54.10 - 0.90
PDSTF3M: 4.2077 MBT: 71.75 - 0.15
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary market rates moved down by an average of 15 basis points week on week after the government posted a better than expected budget surplus during August, market players were expecting a deficit. The surplus was at 1.3 billion pesos as the government tightened its belt meet target deficit for the year. Except for last year, August had been a surplus month for the government since 2005.

Expect interest rates to move sideways with downward bias next week as market liquidity continues to support demand for government securities.

Philippine Equities Outlook

Local shares rose 2.50 percent week-on-week to 4078.87 as investors continue to snap up Philippine shares as valuations remains attractive compared to the region. Mining shares continue to outperform the market as gold prices continue to soar as US Fed suggested they are still prepared to do quantitative easing.

Chartwise, the week’s close at 4078.87 continue to support further upticks towards the 4,150-4,200 levels in the near-term. Immediate support now lie at the 4,000 levels. A break below the said levels could create the much awaited 'pause' possibly towards the 3,800-3850 levels. Technical market indicator RSI implies that the market is quite overbought and may adjust soon.


Philippine Peso Outlook

As of 12:00 pm, the local currency is trading at 44.05, slightly stronger than last week’s 44.21 close due to US dollar weakness against the major currencies after the Fed kept key target rate at historic lows. Portfolio flows remained supportive as valuations remain cheap compared to the region.

Chartwise, the current peso movement suggests a possbile double-bottom was formed at the 43.88 levels. This implies a a bounce possibly retesting the 44.25-44.50 levels in the week ahead. Only a break below the 43.88 levels will trigger further tests towards the 43.00 - 43.50 levels

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Morning Brief 09/23/10

BSP watching increasing risk appetite, flows

INTEREST RATE differentials between the United States and emerging markets that boost risk appetite and capital inflows can complicate monetary policy, Philippine central bank governor Amando M. Tetangco Jr. said on Tuesday.

The Philippines is Southeast Asia’s best-performing stock market this year, rising nearly 34% to record highs, boosted by foreign inflows which have helped drive the peso to two-year highs against the dollar. Foreign portfolio fund flows also hit a 15-month high in August.

"We are mindful of the impact of the interest differentials being in favor of EMEs [emerging market economies] on global risk appetite and capital flows, as this could complicate monetary policy going forward," Mr. Tetangco said via text to reporters after the US Federal Reserve held interest rates near zero.


Meralco bills to rise P0.0314/kWh in Oct.

REGULATORS HAVE allowed the Manila Electric Co. (Meralco) to get back P3.371 billion in costs for power obtained from the spot market in 2006 and 2007, in a move that will raise power bills by P0.0314 per kilowatt-hour (kWh) starting next month.

The Energy Regulatory Commission (ERC) previously disallowed Meralco from charging the amount, requiring the utility to buy no more than 10% of its power requirements from the Wholesale Electricity Spot Market (WESM), where prices are often higher than those of direct supply contracts.

In the decision dated Aug. 16, which was released only yesterday, the ERC reversed itself and noted that WESM rules only require utilities to get "at least" 10% of the their power requirements from the spot market, meaning there should be no cap.

The conflict stemmed from a provision in the Electric Power Industry Reform Act of 2001 that utilities cannot obtain more than 90% of their power requirements from bilateral contracts in order to reflect the true cost of power.

The "disallowed" portion of Meralco’s WESM purchases from August 2006 to May 2007 amounted to P2.7 billion, but the amount to be recovered was raised to reflect interest, ERC Executive Director Francis Saturnino C. Juan said in a phone interview.

Meralco had argued before the ERC that WESM costs are pass-on charges and should automatically charged to consumers, and that putting caps on WESM purchases would undermine the aim of opening up the power sector.


U.S. Stocks Fall on Technology, Banking Profit Outlook

U.S. stocks fell, dragging the Standard & Poor’s 500 Index to its biggest decline in two weeks, as a weakening earnings outlook for technology and financial companies overshadowed speculation the Federal Reserve will take steps to bolster the economy.

Adobe Systems Inc. tumbled 19 percent after estimating sales that missed analysts’ projections. PMC-Sierra Inc. dropped 6 percent as the chipmaker reduced its third-quarter revenue forecast. Microsoft Corp. sank 2.2 percent after announcing a dividend increase that was smaller than some analysts expected. Morgan Stanley and Goldman Sachs Group Inc. lost at least 2.2 percent, pacing a slump in financial shares, as Deutsche Bank AG cut its earnings estimates for the banks.

The S&P 500 slid 0.5 percent, the most since Sept. 7, to 1,134.28 at 4 p.m. in New York, a day after the Federal Reserve said it’s willing to ease monetary policy further to spur growth. The Dow Jones Industrial Average fell 21.72 points, or 0.2 percent, to 10,739.31.

“We’re navigating the slow-growth economy and trying to avoid pitfalls,” said Jack Ablin, chief investment officer at Chicago-based Harris Private Bank, which oversees $55 billion. “The Fed will do whatever it can to avoid a double-dip recession, but it can’t keep on buying debt forever. This is a ‘reflation’ story of weaker dollar, higher commodities prices and lower interest rates. This is not an environment that suggests a huge rally for stocks.”

The S&P 500 has surged 11 percent from this year’s low on July 2 as concern eased that U.S. unemployment and less spending from indebted European nations would stall the global economic recovery. The gauge has gained 1.7 percent so far this year, leaving it 6.8 percent below its peak for 2010.


Treasury 10-Year Notes Rise for Fourth Day on Bets Fed Will Buy More Debt

Treasury 10-year notes rose for a fourth day in the longest stretch of gains since June as traders speculated that the Federal Reserve is preparing to increase purchases of U.S. debt.

The yield on the two-year note touched a record low for a second day after the Fed said yesterday it’s “prepared to provide additional accommodation if needed to support the economic recovery.” The central bank bought $2.07 billion of Treasuries maturing from March 2013 to April 2014 today as part of its effort to keep borrowing costs low.

“There is an underlying bid in the market as the bull trend in Treasuries remains intact,” said Martin Mitchell, head government bond trader in Baltimore at Stifel Nicolaus & Co., a brokerage firm. “The Fed has tipped their hand that they are likely to initiate a larger-scale asset-purchase program in the future. If the Fed becomes a larger buyer, the Treasury market can only go higher.”

The benchmark 10-year note yield dropped 2 basis points, or 0.02 percentage point, to 2.56 percent at 4:04 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 gained 5/32, or $1.56 per $1,000 face amount, to 100 19/32.

The 10-year note yield touched 2.50 percent, the lowest level since Sept. 1. The last time the yield fell for four days in a row was on June 30. The 2-year yield climbed 1 basis point to 0.43 percent after dropping earlier to a record 0.41 percent. The 30-year bond yield fell 4 basis points to 3.74 percent.


Crude Oil Declines After Report Shows Unexpected Increase in Inventories

Crude oil declined for a second day after an Energy Department report showed that U.S. oil and gasoline inventories unexpectedly increased.

Crude supplies rose 970,000 barrels to 358.3 million last week, 13 percent above the five-year average, the department said today. Inventories were forecast to fall 1.75 million barrels, according to a Bloomberg News survey. Gasoline stockpiles also climbed.

“Those unexpected builds have taken the wind out of our sails,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “The report reminded us of the large supply overhang.”

Crude oil for November delivery fell 26 cents, or 0.4 percent, to $74.71 a barrel on the New York Mercantile Exchange, the contract’s lowest settlement since Aug. 31. Futures have gained 4.4 percent in the past year.


Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Morning Brief

Aquino to abolish 10 gov’t offices

Palace says move will save P304M a year


To cut costs, President Benigno Aquino III is moving to abolish 10 agencies that contributed to a bloated bureaucracy under the watch of his predecessor, former President and now Pampanga Rep. Gloria Macapagal-Arroyo.

The abolition of the agencies, including the Presidential Anti-Graft Commission (PAGC) and the Presidential Anti-Smuggling Group (PASG), would save the government some P304.62 million a year, Executive Secretary Paquito Ochoa Jr. said Thursday.

“We are abolishing 10 of the 17 locally funded projects, which are no longer relevant or which are duplicative of the functions of the other projects,” he said in a budget hearing of the House appropriations committee.

Priority programs

The amount would then go to priority programs and projects of the Office of the President in 2011, he added.

The other agencies sought to be abolished are the Mindanao Development Council, the Office of the North Luzon Quadrangle Area, the Office of External Affairs, the Minerals Development

Council, the Luzon Urban Beltway Super Region, the Bicol River Basin Watershed Management Project, the Office of the Presidential Adviser on Global Warming and Climate Change, and the Office of the Presidential Adviser on New Government Centers.

Ochoa did not say what will happen to the personnel of the agencies that would be abolished.

The OP is retaining the Office of the Presidential Adviser on Peace Process, Presidential Anti-Organized Crime Commission, Presidential Visiting Forces Agreement Commission, Commission on Information and Communications Technology, Edsa People Power Commission, Commission on Maritime Affairs, Philippine Truth Commission, and Presidential Communications Development and Strategic Planning Office.


BSP explains intervention

THE PHILIPPINE central bank is acting in the foreign exchange market to reduce the peso’s volatility but is allowing fundamentals to move the currency, a central bank official said yesterday.

The peso hit a two-year high against the dollar last Wednesday and is up more than 5% this year, supported by strong portfolio inflows and remittances from overseas workers.

“We continue to make our presence felt in the market to make sure we reduce volatilities and ensure the fundamental movements of the peso,” Deputy Governor Diwa C. Guinigundo told Reuters.

The peso softened to around P44 per dollar from an opening of P43.88 per dollar after the comments, with traders wary of intervention not only from Manila but other countries in Southeast Asia as currency gains put pressure on exporters.

Anaemic growth and heavy debt burdens across the West and Japan are encouraging an influx of capital inflows to emerging markets as global investors search for better yields.

On Wednesday, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. said interest rate differentials between the United States and emerging markets that have boosted risk appetite and capital flows could complicate monetary policy.

Separately, Mr. Guinigundo told television channel ANC in an interview late Wednesday the peso’s rise was helping to mitigate inflation pressures.

“That is not good news for exporters and OFW (overseas Filipino worker) families, but to a large extent and to the extent that we still import oil and other raw materials, that could help both exporters and Filipino overseas abroad keep up with those increases in exchange rate.”

The central bank has forecast average inflation of 4% this year and 3.25% next year, within the government’s targets.

Mr. Guinigundo said the central bank, which will meet on Oct. 7 to review policy, saw no urgent need to adjust policy rates as inflation was under control.

“The central bank sees no compelling reason to adjust rates at this point given the favorable outlook for inflation.”

The rate has been at a record low of 4% since July 2009. The Philippines is one of the few Asian countries not to have raised interest rates since the end of the global financial crisis.

Mr. Guinigundo said in the television interview that rates could be kept steady as long as inflation stayed within target of 3 to 5% for 2011 and 2012.

“Of course at this point, all available information to us would indicate inflation would just be about 4%, so that means we can afford to keep our policy rates steady for for next two years,” he said.


U.S. Stocks Rise as Technology Rally Overshadows Jobless Claims

U.S. stocks fell, sending the Standard & Poor’s 500 Index to its longest drop in a month, as a deteriorating profit outlook for banks and an increase in jobless claims overshadowed a rally in technology shares.

Goldman Sachs Group Inc. and Citigroup Inc. fell more than 2 percent as Bank of America Corp. cut profit projections and former Federal Reserve Chairman Paul Volcker said the U.S. mortgage market is “absolutely broken.” Real estate companies in the S&P 500 slumped 2.7 percent as a group. Apple Inc. rose for the 17th time in 19 days, briefly passing PetroChina Co. to become the world’s second-largest company by market value.

The S&P 500 fell 0.8 percent to 1,124.83 at 4 p.m. in New York, retreating for a third day, the longest losing streak since Aug. 24. The Dow Jones Industrial Average decreased 76.89 points, or 0.7 percent, to 10,662.42.


Treasuries Climb on Speculation Federal Reserve Will Increase Debt Buying

Treasuries gained, pushing the 10- year note yield below 2.50 percent for the first time in three weeks, on speculation the Federal Reserve may increase purchases of U.S. debt to support the economy.

The 10-year note advanced for a fifth day in its longest winning streak in about a year as initial jobless claims unexpectedly climbed last week. Two-year note yields were within a basis point of the record low two days after the central bank said it’s willing to ease monetary policy further.

“For the next two or three weeks, every single economic statistic will be picked over, and anything showing weakness will lead to market rallies and lower yields,” said Ray Remy, head of fixed income in New York at Daiwa Securities Group Inc., one of the 18 primary dealers that trade directly with the central bank. “Everybody will expect the Fed to step in, step in at any second.”

The benchmark 10-year note yield dropped 1 basis point, or 0.01 percentage point, to 2.56 percent at 5:17 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 rose 2/32, or 63 cents per $1,000 face amount, to 100 18/32.

The yield touched 2.48 percent, the lowest level since Sept. 1. The 2-year yield slid 2 basis points to 0.42 percent, compared with the record 0.41 percent reached yesterday. The 30- year bond yield fell 2 basis points to 3.73 percent.


Oil Falls as Increase in U.S. Jobless Claims Prompts Concerns About Demand

Oil declined in New York after a U.S. government report showed that initial jobless claims rose for the first time in a month, signaling fuel demand in the world’s largest crude consuming nation may falter.

Futures gave back yesterday’s 0.6 percent gain after the Labor Department reported claims increased by 12,000 to 465,000 in the week ended Sept. 18, as the unemployment rate holds near a 26-year high.

The November contract lost as much as 51 cents, or 0.7 percent, to $74.67 a barrel on the New York Mercantile Exchange, and was at $74.69 at 8:20 a.m. Sydney time. Yesterday, it climbed 47 cents to $75.18. Prices are down 5.8 percent this year.


Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

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