Thursday, August 25, 2011
Philippine Markets: 25 August 2011
25 August 2011
USD/PhP: 42.55 PSEi: 4342.69 - 23.76
USD/JPY: 76.97 PFINC: 988.17 - 1.42
EUR/USD: 1.4410 BDO: 59.00 - 0.40
GBP/USD: 1.6374 BPI: 57.95 - 0.05
PDSTF3M: 1.1250 MBT: 73.00 + 0.40
Prices as of 12:00pm Source: Bloomberg, Reuters
Local shares dropped 0.54 percent
PSEi dropped 23.76 points to 4342.69 as investors sold some index stocks that will be removed from the index starting Sept 12. San Miguel Corp., Cebu Air Inc., SM Development Corp., Belle Corp. and Semirara Mining Corp. will be added to the nation’s benchmark stock index starting Sept. 12, the Philippine Stock Exchange Inc. said in a statement. ABS-CBN Corp., Filinvest Land Inc., Lepanto Consolidated Mining Corp. and Security Bank Corp. will be dropped from the measure, it said.
BANCO DE ORO UNIBANK, INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Morning Brief: 25 August 2011
| July shortfall bigger than first-half tally THE BUDGET DEFICIT could have topped P20 billion in July, exceeding the shortfall posted for the entire first semester, a Cabinet official yesterday said. "Our budget deficit in July may have been higher than P20 billion and definitely wider than the first-half deficit of P17.23 billion," Budget Secretary Florencio B. Abad said in a text message. "This indicates that spending is now picking up," he added. In a phone interview, Mr. Abad said government agencies had now implemented spending catch-up plans that boosted the government’s expenditures. Infrastructure projects, in particular, were accelerated, he claimed. The Department of Education has reportedly begun bidding out its schoolbuilding construction projects in clusters. Education Secretary Armin A. Luistro has pledged to eradicate a backlog in 2010 and 2011 projects by yearend. The Department of Public Works and Highways, meanwhile, was also said to have put some 3,000 infrastructure projects on the auction block, comprising 49% of its program for the year. The trend of improved spending is expected to continue in the remaining months of the year, Mr. Abad said. "The review of project costs that delayed project implementation in the first few months of this year has now been completed," he said. "We are also monitoring these government projects and these catch-up plans on a weekly basis. We cannot let up. We will keep identifying the bottlenecks in spending so we can address them." July fiscal data is expected to be released today. The government wrapped up the first semester with a deficit significantly below target as spending remained weak against improving revenue collections. Revenues amounted to P681.64 billion in the first half while expenditures totaled P698.871 billion. The government is aiming to collect P1.411 trillion in revenues by the yearend. Expenditures, on the other hand, have been pegged at P1.711 trillion. The full-year deficit has been capped at P300 billion, equivalent to 3.2% of gross domestic product. University of the Philippines economist Benjamin E. Diokno was unimpressed with the claim that the deficit had doubled. "Assuming that the government posts a P20-billion deficit for every month for the next six months, that would sum up to only P120 billion. When you add that to the P17.23-billion deficit in the first half, that is only P137.23 billion for the entire year, which is way below the target," he said in an e-mail. Mr. Diokno, a former Budget secretary, stressed that the government still "has so much ground to cover to make up the underspending" in the first semester. |
| U.S. Stocks Rise After Durable Goods, Home Prices Beat Forecasts U.S. stocks rose, extending the biggest rally for the Standard & Poor’s 500 Index in a week, after reports on durable-goods orders and home prices beat economists’ forecasts and banks advanced. Financial stocks in the S&P 500 rose 2.8 percent, the biggest gain within 10 industries. Bank of America Corp. (BAC) surged 11 percent as Meredith Whitney, who predicted Citigroup Inc. (C)’s dividend cut three years ago, said it has no urgent need to raise capital. A gauge of 12 homebuilders in S&P indexes added 3.6 percent. Newmont Mining Corp. (NEM) slumped 1.6 percent after gold futures plunged the most since 2008 as demand for havens waned on speculation financial markets may be stabilizing. The S&P 500 rose 1.3 percent to 1,177.60 at 4 p.m. in New York. The durable-goods data wiped out a 1.4 percent retreat in futures on the index. The Dow Jones Industrial Average added 143.95 points, 1.3 percent, to 11,320.71. “Any time you see life in the walking dead, it certainly makes you feel a lot better,” Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private- banking unit of KeyCorp in Cleveland, said in a telephone interview. “There’s so much pessimism priced into the market that if we get any decent news, it’s going to buoy investors’ spirits. If investors can be reassured that a disaster is not imminent, that’s good for the market.” With traders awaiting a speech on Aug. 26 by Federal Reserve Chairman Ben S. Bernanke in Jackson Hole, Wyoming, trading is being affected more than usual by levels monitored by so-called technical analysts who base forecasts on price and volume history. Treasuries Fall on Durable Goods; Five-Year Notes Sell at Record Low Yield Treasuries fell, pushing 10-year note yields to the highest in a week, after a report showed durable goods orders rose in July more than forecast, renewing optimism that the U.S. economic recovery may accelerate. U.S. 30-year bond yields rose the most since Aug. 11 amid speculation about whether Federal Reserve Chairman Ben S. Bernanke will signal if policy makers are willing to take further measures to prevent the U.S. from returning to recession when he delivers an Aug. 26 speech at Jackson Hole, Wyoming. The U.S. sold $35 billion in five-year notes at a record low auction yield before a sale of $29 billion of seven-year notes tomorrow. “The economy is not dead,” said William Larkin, a fixed- income money manager at Salem, Massachusetts-based Cabot Money Management, which oversees $500 million. “You’ve got all this fear, but when you get data that says the fear may not be warranted, like today’s data, you’ll get a pop up in yield.” Ten-year note yields rose 15 basis points to 2.30 percent at 5:01 p.m. in New York, the highest level since Aug. 16, according to Bloomberg Bond Trader prices. The 2.125 percent security due in August 2021 fell 1 9/32, or $12.81 per $1,000 face amount, to 98 14/32. The yield on the 30-year bond rose 16 basis points to 3.65 percent, the highest since Aug. 17. Yields on the current five- year note climbed eight basis points to 1.02 percent. |
| Oil Trades Near Two-Day Low as Dollar’s Gains Counters Stockpile Decline Oil traded near a two-day low in New York after declining yesterday as a stronger dollar, which curbs investor demand for raw materials, countered an unexpected drop in U.S. crude stockpiles. Futures were little changed after slipping 0.3 percent yesterday as the U.S. currency rebounded against the euro, reducing the appeal of dollar-denominated commodities as an investment. Prices had climbed as much as 1.4 percent when the Energy Department said supplies fell 2.21 million barrels to 351.8 million last week. They were forecast to increase. Crude for October delivery was at $85.21 a barrel, up 5 cents, in electronic trading on the New York Mercantile Exchange at 8:42 a.m. Sydney time. The contract yesterday dropped 28 cents to $85.16, the lowest since Aug. 22. Prices are 18 percent higher the past year. Brent oil for October settlement increased 84 cents, or 0.8 percent, to $110.15 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract settled at a premium of $24.99 U.S. futures, compared with a record $26.21 on Aug. 19. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BANCO DE ORO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
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