ACCORD CAPITAL EQUITIES CORPORATION

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
MARKET NOTES_Week 23_TD109_June 6, 2011_Monday
source: www.pse.com.ph

POSITIVES:

• The EU and the IMF have approved the fifth installment of Greece's 110 billion euro (US$161 billion)
bailout.
• This came after the troubled economy's leaders agreed to additional austerity measures worth 78 billion
euros and asset sales through the next four years (to 2015). Specifically, public-sector employment will be
pared down and an agency to manage asset sales will be put up. These efforts are designed to pull the
country's deficit down to 7.5% of GDP.
• Containing an expected political backlash, however, rises as a new challenge.
• Concerns over Greece's ability to meet obligations on its maturing debt issues have widened spreads versus
benchmark German bonds, pushing the former closer to the outside borders of the credit markets. The
home of ancient civilization is entering the third year of recession and remains burdened with the euro
zone's biggest debt load in its young history. Greece was the first of at least five (5) euro member economies
to have required a bail-out. Others that followed were Ireland and, most recently, Portugal. The rest of the
5-nation PIIGS, Spain and Italy are under close watch.
• EU leaders will be meeting on June 23 and 24 in Brussels, Belgium to finalize and approve a plan. It will
revolve around bondholders' willingness to rollover their positions, reducing the risk of a default
classification. In exchange for such “voluntary” action, they may be granted “preferred status,” and higher
coupon payments or collateral, among other things.
• Investors bought Greek bonds, narrowing yields to 22.8% from 24.52% the previous day. At the beginning of
the month, Moody's Investors Services downgraded Greece to Caa1, a rating similar to Cuba, sending bonds
to its lowest since January.

NEGATIVES:

• US ECONOMIC RECOVERY REMAINS DOUBTFUL ON POOR NUMBERS

• Except for Friday's non-manufacturing PMI, the slew of economic numbers reported last week added
evidence to sustained threats to US economic growth. All results fell short of expectations, indicating that
economists are slightly more optimistic than the actual.
• Consumer confidence fell, missing forecast which even anticipated a slight improvement. The measure,
indicative of consumers' outlook for the economy and determines their potential spending patterns and
preferences moving forward, has been erratic over the last three (3) months after peaking at 70.4 in the
February report. Confidence is at the lower half of the survey history range, which topped at 144.4 in May
2000 fell to its lowest at 25 last February 2009. The next release of this series will be on June 28th.
• ADP Non-farm employment change posted a substantial drop to only 38k against an estimated 177k,
which is at par with the prior period's result. After exceeding forecast numbers in the first three months of
the year, despite coming in slower at each month, it has missed expectations in the last two reporting
periods. The year-to-date trend in the numbers remains undoubtedly negative. This adds to the perception
of a still weak jobs market, a crucial pillar of the recovery. Jobs equate to income which then equates to
spending. The number of jobs held or created is held to be directly correlated with consumer spending,
which contributes a significant proportion to the national and domestic output. This series comes two days
ahead of a similar report by the government. It's predictive accuracy is reflected in a similar result – the
number fell to 54k from the 161k forecast, which, by the way, is already lower than the 262k actual (revised)
figure for May 2011. Next release will be on June 29th (for ADP) and July 1st (for the government.)
• Manufacturing Purchasing Managers' Index came in below forecast, which already anticipated slower
numbers. It has been falling since topping at 61.4 in March 2011. Meanwhile, the Non-Manufacturing
PMI turned in the only positive number, rising marginally to 54.6 from 52.8 last month and bettering a 53.8
forecast.
• Weekly Jobless Claims further strengthened the argument of a still weak labor market, exceeding
forecasts which saw a slight improvement from the prior week's numbers. The result, however, still came in
better than the preceding week's total. While this many indicate that fewer people are losing their jobs, or
at least filing for unemployment insurance, there is no evidence that hiring has picked up – as may be
gleaned from the non-farm employment change mentioned earlier. Next on Thursday, June 9.
• RELEASES THIS WEEK:
• It will be a relatively silent week with data due only on Thursday (Unemployment claims and US Trade
Balance.) The former is expected to add another 2,000 to an annual pace of 424,000 while the latter is
anticipated to widen to a deficit of US$48.6B from -US$48.2B.
• On Wednesday afternoon (Manila time) Federal Reserve Chairman Ben Bernanke is due to speak at the
International Monetary Conference on the US economic outlook. Markets will be tuning in to the
Chairman's words for hints, particularly on interest rates which remain near zero.

itsDISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR CO MPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
DAILY Report Page 1 of 2
ACCORD CAPITAL EQUITIES CORPORATION
GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
MARKET NOTES_Week 23_TD109_June 6, 2011_Monday
source: www.pse.com.ph

OTHERS: LOCAL

• BRANCHING RESTRICTIONS LIFTED IN 8 LGUS

• The BSP has approved a two-phase lifting of the branching restrictions on the remaining eight (8) Metro
Manila areas six years after the partial easing of the moratorium in 2005. Second-tier private domestically
incorporated U/KBs and TB's (those with less than 200 branches in the “restricted area” as of end-2010, will
have until June 30, 2014 to apply for and establish branches in the covered jurisdictions of Makati,
Mandaluyong, Manila, Paranaque, Pasay, Pasig, Quezon City and San Juan. Phase 2 begins immediately
after allowing branching in said areas among all, except for rural and cooperative, banks.

• NEDA SETS DEADLINE FOR PIP 2011-2016

• The NEDA will sit on June 21, 2011 to discuss, finalize and approve government agencies' Public
Investments Program, in line with the goals, outcomes and outputs spelled out in the 2011-2016 Philippine
Development Plan (PDP.) Five priority areas have been identified in the formulations: (1) Anti-Corruption,
Transparent, Accountable and Participatory Governance; (2) Poverty Reduction and Empowerment of the
Poor and Vulnerable; (3) Rapid, Inclusive, and Sustained Economic Growth; (4) Just and Lasting Peace and
the Rule of Law; and (5) Integrity of the Environment and Climate Change Mitigation and Adaptation. Note
that in the most recent BSP Business Expectations Survey, the government's perceived slow implementation
of its PPP schemes and lack of direction were cited as among the factors contributing to a decline in the
outlook numbers, both for the current quarter and the next quarter. Nevertheless, optimism remains.

CABINET SHUFFLE
• With the lifting of the election ban in the horizon, market watchers are closely monitoring movements in
President Aquino's Cabinet. On top of the list is losing Vice-Presidental running-mate Manuel A. Roxas II, a
shoo-in for a post although the guessing game remains on what Department Mr. Palengke will eventually
land in. The interim appointment of Jessie Robredo to the DILG early in Mr. Aquino's term has spawned
speculations the seat was just being kept warm for Mr. Roxas. On the other hand, the recent resignation of
Secretary Ping de Jesus from the DOTC has raised the specter of a Roxas-led agency. Furthermore, a recent
statement from the President himself, on his personal but general assessment of his governance team keeps
the nation on edge as to “who's in, and who's out.”

• MAY INFLATION DUE ON TUESDAY

• Consumer prices have been on the rise through April and May is not seen to be divert from this trend,
Pushed by higher world crude oil and commodity prices, and the increased spending as the 2011-2012
Academic year approached, May inflation is seen to have remained elevated, following a 4.5% rise in the
prior month. The high-end of government's full year target is already in danger of being breached,
heightening pressures on the BSP to tweak interest rates higher. It has already adjusted the target rates by
an aggregate of 50 basis points in the last three meetings to 4.5% and 6.5%, for overnight borrowing and
lending, respectively. The next policy review is set for the middle of the month, June 16. On the other hand,
the 4.9% GDP pace in Q1 may keep the money regulators' hands partially tied, balancing the need to rein in
prices without compromising growth.

itsDISCLAIMER: THE MATERIAL CONTAINED IN THIS PUBLICATION IS FOR INFORMATION PURPOSES ONLY. IT IS NOT TO BE REPRODUCED OR COPIED OR MADE
AVAILABLE TO OTHERS. UNDER NO CIRCUMSTANCES IS IT TO BE CONSIDERED AS AN OFFER TO SELL OR A SOLICITATION TO BUY ANY SECURITY. WHILE THE
INFORMATION HEREIN IS FROM SOURCES WE BELIEVE RELIABLE, WE DO NOT REPRESENT THAT IT IS ACCURATE OR CO MPLETE AND IT SHOULD NOT BE RELIED UPON
AS SUCH. IN ADDITION, WE SHALL NOT BE RESPONSIBLE FOR AMENDING, CORRECTING OR UPDATING ANY INFORMATION OR OPINIONS CONTAINED HEREIN. SOME OF
THE VIEWS EXPRESSED IN THIS REPORT ARE NOT NECESSARILY OPINIONS OF ACCORD CAPITAL EQUITIES CORPORATION ON THE CREDIT-WORTHINESS OR
INVESTMENT PROFILE OF THE COMPANY OR THE INDUSTRIES MENTIONED.
DAILY Report Page 2 of 2