ACCORD CAPITAL EQUITIES CORPORATION

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, 1605 (+632)687-5071 (trunk) MONTH REVIEW: JUNE

MARKET NOTES
TD 127_July 1, 2011_FRI

INVESTORS found enough optimism in the last two weeks to close out the month with a 1.1% gain, slimmest month-on-month upside since the 0.3% rise in December 2009 and the 1.6% posted in July last year. Trades were dampened and the index dragged lower by concerns over Greek debt in the first two weeks with the PSEi plunging to depths of nearly -3.0% in intraday lows. The first semester thus ended with a fairly decent 2.14% advance.
The market has generally traded within the 4,170-4,320 band since the first week of April with optimism tempered by slower numbers and increasing inflationary risks at home and the debt problems of both Europe and the US. On the daily charts, the index is meeting some resistance at the 4,290 levels, waiting for more fundamental bases to push the measure sustainably past the 4,300 mark. To date, upside incursions of the line have been welcomed by increased selling pressures. Nevertheless, the optimism of the last two weeks has kept the index above all exponential moving averages, with suggestions of a bull growing as the period considered is extended. The slope of the 150-pdEMA may have eased a bit but it remains positive which augurs well for the long-term outlook. The only concern raised at the end of June is that the market's stochastic is indicating overbought conditions at 84.59. Worse, it has just made a bearish crossover of the trigger line highlighting the growing indecision to push the index past the psychological 4,300line without a prior corrective action. Volume direction, as indicated by both the AccDist Line and On Balance Volume has shifted from an aggressive distributive phase to a more controlled accumulation stance. Average daily volume has stabilized at the php4.5 billion level while volume of trades has risen to its highest for the year at 2.85 billion shares per session. This has sent the average traded price lower for a second straight month off the php2.09 high at the end of April to php1.58. This suggests either an aggressive sell-off in smaller lot, higher priced issues, a shift in trades to lower priced, bigger lot counters or a combination of both. At the end of the day, this suggests that first and second liners have risen past their fundamental values after the first quarter, but has since returned to fairer values. The threats posed by external influences have dissuaded a more active return to blue chip and growth issues as the broad economic growth is placed at risk by inflation, higher interest rates and global growth risks. In terms of sectoral distribution (value), Holding Firms, which are more diversified in terms of revenue sources, have dislodged Industrial from its traditional top spot. Holding Firms, which include actively traded counters AEV and AGI, as well as blue chip AC, cornered one-fourth of the market's value pie through June. This is a marked improvement from its 17% piece in January. The shift reflects investors for an automatic diversification of their equity portfolio to balance out the risks across sectors. The industrial sector's share narrowed to a little over a fifth from over one-third of the total. All sectors got at least 10% of the pie indicating a mix of preference and defining the range of risk profiles of market investors.
6.000 5.000 4.000 3.000 2.000 1.000 JAN FEB AVG VOLUME MAR APR MAY AVG PRICE JUN

AVG VALUE

M&O SVC PRO HDG IND FIN 0.00%

JUN MAY APR MAR FEB JAN

5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00%

, DISCLAIMER: 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 COMPLETE 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. ACCORD CAPITAL MARKET NOTES Page 1 of 2

Fundamental valuations remain low with the PSEI trading at 15.15x trailing 12 month earnings. On this basis nearly half or 14 of the Main index components are relative fundamental bargains, spread across all sectors except Mining and Oil. Four of those in the list are even trading at below their respective book values.

SECTOR FIN IND

HDG

The presence of these depressed valuations, in the context of even slower growth expectations have kept investors hooked to equities, providing PRO long-term support despite the negative volatility offered by the uncertainties in major economies in Europe, as well as in the US, China and Japan. While the main concern in Europe, Japan and the US is how to SVC boost the economy from varying nature and degree of crisis, the question in China is how to prevent growth from overheating. The twist in the equation is that a slowing China economy, should the policy interventions prove effective, will affect the pace of growth in the other areas. China's sustained demand for goods has provided the needle of hope for global economies struggling from the ruins of the last recession.

STOCK MBT SECB FPH MWC URC AEV AC AGI SM RLC MEG FLI GLO ABS

LAST 70.00 100.00 59.20 18.64 40.80 42.00 319.00 10.94 534.50 12.00 1.99 1.17 894.00 40.50

PE (TTM) 1.02 5.78 .98 10.12 10.13 11.74 12.31 12.99 14.46 9.28 11.85 12.57 6.30 9.78

PRICE-TO-BOOK 0.22 1.58 0.40 2.05 2.11 3.53 2.11 1.24 1.89 1.24 0.97 0.72 2.49 1.83

Moving forward, the market will begin the second half of the year with an early eye on the next earnings cycle. The first quarter continued to be bullish to listed-firms bottom-line but the impact of the events that unfolded in the second quarter may have caused a dent on expectations. Nevertheless, we still expect incomes to grow, albeit at a slower pace. The onset of the Chinese ghost month in mid-Q3 (July 31 to August 28, with the Hungry Ghost Festival on the 14th of August) may dampen trades. Over-all, ceteris paribus, the market may continue to take a consolidation, range-bound path with a positive bias proffered by encouraging signs in the road towards a second bail-out for Greece and the eventual settlement of the US debt ceiling problem.

, DISCLAIMER: 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 COMPLETE 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. ACCORD CAPITAL MARKET NOTES Page 2 of 2