Philippine Markets: 7 October 2011

07 October 2011

USD/PhP:  43.54 - 0.12        PSEi:     4009.26  + 118.74
USD/JPY:   76.64        PFINC:          906.97  +   25.41
EUR/USD: 1.3455         BDO:        51.00  +     3.15
GBP/USD: 1.5523         BPI:        55.50  +     1.35
PDSTF3M: 2.9154         MBT:          64.85  +     2.35
Prices as of  4:00pm                Source: Bloomberg, Reuters


Philippine Interest Rate Outlook
Secondary money market rates moved sideways this week despite a slightly
higher September inflation of 4.8 percent. The National Treasury the
rejected
all bids at its latest auction of government securities. Positive
sentiments coming
out of the euro zone also helped in kept rates at bay.

Continue to expect rates to remain volatile in the near- term.

Philippine Equities Outlook
Local shares were marginally higher by 0.30 percent week-on-week to 4009.26
as
inflation remain contained at 4.80 percent for the month of September.
Positive developments
coming from the Euro zone helped investors to take advantage of the low
prices and take more
risks.

Chartwise, the week's close at 4009.26 suggests the market has still some
gas to try the
4050 - 4100 levels in the near-term. However, the recent market rally is
still viewed as a
mere technical rebound as market volume remains anemic. A clear break above
4,250
is needed to put the  bulls back to play. Failure for the market to clear
said levels could
call for a retest of the 3,800 levels.

Philippine Peso Outlook
The local currency rose 0.50 percent week-on-week to 43.54 for the first
time in six weeks,
as greenback took a breather from a month long rally.  Positive news out of
the Euro zone
relaxed cautious investors causing them to sell the US dollar and go back
to the equity markets
and take more risks.

Chartwise, the week 's close at 43.54 continues to suggest that the current
peso strength is viewed
as a mere corretive bounce and should see some support at the 43.50 -43.60
levels.  The next ensuing
move is a retest of the 44.00 levels.



BDO UNIBANK, INC.

Jonathan Ravelas
Chief Market Strategist
(632) 858-3145