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 155-156_August 10-11, 2011
Market Statistics for August 10, 2011, Tuesday INDEX PSEI ALL SHARES FINANCIAL INDUSTRIAL HOLDING FIRMS PROPERTY SERVICE MINING & OIL VOLUME VALUE (in php) ADL LEVEL

CHANGE%
3.20% 2.82% 3.79% 2.85% 3.00% 4.39% 1.25% 6.26%
17

4,290.14 2,988.08 995.01 7,082.56 3,372.16 1,489.58 1,491.74 23,362.93

149

WO complementary perspectives poses a plausible explanation for the market's strong rebound off Tuesday's rout: the technical view and the fundamental outlook. Whichever school of thought one adheres to, however, there is a common thread that runs through and joins both: the three-day slide has brought stocks prices to bargain-levels that is, if they haven't been so in the first place even before this fears mounted. The PSEI rallied 133.11 points to close the session just tipping a resistance line at 4,290.14, erasing three-fourths of the prior day's slide and pushing the measure back into positive year-to-date territory. The rebound reverberated across all sectors with the Service group posting the least advance at +1.25% while Mining and Oil counters cumulated a 6.26% rise. Technical Perspective:

7,834,979,622 7,616,765,329.00 17

Chartist would by an large define today's recovery as leaning towards a technical bounce. Whether it is of a dead-cat type is debatable. What is clear is that a rebound was a reasonable expectation after the measure dropped -393.5 points or -8.65% in six days, a big part of which (nearly 90%) were registered in the last three. At that point, both RSI(14) and STO(14,3,3) had nose-dived into oversold territory and an inverse move was imminent. From yet another perspective, Tuesday's sudden slump created a gap between 4,320.58 and 4,208.55. Technically, sooner or later this gap has to be closed, and Wednesday may be seen as an initial attempt to do just that. (figure 1) Market breadth was widely positive, 149-17, reversing Tuesday's -156. Nevertheless, the +90 spread covers just a little over onefifth of the three-day negative gap, suggesting the force behind today's massive points rebound lacked substantial support from the broad market. The ADL remains under last week's closing level, which in turn was lower than the preceding period. This internal measure's bias continue to be negative. (figure 2) Value turnover came in slightly thinner than Tuesday's total at php7.46 billion (net of block sales), but nevertheless is still more than 1.5x the year-to-date daily average which has risen to php4.715 billion. Shares turnover likewise stayed at 2.4x the same period average, even as the day's total fell -3.2% less than the previous session. Foreigners have kept on the sell side in the last five (5) sessions, aggregating net sales amounting to php4.477 billion. The sudden change in their trade direction is clearly observed at the tail-end of the chart (figure 3). Fundamental perspective Fundamentalists on the other hand argue that the consecutive days the market dropped has pulled stock prices below fair values, in light of the positive numbers most reporting entities have posted through the first six months of the year. In a prior report, we have highlighted that eleven of the 13 earnings reports have come in positively with most registering double-digit year-on-year increases. From a valuation standpoint, the market PE has dropped to 15.1x in line with historical averages. Using this as a screen, we find six (6) of the PSEI components under 10x earnings, and another seven (7) which are under the PSEI level. (table 1)
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 3

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 155-156_August 10-11, 2011
In addition to these, the broad economy's numbers remain encouraging. Inflation for July, using the new base (2006) stood at 4.6%, the similar pace in the immediately preceding month. The country's international reserves has reached over US$70 billion, providing a safe cushion.

figure 1: six-day slump

figure 2: Advance Decline Line (A/D Line)

ADL 2011
200

-1000

-1200

figure 3: daily average net foreign trades

400.00

Table 1: PE Bargains (psei = 15.06) PE < 10x FLI RLC ABS AP AGI AEV 9.21 9.23 9.40 9.74 0.00 9.95 10 < PE < PSEI MEG TEL JGS MWC GLO DMC URC 10.10 10.83 11.26 11.94 12.21 13.33 13.66

s n o l i M

300.00 200.00 100.00 3-Jan (100.00) (200.00) (300.00) (400.00) 3-Feb 3-Mar 3-Apr 3-May 3-Jun 3-Jul 3-Aug

MOVING FORWARD: The rally in US stocks was a welcome respite from the pervasive pessimism that has clouded over the market since late last week. But, as we mentioned at the top, there are those who hold it to be no more than a dead cat. Sustaining the rebound, in the midst of a still unchange d and uncertain environment, will be a challenge. In early trades, the Dow has already dropped over 400 points, and there are no indications at this time that the day's trend will reverse in the afternoon. If this should be the case, investors will more likely keep their hands in their pockets, while those who have kept faith in stocks may begin to lose it. Negative sentiments will drive trading on the penultimate session of the week.

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 3

3 n a J 0 1 n a J 7 1 n a J 4 2 n a J 1 3 n a J 7 b e F 4 1 b e F 1 2 b e F 8 2 b e F 7 r a M 4 1 r a M 1 2 r a M 8 2 r a M 4 r p A 1 r p A 8 1 r p A 5 2 r p A 2 y a M 9 y a M 6 1 y a M 3 2 y a M 0 3 y a M 6 n u J 3 1 n u J 0 2 n u J 7 2 n u J 4 l u J 1 l u J 8 1 l u J 5 2 l u J 1 g u A 8 g u A
0 -200 -400

-480 PSEI: >4,500

-600

-800

-686 Aug 5 PSE: 4,437.55 -926 June 14 PSE: 4,140.27

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 155-156_August 10-11, 2011
Yet, having said that, we maintain our own faith in the domestic fundamentals and corporate earnings. Drops of a big magnitude should be an opportunity to selectively pick up bargain counters with a good fundamental standing. Speculative play may impress short term monies but over-all risks remaines elevated. It is a time to be both prudent and wise. The fundamentals generally point to a decent picture, admittedly not as rosy as it was at the beginning of the year, while the technicals and internals show a still weak market unable to support and sustain an upside over the medium-term. The differences in opinion as to where the market will head over the short and medium-term arises from contrasting calculations of how the fiscal crisis in both Europe and the US, which have the potential to send global economies into yet another tailspin into a recession. The long-term however, remains promising. (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 3 of 3