In its latest publication of The Market Call, First Metro Investment Corp. (FMIC) indicated its view that inflation is expected to decelerate to just 0.2 percent in July, 2009.

First Metro Investment Corp. (FMIC), together with the University of Asia and the Pacific (UA&P), recently released its June month end issue of The Market Call , a publication which 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 June issue:

  • Macroeconomy

             While the economy slowed to a 0.4% GDP growth in the 1st quarter, the financial markets were racing forward in a usually strong rally lasting until early June.  Weak economic fundamentals abroad are bringing stocks back to earth.  Bonds are being beaten down by budget deficit fears, while domestic economy may recover from the recorded slowdown.

  • Fixed-income securities

The continued drop in inflation, policy rate cuts and surplus in government cash operations did little to stabilize, if not lower, the short-term yields of fixed-income paper.  In addition, to lower-than-expected Philippine GDP growth, supply concerns due to the impending Retail Treasury Bond in July and issuances of higher-yielding corporate bonds had caused short-term yields to rise.

  • Equities

We view that investors may be overvaluing the extent of the recovery and may be setting themselves up for potential disappointments.

For full details of The Market Call, please click here — The Market Call, June 2009.

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