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WoW WoW %

Index/Bond Index Level/Yield


Change Change
PSEi 8,915.92 101.30 1.15%
Dow Jones 26,071.72 268.53 1.04%

WEEKLY
S&P500 2,810.30 24.06 0.86%
MSCI Asia ex-Japan 756.04 12.74 1.71%
MSCI Europe 1,883.86 22.60 1.21%

MARKET
MSCI Emerging Market 1,232.60 24.43 2.02%
MSCI World Index 1,842.98 -2.48 -0.13%
S&P GSCI Commodity 2,607.20 -15.83 -0.60%

SNAPSHOT
S&P Global REITs 533.38 3.85 0.73%
5Yr FXTN 4.74 2 bps
10 Yr US Treasury 2.66 11 bps
January 22, 2018
Source: Bloomberg

Philippine Equities
Following the US government shutdown over the weekend, this week will
• Philippine Stock Exchange Index (PSEi) was up yet again by 1.01% week- tell how much weight markets have ascribed to geopolitical risks. We
on-week (WoW). The index ended at 8,915.42 as it continued its streak expect investors to shrug-off the headline news, while focusing on
to seven weeks of uptrend. Foreigners almost doubled their purchases earnings scheduled for release this week. Companies reporting this week
as flows shot up to $56.3 million last week which increased the year-to- include Netflix, UBS Group, General Electric, and Intel among others. We
date inflows to $120.9 million. continue to favor Asia and European markets over the US amid growing
• The top index performers for the week were Jollibee Foods (JFC +9.80%
downside risks.
WoW), LT Group (LTG +7.98% WoW) and Abotiiz Equity (AEV +5.83%
WoW). The bottom index performers were Metrobank (MBT -8.66%
WoW), Robinsons Land (RLC -4.99% WoW) and BDO Unibank (BDP –
3.27% WoW).
• Stock rights offerings accelerated last week as Bank of the Philippine Philippine Fixed Income
Islands (BPI) and Metrobank (MBT) announced that they will sell shares
to beef up their capital base. This development increases the • Trading volumes firmed somewhat after a strong T-bill auction at the
announced stock rights offerings to about P300 billion (Purefoods start of the week. Investors swarmed the auction, hungry for short-
announced P150 billion last year) this year. term paper, with the liquid FXTN 5-72 (5mos) also trading actively.
Buying interest initially spilled over to the liquid RTB 3-8 (2.2yrs) and
With all the companies selling shares, investors are getting cautious that RTB 5-11 (5yrs) which rallied initially before a sharp uptick in US
the market may be toppish as this may signal that companies view their Treasury yields caused profit taking. Yields closed at week-high levels.
current stock prices are attractive, and therefore expensive for investors. • USD Bond Issuance: Bureau of Treasury (BTr) issued a 10-year USD-
However, we believe the majority of these offerings will be marginally denominated Republic of the Philippines (ROP) benchmark security
short-term negative (i.e. reduce earnings per share growth, return on maturing in 2028 to strong demand. Initial pricing guidance for the new
equity) but is largely long-term value accretive. Therefore, we view any ROP 28 was at 3.3% but investor interest dragged this lower and the
dips to be a buying opportunity. In terms of our strategy, we like banks, BTr was able to award at 3.0% (roughly just 40bps over the 10yr US
consumer discretionary and infra-related companies as we perceive Treasury benchmark). USD 2Bn was awarded with 0.75 Bn via new
these companies to be the main beneficiaries of the current reforms and money investors and 1.25 Bn via switch tenders (bond exchange
macroeconomic environment. between existing bondholders and the BTr).
• Term Deposit Facility (TDF) auction: 01/17/18
7-day: Average yield at 3.028%; Fully awarded and 3.14x
oversubscribed
Global Equities *28-day tenor was not offered
• US markets hit fresh all-time highs last week. The S&P 500 Index rose With US Treasury (UST) yields at multi-year highs amid the ongoing US
86 bps, while the DJIA grew 104 bps week-on-week (WoW) on Friday. government shutdown, investors will be watching the ECB and BOJ
Despite the looming threat of a government shutdown all week, closely at their respective policy meetings this week. While we expect
investors read more into favorable earnings that is expected to get interest rates to continue to trend higher, we expect some sort of
boost from the tax overhaul this year. resolution to the US deadlock and a slight pullback from current levels in
• European equities also closed the week higher. The MSCI Europe Index the short-term.
advanced 57 bps WoW to close the week, with the largest increase on
Friday. There was renewed optimism in the region as Germany's BTr will be issuing a new security, the FXTN 3-23, at their 3-year auction
Angela Merkel has made a breakthrough toward her fourth term after tomorrow. We believe it will issue within the 4.125% - 4.375% range.
months of political impasses to form a coalition. Elevated UST yields are likely to increase the risk-off sentiment we have
• Asia Pacific markets surged last week on the back of solid macro data. been seeing in Philippine GS recently, but we remain constructive on this
The MSCI Asia Pacific Index jumped 151 bps WoW on Friday. In point of the curve and plan to participate at the 4.25% level where we
addition to the broad dollar weakness, strong Chinese data helped see value.
push markets higher.

The content on this material is provided for information purposes only and should not be considered as investment advice. This document is not a solicitation or an offer to buy or sell any securities or related financial
products. While this document was prepared with reasonable care, no guarantee is given as to the accuracy and completeness of the information herein. Information and/or views contained herein are for information
only and based on data that ATR Asset Management (ATRAM) has researched. However, ATRAM does not represent that the information and/or views are accurate or complete, and these should not be relied upon
as such. Any person receiving this document must make his/her own investigation and satisfy him-/herself as to the accuracy and completeness of the information and/or views. Any information or opinion expressed in
this document is subject to change without prior notice. This document may not be reproduced or distributed without written consent from ATR Asset Management.
We maintain a low duration and continue to favor the short-end and the
belly of the curve which continue to offer both value and a defensive tilt. 01/24/2018 US Markit US Manufacturing PMI Jan
01/24/2018 US Existing Home Sales Dec
01/24/2018 US FHFA House Price Index MoM Nov
01/24/2018 US Markit US Composite PMI Jan
Global Fixed Income 01/24/2018 US Markit US Services PMI Jan
01/24/2018 Japan Nikkei Japan PMI Mfg Jan
• US Treasuries continued to weaken last week despite the looming
01/24/2018 Malaysia CPI YoY Dec
possibility of a government shutdown, which ultimately materialized.
01/24/2018 Japan Trade Balance Dec
It seems bond investors are betting more on solid US economic growth
rather than potential geopolitical risks. The 10-year US Treasury yield 01/25/2018 US Initial Jobless Claims 20-Jan
leaped 11 bps on Friday week-on-week (WoW) to close at 2.66% -- the 01/25/2018 US New Home Sales Dec
highest level since 2014. On the other hand, FX traders have been 01/25/2018 US Leading Index Dec
shorting the USD against most of the major currencies, probably in 01/25/2018 US Wholesale Inventories MoM Dec
anticipation of hawkishness from the European Central Bank (ECB) and 01/25/2018 US Continuing Claims 13-Jan
the Bank of Japan (BOJ). 01/25/2018 US Bloomberg Consumer Comfort 21-Jan
• European Sovereign yields held steady, with the 10-year German Bund 01/25/2018 South Korea GDP YoY 4Q
yield only losing 1 bp on Friday WoW. Meanwhile, British Gilts were
01/25/2018 Malaysia BNM Overnight Policy Rate 25-Jan
flat for the week. Eurozone inflation remained subdued in the region
01/25/2018 Vietnam CPI YoY Jan
in December with CPI at 1.4% YoY.
01/25/2018 Hong Kong Exports YoY Dec
The spotlight is on US congress, as they announced a government 01/25/2018 South Korea GDP SA QoQ 4Q
shutdown over the weekend due to their inability to agree over the 01/25/2018 Vietnam Exports YTD YoY Jan
stopgap spending bill. We expect markets to shrug-off the headline news, 01/25/2018 Hong Kong Imports YoY Dec
especially after a technical breakout for US Treasuries. The BOJ and ECB 01/26/2018 US GDP Annualized QoQ 4Q A
meeting this week are expected to present the same rhetoric, with both 01/26/2018 US Durable Goods Orders Dec
central banks committing to maintain monetary policy. Our defensive 01/26/2018 US GDP Price Index 4Q
position of light duration has worked in our favor so far this year as yields
01/26/2018 US Durables Ex Transportation Dec
have ran up markedly. We believe US yields to continue grinding higher
01/26/2018 US Core PCE QoQ 4Q
with a slight risk of a minor short-term correction. Thus, we maintain our
strategy of being heavily invested along the belly of the curve while 01/26/2018 US Personal Consumption 4Q
keeping a heavy weight in cash. 01/26/2018 US Cap Goods Orders Nondef Ex Air Dec
01/26/2018 Japan Tokyo CPI Ex-Fresh Food YoY Jan
01/26/2018 Macau Unemployment Rate Dec
ECONOMIC RELEASES 01/26/2018 Singapore Industrial Production YoY Dec
01/26/2018 Japan Natl CPI YoY Dec
01/26/2018 Thailand Foreign Reserves 19-Jan
Date
Country Data Period 01/26/2018 Japan Tokyo CPI YoY Jan
01/22/2018 US Chicago Fed Nat Activity Index Dec 01/26/2018 Japan Natl CPI Ex Fresh Food YoY Dec
01/22/2018 Taiwan Export Orders YoY Dec 01/26/2018 Singapore Industrial Production SA MoM Dec
01/22/2018 Thailand Customs Exports YoY Dec 01/26/2018 Singapore Unemployment rate SA 4Q
01/22/2018 Taiwan Unemployment Rate Dec 01/29/2018 US Personal Spending Dec
01/22/2018 Malaysia Foreign Reserves 15-Jan 01/29/2018 US Personal Income Dec
01/22/2018 Thailand Customs Imports YoY Dec 01/29/2018 US Dallas Fed Manf. Activity Jan
01/23/2018 US Richmond Fed Manufact. Index Jan 01/29/2018 Philippines Budget Balance PHP Dec
01/23/2018 Singapore CPI YoY Dec
01/23/2018 Philippines GDP YoY 4Q
01/23/2018 Japan All Industry Activity Index MoM Nov
01/23/2018 Hong Kong CPI Composite YoY Dec
01/23/2018 Macau Visitor Arrivals Dec
01/23/2018 Taiwan Industrial Production YoY Dec
01/23/2018 Japan Machine Tool Orders YoY Dec
01/23/2018 Singapore CPI NSA MoM Dec
01/23/2018 Japan BOJ Policy Balance Rate 23-Jan
01/24/2018 US MBA Mortgage Applications 19-Jan

The content on this material is provided for information purposes only and should not be considered as investment advice. This document is not a solicitation or an offer to buy or sell any securities or related financial
products. While this document was prepared with reasonable care, no guarantee is given as to the accuracy and completeness of the information herein. Information and/or views contained herein are for information
only and based on data that ATR Asset Management (ATRAM) has researched. However, ATRAM does not represent that the information and/or views are accurate or complete, and these should not be relied upon
as such. Any person receiving this document must make his/her own investigation and satisfy him-/herself as to the accuracy and completeness of the information and/or views. Any information or opinion expressed in
this document is subject to change without prior notice. This document may not be reproduced or distributed without written consent from ATR Asset Management.

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