First Metro Investment Releases November Philippines Market Call

Manila, Nov 16, 2012 – (ACN Newswire) – First Metro Investment Corp (FMIC) and University of Asia and the Pacific (UA&P) have published the November 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:

” Macroeconomy – Growth, Credit Upgrades, Okay Solid Footings

A spate of positive external and internal assessments in late October upheld the growing and widespread belief that the economy is grounded on solid footings and is likely to be in the throes of becoming a Tiger economy in the current decade. The International Monetary Fund (IMF), World Bank (WB), and Asian Development Bank (ADB) have raised their forecast for the country’s economic growth for 2012 with the best prognosis provided by the usually conservative ADB at 5.5%. Moody’s, on the other hand, raised its credit rating for the country’s foreign-denominated debt papers to a just a notch lower than investment grade, putting its evaluation at the same grade as those of Standard & Poor (S&P) and Fitch Ratings. Finally, the Monetary Board (MB) of the Bangko Sentral ng Pilipinas (BSP) cut the policy rate by 25 basis points (bps) to 3.5%, a second record-low achieved in 2012.

Concretely, the economy appears to have recovered from the devastating floods in August, as evidenced by the slight uptick of electricity sales in September, albeit slower than expected as the destruction had been greater due to a reprise of the heavy rains and flooding in the later part of August. More rains came in September which negatively affected the service sector, but had positive impact on agriculture.

“Fixed Income Securities – Moody’s Upgrade and Rate Cut Lower Yields

On October 25, the Bangko Sentral Ng Pilipinas (BSP) clipped policy rate by 25 basis points (bps) to an all-time low of 3.5%. The move did not come as a surprise as most analysts anticipated the rate cut. What was more telling was BSP’s announcement of their openness for further easing to bolster the economy and to curb the peso’s appreciation.

The following week, Moody’s Investor Services upgraded Philippine sovereign credit to one notch below investment grade. Anticipating a renewed demand for the Philippine currency, investors pushed 364-day T-bill rates to below-1% as the month ended. Other T-bill rates continued to trend lower with the 91-day and 182- day T-bills nearing the lowest awarded rates set in September 2011. Unmet demand from cancelled T-bond auctions and a shortened Retail Treasury Bond (RTB) offer period also contributed to the drop in T-bill yields.

The Bureau of the Treasury (BTr) marked another record in the bond market in October as the Retail Treasury Bonds (RTBs) sale raised P188 B in its 16 tranche for 25-year paper. The scheduled 10-day auction period was cut short as daily offers had been continuously oversubscribed. Long tenors in the secondary market were met with high demand as well with inflation remaining benign at 3.6% in September and the budget deficit staying widely below programmed levels.

“Equity Markets – The Philippine Bull Has Stronger Legs

In the US, earnings concerns, fragile economy, and the 2012 Presidential Election weighed on equities. But unlike previous periods, we are seeing correlation between the PSEi and US equity indices declining. For the month of October, the PSEi rose 1.47%, while the Dow Jones Industrial Average fell a moderate 0.65% and the S&P 500 a similarly mild 0.03%. The PSEi’s performance in October was consistent with our seasonality study. In November, we expect the Philippine equities market to move higher. Most local companies will release earnings results this month which should be in-line with consensus. While investors may take profit on earnings news, we will keep existing positions and accumulate on dips. Trailing valuations may appear stretched but robust macro, undemanding forward valuations and strengthening inflow from foreign funds make a case to remain invested.

To download the full 22-page November ‘Market Call’, and all recent reports, please visit

About First Metro Investment Corporation

Founded in 1972, First Metro Investment Corporation is the investment banking arm of Metropolitan Bank and Trust Co. (Metrobank) – the Philippines’ largest financial conglomerate. With over 100 employees, First Metro provides investment banking services through its four strategic business units: Investment Banking, Treasury, Investment Advisory and Corporate Lending and the Regional Business Development Desk. First Metro holds the distinction of being the sole publicly listed investment house among the member institutions of the Investment House Association of the Philippines (IHAP) and has been ranked among the Top 11 Philippine Companies and among the Best ASEAN 100 Companies based on Relative Wealth Added Index by NY-Based management consulting firm, Stern Stewart & Co. In 2009, First Metro was awarded the Best Bond House in the Philippines by Finance Asia. In the last two years, it was also awarded the Best Bond House by The Asset Magazine of Hong Kong. For more information on First Metro, visit

Source: First Metro Investment Corporation


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