Friday, November 19, 2010
Philippine Markets: 19 November 2010
19 November 2010
USD/PhP: 43.83 + 0.16 PSEi: 4203.60 + 82.98
USD/JPY: 83.37 PFINC: 959.33 + 2.63
EUR/USD: 1.3677 BDO: 56.80 + 0.30
GBP/USD: 1.6073 BPI: 58.40 + 0.70
PDSTF3M: 2.1808 MBT: 71.55 - 1.95
Prices as of 4:00pm Source: Bloomberg, Reuters
Philippine Interest Rate Outlook
Secondary money market rates fell anew by an average of 14 basis points week on week with short term yields falling by around 100 basis points after rates fell at the goverment's latest auction of government securities. Market liquidity remains the key driver of drop in rates supported by the upgrade of the country's credit rating the other week.
Continue to see rates to move sideways to down till end of the year.
Philippine Equities Outlook
Local shares rose 3.11 percent week-on-week to 4203.60 due to bargain hunting activities as the country's credit upgrade renewed investors appetite for Philippine stocks. Strong 3Q corporate results and improving market sentiment overseas continue to support the emerging rally.
Chartwise, the week's close at 4203.60 implies a test of the 4,250 levels in the near-term. Strong support lies at the 4,050 levels.
Philippine Peso Outlook
The local currency declined 0.16 percent week-on-week to 43.83 as dollar strengthened against major currencies. Chartwise, continue to expect the currency to range between the 43.50 - 44.00 levels in the week ahead.
Morning Brief: 19 November 2010
| Aquino to protect big infra investors Solicited projects get regulatory risk surety By Daxim Lucas, Norman Bordadora, Paolo Montecillo “If for some reason, a court decision threatens the adjustment, the government will compensate the private concessionaire for the difference between what the tariff should have been under the formula and the tariff which it is actually able to collect,” the President said at the opening of the public-private partnership conference in Pasay City. Before some 500 foreign fund managers at the Marriott Hotel, Mr. Aquino unveiled this landmark policy that his economic team hoped would assuage overseas businessmen’s fears about their ability to recoup investments. “If we are truly interested in a square deal for all, then what we shake hands on, should be what endures,” he said. “To this end, what we will be doing in so far as solicited projects are concerned is to minimize your risk in a meaningful and fair manner.” Mr. Aquino said the government would provide investors with protection against so-called “regulatory risk” or the risk of being unable to recoup one’s investments due to changes in the local regulatory environment—a common complaint among foreign businesses operating in the Philippines. “Infrastructure can only be paid for from user fees or taxes,” he said. “When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees—by regulators, courts, or the legislature—then our government will use its own resources to ensure that they are kept whole.” Seeking to lure back foreign investors, many of whom have been personally burned by soured investments or deterred by tales about the perils of doing business in the country, he said: “You cannot deal with a government where the right hand is offering a handshake while the left hand is trying to pick your pocket.”
By Michelle Remo
The latest confidence index was higher than the +45 percent recorded for the third quarter of the year, and the +22 percent posted for the fourth quarter of last year. “In the fourth quarter, businesses are bullish for various reasons, including sustained improvement of the economy given strong demand and steady inflow of remittances from overseas Filipino workers,” said Diwa Guinigundo, Bangko Sentral ng Pilipinas deputy governor. The index is a measure of the level of confidence of businesses in terms of their ability to generate profit and their sentiment on the economy in general. The index is computed as the difference between the percentage of respondents who say they are optimistic against those who say they are pessimistic. “Seasonal factor, particularly projections of improved demand during the Christmas season, and optimism brought by the new administration also helped improve the confidence index,” said Rosabel Guerrero, director of the department of economic statistics at the central bank. |
Stocks in U.S. Rally on Manufacturing Report, Prospects for Irish Bailout U.S. stocks rallied, sending major equity benchmarks to their biggest gains in two weeks, as speculation grew that Ireland will accept a bailout to rescue indebted banks and reports on manufacturing and jobless claims bolstered optimism about the economy. Alcoa Inc. and Halliburton Co. climbed at least 3.4 percent as metals prices jumped and crude oil rebounded from a four-day drop.Caterpillar Inc. advanced 2.4 percent as the world’s largest maker of construction equipment said global retail sales of machines soared 48 percent. General Motors Co. rose 3.6 percent on its return to public trading following a $20 billion initial public offering. The Standard & Poor’s 500 Index gained 1.5 percent to 1,196.69 at 4 p.m. in New York. The Dow Jones Industrial Average added 173.35 points, or 1.6 percent, to 11,181.23. “It seems like everyone wants a rally today,” said Jeffrey Davis, who oversees $5 billion as chief investment officer at Lee Munder Capital Group in Boston. “The U.S. economic numbers have been very supportive. On top of that, we’re pretty satisfied with the way Europe is handling the Irish situation. And obviously GM’s IPO is bringing a positive tone to everybody’s thinking. I’m encouraged.” The S&P 500 tumbled by the most in almost three months on Nov. 16 amid speculation the debt crisis in Europe is worsening and that China will act to slow its economy. The benchmark gauge has still jumped 17 percent since July 2 as the Federal Reserve increased its program of asset purchases to stimulate growth.
Thirty-year bonds erased losses as the Federal Reserve prepares to buy Treasuries tomorrow maturing from August 2028 to November 2041, the first long-term debt purchase since it began the second round of purchases last week. Ten-year note yields were near a three-month high as the index of U.S. leading indicators rose for a fourth consecutive month and mid-Atlantic manufacturing surged, signaling the world’s largest economy is accelerating. “Things are getting a bit better,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Financial Group Inc. “It put pressure on the market.” Ten-year note yields climbed two basis points, or 0.02 percentage point, to 2.9 percent at 5:17 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in November 2020 fell 5/32, or $1.56 per $1,000 face amount, to 97 5/8. The notes last touched a 3 percent yield on July 29. Thirty-year bond yields fell less than one basis point to 4.28 percent after touching 4.34 percent, near a six-month high. |
| Crude Oil Rises a Second Day on Optimism Over Fuel Demand, Irish Bailout Oil climbed for a second day in New York amid optimism fuel demand will increase in the U.S. because of improved economic prospects and as Ireland moved closer to a European Union-led financial bailout. Futures gained 1.8 percent yesterday after Ireland’s central bank governor said he expects the country to seek help, strengthening the euro and boosting commodities. Prices also advanced as reports showed that the index of U.S. leading indicators rose for a fourth consecutive month, manufacturing surged in the Philadelphia area and jobless claims climbed less than forecast. The December contract increased 48 cents, or 0.6 percent, to $82.33 a barrel, in electronic trading on the New York Mercantile Exchange at 10:10 a.m. Sydney time. Yesterday, it added $1.41 to $81.85 a barrel, snapping a four-day drop. Prices are down 3.1 percent this week and 3.7 percent higher 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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