Friday, November 19, 2010
Philippine Markets: 19 November 2010
19 November 2010
USD/PhP: 43.83 + 0.16 PSEi: 4203.60 + 82.98
USD/JPY: 83.37 PFINC: 959.33 + 2.63
EUR/USD: 1.3677 BDO: 56.80 + 0.30
GBP/USD: 1.6073 BPI: 58.40 + 0.70
PDSTF3M: 2.1808 MBT: 71.55 - 1.95
Prices as of 4:00pm Source: Bloomberg, Reuters
Philippine Interest Rate Outlook
Secondary money market rates fell anew by an average of 14 basis points week on week with short term yields falling by around 100 basis points after rates fell at the goverment's latest auction of government securities. Market liquidity remains the key driver of drop in rates supported by the upgrade of the country's credit rating the other week.
Continue to see rates to move sideways to down till end of the year.
Philippine Equities Outlook
Local shares rose 3.11 percent week-on-week to 4203.60 due to bargain hunting activities as the country's credit upgrade renewed investors appetite for Philippine stocks. Strong 3Q corporate results and improving market sentiment overseas continue to support the emerging rally.
Chartwise, the week's close at 4203.60 implies a test of the 4,250 levels in the near-term. Strong support lies at the 4,050 levels.
Philippine Peso Outlook
The local currency declined 0.16 percent week-on-week to 43.83 as dollar strengthened against major currencies. Chartwise, continue to expect the currency to range between the 43.50 - 44.00 levels in the week ahead.
Morning Brief: 19 November 2010
| Aquino to protect big infra investors Solicited projects get regulatory risk surety By Daxim Lucas, Norman Bordadora, Paolo Montecillo “If for some reason, a court decision threatens the adjustment, the government will compensate the private concessionaire for the difference between what the tariff should have been under the formula and the tariff which it is actually able to collect,” the President said at the opening of the public-private partnership conference in Pasay City. Before some 500 foreign fund managers at the Marriott Hotel, Mr. Aquino unveiled this landmark policy that his economic team hoped would assuage overseas businessmen’s fears about their ability to recoup investments. “If we are truly interested in a square deal for all, then what we shake hands on, should be what endures,” he said. “To this end, what we will be doing in so far as solicited projects are concerned is to minimize your risk in a meaningful and fair manner.” Mr. Aquino said the government would provide investors with protection against so-called “regulatory risk” or the risk of being unable to recoup one’s investments due to changes in the local regulatory environment—a common complaint among foreign businesses operating in the Philippines. “Infrastructure can only be paid for from user fees or taxes,” he said. “When government commits to allow investors to earn their return from user fees, it is important that that commitment be reliable and enforceable. And if private investors are impeded from collecting contractually agreed fees—by regulators, courts, or the legislature—then our government will use its own resources to ensure that they are kept whole.” Seeking to lure back foreign investors, many of whom have been personally burned by soured investments or deterred by tales about the perils of doing business in the country, he said: “You cannot deal with a government where the right hand is offering a handshake while the left hand is trying to pick your pocket.”
By Michelle Remo
The latest confidence index was higher than the +45 percent recorded for the third quarter of the year, and the +22 percent posted for the fourth quarter of last year. “In the fourth quarter, businesses are bullish for various reasons, including sustained improvement of the economy given strong demand and steady inflow of remittances from overseas Filipino workers,” said Diwa Guinigundo, Bangko Sentral ng Pilipinas deputy governor. The index is a measure of the level of confidence of businesses in terms of their ability to generate profit and their sentiment on the economy in general. The index is computed as the difference between the percentage of respondents who say they are optimistic against those who say they are pessimistic. “Seasonal factor, particularly projections of improved demand during the Christmas season, and optimism brought by the new administration also helped improve the confidence index,” said Rosabel Guerrero, director of the department of economic statistics at the central bank. |
Stocks in U.S. Rally on Manufacturing Report, Prospects for Irish Bailout U.S. stocks rallied, sending major equity benchmarks to their biggest gains in two weeks, as speculation grew that Ireland will accept a bailout to rescue indebted banks and reports on manufacturing and jobless claims bolstered optimism about the economy. Alcoa Inc. and Halliburton Co. climbed at least 3.4 percent as metals prices jumped and crude oil rebounded from a four-day drop.Caterpillar Inc. advanced 2.4 percent as the world’s largest maker of construction equipment said global retail sales of machines soared 48 percent. General Motors Co. rose 3.6 percent on its return to public trading following a $20 billion initial public offering. The Standard & Poor’s 500 Index gained 1.5 percent to 1,196.69 at 4 p.m. in New York. The Dow Jones Industrial Average added 173.35 points, or 1.6 percent, to 11,181.23. “It seems like everyone wants a rally today,” said Jeffrey Davis, who oversees $5 billion as chief investment officer at Lee Munder Capital Group in Boston. “The U.S. economic numbers have been very supportive. On top of that, we’re pretty satisfied with the way Europe is handling the Irish situation. And obviously GM’s IPO is bringing a positive tone to everybody’s thinking. I’m encouraged.” The S&P 500 tumbled by the most in almost three months on Nov. 16 amid speculation the debt crisis in Europe is worsening and that China will act to slow its economy. The benchmark gauge has still jumped 17 percent since July 2 as the Federal Reserve increased its program of asset purchases to stimulate growth.
Thirty-year bonds erased losses as the Federal Reserve prepares to buy Treasuries tomorrow maturing from August 2028 to November 2041, the first long-term debt purchase since it began the second round of purchases last week. Ten-year note yields were near a three-month high as the index of U.S. leading indicators rose for a fourth consecutive month and mid-Atlantic manufacturing surged, signaling the world’s largest economy is accelerating. “Things are getting a bit better,” said Thomas Roth, senior Treasury trader in New York at Mitsubishi UFJ Financial Group Inc. “It put pressure on the market.” Ten-year note yields climbed two basis points, or 0.02 percentage point, to 2.9 percent at 5:17 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in November 2020 fell 5/32, or $1.56 per $1,000 face amount, to 97 5/8. The notes last touched a 3 percent yield on July 29. Thirty-year bond yields fell less than one basis point to 4.28 percent after touching 4.34 percent, near a six-month high. |
| Crude Oil Rises a Second Day on Optimism Over Fuel Demand, Irish Bailout Oil climbed for a second day in New York amid optimism fuel demand will increase in the U.S. because of improved economic prospects and as Ireland moved closer to a European Union-led financial bailout. Futures gained 1.8 percent yesterday after Ireland’s central bank governor said he expects the country to seek help, strengthening the euro and boosting commodities. Prices also advanced as reports showed that the index of U.S. leading indicators rose for a fourth consecutive month, manufacturing surged in the Philadelphia area and jobless claims climbed less than forecast. The December contract increased 48 cents, or 0.6 percent, to $82.33 a barrel, in electronic trading on the New York Mercantile Exchange at 10:10 a.m. Sydney time. Yesterday, it added $1.41 to $81.85 a barrel, snapping a four-day drop. Prices are down 3.1 percent this week and 3.7 percent higher this year. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
Thursday, November 18, 2010
Morning Brief: 18 November 2010
BSP urged to lower interest rates on special deposit account facility
By Michelle Remo
Philippine Daily Inquirer
The bureau of the Treasury, which manages the national government’s borrowings, has urged the central bank to move against the tide and reduce interest rates.
Lower interest rates paid by the Bangko Sentral ng Pilipinas both for its overnight lending and special deposit account (SDA) facilities were necessary to force banks to lend more to the public rather than park their money in the central bank’s vault, the Treasury said.
The overnight lending and SDA rates are at historic lows of 6 and 4 percent, respectively. Still, the Treasury said there was much room for the BSP to cut rates.
A ranking Treasury official noted that inflation remained way below the official ceiling and that any reduction in interest rates was not expected to cause prices to rise sharply.
“Besides, it would benefit them to cut rates because that would mean they would spend less [on interest on deposits by banks],” Deputy Treasurer Eduardo Mendiola said.
It would also favor the national government if the BSP would reduce interest rates because deposit facilities of the BSP directly competed with the treasury bills and bonds being sold by the national government. The high rates offered by the BSP encourage banks to place more of their funds in the central bank’s deposit facilities instead of investing in government securities.
But Mendiola said that aside from benefiting the national government, lower rates offered by the BSP would encourage banks to lend more to the public.
Funds with the BSP’s SDA facility alone already amounted to more than P900 billion, a record high. Analysts said banks were attracted to deposit funds to the virtually risk-free and relatively high-yield BSP facility.
Latest documents showed that bank lending was so far growing nearly 10 percent this year. Although this was a decent growth, analysts said banks actually had the capacity to lend more.
No lotto winner; prize up P535M
By Tina Santos
Philippine Daily Inquirer
MANILA, Philippines—The wait is still on for the bettor who will win the 6/55 Grand Lotto as no one won the over P495 million jackpot during Wednesday night’s draw.
In a text message, assistant general manager Liza Gabuyo of the Philippine Charity Sweepstakes Office said no one was able to correctly guess the six number combination of 53-09-45-24-50-29.
The prize reached P495,597,376.80, currently the record holder for the biggest lotto jackpot in PCSO history.
The next draw for the 6/55 Grand Lotto is on Saturday night. Gabuyo said the jackpot is expected to reach P535 million.
Most Stocks in U.S. Gain as Target Earnings Offset Tech-Spending Concern
Most U.S. stocks rose, snapping a four-day losing streak in the Standard & Poor’s 500 Index, as earnings at Target Corp. and speculation that Ireland will receive aid offset concern that technology spending is slowing.
Target climbed 3.4 percent as profit jumped 23 percent on credit-card unit growth. McDonald’s Corp. gained 1.2 percent, helping give consumer shares the biggest gain among 10 industries in the S&P 500. NetApp Inc. tumbled 6.5 percent after the maker of storage equipment joined Cisco Systems Inc. in giving a forecast that spurred concern corporations are spending less on computer gear.
The S&P 500 added less than a point to 1,178.59 at 4 p.m. in New York, after earlier rising 0.3 percent. The 30-stock Dow Jones Industrial Average declined 15.62, or 0.1 percent, to 11,007.88. About five stocks advanced for every four that fell on U.S. exchanges, according to Bloomberg data.
Irish Bonds Rise as Lenihan Says Aid Talks to Start Tomorrow; Bunds Climb
Irish bonds rose after Finance Minister Brian Lenihan said potential aid talks for the government’s banks will start tomorrow.
The nation’s debt fell earlier after LCH Clearnet Ltd. raised the deposit clients must pay to trade the nation’s securities for the second time in a week in response to soaring yields. Lenihan said he will hold talks with the European Commission, European Central Bank and International Monetary Fund on the country’s banks. German bonds climbed.
“The margin requirement increase isn’t good for Irish bonds, but it makes an aid deal more likely,” said Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank in London. “It seems pretty inevitable that some kind of deal will be done. It’s just a question of how and what the details are.”
The yield on the 10-year Irish bond fell 14 basis points to 8.32 percent at 4:35 p.m. in London after jumping 31 basis points yesterday. The 5 percent security due October 2020 rose 0.775, or 7.75 euros per 1,000-euro ($1,351) face amount, to 78.14. German 10-year yields fell three basis points to 2.6 percent.
The difference in yield, or spread, between Irish and German 10-year bonds narrowed 10 basis points to 552 basis points, according to Bloomberg generic prices.
Crude Oil Tumbles to Four-Week Low on Signals China Will Increase Rates
Crude oil declined to a four-week low on speculation that China will raise interest rates, slowing economic growth in the world’s biggest energy-consuming country.
Oil fell 2.3 percent after Chinese Premier Wen Jiabao said the government was drafting measures to counter inflation. Prices also dropped on concern Europe’s debt crisis is worsening as ministers considered a rescue package for Irish banks. Futures rebounded briefly after an Energy Department report showed U.S. crude supplies slid 7.29 million barrels last week.
“Fears about Ireland and China are trumping inventories at the moment,” said Andre Julian, chief financial officer and senior market strategist at OpVest Wealth Management in Irvine, California. “Under normal circumstances prices would rally after a 7 million-barrel drop.”
Crude oil for December delivery fell $1.90 to $80.44 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 19. Futures have dropped 9.2 percent from the two-year intraday high of $88.63 a barrel on Nov. 11.
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
By Michelle Remo
Philippine Daily Inquirer
The bureau of the Treasury, which manages the national government’s borrowings, has urged the central bank to move against the tide and reduce interest rates.
Lower interest rates paid by the Bangko Sentral ng Pilipinas both for its overnight lending and special deposit account (SDA) facilities were necessary to force banks to lend more to the public rather than park their money in the central bank’s vault, the Treasury said.
The overnight lending and SDA rates are at historic lows of 6 and 4 percent, respectively. Still, the Treasury said there was much room for the BSP to cut rates.
A ranking Treasury official noted that inflation remained way below the official ceiling and that any reduction in interest rates was not expected to cause prices to rise sharply.
“Besides, it would benefit them to cut rates because that would mean they would spend less [on interest on deposits by banks],” Deputy Treasurer Eduardo Mendiola said.
It would also favor the national government if the BSP would reduce interest rates because deposit facilities of the BSP directly competed with the treasury bills and bonds being sold by the national government. The high rates offered by the BSP encourage banks to place more of their funds in the central bank’s deposit facilities instead of investing in government securities.
But Mendiola said that aside from benefiting the national government, lower rates offered by the BSP would encourage banks to lend more to the public.
Funds with the BSP’s SDA facility alone already amounted to more than P900 billion, a record high. Analysts said banks were attracted to deposit funds to the virtually risk-free and relatively high-yield BSP facility.
Latest documents showed that bank lending was so far growing nearly 10 percent this year. Although this was a decent growth, analysts said banks actually had the capacity to lend more.
No lotto winner; prize up P535M
By Tina Santos
Philippine Daily Inquirer
MANILA, Philippines—The wait is still on for the bettor who will win the 6/55 Grand Lotto as no one won the over P495 million jackpot during Wednesday night’s draw.
In a text message, assistant general manager Liza Gabuyo of the Philippine Charity Sweepstakes Office said no one was able to correctly guess the six number combination of 53-09-45-24-50-29.
The prize reached P495,597,376.80, currently the record holder for the biggest lotto jackpot in PCSO history.
The next draw for the 6/55 Grand Lotto is on Saturday night. Gabuyo said the jackpot is expected to reach P535 million.
Most Stocks in U.S. Gain as Target Earnings Offset Tech-Spending Concern
Most U.S. stocks rose, snapping a four-day losing streak in the Standard & Poor’s 500 Index, as earnings at Target Corp. and speculation that Ireland will receive aid offset concern that technology spending is slowing.
Target climbed 3.4 percent as profit jumped 23 percent on credit-card unit growth. McDonald’s Corp. gained 1.2 percent, helping give consumer shares the biggest gain among 10 industries in the S&P 500. NetApp Inc. tumbled 6.5 percent after the maker of storage equipment joined Cisco Systems Inc. in giving a forecast that spurred concern corporations are spending less on computer gear.
The S&P 500 added less than a point to 1,178.59 at 4 p.m. in New York, after earlier rising 0.3 percent. The 30-stock Dow Jones Industrial Average declined 15.62, or 0.1 percent, to 11,007.88. About five stocks advanced for every four that fell on U.S. exchanges, according to Bloomberg data.
Irish Bonds Rise as Lenihan Says Aid Talks to Start Tomorrow; Bunds Climb
Irish bonds rose after Finance Minister Brian Lenihan said potential aid talks for the government’s banks will start tomorrow.
The nation’s debt fell earlier after LCH Clearnet Ltd. raised the deposit clients must pay to trade the nation’s securities for the second time in a week in response to soaring yields. Lenihan said he will hold talks with the European Commission, European Central Bank and International Monetary Fund on the country’s banks. German bonds climbed.
“The margin requirement increase isn’t good for Irish bonds, but it makes an aid deal more likely,” said Charles Diebel, head of market strategy at Lloyds TSB Corporate Bank in London. “It seems pretty inevitable that some kind of deal will be done. It’s just a question of how and what the details are.”
The yield on the 10-year Irish bond fell 14 basis points to 8.32 percent at 4:35 p.m. in London after jumping 31 basis points yesterday. The 5 percent security due October 2020 rose 0.775, or 7.75 euros per 1,000-euro ($1,351) face amount, to 78.14. German 10-year yields fell three basis points to 2.6 percent.
The difference in yield, or spread, between Irish and German 10-year bonds narrowed 10 basis points to 552 basis points, according to Bloomberg generic prices.
Crude Oil Tumbles to Four-Week Low on Signals China Will Increase Rates
Crude oil declined to a four-week low on speculation that China will raise interest rates, slowing economic growth in the world’s biggest energy-consuming country.
Oil fell 2.3 percent after Chinese Premier Wen Jiabao said the government was drafting measures to counter inflation. Prices also dropped on concern Europe’s debt crisis is worsening as ministers considered a rescue package for Irish banks. Futures rebounded briefly after an Energy Department report showed U.S. crude supplies slid 7.29 million barrels last week.
“Fears about Ireland and China are trumping inventories at the moment,” said Andre Julian, chief financial officer and senior market strategist at OpVest Wealth Management in Irvine, California. “Under normal circumstances prices would rally after a 7 million-barrel drop.”
Crude oil for December delivery fell $1.90 to $80.44 a barrel on the New York Mercantile Exchange, the lowest settlement since Oct. 19. Futures have dropped 9.2 percent from the two-year intraday high of $88.63 a barrel on Nov. 11.
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
Rhys Cruz
Junior Researcher
(632) 858-3001
Subscribe to:
Posts (Atom)
