Philippines Markets: 5 November 2010

05 November 2010

USD/PhP: 42.70 + 0.17 PSEi: 4349.11 - 48.19
USD/JPY: 80.89 PFINC: 1032.84 + 3.49
EUR/USD: 1.4196 BDO: 62.80 + 0.30
GBP/USD: 1.6194 BPI: 60.85 - 0.15
PDSTF3M: 3.6808 MBT: 82.50 - 0.35
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary money market rates moved lower this week as demand for government securities continues to push yields down. This was further boosted by expectations that a possible credit
upgrade is just around the corner. The government released October inflation at 2.8 percent, lower than expected 3.3 percent, bolstering views that monetary authorities will keep rates unchanged for the rest of the year.

Continue to see rates to move sideways to down in the coming weeks.

Philippine Equities Outlook

Local shares continue to post new highs this week on positve 3Q corporate results. These activities continue to boost investor confidence in the market causing foreign funds to flow to the local markets,
boosting the index to close the week at 4349.11, up by 1.88 percent week-on-week.

Chartwise, the week's close at 4349.11 continues to suggest the market has enough gas to test the 4,500 levels in the near-term.

Immediate support and resistance is seen at 4,250.00 and 4,500 levels, respectively.

Philippine Peso Outlook

The local currency strengthened anew by 0.72 percent week-on-week to 42.70 buoyed by strong portfolio flows to local capital markets. The prevailing weak dollar sentiment due to recent US Fed movements as well as continued flows from Filipinos working abroad further fueled the currency's appreciation causing rate to breach the 43.00 levels.

Chartwise, the break below the 43.00 levels indicates further peso strength in the coming weeks, possibly testing the 41.80 - 42.00 levels. Year-end is expected at the 42.00 levels.