Philippine Markets: 18 May 2011

18 May 2011

USD/PhP: 43.23 - 0.055 PSEi: 4303.31 + 41.71
USD/JPY: 80.95 PFINC: 959.99 + 13.35
EUR/USD: 1.4261 BDO: 58.65 + 1.20
GBP/USD: 1.6230 BPI: 57.30 + 0.80
PDSTF3M: 2.3712 MBT: 70.25 + 1.10
Prices as of 4:00pm Source: Bloomberg, Reuters


Asian Stocks Rise on Merger Talk, Profits; Tokyo Electric Rises
By Shani Raja

May 18 (Bloomberg) -- Asian stocks rose, driving a regional
benchmark index higher for the first time in five days, amid
improved earnings and merger-and-acquisition speculation. Tokyo
Electric Power Co. gained after it presented a plan for
stabilizing a stricken nuclear-power plant.
Fairfax Media Ltd. surged 4.3 percent in Sydney after
reports Lachlan Murdoch, son of News Corp. Chief Rupert Murdoch,
is mulling a bid for its radio unit. Austar United
Communications Ltd. added 6.1 percent on speculation Foxtel is
in advanced talks over a potential takeover. Mizuho Financial
Group Inc. gained 3.2 percent in Tokyo after the Nikkei
newspaper said it plans to merge its retail and corporate banks.
Tokyo Electric rose 2.4 percent as it confirmed plans to cool
damaged reactors as early as October
“Increasing corporate activity reflects the fact that
companies’ balance sheets are well capitalized and funding has
become more freely available,” said Matt Riordan, who helps
manage close to $7 billion in Sydney at Paradice Investment
Management Pty. “Corporate activity is positive as it
underwrites the share prices of the potential targets.”
The MSCI Asia Pacific Index advanced 1.1 percent to 135.34
as of 3:20 p.m. in Tokyo. About seven stocks rose for each three
that declined on the gauge, which last week recorded its second
straight weekly drop amid concern China’s anti-inflation
policies may slow global economic growth.
Japan’s Nikkei 225 Stock Average gained 1 percent and South
Korea’s Kospi Index climbed 1.6 percent. Hong Kong’s Hang Seng
Index advanced 0.6 percent.

Bank Downgrade

Australia’s S&P/ASX 200 Index rose 0.2 percent, paring a
gain of as much as 0.5 percent earlier after Moody’s Investors
Service downgraded the long-term, senior unsecured debt ratings
of the country’s four major banks.
Futures on the Standard & Poor’s 500 Index increased 0.4
percent today. In New York, the index declined less than 0.1
percent yesterday as a reduced sales forecast at Hewlett-Packard
Co. and an unexpected decline in housing starts damped optimism
about the economic recovery.
Work began on 523,000 houses in April, down 11 percent from
the prior month and less than the 569,000 median forecast of
economists surveyed by Bloomberg News, figures from the Commerce
Department showed yesterday in Washington. Building permits, a
sign of future construction, also decreased.

Murdoch, Fairfax

Fairfax advanced 4.3 percent to A$1.085 in Sydney. Lachlan
Murdoch’s investment group Illyria Pty. is among companies in
talks over the sale of Fairfax’s A$300 million radio unit, the
Financial Review reported today, without citing anyone.
Austar United rose 6.1 percent to A$1.30. Foxtel and
Liberty Global Inc., the U.S. company that is Austar’s largest
shareholder, are in advanced talks over a potential A$2 billion
($2.1 billion) takeover bid by the Australian subscription
television operator for rival Austar, the Australian reported.
The newspaper cited unidentified sources it said are close
to the negotiations, and Austar later said talks were “ongoing
and exploratory in nature” with no assurance of a formal
proposal.
In Tokyo, Mizuho Financial climbed 3.2 percent to 131 yen
after the Nikkei newspaper said the bank will appoint Yasuhiro
Sato, who heads Mizuho Corporate Bank Ltd., as president to
replace Takashi Tsukamoto, and that it aims to merge its
corporate and retail banking units by 2013. Mizuho later said it
wasn’t considering the banking unit merger.

Nuclear Cooling Plan

Fortescue Metals Group Ltd., Australia’s third-largest
iron-ore exporter, climbed 2.9 percent to A$6.39 in Sydney after
hiring five banks to help obtain $1.5 billion of loans,
according to a person familiar with the matter, who asked not to
be named as the details haven’t been made public.
Fortescue will use part of the funding to help pay for the
$8.4 billion expansion of its Pilbara iron-ore operations,
according to a filing yesterday to the Australian stock exchange.
Tokyo Electric Power gained 2.4 percent to 389 yen. The
company expects to cool reactors at its stricken Fukushima Dai-
Ichi plant by as early as October, maintaining its earlier
timetable in an updated plan to resolve the worst nuclear crisis
in 25 years.
One month after releasing its so-called road map to
stabilize the Fukushima plant, the company known as Tepco
outlined more detailed steps at achieving a cold shutdown, where
the core temperature in the three damaged reactors falls to
below 100 degrees Celsius (212 degrees Fahrenheit).
The MSCI Asia Pacific Index lost 2.8 percent this year
through yesterday, compared with gains of 5.7 percent by the S&P
500 and 0.5 percent by the Stoxx Europe 600 Index. Stocks in the
Asian benchmark are valued at 13.3 times estimated earnings on
average, compared with 13.4 times for the S&P 500 and 11.1 times
for the Stoxx 600.

Earnings Reports

In Hong Kong, SJM Holdings Ltd., the world’s biggest listed
casino operator by revenue, surged 7.4 percent to HK$17.98 after
reporting 85 percent higher profit. First-quarter net income
jumped to HK$1.41 billion ($181 million), the company said, as
gambling revenue grew 43 percent to HK$18.14 billion.
Esso Malaysia Bhd., a unit of Exxon Mobil Corp., surged 4.3
percent in Kuala Lumpur after saying first-quarter profit more
than doubled from a year earlier.
Companies on the MSCI Asia Pacific Index that have reported
earnings for the most recent quarter have posted an average 8.5
percent increase in net income, with about the same number of
companies exceeding analyst estimates as failing to meet them.
For the MSCI Asia Pacific excluding Japan Index the figure is an
average 25 percent increase, reflecting the impact of Japan’s
March 11 earthquake.

Oil Companies

Oil producers also climbed after futures rose as much as
1.1 percent from a three-month low today in New York.
Cnooc Ltd., China’s biggest offshore oil producer, gained
2.2 percent to HK$18.04 in Hong Kong, while PetroChina Co.
climbed 1.7 percent to HK$10.66.
In Sydney, Australia bank shares reversed gains after
Moody’s downgraded to Aa2 from Aa1 the long-term, senior
unsecured debt ratings of Australia and New Zealand Banking
Corp., Commonwealth Bank of Australia, National Australia Bank
Ltd. and Westpac Banking Corp. Shares of all four banks reversed
gains.

BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001