MARKET BALANCE: DAILY ACCORD CAPITAL EQUITIES CORPORATION

EC-058 GF East Tower, PSE Center, Exchange Road, Ortigas Center Pasig City, PHILIPPINES, +(632)687-5071 TD 154-155_August 9-10, 2011
HIGHLIGHTS: PSEI in worst single-day slump since 2008 Global markets tumble to bear territory China inflation at fastest pace in three years; further tightening seen Futures indexes suggest no let-up First- and second-line counters drop to bargain levels

nvestors found little or no reason to shift to a bargain hunting stance as the events of the day failed to ease concerns over a second recession. The Dow pulled under 11,000 for the first time since October 2010, consumer prices in China continued to accelerate and early futures indices point to a further rout tonight. There was no mistaking which direction trades were heading right off the opening bell, as it gapped down by -122 points or -2.83% to 4,208.55. By mid-session, 80 points have been added to the losses, pulling the measure to the 4,120-4,130 support range. The PSEI has not lost more than 200-points since October 27, 2008 when it shed 239.66 points or 12.27% off the previous day's close. This was soon after the Lehman Brother's bankcruptcy the preceding month. The only other ocassion it fell by that magnitude was in February 27, 2007, as the first signs of the 2008 recession emerged. The picture is not much different when viewed percentage-wise. At mid-day's -4.8%, this is the market's 8 th worst day in this decade. All, exccept one, we registered in the 2007-2008 market, ranging between -5.0% and almost -13%. All sectors are posting huge losses as well, ranging from -4.3% to over -5.0%, an hour before the close. Red spilled all over the Asia Pacific region with China's 6.5% inflation for July adding to an already widepsread pessimism. This is the fastest pace recorded in three years, exceeding estimates by 10 basis points. Bets on another round of monetary tightening by Chinese authorities have increased, a move that could futher dampen demand and growth. A growing number of markets across the globe have tumbled past the -20% retreat line marking a bear market.

INDEX PSEI ALL SHARES FINANCIAL INDUSTRIAL HOLDING FIRMS PROPERTY SERVICE MINING & OIL VOLUME VALUE (in php) ADL

LEVEL

CHANGE%
-4.07% -3.63% -3.69% -4.01% -4.03% -5.07% -4.83% -3.91%
174 13

4,154.84 2,885.59 957.39 6,858.49 3,284.27 1,420.43 1,472.01 21,857.48

10

7,106,410,560 6,476,400,339.00

** numbers as of 1135H
MOVING FORWARD

The index has breezed past previously strong and valid support lines where in the recent past, investors took as a signal to rush back in. There has been, nor do we think there will be in the short-run, an aggressive plough back of money into equities, save for the usual technical rebounds and selective bargain hunting. While it is true that the magnitude of the two-session drop this week is an inviting prospect for bargain hunting, at this point, even contrarians may take a while before throwing money into what is beginning to look like a bottomless pit. The downward momentum is still heavily evident and, as we have consistently held, never catch a falling dagger. We are inclined to keep close tabs on changes in volume and value flow as the index approaches yet another support mark. Stock futures indexes are suggesting markets in Europe and the US may sustain the present downtrend. No one has yet come out with a plausible opinion as to how far this spiral will take us. A drop below the 10,000-line for the Dow cannot be discounted, given the present circumstances and such an event will further fan the fire of pessimism, raise risk aversion, make equities less attractive and, ironically, despite downgrades and all, government issues as safer havens not to mention gold and other precious metals. The only other option left is to stay liquid and hold cash. It may take a while before local investors will manage to shake off its own version of recession fears and keep focus on a still relatively
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. Market Balance:DAILY Page 1 of 2

MARKET BALANCE: DAILY ACCORD CAPITAL EQUITIES CORPORATION

EC-058 GF East Tower, PSE Center, Exchange Road, Ortigas Center Pasig City, PHILIPPINES, +(632)687-5071 TD 154-155_August 9-10, 2011
rosy picture of the local economy, or at the very least, corporate earnings. Back in 2009, when the broad economy struggled to keep its head above water amid the then recession, stocks posted a full-year returnn of 63%, setting a record in fact. This was founded on strong numbers from the corporate front. At least through the first semester of the year, a similar corporate backdrop appears to develop while the broad fundamentals prove resilient still. Yet, investors' response has not been duplicated. Having said that, it is understandable why investors are challenged to find reason to be optimistic when everything else external is negative. In this light, while we recognize that a good number of our blue chip and second line companies have fallen to bargain levels, prudence dictates we wait for a discernible shift in the undercurrents before we move back in. And we believe that this will be coming in sooner than later. In fact, the action of the market, which, half-an-hour before the close has managed to marginally shave off some of the losses, is proof that bargain hunters are still on the prowl. (jc)

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. Market Balance:DAILY Page 2 of 2