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