Philippine Markets: 17 June 2011

17 June 2011

USD/PhP: 43.66 + 0.135 PSEi: 4153.11 - 19.97
USD/JPY: 80.46 PFINC: 912.43 - 21.65
EUR/USD: 1.4165 BDO: 51.80 - 3.15
GBP/USD: 1.6118 BPI: 53.95 - 1.55
PDSTF3M: 3.1804 MBT: 69.50 - 0.05
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary market rates moved up by an average of 7 basis points week-on-week as short-term rates continued to move up in anticipation that monetary authorities will continue to hike its benchmark rates at its policy meeting scheduled on 16 June . The BSP unexpectedly kept the benchmark rate to 4.50 percent but increased reserve requirements from 19% to 20%. It aimed to siphon excess liquidity in the market to prevent further inflationary pressures. Their recent move reinforces its move to stay ahead of inflation.

Continue to expect interest rates to move sideways with upward bias next week.

Philippine Equities Outlook

Local shares slumped 1.60 percent week-on-week to 4153.11 as fear trades triggered sell-off in global equity markets due to uncertainty in US economic health and escalating Euro debt concerns. Expect continued weakness and heightened volatility in the market as locals track US market movements.

Chartwise, the week’s close at 4153.11 continues to support the emerging down trend forming in the charts. A break below 4150 levels will put the 4000-4100 levels at play. Only a strong move above the 4250 will put the bulls back into play.

Philippine Peso Outlook

Local currency fell 0.88 percent week-on-week to 43.66 as US dollar strengthened against major currencies particularly the Euro as Greek debt concerns are worrying investors and traders worldwide. Weakness in global equity markets also prompted buying of US dollars as safe haven

Chartwise, the week's close at 43.66 signals a break of an important resistance at 43.60. This suggests the market has the momentum to try the 44.00-44.50 levels in the next few weeks. Only a move below the 43.00 levels will negate any moves above the 44.00 levels.


BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001