THE VOICE OF BUSINESS IN NORTHERN MINDANAO

Monday, February 28, 2011

Philippine Markets: 28 February 2011


28 February 2011

USD/PhP: 43.565 - 0.145 PSEi: 3766.73 + 29.69
USD/JPY: 81.69 PFINC: 839.97 + 21.17
EUR/USD: 1.3784 BDO: 46.90 + 0.40
GBP/USD: 1.6147 BPI: 55.65 + 2.65
PDSTF3M: 1.9269 MBT: 57.40 + 0.45
Prices as of 4:00pm Source: Bloomberg, Reuters



Upbeat mood marks trading on local stock market
By Doris Dumlao
Philippine Daily Inquirer


MANILA, Philippines—The local stock market started the week on an upbeat mood as bargain hunters loaded up on Aboitiz stocks alongside other oversold conglomerate and banking shares.

The main-share Philippine Stock Exchange index added 29.69 points or 0.79 percent to finish at 3,766.73 in heavy trading on Monday.

Dealers said the day's upswing was fueled by heavy buying on Aboitiz stocks, particularly holding firm Aboitiz Equity Ventures (AEV) and power unit Aboitiz Power. This was as the inclusion of AEV in a closely tracked MSCI index took effect.

Value turnover surged to P8.29 billion, bouncing from anemic trading in the last few weeks. About P3.9 billion of the value traded on the local bourse was on AEV.

But the bargain-hunting was selective, thereby lifting 63 stocks as against 61 that declined.

Other stocks that benefited from bargain hunting for the day were SM Investments, Megaworld, Cebu Air, DMCI Holdings, San Miguel Corp., BPI, Banco de Oro and Semirara Mining Corp.

On the other hand, AGI, PLDT, Ayala Land, ICTSI, Meralco, EDC, Jollibee, SM Prime and Philex Mining traded in the red.



BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

BIR Annual Campaign Program

ACCOUNTING FOR NON-ACCOUNTANTS

PRESS RELEASE

Contact: OROCHAMBER thru Tel# 859-1426

OROCHAMBER, Chinese Chambers, PICPA host Accounting Forum


The Cagayan de Oro Chamber of Commerce and Industry Foundation, Inc. (Oro Chamber) in partnership with BPR & Co., CDO Fil-Chi Chamber, Misamis Oriental Fil-Chi Chamber and PICPA Region 10 conducted a seminar on “ACCOUNTING FOR NON- ACCOUNTANTS” last February 24 at the VIP Hotel.

More than 130 participants listened to practical accounting and bookkeeping tips.

OroChamber President Antonio Uy shared that the forum is one of the Chamber’s priority activities under its Effective Taxation Program.

“We have to continually capacitate our members,” he said. “We want to ensure that all member companies are compliant to the reporting requirements of BIR by keeping them updated on the new regulations and circulars of the bureau,” he added.

“With this surge of participants, we see the need to have a workshop series on accounting both for employers and non-accounting staff who are handling bookkeeping and finance functions,” Vice President for Trade and Commerce Mr. Efren Uy mused.

Starting March, member and partner companies can actively participate in the accounting and bookkeeping workshops which will highlight report-preparation exercises.

For related queries, please call the OROCHAMBER Office and look for Ms. Mozell Nabua.

Friday, February 25, 2011

Philippine Markets: 25 February 2011


25 February 2011

USD/PhP: 43.84 PSEi: 3737.04 + 6.20
USD/JPY: 81.90 PFINC: 818.30 - 2.13
EUR/USD: 1.3822 BDO: 46.50 - 0.40
GBP/USD: 1.6146 BPI: 53.00 - 0.20
PDSTF3M: 1.9000 MBT: 56.95 - 0.30
Prices as of 12:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary money market rates moved down by an average of 34 basis points as short-term rates fell. Investors flocked to the safety of government securites as risk aversion rose following the wide spread civil unrest in the Middle East and North Africa (MENA). This caused oil prices to rise above the US$100/bbl for the first time since 2008.

The current drop in yields is viewed as a mere correction following the rise in rates a few weeks ago . We remain comitted to see interest rates to inch upwards in the near future as rising global commodities prices will further fan inflation concerns.


Philippine Equities Outlook

Local shares plunged 2.67 percent to 3737.04 as tensions in the MENA region triggered a global sell-off in the equity markets. Investors fear that a prolonged uncertainty in the Middle East could stall the global recovery as it aids global commodity prices to new highs. This condition could fan inflation in the medium term causing some upward adjustment in interest rates.

Chartwise, the week’s close at 3737.04 continues to imply further tests towards the 3,600 levels in the near-term. Expect some bargain hunting near the said levels. Support and resistance is seen at 3,600 and 3,800 levels, respectively.

Philippine Peso Outlook

The local currency depreciated against the dollar as investors sought safe haven in US dollar as current geopolitical risks rises in Middle East. Near-term demand for the greenback grew after crude oil rose to its highest level since 2008 at US$100/bbl.

Chartwise, current movement of the exchange rate confirms a near-term bottom at the 43.25 levels. A close above the 44.00/44.10 levels will signal a retest of the 44.50 levels.

Immediate support and resistance is seen at 43.50 and 44.00 levels, respectively.



BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Morning Brief: 25 February 2011

Firms’ optimism slips in Q1
www.bworldonline.com

OPTIMISM among businesses in the country slipped this quarter, weighed partly by concerns over rising prices of oil and other commodities, results of the latest Business Expectations Survey which the central bank released yesterday showed.

Still, the Bangko Sentral ng Pilipinas (BSP) noted that the overall confidence index -- computed as the percentage of respondents who answered in the affirmative less the percentage of those who answered in the negative with respect to their views on specific indicators -- remained "strong" at 47.5% this quarter.

Specifically, the first quarter 2011 index slid from 50.6% in the fourth quarter last year, but was still better than the 39.1% recorded in Jan.-March 2010, the BSP data showed.

The central bank attributed the survey respondents’ "less upbeat" quarter-on-quarter outlook to the usual slowdown in business activity after the Christmas and harvest seasons, rising prices of oil and other commodities, and the expected impact of "abnormal weather conditions," apparently referring to the heavy rains and floods that hit the country’s eastern provinces from southern Luzon to Mindanao.

World oil prices have been on the rise, fueled by fears of long-drawn unrest in the Middle East. Brent on Wednesday increased 5.3% to settle at $111.25 per barrel (/bbl). It averaged $102.67/bbl on Feb. 1-23 from $96.91/bbl last Jan. 3-31. Dubai crude, a benchmark for local fuel prices, eased slightly to $102.55/bbl on Wednesday from $103.44/bbl the day before. But its average rose to $98.50/bbl on Feb. 1-23 from $92.55/bbl last Jan. 3-31. Prices of all oil products at home rose by 50 centavos last Monday.

The central bank also noted that respondents’ outlook for the second quarter improved to an all-time-high 59.4% from the 51% recorded in Oct.-Dec. 2010. It noted that the second quarter outlook was the highest since the survey started in 2001.

It attributed this to respondents’ continued confidence in the current administration, as well as expectations of faster recovery among developing economies, robust growth of merchandise exports, continued strong inflows of remittances and foreign capital, and the government’s "front-loading" of spending and plans to undertake big-ticket infrastructure projects under the public-private sector partnership (PPP) scheme.

"Sustained business optimism indicates that growth momentum could continue in 2011," a BSP statement read.

Among the sectors monitored, construction and industry displayed the most optimism for the current quarter due to expected opportunities in the state’s PPP thrust, as well as the increase in demand for residential and commercial buildings.

However, expectations dipped in services -- consisting of financial intermediation, hotels and restaurants, renting and business activities, as well as community and social services -- a development the central bank blamed on the seasonal slack in demand after the holidays, rising cost of operations and higher fuel prices.

The outlook for the second quarter, however, was more upbeat across all sectors, the same data showed.

The latest survey was conducted among representatives of 1,630 firms nationwide last Jan. 6-Feb. 14.

It had a 78.2% response rate.


Fare increase for light rail lines deferred
www.bworldonline.com

THE LIGHT RAIL Transit Authority (LRTA) yesterday deferred implementation of higher fares for Metro Manila’s three railways, initially set for March 1, pending consultation with the Land Transportation Franchising and Regulatory Board (LTFRB) and publication of the new rates.

"The fare adjustment for [Light Rail Transit lines 1 and 2] and [Metro Rail Transit-3] has been deferred," LRTA spokesman Hernando T. Cabrera told reporters in Filipino after an LRTA board meeting yesterday. "This does not mean the new fares will no longer take effect; only that implementation has been deferred. There is a need to consult LTFRB and for publication."

Executive Order 603, issued on July 12, 1980, formed the LRTA and imbued it with the power to determine fares, but said it has to consult LTFRB -- referred to in the order by its former name, the Board of Transportation -- on this matter.

Mr. Cabrera said the LRTA board has yet to determine a "definite date" for the fare hike implementation."

The LRTA board also decided on a 20% discount for students on all three light railways, adding to the current beneficiaries composed of senior citizens and the disabled, he added.

The provisional fare adjustment announced last Jan. 11 would add an average P10 to current rates, which now range from P12 to P20 for all three lines.


Most U.S. Stocks Rise as Crude Oil's Retreat Eases Concern About Recovery

Most U.S. stocks rose, erasing most of the 123-point drop in the Dow Jones Industrial Average, as oil’s retreat from the highest level since 2008 eased concern that surging energy prices will hurt the economic recovery.

Boeing Co. added 0.8 percent as government data showed more demand for aircraft. Priceline.com Inc. soared 8.5 percent as the online travel agency’s earnings forecast beat analyst estimates. General Motors Co. tumbled to $32.05, the lowest intraday price since its initial public offering in November, as the 15 percent surge in oil since Feb. 15 dimmed the outlook for truck sales. Exxon Mobil Corp. andSchlumberger Ltd. dropped more than 1.2 percent as oil fell to $97.28 a barrel.

More than four stocks advanced for every three that declined on U.S. exchanges as of 4 p.m. in New York. The Standard & Poor’s 500 Index retreated 0.1 percent to 1,306.10, after losing as much as 1 percent amid oil’s surge to $103.41. The Dow decreased 37.28 points, or 0.3 percent, to 12,068.50.

“We’re certainly watching a battle between nerves and economic fundamentals,” said Bruce McCain, who oversees $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “For the most part, economic data points in the U.S. have been good. However, the focus will be on oil, rumors and their implications. For the time being, no matter how strong the economy is, we’ll have that oil overhang.”


Treasuries Advance as Investors Seek U.S. Securities Amid Turmoil in Libya

Treasuries rose, driving 30-year bond yields to the lowest level this month, as investors sought the safest government securities amid violence in Libya and the threat of contagion.

Ten-year yields reached a three-week low as the U.S. auctioned $29 billion in seven year notes in the final of three sales this week totaling $99 billion. The yield touched the lowest since Feb. 2 as loyalists of Muammar Qaddafi sought to crush dissent in Libya, which sent crude oil to a 29-month high. The Fed purchased $5 billion in Treasuries with maturities ranging from November 2012 to August 2013 today as part of its planned $600 billion in purchases to support the economy.

“The driver continues to be Libya,” said David Coard, head of fixed-income trading in New York at Williams Capital Group, a brokerage for institutional investors. “The price of oil is driving everything.”

The yield on 30-year Treasuries fell four basis points, or 0.04 percentage point, to 4.54 percent at 5:01 p.m. in New York, according to BGCantor Market Data, after touching the lowest level since Jan. 31, The price of the 4.75 percent security maturing in February 2041 increased 21/32, or $6.56 per $1,000 face amount, to 103 12/32.

The 10-year note yield dropped four basis points to 3.45 percent after touching the lowest since Feb. 2. The yield on the current seven-year note fell two basis points to 2.85 percent.

Oil Retreats on Assurances Libyan Shipments Can Be Replaced

Crude in New York retreated from the highest level in 29 months on assurances from the U.S., Saudi Arabia and the International Energy Agency that they can compensate for any disruption of Libyan shipments.

Oil slipped after President Barack Obama said the U.S. will be able to “ride out” a cut resulting from turmoil in Libya. The crisis has trimmed supply by 500,000 to 750,000 barrels a day, the IEA said today. The cuts create “significant upside risk” to prices, Goldman Sachs Group Inc. said.

“It looks like the assurances that any missing barrels will be made up are finally having an impact,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “Nothing appears to have changed in Libya and there’s still quite a geopolitical premium in the market.”

Crude oil for April delivery declined 82 cents, or 0.8 percent, to settle at $97.28 a barrel on the New York Mercantile Exchange. The contract touched $103.41, the highest intraday price since Sept. 29, 2008. Futures are up 22 percent from a year ago.

Brent oil for April settlement rose 11 cents to $111.36 a barrel on the London-based ICE Futures Europe exchange, the highest close since Aug. 29, 2008.



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

BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Thursday, February 24, 2011

Morning Brief: 24 February 2011

World Bank says gov’t off to a good start, but ...

STRONGER ECONOMIC expansion could be achieved this year on the back of more private investments, but the government should be mindful of risks posed by rising food and oil prices, the World Bank said yesterday as it maintained its growth outlook for this year and the next.

In its latest Philippines Quarterly Update released yesterday, the Washington-based lender kept its growth forecast for the Philippine economy at 5.0% in 2011 and 5.4% in 2012, unchanged from earlier readings announced last month.

It pointed out, however, that economic growth "could be higher" if the investment climate continues to improve.

"Strong private investment in the fourth quarter of 2010 and bullish business confidence" are signs that the government can attract more investments needed to "boost...growth and generate more jobs," World Bank Country Director Bert Hofman said in a statement posted on the World Bank Web site.

The World Bank report said investments will become a "main" contributor to the economy this year, even as it pointed out that the benefit from the Aquino administration’s public-private partnership (PPP) projects will be felt only by 2012.

Sought for comment, Socioeconomic Planning Secretary Cayetano W. Paderanga, Jr. said: "There are other investments made by the government, international lending institutions along with the private sector. And this should sustain growth."

"But there has been no loss in continuity of the PPP [initiatives], as we have not stalled in pursuing projects," he said in a phone interview.

World Bank senior economist Eric Le Borgne was quoted in the same statement as saying that addressing "corruption and weak governance," along with "more credit-rating upgrades," should boost investor confidence and attract more private investments.

Mr. Paderanga concurred, noting the Aquino government’s focus on its anti-corruption drive and improved governance.

The World Bank also cited continuing hikes in food and oil prices as growth risks. These price hikes are expected to drive inflation to 4.8%, at the upper end of the central bank’s 3-5% target range for 2011, it said in the report.

The multilateral lender expects the Bangko Sentral ng Pilipinas (BSP) to tighten monetary policy in the second half of 2011 to control inflationary pressures. The Monetary Board did not touch policy rates when it met last February 10 but raised its inflation forecast for 2011 to 4.4% from 3.6%. The inflation forecast for 2012 was similarly adjusted to 3.5% from 3% previously.

In a separate telephone interview, Mr. Le Borgne said the government can address rising food prices by increasing the domestic food stock and easing tariff on food imports. "One of the major things that the government can do is to increase food stock, such as rice stock, and welcoming more imports by adjusting tariff," he told BusinessWorld.

For its part, the government "will try to make sure supplies of staple products are maintained," Mr. Paderanga said.

University of the Philippines economist and former budget secretary Benjamin E. Diokno said via text that the oil price increases driven by unrest and uncertainties in the Middle East would be "beyond [the government’s] control."

"It [geopolitical risk] has an impact on supply disruptions and rising oil prices. It also affects the incomes of present and potential OFWs (overseas Filipino workers)," he added.

Mr. Diokno said that the government should address such risk through "more efficient use of oil" and "development of the domestic economy."

At the same time, the World Bank noted that economic expansion seen in recent years has bypassed the poorest of the poor.

Although real gross domestic product growth averaged 5.4% from 2003-2006 and 4.3% from 2006-2009, well above the country’s population growth rate, poverty incidence rose to 26.4% of the population in 2006 from 24.9% in 2003, the World Bank said in its report. That rate inched up further to 26.5% in 2009, it noted further.

And while the government has started taking steps to try to bring the poorest households closer to the mainstream, Mr. Le Borgne said the full benefits of the government’s conditional cash transfer (CCT) program have yet to be seen. "It (the CCT) didn’t eradicate poverty because the program was small at the time," he added.

The Aquino administration nearly doubled the program’s budget to P21.9 billion this year from P12 billion in 2010 in a bid to cover about 2.3 million poor households -- or about 60% of the total against just 26% by end-2010.

The same report also noted that the current administration was able to slightly improve its finances by reining in "the initially spiraling" budget deficit. The government did this by restraining state spending "in the face of modest revenue improvements." This tack enabled the government to keep the 2010 deficit at P310 billion against a P325-billion target ceiling, according to preliminary data.

But while the government "has set the stage for a moderate degree of fiscal consolidation...as the 2011 budget kick-starts important reforms in spending efficiency and transparency," the World Bank said it can go only so far with the current thrust to increase revenue collections by improving tax administration.

"Given the large priority expenditure needs...administrative measures would have to be complemented by tax policy measures," the report read.

"To keep with the government’s election pledge of no new taxes and tax increases in the first 18 months of the new administration, these could be introduced in 2012 and onwards."

U.S. Stocks Fall as Oil Rises to $100, Hewlett-Packard Tumbles

U.S. stocks fell, dragging benchmark indexes to the biggest two-day drop in six months, as oil surged to $100 a barrel amid growing tensions in the Middle East and Hewlett-Packard Co.’s forecasts trailed analysts’ estimates.

Hewlett-Packard, the largest computer maker, tumbled 9.6 percent. Ford Motor Co. sank 2.4 percent after announcing a recall of 144,000 pickup trucks and as a Supreme Court ruling opened the auto industry to new lawsuits over seatbelt design. Lowe’s Cos. slid 1 percent after forecasting profit that missed analyst estimates. Chevron Corp. rose 1.9 percent as oil climbed to a 28-month high amid escalating violence in Libya.

The Standard & Poor’s 500 Index fell 0.6 percent to 1,307.40 as of 4 p.m. in New York and is down 2.7 percent over the last two days. The Dow Jones Industrial Average slid 107.01 points, or 0.9 percent, to 12,105.78 today. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, jumped 6.4 percent to 22.13, the highest since Nov. 30.


Treasury Notes Decline on Concern Refuge Appeal of U.S. Debt May Be Waning

Treasury notes dropped as the $35 billion government auction of five-year debt drew lower demand than forecast, raising concern the refuge appeal of U.S. securities may be waning.

Benchmark 10-year securities rose earlier, pushing the yield to a three-week low on speculation a jump in crude oil prices over violent protests in Libya will slow the economic recovery. U.S. notes erased gains as the sale of five-year debt drew the lowest level of participation since November from a group of investors including foreign central banks.

“It’s a bit surprising that there wasn’t stronger demand at the auction when the geopolitical platform indicates you probably want the safety of Treasuries,” said Bulent Baygun, head of interest-rate strategy in New York at BNP Paribas SA, one of the 20 primary dealers obligated to participate in government debt sales. “It’s perhaps the sentiment shared by a lot of other people.”

Yields on current five-year notes gained three basis points, or 0.03 percentage point, to 2.17 percent at 4:13 p.m. in New York, according to BGCantor Market Data. The 2 percent security maturing in January 2016 dropped 5/32, or $1.56 per $1,000 face amount, to 99 7/32.

At today’s auction, the five-year notes drew a yield of 2.190 percent, compared with the average forecast of 2.170 percent in a Bloomberg News survey of 6 primary dealers.

The bid-to-cover ratio, which gauges demand by comparing total bids with the amount of securities offered, was 2.69, compared with an average of 2.79 at the previous 10 sales.

Oil Touches $100 a Barrel for First Time in Two Years on Libya

Oil surged to $100 a barrel in New York for the first time in two years as Libya’s violent uprising threatened to disrupt exports fromAfrica’s third-biggest supplier and spread to other Middle East oil producers.

Futures climbed as much as 4.8 percent after heavy gunfire broke out in Tripoli again today, army units defected and a former aide to Libyan leader Muammar Qaddafi warned the spreading revolt may topple the regime within days. Oil pared gains on signals that Saudi Arabia and some other producers are willing to put more oil on the market if buyers demand it.

“We’re crossing $100 because with the cut in Libyan output, the unrest in the Middle East is actually having an impact on oil supply,” said Phil Flynn, vice president of research at PFGBest in Chicago. “There’s concern that unrest will spread further, threatening Saudi Arabiaand other producers.”

Crude for April delivery increased $2.68, or 2.8 percent, to settle at $98.10 a barrel on the New York Mercantile Exchange. Earlier, it touched $100, the highest level since Oct. 2, 2008. Futures are up 24 percent from a year ago.

Prices rose from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles gained 163,000 barrels to 345.8 million. April oil advanced $3.32, or 3.5 percent, to $98.74 a barrel in electronic trading at 4:32 p.m.

Libya, which pumps 1.6 million barrels a day of oil, is the ninth-largest producer among the 12 members of the Organization of Petroleum Exporting Countries, sending most of its crude and fuels across the Mediterranean to Europe. The country has the largest reserves in Africa.



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

BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Wednesday, February 23, 2011

Philippine Markets: 23 February 2011


23 February 2011

USD/PhP: 43.57 PSEi: 3757.04 - 27.03
USD/JPY: 82.73 PFINC: 823.17 - 4.76
EUR/USD: 1.3723 BDO: 47.10 + 0.20
GBP/USD: 1.6204 BPI: 53.30 - 0.70
PDSTF3M: 2.2654 MBT: 57.00 + 0.10
Prices as of 4:00pm Source: Bloomberg, Reuters


PH stock prices weaken
By Doris Dumlao
Philippine Daily Inquirer


MANILA, Philippines—Local stock prices weakened further on Wednesday as the continuing turmoil in oil-rich Libya spooked global financial markets.

The main-share Philippine Stock Exchange index lost 27.03 points or 0.71 percent to finish at 3,757.04.

Oil prices surged by 6 percent to $95 a barrel as Libyan leader Moammar Gadhafi came out on national TV to say that he would remain in office. He also tried to rally supporters to come out of their homes to ward off the young protesters.

Libya is the world's 15th largest exporter of crude and has the largest oil reserves in Africa. It accounts for 2 percent of global daily output.

At the local market, the 3,700 level appeared to be a strong support level as selective bargain-hunting emerged when the index neared this barrier.

The financial, industrial, holding firm and services counters traded in the red while modest gains eked out by the property and mining/oil counters tempered the overall decline.

Value turnover was still meek at P3.4 billion. There were 46 advancers against 89 decliners while 32 stocks were unchanged.

PLDT, San Miguel, EDC, Cebu Air, Ayala Corp., SM Investments, Nickel Asia, AGI, BPI, Security Bank, FPH, Meralco and Metro Pacific Investments were traded down. On the other hand, bargain-hunters picked up shares of Aboitiz Power, Metrobank, Semirara Mining, Megaworld, Banco de Oro and Manila Mining.

Markets feared that the uprising in the Middle East and North Africa, which has already toppled leaders in Tunisia and Egypt, could spread elsewhere and cause disruptions in the price of oil.

The Philippines, which was hit badly by the last global commodity upswing in 2008, is a net oil importer.

BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Brownout Schedule

Important Notice to CEPALCO Customers
Subject: Scheduled Interruption on Sunday, February 27, 2011

The Cagayan Electric Power & Light Co., Inc. (CEPALCO) would like to inform all customers that the NATIONAL GRID CORPORATION OF THE PHILIPPINES (NGCP) has advised CEPALCO that power supply will be interrupted on FEBRUARY 27, 2011 as shown below:

Reasons: NGCP WILL INSTALL SAFETY COVERING OF THE CONDUCTORS OF THE LUGAIT-CARMEN 69KV LINE ADJACENT TO THE METERING SERVICE OPERATIONS (MSO) BUILDING BEING CONSTRUCTED AT NGCP COMPLEX IN CARMEN AND RELOCATE ONE PHASE CONDUCTOR TO THE OTHER SIDE OF THE LINE STRUCTURE TO FURTHER IMPROVE SAFETY. TO MAKE USE OF THE INTERRUPTION, CEPALCO WILL ALSO CONDUCT LINE MAINTENANCE WORKS ALONG AFFECTED AREA.

Date:
Sunday, February 27, 2011
Interruption Time: 7:00 AM – 6:00 PM (11 hours)

Affected Areas: CARMEN FEEDER #1 AREAS:
1. Greater portion of Carmen proper along Lirio St. from Trinity Tree St. towards Oak St., Max Suniel St., Vamenta Blvd. up to corner Jasmin St. including Waterlily St. and Carmen Market area.
2. Along Mabolo St. from Lirio St. towards corner Rosal St. including portion of Marigold St. from Mabolo St.
3. Portion of Carmen: vicinities along Vamenta Blvd. from Fernandez St. towards greater part of Ilaya including: portions of Ipil St. and Mahogany St. from Fernandez St.; Madonna & Child Hospital; and; Seriña St. from COA towards Gumamela Ext., Guani Coliseum (former O. Roa’s) and Maharlika Police Station.
4. All of Macanhan, Carmen towards all of Lower Balulang.

CARMEN FEEDER #2 AREAS:
1. Portion of Carmen along Yacal St. towards Lirio St., Vamenta Blvd., Waling-waling St. up to GSIS area including Ferrabrel St., Mango St. and portion of Rosal St. and Marigold St.
2. Along Pelaez Blvd from Waling-waling Street up to National Highway including Liceo de Cagayan University.
3. All of Kauswagan proper, Bonbon and Bayabas.
4. Isla de Oro.
5. 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.
6. Portions of A. Luna St. from corner Corrales Ave.; towards vicinities along A.Velez St. up to corner Mabini St. including portion of: Makahambus St. from A.Velez St. and Tiano Bros. St. from Macahambus St.

Power will however be restored immediately without further notice
when line works are completed earlier than scheduled.
We hope the affected customers and the public in general
will be guided by this announcement. Thank you.




Released by: Ms. Marilyn A. Chavez
Senior Manager
Customer & Community Relations Dept.

Morning Brief: 23 February 2011

At least P100B eyed from RTB offering

THE GOVERNMENT yesterday auctioned off P20 billion worth of five- and 10-year retail Treasury bonds (RTBs) and could raise at least P100 billion from the offering, an underwriter yesterday said.

"[W]e want to issue at least P100 billion, that is our recommendation," said Roberto Juanchito T. Dispo, executive vice-president of First Metro Investment Corp. (FMIC).

The Bureau of the Treasury (BTr) sold P10 billion each for the five-year and 10-year debt papers yesterday as planned. Coupon rates were 6% and 7.375%, respectively, for the five- and 10-year papers.

The rate of the five-year paper was 52 basis points (bps) lower than the Philippine Dealing System Treasury Rate-F (PDST-F) benchmark of 6.52%. The rate of the 10-year paper, meanwhile, was 34.23 bps higher than the PDST-F benchmark of 7.173%.

Demand for the two tenors was high, with tenders for the five-year papers amounting to P31.093 billion. Tenders for the 10-year papers totalled P20 billion.

FMIC’s Mr. Dispo said, "demand from the retail sector is strong because the range is more attractive now compared to the previous RTBs, especially for those who are living on interest funding for their cost of living."

"The total demand we are looking at is around P70 to P80 billion, but then again it would depend on the issuer," he added.

Mr. Dispo also said: "Given that the outlook is for rates to move up because of inflation, the government should be opportunistic and raise as much money in the RTBs."

The Philippines is the only major Asian economy not to have raised rates since the end of the global financial crisis, with its policy rate still at a record low of 4%.

Mr. Dispo said retail investors were likely to comprise 60% of the bond buyers this year, against just 45% at last year’s issue. Institutional buyers account for the rest.

Part of their proposal, he said, is the issuance of RTBs "at least twice a year or once every semester."

Asked when the second batch of RTBs would be issued, Mr. Dispo replied, "around September or October so the government can avoid bunching up huge RTBs on an annual basis ... and for the issue size to be more manageable."

Investors can purchase the debt papers through the following agents: Allied Banking Corp.; BDO Capital & Investment Corp.; BDO Universal Bank; BPI Capital Corp.; China Banking Corp.; Deutsche Bank; FMIC; Land Bank of the Philippines; Metropolitan Bank & Trust Co. (Metrobank); Rizal Commercial Banking Corp.; and United Coconut Planters Bank.

The offer period started yesterday and will end March 1. The debt papers will be issued on March 3.

The sale of RTBs is part of an initiative to make government securities more accessible to retail investors. Investors can buy the debt paper for a minimum of P5,000.

Underwriters for the RTB sale are state-run Development Bank of the Philippines and Land Bank, Metrobank, BPI Capital and FMIC.

The government twice sold RTBs last year.

The first was in April when it raised $500 million from the sale of three- and five-year papers in dollar and euro denominations.

The second was in August when it raised P97 billion from the sale of five-, seven-, and 10-year RTBs.

The Philippines, which relies heavily on local and foreign borrowings to fund its budget deficit, has a total P28 billion worth of RTBs falling due in the second half of 2011. -- A. R. R. Gregorio with a report from Reuters


U.S. Stocks Tumble as S&P 500 Has Biggest Decline Since August

U.S. stocks tumbled, dragging the Standard & Poor’s 500 Index to its biggest decline since August, as violence escalated in Libya andWal-Mart Stores Inc. reported sales that trailed its own forecasts.

Wal-Mart fell 3.1 percent, the most since May 20. Bank of America Corp. retreated 3.9 percent after almost doubling a writedown for its credit-card unit to $20.3 billion. Freeport- McMoRan Copper & Gold Inc. slumped 4.9 percent as copper fell the most in three months amid concern that surging oil costs may slow economic growth. Exxon Mobil Corp. and Chevron Corp. rallied as Middle East tensions sent oil to a two-year high.

The S&P 500 declined 2.1 percent to 1,315.44 at 4 p.m. in New York, its biggest drop since Aug. 11. The Dow Jones Industrial Averageretreated 178.46 points, or 1.4 percent, to 12,212.79, snapping a three-day rally. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, soared 27 percent to 20.80, the biggest advance since May 20.

“The market is extremely vulnerable to the kind of global risk we’re seeing now,” said Tom Mangan, who helps oversee $2.5 billion as a money manager at James Investment Research Inc. in Xenia, Ohio. “If the violence in Libya turns into a prolonged civil war, it will increase the risk that oil supplies could be disrupted. This could be the catalyst that starts the 5 percent to 10 percent correction.”


Treasuries Rise as U.S. Sells Two-Year Notes Amid Libya Turmoil

Treasuries rose, pushing 10-year note yields down the most this year, as violence in Libya bolstered refuge appeal for U.S. debt.

Two-year note yields fell the most in almost two months as the $35 billion of the securities auctioned today drew the highest demand from the class of investors including foreign central banks since November. Treasuries gained as crude oil futures touched a 28-month high, boosting speculation fuel costs will limit global economic growth and Libyan leader Muammar Qaddafi said he hadn’t fled the country as the political crisis deepened after a crackdown on demonstrators left hundreds dead.

“Treasuries are getting a safety bid as we are facing massive tension and disruption in the Middle East as the Libyan story stokes fears that the unrest could spread,” said Scott Graham, head of government bond trading at in Chicago at Bank of Montreal’s BMO Capital Markets unit.

The current two-year note yield fell seven basis points to 0.69 percent at 5:03 p.m. in New York, according to BGCantor Market Data, the least since Feb. 3. The 0.625 percent securities maturing in January 2013 rose 4/32, or $1.25 per $1,000 of face value, to 99 28/32.

The yield on the 10-year note dropped 13 basis points 3.46 percent, the lowest since Feb. 2.


Oil Surges More Than $7 to Highest Level Since 2008 on Libya

Oil surged to the highest level in more than two years as intensifying violence in Libya fueled concern that supplies from the holder of Africa’s largest crude reserves may be disrupted.

Prices in New York jumped 8.6 percent from the Feb. 18 settlement as soldiers deserted Libyan leader Muammar Qaddafi’s government and diplomats resigned. Saudi Arabian Oil Minister Ali al-Naimi said there is “absolutely no shortage of supply” and that OPEC will be ready to boost output if one develops.

“The world could deal with the loss of Libyan barrels, but the worry is that it won’t stop at Libya,” said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis. “We don’t know where this is going to end.”

Crude for March delivery gained $7.37 to $93.57 a barrel on the New York Mercantile Exchange, the highest settlement since Oct. 3, 2008. Futures have risen 17 percent in the past year. U.S. financial markets were closed yesterday for the Presidents Day holiday.

The March contract expired at the close of floor trading today. The more-active April contract increased $5.71, or 6.4 percent, to settle at $95.42 a barrel.

Libya declared force majeure on all oil exports, Reuters reported, citing sources it didn’t identify. Force majeure allows producers to miss contractual obligations because of circumstances beyond their control.



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

BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Friday, February 18, 2011

Philippine Markets: 18 February 2011


18 February 2011

USD/PhP: 43.34 - 0.08 PSEi: 3851.24 - 15.14
USD/JPY: 83.28 PFINC: 847.15 - 5.35
EUR/USD: 1.3598 BDO: 47.90 - 0.75
GBP/USD: 1.6164 BPI: 54.20 - 0.40
PDSTF3M: 3.1673 MBT: 59.85 - 0.30
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary market rates moved sideways this week despite rising inflation risks haunting the markets. Short-term yields dropped while bonds with longer tenors moved up. Monetary authorities have hinted to the market that any future moves will be preemptive against any inflation risk.

Continue to expect interest rates to move sideways with upward bias in the week ahead.

Philippine Equities Outlook

Local shares rose by 2.72 percent week-on-week to 3851.24 for the first time in three weeks on bargain hunting activities after sell-off during the previous weeks. Strength in US equity markets also helped buoy the rebound. However, investors remained cautious as recovery remains fragile.

Chartwise, the week's close continues to suggest the market's recent uptick is a mere technical rebound and the rally could strech to the 3,900 levels. Near-term bias continues to support further tests towards the 3,600-3,650 levels in the coming weeks.


Philippine Peso Outlook

The local currency rose 1.10 percent to 43.34 as the dollar weakened against major currencies.

Chartwise, continue to expect the currency to range between the 43.25 - 43.70 levels in the week ahead. A confirmation close above the 44.00-44.10 level will confirm the bottom at the 43.34 levels and signal a retest of the 44.50 levels (the upper band of the 43.50-44.50 consolidation range. However, break of 43.34 suggests tests toward 43.00 / 43.25 levels.


BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Morning Brief: 18 February 2011

January deficit expected

THE GOVERNMENT likely posted a deficit in January as it sought to jump-start projects before the onset of the rainy season.

"Most likely we had a deficit because we are frontloading our expenses to take advantage of the good weather months," Budget Secretary Florencio B. Abad told BusinessWorld yesterday.

He did not cite figures, however, saying the government will detail its fiscal performance for the start of the year later this month.

Finance Secretary Cesar V. Purisima, meanwhile, told reporters that expenditures for January were higher than the P129.4 billion recorded 12 months earlier.

But revenues came in strongly as well, he claimed, as the Bureau of Customs collected more than its P20-billion goal for January. The Bureau of Internal Revenue (BIR) has said it managed to exceed its January 2010 take of P64 billion but did not detail if its P71.9-billion target for last month was met.

"Revenues are good. Customs is on target and I think BIR is doing good," Mr. Purisima said without elaborating.

State firms also paid dividends totaling P30 billion, higher than their quota.

Finance Undersecretary Gil S. Beltran, in a telephone interview, said the government may have incurred a January deficit "within the neighborhood of P37-38 billion," about the same as the P37.1-billion deficit recorded in the same month last year.

"I do not have the data right now but the past administration also frontloaded [expenses] last year because [then President Gloria Macapagal] Arroyo wanted to finish her projects before leaving office," Mr. Beltran said.

Disbursements last month, Mr. Abad said, included P717 million released to agencies to finance capital outlays, maintenance and operations, and to pay salaries.

Frontloading will continue until June, Mr. Abad said, which will likely result in a "higher deficit" in the first semester that will be offset with "lower shortfalls" in the second half.

"For instance, we may accommodate a [deficit] total of P190 billion for the first semester and then have only P100 billion for the latter part," he said.

Mr. Purisima also stressed that the government would stick to its P290-billion deficit ceiling for the year, which is equivalent to 3.2% of gross domestic product (GDP).

"We will keep that target and we will meet that. There’s no need to worry because what we are doing is we are frontloading expenses unlike before when we used to divide them on a monthly basis," he said.

The Aquino government likely incurred a deficit of P309.8 billion -- corresponding to 3.6% of GDP -- last year based on initial figures, well below a P325-billion cap. -- P. P. Magtulis


Manila is 59th most expensive city for expats

METRO MANILA rose 16 spots last year to become the 59th most expensive city in the world for expatriates after an economic rebound and a stronger peso made leases more costly, consultancy firm ECA said in its annual Accommodation Report.

Rental costs here were also the 12th most expensive in Asia, ECA said, based on September 2010 data on two-bedroom properties "commonly inhabited by international assignees".

The Philippine capital, which ranked 13th in Asia in the previous report, surpassed neighboring capitals like Taipei, Kuala Lumpur and Shenzen.

Tokyo topped the global and Asian rankings due to the strengthening of the yen even as actual rental prices dropped by 7% last year. Expatriates there had to fork over an average $4,352 a month.

The Japanese capital was followed by Moscow, Hong Kong, London, Singapore, Caracas, Abu Dhabi, Bogota, San Francisco and Geneva.

In Asia, Tokyo was joined by Hong Kong, Singapore, Seoul, Shanghai, Hanoi, Bangkok, Mumbai, Jakarta and Beijing as the top ten cities.

The region saw leases rise by an average of nearly 7% in 2010 after falling by more than a tenth in 2009.

"The strong rebound in rental rates in many cities reflects both the rapid economic recovery and the continued expansion of companies into the region," Lee Quane, regional director of ECA Asia, said in a statement.

Rent in Metro Manila rose by 14% "due to the strengthening of the peso against the greenback", ECA said in an e-mail to BusinessWorld. This was based on properties mostly in Makati.

Hong Kong, meanwhile, saw rents increase by 22% to $2,830 a month for a two-bedroom unit after prices fell by roughly a quarter the previous year, ECA said. -- Jessica Anne D. Hermosa


U.S. Stocks Advance Following Higher-Than-Estimated Economic Data, Profits

U.S. stocks rose, sending the Standard & Poor’s 500 Index to a 32-month high, as improving corporate earnings and manufacturing data overshadowed higher- than-forecast growth in consumer prices.

Cliffs Natural Resources Inc. jumped 7.2 percent after profit beat analysts’ estimates. Nvidia Corp. added 9.8 percent as the maker of graphics chips forecast higher sales than analysts had predicted. American Express Co. slumped 2.3 percent amid investor concern about the impact of a proposed rule on interchange fees. Huntington Bancshares Inc. declined 2.5 percent after Bank of America Corp. cut its stock rating.

The S&P 500 rose 0.3 percent to 1,340.43 at 4 p.m. in New York. The Dow Jones Industrial Average climbed 29.97 points, or 0.2 percent, to 12,318.14. Both gauges are at the highest levels since June 2008. Stocks fell earlier as anti-government protests spread in the Middle East and Iran’s state-run Press TV said the nation is sending warships to use Egypt’s Suez Canal.

“There’s economic momentum,” said Bruce McCain, who oversees $25 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland. “The consumer is back, businesses have been more optimistic, manufacturing has been expanding and earnings have been good. That’s enough to keep the stock rally going.”


Treasuries Gain Amid Mideast Tension, Rise in U.S. Initial Jobless Claims

Treasuries gained amid tension in the Mideast after initial claims for unemployment insurance increased in the latest week in a sign that improvement in the U.S. labor market will take time.

Ten-year note yields fell to the lowest in almost two weeks after reports that Iran is sending two warships through the Suez Canal. Treasuries gained even after a government report showed consumer prices rose more than forecast last month. The Federal Reservepurchased $7.2 billion in notes maturing from May 2018 to August 2020 as part of its plan to pump $600 billion into the economy.

“The uncertainty and geopolitical risks are supportive of Treasuries,” said Sergey Bondarchuk, an interest-rate strategist in New York at BNP Paribas, one of 20 primary dealers that trade Treasuries with the Fed. “People just don’t want to be short the market.” A short is a bet that prices will fall.

Ten-year note yields fell five basis points to 3.57 percent at 5:02 p.m. in New York, according to BGCantor Market data, the lowest level since Feb. 4. The 3.625 percent security due in February 2021 rose 12/32, or $3.75 per $1,000 face amount, to 100 13/32. Thirty-year bond yields decreased two basis points to 4.66 percent.


Oil Surges in N.Y. on Mideast Unrest, Shrinks Discount to Brent

Oil surged the most this month amid mounting Middle East tensions, narrowing a record spread between U.S.-traded West Texas Intermediate and Brent in London.

Crude oil in New York rose 1.6 percent after protesters clashed with police in Bahrain, Yemen and Libya, and Iranian state-run television said the country was sending two warships through the Suez Canal. Brent slipped from a two-year high as traders moved money into the U.S. contract.

“The spread between Brent and WTI is coming in,” said John Kilduff, a partner at Again Capital LLC, a New York-based hedge fund that focuses on energy. “There’s some catch-up for WTI when it comes to the geopolitical situation taking place.”

Crude for March delivery rose $1.37 to settle at $86.36 a barrel on the New York Mercantile Exchange, the biggest one-day increase since Jan. 31. Futures have gained 12 percent in the past year. April crude on the Nymex gained $1, or 1.1 percent, to $88.84. The March contract in New York expires on Feb. 22.

Brent crude for April settlement fell $1.19, or 1.1 percent, to $102.59 a barrel on the ICE Futures Europe exchange in London. The contract increased to $103.78 yesterday, the highest settlement since Sept. 25, 2008.

The difference between the April contracts in London and New York was at $13.75 a barrel, compared with $15.94 yesterday. The spread had widened amid a glut of oil at Cushing, Oklahoma, the delivery point for the New York-traded contract.

Brent prices tumbled 1.3 percent and New York futures jumped 1 percent in the two hours before floor trading closed on the Nymex.



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

BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001

Thursday, February 17, 2011

Morning Brief: 17 February 2011


Finance dep’t offers REIT rule compromise

THE FINANCE department has softened its stance on the public ownership level to be required of firms seeking perks under the Real Estate Investment Trusts (REIT) Act, a development that could finally lead to law’s implementation.

Finance Secretary Cesar V. Purisima, who had wanted REITs to sell 51% of their shares to the public to make sure capital is "recycled" rather than used to repay debts, is now willing to bring down the initial public float requirement to below 50%. The REIT law’s implementing rules require only a public float of 33%.

"We are open to a program where we start with less than 50% but move towards greater public ownership," Mr. Purisima yesterday told reporters on the sidelines of a Financial Executives Institute of the Philippines meeting in Makati.

"Based on my discussions with [the Securities and Exchange Commission] they are open to that concept but we just have to fine-tune exactly what it is," he added.

Mr. Purisima said the public float level would still "be higher than 33.3%" but did not go into details.

He added that a working group composed of representatives from the Finance department, SEC and the Bureau of Internal Revenue would present the proposal to the public-private Capital Market Development Council (CMDC) in a meeting next quarter.

"It will not be 33.3%. We are still finalizing the program to be presented to the [CMDC] in our next meeting. We plan to finish the REIT issue during that meeting," Mr. Purisima said.

SEC Commissioner Ma. Juanita Cueto, in a phone interview, said the CMDC, as a policy-recommending group, "will greatly help" in the drafting of the rules since it is composed of "private players that may be affected."

Republic Act 9856 or the REIT Law, which took effect in December 2009, establishes the framework for REITs -- corporations that use a pool of investor funds to purchase and manage real estate assets. REITs can raise money by going public and are entitled to tax incentives.

The law, however, has yet to be implemented in the absence of tax rules from the BIR, which is under the Finance department.

A REIT, as defined in the rules, is a stock corporation "owning income-generating real estate assets". It must be listed on the stock exchange and have at least 1,000 shareholders, each with at least 50 shares of any class and who, in the aggregate, must own a third of the REIT’s outstanding shares.

A REIT should have a minimum capitalization of P300 million. It must dispense 90% of its distributable income -- defined as net income adjusted for unrealized gains or losses -- as dividends each year.

Under the law, the sale or transfer of real properties to a REIT shall be levied only half the applicable documentary stamp tax (DST) as well as registration and annotation fees. Initial and secondary public offerings of securities will be exempted from the initial public offering tax while the sale or exchange of securities will be exempted from the DST.

While he is willing to lower the initial public float, Mr. Purisima said this should eventually go up to 67% on a REIT firm’s third year. "That did not change. I still want 67% in the third year," he said.

"In the first place, we in the government also want to develop the market and in doing so, we have to compromise [with other agencies]," he explained.

Ms. Cueto declined to comment, saying she was not privy to the talks between SEC Chairman Fe B. Barin and Mr. Purisima.

Ms. Barin and Philippine Stock Exchange officials were not immediately available for comment. -- PPM


Investor pledges up 72.7% in 2010 to P542.6 billion

INVESTMENT pledges filed with four incentive-granting agencies rose by 72.7% to P542.6 billion last year with Filipino firms leading the pack, data released yesterday showed.

Manufacturing projects accounted for roughly two-fifths of the commitments recorded by the Board of Investments, Philippine Economic Zone Authority (PEZA), Subic Bay Metropolitan Authority (SBMA) and Clark Development Corp.

Filipino investors were behind two-thirds of the figure or P346.5 billion. This was a 79.9% increase from 2009. Foreign investors, meanwhile, pledged P196.1-billion worth of projects, up by 61%.

Nearly a third (29.8%) of the foreign direct investment (FDI) pledges came from Japan. The Netherlands, Korea, Switzerland, the United States and Cayman Islands trailed behind as other top sources of proposed FDI.

The committed projects from both Filipino and foreign investors are expected to generate 134,534 jobs once they come on stream. This, however, is 27% less than the employment figure forecast from investment pledges filed in 2009.

Most of the new jobs will be seen in PEZA sites as investments registered with this state agency are projected to create nearly two-thirds of the forecast employment. -- J. A. D. Hermosa


U.S. Stocks Advance as Federal Reserve Grows More Optimistic on Growth

U.S. stocks gained, pushing the Standard & Poor’s 500 Index to a 32-month high, as a higher forecast for economic growth from theFederal Reserve, improving earnings and takeovers bolstered confidence in equities.

Dell Inc. surged 12 percent, the most since December 2008, as earnings beat analysts’ estimates on business spending. Deere & Co. gained 2.4 percent to a record after boosting its full- year profit forecast. Genzyme Corp. rose 1.1 percent as Sanofi- Aventis SA agreed to buy the company for $20.1 billion and Family Dollar Stores Inc. soared 21 percent as Nelson Peltz offered to acquire the retailer for as much as $7.6 billion.

The S&P 500 rose 0.6 percent to 1,336.32 at 4 p.m. in New York, the fourth gain in five days. The Dow Jones Industrial Average rallied 61.53 points, or 0.5 percent, to 12,288.17. The Nasdaq Composite Index added 0.8 percent to 2,825.56, while the Russell 2000 Index climbed 1 percent to 828.37. Both gauges rose to the highest level since October 2007.

“The more optimistic view of the Federal Reserve is confirmed in part by the financial performance of major U.S. corporations,” said Richard Skaggs, senior equity strategist at Loomis Sayles & Co. in Boston, which manages $152 billion. “Frankly we’re encouraged to see the Fed take note of the improvement that is seen in some quarters.”

The S&P 500 has gained 6.3 percent this year, adding to 2010’s 13 percent rally, amid government stimulus measures and higher-than-estimated corporate profits. The gauge needs to rise 1.3 percent to 1,353.06 in order to complete a 100 percent rally from its 12-year low in March 2009. Earnings topped estimates at 72 percent of the 371 companies in the S&P 500 that reported since Jan. 10, according to data compiled by Bloomberg.

Fed Meeting

Stocks extended gains today after minutes from the Fed’s last policy meeting showed officials “continued to express disappointment in both the pace and the unevenness of the improvements in labor markets,” while also judging the recovery to be on a “firmer footing.” Policy makers raised projections for economic growth this year and made little change to forecasts after 2011 or for unemployment and inflation.

Stock-index futures rose before the open of exchanges as Commerce Department figures showed that housing starts climbed 15 percent to a 596,000 annual rate. The median forecast in a Bloomberg News survey called for a 539,000 rate. Work started on 78 percent more dwellings with two or more units, overshadowing a drop in single-family houses that indicates the housing market continues to struggle.

An index of homebuilders in S&P indexes rose 1.7 percent as all of its 12 members rallied. KB Home advanced 2.1 percent to $14.64.Lennar Corp. climbed 1.9 percent to $20.85.


Oil Climbs as Israel Says Iranian Warships Heading for Syria

Crude rose after Israeli Foreign Minister Avigdor Lieberman said two Iranian gunboats are planning to move through the Suez Canal toSyria, spurring concern that Middle Eastern oil shipments will be disrupted.

Oil climbed 0.8 percent after Lieberman called the move he expects later today a “provocation.” The possible action by Iran comes five days after Egyptian President Hosni Mubarak stepped down. Brent crude, the European benchmark that is more sensitive to Middle East unrest, settled at the highest level since Sept. 25, 2008.

“This is the latest addition to the Middle East risk premium,” said Phil Flynn, vice president of research at PFGBest in Chicago. “This is a knee-jerk reaction to the headlines that Iran is planning to send two warships through the Suez Canal.”

Crude oil for March delivery rose 67 cents to settle at $84.99 a barrel on the New York Mercantile Exchange. Prices are up 10 percent from a year ago.

Brent crude oil for April settlement advanced $2.14, or 2.1 percent, to $103.78 a barrel on the London-based ICE Futures Europeexchange.

The premium of April Brent to New York oil for the same delivery month rose to a record $15.94 a barrel today. The gap averaged 76 cents last year.

“The tension in the Middle East is having a greater impact on the Brent market,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “This has a much bigger impact on Europe, we don’t get as much oil from the Middle East.”



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

BDO UNIBANK INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher

(632) 858-3001
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