Philippine Markets: 03 June 2011

03 June 2011

USD/PhP: 43.205 -0.068 PSEi: 4297.62 - 27.36
USD/JPY: 80.64 PFINC: 962.29 + 5.73
EUR/USD: 1.4478 BDO: 58.75 + 0.05
GBP/USD: 1.6451 BPI: 57.70 + 0.30
PDSTF3M: 2.5808 MBT: 71.75 + 1.20
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary money market rates moved sideways week on week as market liquidity remained abundant. Expectations for May inflation is within the 4.5-5.0 percent range, as some seasonal price adjustments are seen due to the start of the school season in June, as well as the fact that commodity prices remained elevated.

With the expectations that monetary authorities will still hike benchmark rate during its next policy meeting in 16 June, continue to expect rates to move sideways to up in the coming weeks.

Philippine Equity Outlook

Local equity market prices rose 0.54 percent week on week to 4297.62 as some local investors took advantage of the recent decline to bargain hunt on selected issues. This caused the market to rally to as high as 4,320.60. However, the market appears to be encounterd some selling towards the end of the trading week causing the index to close the trading week below the 4,300 levels.
Local investor sentiment is being clouded by the developments in the global markets.

Chartwise, the the week's close at 4297.62 highlights the market's vulnerabilty. If a break above the 4,300 fails to materialize, expect further weakness toward test the 4,150 - 4,250 levels in the near-term.

Philippine Peso Outlook

TThe local currency regained its footing agains the greenback by 0.38 percent week-on-week to 43.205 as US dollar weakened against the major currencies, particularly agaist the Euro. The recent dollar weakness is viewed as a technical correction.

Continue to expect the currency to range between the 43.15 - 43.30 levels in the week ahead. Immediate support and resistance is seen at 43.25 and 43.50 levels, respectively.


BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001