slamc weekly- june 17, 2013

8/12/2019 SLAMC Weekly- June 17, 2013

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Chart 1 - Dow Jones Industrial Index

Source: Bloomberg

Chart 2 US Treasury Rates

Issue Jun 14 Jun 7 +/-

3m 0.05 0.04 0.01

6m 0.08 0.07 0.01

1y 0.13 0.14 -0.01

2y 0.29 0.32 -0.03

3y 0.49 0.52 -0.03

5y 1.04 1.1 -0.06

7y 1.53 1.59 -0.06

10y 2.14 2.17 -0.03

30y 3.28 3.33 -0.05Source: US Department of Treasury

June 17, 2013Issue No. 98

HIGHLIGHTS- Investors react to developments in US, Japan and China- US Treasury yields rose on tepid demand- The PSEi posts a 6.75% single-day decline- BSP keeps SDA and policy rates unchanged- Peso government securities continue to rise amid foreign sell-off

Stumbling BlocksMarkets remained volatile with equities ending innegative territory

Investors were on the side of caution amid thevolatile market conditions. Aside from thecontinued speculation on the Fed tapering off itsbond-buying program, lack of decisiveness inJapans own monetary stimulus and a slowingChinese economy were the major catalysts.

oAfter Prime Minister Abe announced theThird Arrow of his reform program, theBank of Japan (BoJ) held off from taking newmonetary easing measures. Investors weredissatisfied with their lack of specifics as theyexpected the central bank to make concreteactions in addressing recent bond volatility.

oChina showed signs of a slowing economywith their weak economic figures in May. Thelatest export data increasing by 1% in May,

which was lower than the estimate of 7.4% S&P raised the US sovereign outlook to stable from

negative citing the US governments strengthenedfinances. Meanwhile, International Monetary Fund(IMF) sees slower growth for the US economy as itcut its growth forecast for next year to 2.7% from3% previously.

The Dow closed at 15,070.18, which fell by 1.20%WoW. The S&P dropped by 1.0% while Nasdaqslipped 1.3%, ending the week at 1,626.73 and3,423.56 respectively.

US Treasurys 10-year paper posted highest yield inmonths amid dampened demand

Yields pushed out to 14-month highs with the 10-year paper trading as high as 2.27% earlier in theweek. Its bid-to-cover ratio was at 2.53%, theweakest since August 2012.


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Chart 3 - Philippine Stock Exchange Index

4,700

5,000

5,300

5,600

5,900

6,200

6,500

6,800

7,100

-400.0

-300.0

-200.0

-100.0

0.0

100.0

200.0

300.0

400.0

500.0

inUSDmn

Net Foreign Flow PSEi (RHS) Source: Sun Life Asset Management Company, Inc.

Sectors: Services -3.63%,Mining and Oil -5.26%,Banks -6.71%, Conglomerates -6.73%, Industrials-7.33%, Properties -8.63%

Leaders: BLOOM +0.18%, GLO -0.99%,ICT -2.92%, MWC -3.18%, SCC -3.26%

Laggards:JFC -12.75%, ALI -11.75%,JGS -11.66%, MER -11.61%, URC -9.84%

Source: The Philippine Stock Exchange

Chart 4 - PDST-R2 Reference Rates


1m 2.0000 2.0000 0.0000

3m 1.5000 2.0000 -0.5000

6m 2.1250 2.0000 0.1250

1y 2.1250 2.0000 0.1250

2y 2.5000 2.4250 0.0750

3y 2.3386 2.1485 0.1901

4y 2.8450 2.4500 0.39505y 2.0842 2.1471 -0.0629

7y 3.1250 3.0000 0.1250

10y 3.3000 3.2500 0.0500

20y 3.5049 3.4707 0.0342

25y 5.0043 4.5727 0.4316Source: Philippine Dealing and Exchange Corp.

Chart 5 ROP Average Rates


ROP14 0.9580 0.9400 0.0180

ROP15 1.2110 1.1860 0.0250

ROP16 1.6140 1.4610 0.1530

ROP19 2.6640 2.4800 0.1840

ROP20 2.7940 2.6020 0.1920

ROP21 2.8860 2.7160 0.1700

ROP26 3.6550 3.4750 0.1800

ROP32 4.4650 4.3480 0.1170

ROP37 4.3050 4.2230 0.0820

Source: Bloomberg

PSEi recorded biggest one-day decline

The PSEi ended the week lower by 6.86% WoW toclose at 6,242.26 as investors remain wary ofexternal developments. Last Thursday, the market

posted its biggest single-day decline since 2008, asit fell 6.75%

During the Monetary Boards rate-setting meetingheld on Thursday, the Bangko Sentral kept policyrates unchanged for overnight borrowing andlending at 3.5% and 5.5% respectively. The SDArate was also maintained at 2%, contrary toexpectations that there will be another cut.

Bond yields continued to rise

Yields of peso government securities continued itsupward trend with the 20-year and 25-year paperrose by 3 bps and 43 bps, respectively.

There was relatively thin trading volume with anaverage of Php 9-13Bn.

Meanwhile, ROPs were also sold down last week.Yields increased across the curve as it continued tofollow the movement of the US Treasury.


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Outlook (June 17 to June 21)

For local equities, we expect the market to be volatile in the coming days with investors taking a cautious stanceas they await for further developments in the global front. Short-term support is seen at the 200-day movingaverage of the Phisix at 6,128. Resistance is expected at the recent downside gap of 6,457 to 6,549.

For peso government securities, yields are expected to be range-bound as investors anticipate the results of theFederal Open Market Committee (FOMC) Meeting to be held on June 18. On the other hand, ROPs are seen tomove sideways as it continues to track US treasuries.

Main drivers for the week are the minutes of the FOMC meeting and the release of Philippine OFW remittancefigure.

Chart 6 - Sun Life Prosperity Funds Performance

Source: Sun Life Financial Philippines

slamc weekly- june 17, 2013

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