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
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.”
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
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