First Metro Asset Management Inc

FMIC-UA&P Capital Markets Research – The Market Call (March 2010)

5 April 2010

 Dear Colleagues:

We are pleased to release the March 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 March issue:

 Macroeconomy

The outlook for the economy is looking better for the first half of the year.  January 2010’s record gains in electricity sales and em­ployment are reflecting the rebound in exports and the renewed strength of construction spending.  Despite elevated crude oil prices, their upward trend has weakened, and further pressures on domestic infla­tion are limited. We think infla­tion would range from 4.2% to 4.8% in Q2. Moreover, exports are expected to continue being in a strong re­covery mode as the US and East Asia have rebounded impressively. OFW remittances are also likely to grow between 8-10% for Q2.

 Fixed-Income Securities

Interest rates will remain stable in the second quarter with very little threat from inflation and a strong peso. With cash positions of banks and investors remaining very high, there appears very little threat that the curve will sharply steepen. Indeed, a moderate flattening is al­ready beginning to emerge. ROPs will most likely narrow its trading range but could move up if euro-zone debt problem escalates.

 Equities Market

The El Niño continues to put pressure on growth, while rotating power disruptions may likely cur­tail company earnings. Even so, heavy election spending compounded with accommodative monetary policy will likely keep local equities afloat. We expect pullbacks to proliferate due to the increase in volatility and uncertainties surrounding the election.

 For full details of The Market Call, please click http://www.firstmetro.com.ph/Market%20Call/TMC%20March%202010.pdf.

 Thank you.

 Roberto Juanchito T. Dispo

Chairman, Capital Markets Development Committee

First Metro Investment Corporation

45/F GT Tower International,

Ayala Ave. cor. HV Dela Costa St.,

Makati City

Tel:       (+632) 858 7900

Fax:      (+632) 816 0984

Web:    www.firstmetro.com.ph

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