The Market Call, April 2012!
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We are pleased to release the April issue of The Market Call, as published by the FMIC & UA&P Capital Markets Research. This is a result of an in-depth analysis on the emerging and leading trends in the global and local markets that have shaped the direction of the Philippine capital markets in the last four weeks.
Here are the highlights of the April issue:
With both external and internal demand factors working to its advantage, the economy is expected to expand by some 5.3% in Q1 with further accelerations in the subsequent quarters. Inflation will be kept at bay and average 2.9% in Q2 compared to 3.1% in Q1, as food supply has more than kept pace with population growth, and crude oil prices have stabilized, albeit at elevated levels.
BTr will issue a significantly lower amount of debt papers in Q2 compared to a year ago, and with its healthy cash position (April is top month for BIR collections) NG may even reject a number of bids. This combination would lead us to conclude that supply of government debt papers would be relatively tight in Q2. However, short-term yields may not drop much because of distinctly better yields from SDAs.
While the market is likely to move higher on bullish sentiments, our rational view tells us that caution is always a good strategy. This means that portfolios should always have cash available and avoid to be fully invested. Should GDP and earnings be in-line with expectations, we are confident that the market will be supported at these levels. Any further upside in stock prices would be the result of positive surprises in earnings forecasts.