The Market Call | March 2015




From December to February, the US-PHP exchange rate appreciated which may put a downward pressure on the country's growth trajectory. The more than 1 M net new jobs created in the past 4 quarters augur well for stronger consumption and investment spending.Inflation rate averaging 2.5% in Q1, pulled down by weak crude oil prices, should support this impetus.


Fixed-Income Securities


Apart from sporadic bouts in volatility due to geopolitical risks like the Greece debt crisis, the Ukraine-Russian conflict and the continuing tension in the Middle East spawned by the rise of ISIS, the domestic bond markets will likely depend on two major factors US Treasury movements, and domestic liquidity.


Equities Market


We think it is best to stay invested, since our target for the PSEi remains unchanged (i.e. 8,300-8,500). Investor sentiment will likely be positive given the supportive macro factors (see Macroeconomy). We see pullbacks as opportunities to increase exposure. Foreign fund flows will continue to drive market returns. But the direction will be determined by USD-PHP exchange rate. We reiterate our preference towards modern retailers, power generation sector, and gaming.



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