Philippines Markets: 24 September 2010 (as of 12:00pm)

24 September 2010

USD/PhP: 44.05 (as of 12:00pm) PSEi: 4078.87 + 11.44
USD/JPY: 84.52 PFINC: 942.31 - 3.20
EUR/USD: 1.3346 BDO: 60.00 - 0.40
GBP/USD: 1.5683 BPI: 54.10 - 0.90
PDSTF3M: 4.2077 MBT: 71.75 - 0.15
Prices as of 4:00pm Source: Bloomberg, Reuters


Philippine Interest Rate Outlook

Secondary market rates moved down by an average of 15 basis points week on week after the government posted a better than expected budget surplus during August, market players were expecting a deficit. The surplus was at 1.3 billion pesos as the government tightened its belt meet target deficit for the year. Except for last year, August had been a surplus month for the government since 2005.

Expect interest rates to move sideways with downward bias next week as market liquidity continues to support demand for government securities.

Philippine Equities Outlook

Local shares rose 2.50 percent week-on-week to 4078.87 as investors continue to snap up Philippine shares as valuations remains attractive compared to the region. Mining shares continue to outperform the market as gold prices continue to soar as US Fed suggested they are still prepared to do quantitative easing.

Chartwise, the week’s close at 4078.87 continue to support further upticks towards the 4,150-4,200 levels in the near-term. Immediate support now lie at the 4,000 levels. A break below the said levels could create the much awaited 'pause' possibly towards the 3,800-3850 levels. Technical market indicator RSI implies that the market is quite overbought and may adjust soon.


Philippine Peso Outlook

As of 12:00 pm, the local currency is trading at 44.05, slightly stronger than last week’s 44.21 close due to US dollar weakness against the major currencies after the Fed kept key target rate at historic lows. Portfolio flows remained supportive as valuations remain cheap compared to the region.

Chartwise, the current peso movement suggests a possbile double-bottom was formed at the 43.88 levels. This implies a a bounce possibly retesting the 44.25-44.50 levels in the week ahead. Only a break below the 43.88 levels will trigger further tests towards the 43.00 - 43.50 levels

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Rhys Cruz
Junior Researcher
(632) 858-3001