Friday, March 4, 2011
Philippine Markets: 04 March 2011
04 March 2011
USD/PhP: 43.28 - 0.085 PSEi: 3882.71 + 48.66
USD/JPY: 82.43 PFINC: 850.81 + 4.56
EUR/USD: 1.3959 BDO: 48.90 + 0.90
GBP/USD: 1.6284 BPI: 53.70 - 0.90
PDSTF3M: 1.7012 MBT: 60.60 + 1.60
Prices as of 4:00pm Source: Bloomberg, Reuters
Philippine Interest Rate Outlook
Secondary market rates moved sideways week-on-week despite higher than expected February inflation at 4.3 percent and the recent statements from BSP that the window of keeping interest rates steady has narrowed. Market participants continued to focus on the market liquidity present in the system. This is keeping short-term interest rates at the low side.
Expect interest rates to creep upwards in the coming weeks.
Philippine Equities Outlook
Local shares moved up 3.90 percent to 3882.71 as bargain hunting activities dominated investor sentiment as market deemed last week’s slump was overdone. Strong US economic data also supported recent rally. However, the rising global commodities continue to fuel inflation concerns which could cap market's rally near the 3,925- 3,950 levels.
Chartwise, the week’s close at 3882.71 suggests the market has still some gas to try the 3,950 levels. Failure for the market to clear said levels could trigger some profit taking activities.Immediate support lies at the 3,800 support levels.
Philippine Peso Outlook
The local currency rose 0.98 percent week-on-week to 43.28 as the dollar weakened against major currencies. Rally in emerging market stocks also helped buoy sentiment.
Chartwise, the week’s close at 43.28 implies further tests of the 43.00 - 43.25 levels. However, failure for the market to break below the 43.00 levels could call for a retest of the 43.50 - 44.00 levels in the near-term.
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
Morning Brief: 04 March 2011
Gov’t plans to sell Samurai bonds longer than 10 years Philippine Daily Inquirer
Manila is also considering a third local currency global bond and dollar bond sales to complete its $2.5-billion foreign financing needs this year. “The earliest we can do the Samurai is in April, if we decide to,” Purisima told reporters. “Which (instrument) we will use will depend on the conditions at that time, but I can tell you that we are looking at the Samurai, we are looking at the dollar, and GPN (global peso notes) as well.” Purisima reiterated that Manila preferred a Samurai issue of more than 10 years, with the Japan Bank for International Cooperation (JBIC) open to providing a guarantee to the bond. JBIC had extended a 95-percent guarantee on the Philippines’ $1 billion 10-year yen bonds, which were sold via private placement last year when the country returned to the Japanese debt market after nine years. The Philippines is known to be among the most innovative countries in selling local currency debt to wean itself off riskier foreign currency borrowing. It was the first Asian sovereign issuer of local currency global bonds, going to the market twice between September 2010 and January this year to sell global peso bonds. The Philippines raised $1.25 billion from its last offer of global peso bonds in January. Manila borrows heavily from local and foreign sources to offset weak revenues and fund its budget deficit expected to narrow to P290 billion, or 3.2 percent of GDP, this year, down from an expected 3.6 percent in 2010. This year, it is targeting gross borrowing of P772.9 billion, of which 73 percent, or P563.3 billion, will be raised from the local bond market. Manila raised P104 billion from the sale of domestic retail treasury bonds, which ended this week, which means lesser pressure on its borrowing for the rest of the year, Purisima said. “The balance of the amount we will borrow is much less now,” he said.—Reuters |
U.S. Stocks Advance on Economy as Dow, S&P 500 Gain Most Since December U.S. stocks rallied, giving benchmark indexes their biggest advances in three months, as a decrease in jobless claims and growth inservice industries bolstered confidence in the economic recovery. DuPont Co. and Caterpillar Inc. (CAT) advanced at least 2.8 percent, pacing gains in industrial companies. A gauge of retailers in the Standard & Poor’s 500 Index added 1.2 percent as Retail Metrics said industry sales rose 4.3 percent in February, topping analyst estimates. Big Lots Inc. (BIG) jumped 3.6 percent after reporting earnings that beat forecasts. Valero Energy Corp. (VLO) rose 7.7 percent as the refiner projected a profit. The S&P 500 added 1.7 percent to 1,330.97 at 4 p.m. in New York. The Dow Jones Industrial Average increased 191.40 points, or 1.6 percent, to 12,258.20. Both gauges gained the most since Dec. 1. Crude oil declined as Venezuela offered to mediate a resolution to the Libyan crisis. The Chicago Board Options Exchange Volatility Index, which measures the cost of using options as insurance against declines in the S&P 500, tumbled 10 percent, the most since November, to 18.60. “It’s a relief rally,” said Michael Nasto, senior trader at U.S. Global Investors Inc., which manages about $3 billion in San Antonio. “We got strong economic data across the board. Oil is down, which is also a positive, reflecting what I like to call a controlled chaos in the Middle East. Traders are happy about the fact that the market has been hanging in there despite all the recent turmoil.”
The difference between yields on 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for consumer prices, reached 251 basis points, the most since July 2008. Ten-year note yields touched the highest in more than a week before the Labor Department issues February jobs data tomorrow. The yields dropped earlier as concern political unrest in the Middle East and North Africa may spread encouraged demand for the safest fixed-income assets. “The data was the catalyst for the selloff, with jobless claims well below expectations, suggesting that the labor market is on better footing,” said Christopher Sullivan, who oversees $1.6 billion as chief investment officer at United Nations Federal Credit Union in New York. The 10-year note yield increased nine basis points, or 0.09 percentage point, to 3.56 percent at 5:02 p.m. in New York, according to BGCantor Market Data, after touching the highest since Feb. 21. The price of the 3.625 percent security maturing in February 2021 dropped 23/32, or $7.19 per $1,000 face amount, to 100 17/32. Thirty-year bond yields rose five basis points to 4.62 percent, the most since Feb. 22. |
Crude Oil in New York Slips From 29-Month High on Libya Mediation Proposal
Crude declined 0.3 percent on the Venezuelan proposal and after the Associated Press reported army deserters secured oil facilities in the rebel-held port of Brega on the Gulf of Sidra. Forces loyal to Libyan leader Muammar Qaddafi briefly seized, then lost control of, Brega yesterday. “There are people attempting to come up with some kind of compromise that would allow some kind of peace settlement, and that’s definitely a bearish sign,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. The government’s failure to hold Brega “removed any thought that there would be any damage to the oil exports,” he said. Crude for April delivery slid 32 cents to settle at $101.91 a barrel on the New York Mercantile Exchange. Prices have risen 26 percent in the past year. |
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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