ACCORD CAPITAL EQUITIES CORPORATION

2011 STOCK MARKET

OUTLOOK
QUICK REVIEW 2010: PSEI
The PSEI returned
Ø Click to edit Master text styles
37.62% for the full year,
roughly 60% of 2009’s Second level
record 63% gains.
● Third level
This is the fourth best year
Fourth level
Ø
●
over the last decade
● Fifth level
Ø 2009 = 63.0%
Ø 2006 = 42.3%
Ø 2003 = 41.6%
Market returns over 40%
Ø

every three (3) years

Ø Ranked 3rd in ASEAN 6
QUICK REVIEW 2010:
VOLUME/VALUE
Ø Total volume 12

turnover reached
423.9 B; net of
10
block sales,
399.6 B
Ø Total value 8

turnover reached
php1.187 T; net
of block sales, 6

php971.3B
Ø December trades 4
saw an above
average flow to
Financials, 2

Holding Firms,
Services, Mining
0
& Oil and
Property
Ø Overall,
Industrials got
QUICK REVIEW 2010: FOREIGN
VALUE
Net Foreign fund was
Ø

negative in 4 of the 12
months (July-August and
November-December)
Sales in the last two
Ø 10
months of the year hardly 9
8
dented the long-term 7
picture, accounting for only 6
6.8% of the aggregate net 5
purchases through October 4
3
2
Daily average net
Ø
1
purchases for the year 0
amounted to php220.3M 12

10

0
QUICK REVIEW 2010: SECTORAL
INDEX
Except for the SVC and
Ø INDEX 2010 2009 2008 2007
M&O , all sectors posted
returns better than 2007
results;
PSEI 37.6 63.0 (48.3) 21.4
Only the Holding Firms
Ø
ALL 56.7 60.3 (46.0) 19.2
group managed to
outperform 2009 returns
FIN 43.5 46.6 (47.1) 5.0
IND 56.0 115.7 (51.5) 12.2
SVC continued to lag
Ø

the market, the only

HDG 110.3 79.6 (55.9) 17.6
sector to return less
than the PSEI
PRO 47.0 72.6 (57.6) 16.6
SVC 5.4 32.0 (40.0) 27.5
M&O 30.0 234.1 (61.5) 85.0
THE BROAD ECONOMY: GDP
(quarterly, yoy)
(source: WWW.CENSUS.GOV.PH)
GDP in January to
Ø
12
September at 7.5%
returning to pre-
crisis/global 10
recession levels

Worst-case scenario
Ø

of q4 at 1.5% pace, 6
full year GDP
average remains
within 5.0%-6.0% 4
target range (dotted
line) – an unlikely
2
event

0
THE BROAD ECONOMY: GDP vs. ASEAN 6

RP ranked 3rd behind

Ø 12
Singapore and
Thailand in terms of
real GDP after Q3, 10
2010.

8
In 2009, Singapore,
Ø

Malaysia and Thailand

registered negative 6
GDP growth

RP’s 7.4% (through

Ø

Q3) betters the 2007

pace of 7.1% 2

0
THE BROAD ECONOMY: Inflation

Annual inflation over

Ø

the last 10 years have

been erratic;

Slowest pace in 2007

Ø

(2.8%), fastest in crisis

year 2008 (9.3%)

2010 sees a slight

Ø

uptick from 2009 levels,

but have remained
within targets set by our
economic managers
THE BROAD ECONOMY: Interest Rates

Philippine Lending Rates

Ø 11
(all maturities) has
consistently dropped over
the last 10 years;
10
Remains high compared
Ø

to ASEAN 6 peers, behind

Indonesia’s 13.3%
9
Thailand and Malaysia
Ø

have significantly lower

rates for comparable
8
instruments at a little
over 5.0%

5
PSEI Outlook: Technical Condition

Market @ 2nd
Ø

extended
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consolidation band,
4,050-4,200, with
Second level
positive bias ● Third level
1st major pullback line
Ø
● Fourth level
● Fifth level
@ 4,125
1st major breakout
Ø

point @ 4,220
1st consolidation band
Ø

coincided with election

period with the Greece
debt-crisis coming into
play in the later part
of the range, lending
negative volatility
PSEI Outlook: Daily RSI (14)

RSI on rising trend

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Ø

indicating increased
positive momentum
Second level
Coincident RSI tops
Third level
Ø
●
with PSEI peaks
(>4,000) accompanied ● Fourth level
by higher RSI levels, ● Fifth level

[marked as pts. 1, 2,
and 3] positing a
probable positive
break of 4,000-mark
Less encouraging are
Ø

suggestions from the

weekly and monthly
charts, with tops
“unsupported”
PSEI Outlook: Daily MACD (12,6,9)

MACD broke the signal line

Ø

as the PSEI broke its own

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near-term downtrend line,
settling at 4,166.04 Second level
Histogram shows an
Ø
● Third level
increasing positive gap
between the MACD and the
● Fourth level
signal line, likewise, the line ● Fifth level
has crossed over to positive
territory
Despite the breakout from
Ø

the downtrend, the index

remains within a month-
long consolidation range
PSEI Outlook: STO (10,3,3)

Market at overbought
Ø

territory, 6 days after

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rising from oversold
area and registering a
Second level
bullish crossover of
● Third level
the trigger line; ● Fourth level
● Fifth level

STO has reached

Ø

>95, which on two

prior instances,
preceded a sell-off
ranging from -4.3% to
-18.3% over the next
1 to 3 weeks.
PSEI Outlook: Daily MFI (14)

the Index fell in line with

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Ø

the MFI suggestions,

following a 2-week
divergence, Second level
Index break of downtrend
Ø

from November 4th

● Third level
supported by similar ● Fourth level
break of a longer-term ● Fifth level
downtrend in the MFI
Breakout line insufficient
Ø

to provide reliable
guidance on the strength
and sustainability of the
current direction
PSEI Outlook: Fundamental Valuations

ØThe market remains a 12

“bargain”

10
End-2010 PE for the
Ø

Main Index at 14.98x

8

At the peak of the

Ø

2003-2007 bull market, 6

PE topped at 15.68x
(October 2007)
4

Using Projected PE
Ø

growth, six (6) index 2

component counters
remain undervalued
0
STOCK PICKS: PE Bargains

ØSix (6) counters STOCK end201 End201 PEG INITIAL

across the Holding
Firm, Property, and
0CLOS 0 PE PTarget
Industrial Sectors E
pose bargain
opporutunities
based on their 5-yr MPI 3.89 20.16 0.26 6.90
EPS growth;
AGI 12.50 25.41 0.65 17.40
RLC 16.30 13.70 0.56 20.25
Price Target
DMC 36.00 20.45 0.91 44.00
Ø

computed as
projected 2011 EPS MEG 2.48 14.09 0.77 2.95
x end-2010 PE
FPH 62.60 5.03 0.62 67.60

PEG of <1.0 are

Ø

theoretical bargains
STOCK PICK: MPI

ØPrice rose above Click to edit Master text styles

10-, 50- and 150pd
EMA’s
Second level
● Third level
10pdEMA is poised
Ø

to break above the

● Fourth level
● Fifth level
50pdEMA,
suggesting a further
upside momentum

Only the STO

Ø

suggests a possible
pullback as it hovers
in overbought
territory and draws a
possible break below
its trigger line
STOCK PICK: AGI

ØPrice has met strong

resistance at
Click to edit Master text styles
php13.00 level; Second level
MACD (2nd chart
Ø ● Third level
from top) on fresh ● Fourth level
break of the signal ● Fifth level
line, moving into
positive territory,
suggesting a build-up
of strength
STO requires a near-
Ø

term pullback, which

should open a BUY
window @ php11.20
Volume movements
Ø

stable with slight

pick-up bias
STOCK PICK: RLC

ØPrice remains under a

2-month downtrend Click to edit Master text styles
but is poised to
breakout off the
Second level
php16.40 resistance ● Third level
10pdEMA suggesting
Ø
● Fourth level
an oncoming break ● Fifth level

above the 50pdEMA,

with price consistently
holding php15.40
support
MACD draws same
Ø

possibility as the EMA

STO keeps break over
Ø

trigger line, still fresh

from oversold area
STOCK PICK: DMC

ØPositive but gradual

price action, breaking
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a slight downward
bias, even as it keeps
Second level
above all EMAs
● Third level
● Fourth level
MACD still positive,
Ø
● Fifth level
build-up still slow but
positive
STO in overbought
Ø

territory, positing a
break below trigger
line, suggesting a
near-term slide
AccDist Line strongly
Ø

shows accumulative
bias
STOCK PICK: MEG

Support building up at
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Ø

the php2.38-2.44 range,

with Major Support still
at php2.32 Second level
Critical price level to
Ø
● Third level
reverse positive mood ● Fourth level
at php2.10 ● Fifth level

STO overbought,
Ø

possible near-term slide

that should hold support
MACD gradually picking
Ø

up momentum
Distributive pressure
Ø

last week of 2010 not

making a dent on the
accumulative bias
STOCK PICK: FPH

Price has moved

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Ø

from negative trend

to consolidative
bias between
Second level
php59.50 –
● Third level
php63.00 ● Fourth level
● Fifth level
MACD, STO on even
Ø

keel, supporting the

sideways price bias
Distributive
Ø

pressure still
slightly dominant
Entry window opens
Ø

as price slides
towards support line
2010 Positives

Consumer & Business sentiments high

No political risks
Low interest rates
Contained Inflation
Increased investments flow
Sustained and stronger global recoveries
Sustained improvement in economic
fundamentals
2010 Risks

European “crisis” shifting to Spain,

Portugal
China monetary tightening to contain
inflation
Government’s revenue efforts
Unforeseen events
ACCORD CAPITAL EQUITIES CORPORATION

End of presentation