First Metro Investment Releases June Philippines 'Market Call'

Jul 13, 2012 19:00 JST

Source: First Metro Investment Corporation

MANILA, Jul 13, 2012 - (ACN Newswire) - First Metro Investment Corp (FMIC) and University of Asia and the Pacific (UA&P) have published the June issue of "The Market Call, Capital Markets Research". The report, which covers the Philippines' Macroeconomy, Fixed Income Securities, Equity Markets and Economic Indicators, includes the following highlights:

"Macro-Economy: Q2 Promises to be Better than Ever -

Recent economic indicators - higher electricity sales growth, more than a million jobs created, inflation easing, improving exports, and better agricultural output due to favorable weather, among others - are pointing towards an even faster output growth in Q2 from the 6.4% Gross Domestic Product (GDP) posted in Q1.

The upgraded outlook for 2012-Q2 GDP expansion is more remarkable given the slowdown of the U.S. economy and China, two main engines of world growth, and the lingering banking and debt crisis in the Euro-zone focused on elections in Greece, which held the world in tenterhooks. The outcome was fairly positive - No Grexit - followed by some concessions by Germany in favor of growth for beleaguered Spain and Italy, core countries in the Eurozone.

...the Philippine economy appears to be on a roll as the economy seems to be in a "sweet spot" of faster growth and slower inflation.

"Fixed Income Securities: Eurozone Crisis Temper Good Fundamentals

With inflation easing slightly in May to 2.9% (due to lower oil prices), to bring the 5-month average to the lower end of the inflation target of 3-5%, the BSP has maintained policy rates in its last two meetings to further support the growth momentum of the economy which expanded faster than expected in Q1. In addition, the government registered a five-month deficit of P22.79 B as government spending reached its highest in May amidst slowing revenue collection. The deficit was only 22% of the P109.34 B deficit cap in H1. With continued benign inflation outlook and sound fundamentals, Moody's has upgraded the country's outlook from stable to positive in contrast to the downgrades that plagued Europe.

All eyes are focused on Europe as the EU Summit agreed in principle for greater monetary unity and more emphasis on growth. Investors are awaiting further details as uncertainty lingers despite the relatively positive results of the Greek elections. Nevertheless, domestic bond yields may not move up much as the government announced its borrowing plans for Q3 to be P108 B (below same period in 2011) given its strong cash position.

...With the Greek debt crisis cooling off, at least until the end of the year, and inflation expected to keep at the lower end of the BSP's inflation target of 3-5%, the outlook for H2 looks more promising.

"Equity Markets: 'Ghost' Month, EU Risks Outweigh Positives

In the 2nd quarter of 2012, we saw bullish sentiment zapped by the Eurozone's long drawn financial crisis and the weakening economic data in the US and China. The PSEi took back 8.75% (466 points) from its peak in about a month (early May to mid June). The May elections and the inability of Greece to form a government spooked investors as the country risked having to leave the Eurozone. Between May 6 and June 17, Greece held the markets hostage until a new and decisive election was held. During this period, the Philippine equities market experienced selling pressure.

...Robust economic and earnings reports should provide support to the local market."

To download the full June 24-page 'Market Call', and all recent reports, please visit http://firstmetro.com.ph/publications_marketcalls.asp.

Contact:

Anna Marie Tuprio
Corporate Planning & Affairs Department 
Tel: +63-2-858-7951                   
E-mail: marie.tuprio@firstmetro.com.ph

Source: First Metro Investment Corporation
Sectors: Daily Finance

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