Rates & Bonds 2 MIN READ

Peso GS Weekly: Bond yields may trek higher

Investors are expected to demand higher yields in future bond auctions by the Bureau of the Treasury (BTr). With inflation still at record highs, the central bank has hinted at more rate hikes. We have four top picks you can consider.

January 10, 2023By Government Securities Trading Department

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The peso government securities (GS) market welcomed the year with better selling interest as the demand for bonds grew stronger and investors continued to track the move higher in US Treasury yields.

In addition, dealers and traders trimmed risk positions in peso GS as they await better entry levels from the upcoming bond issuances by the Bureau of the Treasury (BTr) slated for this month.

The 7-year auction for Fixed Rate Treasury Note (FXTN) 7-68 garnered strong interest from market participants and was awarded at an average of 6.796%, or close to where it was trading in the secondary market prior to the auction.

As the auction was over two times oversubscribed, the BTr then decided to open the TAP (Tender at Premium) facility, a tool that can help manage money supply. Interest, however, failed to follow-through, with only PHP 2.675-billion tenders, out of the PHP 5-billion offering, being received and accepted.

Meanwhile, the December inflation data showed a slightly slower-than-expected 8.1% vs the 8.2% consensus estimate. However, it still failed to boost risk-taking appetite given that inflation was still the hig

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Rates & Bonds 2 MIN READ

What to do with your bond investments in 2023

Positioning your portfolio will remain challenging for many high-net-worth investors in 2023. We recommend staying nimble to take advantage of opportunities amid the volatility.

January 9, 2023By Ruben Zamora

This article is exclusive to Metrobank preferred clients.

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Coming from a rather tumultuous 2022—with inflation reaching four-decade highs, financial markets plunging, and benchmark interest rates soaring—a well-thought-out investment strategy can help you manage your risk and maximize returns.

While there are indeed many ways to construct your fixed income portfolios, we believe that staying nimble and opportunistic throughout the year is the best way to preserve and grow your wealth.

We believe 2023 will be a strong year for bonds. We recommend gradually building a portfolio favoring longer-tenor peso bonds.

For the first half of the year, we see good entry levels for 10-year peso government securities at yields of 7.125% or higher, as we expect bond supply to peak in the early part of the year and therefore add upward pressure on bond yields. Why? Because as more new bonds are issued, buyers will demand higher yields.

In contrast, we expect bond supply to diminish by the second half, similar to the past two years, while liquidity in the system remains high compared to historical levels, which could potentially drive yields lower.

Meanwhile, inflation is expected to stay elevated relative to the g

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Equities 4 MIN READ

Stock Market Weekly: Robust US labor market, easing recession fears influence PSEi

With some good news from the US, owing to the improving labor market and reduced fears of recession, sideways trading with an upward bias can be expected this week.

January 9, 2023By First Metro Securities Research


The Philippine Stock Exchange index (PSEi) ended 1.55% higher week-on-week to 6,667.97 (+101.58 points). The market started the year in the green as investors cheered the higher manufacturing Purchasing Mangers’ Index (PMI) at 53.1 in December 2022 (November 2022: 52.7) and the slightly cooler December 2022 local inflation print at 8.1% (BSP estimate: 7.8%-8.6%; actual for November 2022: 8.0%).

However, gains were capped as investors took profits following strong US and local jobs data, which fueled speculation of continued hawkish sentiment from the US Fed and the Bangko Sentral ng Pilipinas (BSP).

Top index performers were Monde Nissin (MONDE) (+11.6%), Converge (CNVRG) (+10.2%), and JG Summit (JGS) (+6.9%), while index laggards were Alliance Global (AGI) (-4.2%), Globe (GLO) (-2.5%), and International Container Terminal Services (ICT) (-2.0%). The index breadth was positive with 20 gainers versus 10 losers. The average daily turnover value was PHP 5.3 billion. Foreigners were net buyers by PHP 1.1 billion.


We expect the PSEi to trade sideways with an upward bias, following the rally in the US markets last week after data showed a robust labor market and easing recession fears.

Investors will also be monitoring the upcoming US Consumer Price Index (CPI) report on Thursday, January 12, 2023, which is projected to come in slightly lower at 6.6% and is considered a key factor in determining the US Fed’s next course of action.

Furthermore, domestic fuel price rollbacks may partly lift investor sentiment next week, as gasoline prices are expected to fall by PHP 0.50 to PHP 0.60 per liter, diesel prices by PHP 2.40 to PHP 2.60 per liter, and kerosene prices to decline by PHP 1.50 per liter. However, pending petitions for transport fare hikes, as well as the recent tranche of wage hike adjustments (in Cordillera, Cagayan Valley, Central Luzon, Eastern Visayas, and Davao) are likely to offset some downside pressures.



After its recent breakout, MREIT is now consolidating around PHP 13.40 to PHP 14.50, trading above its key moving averages (MA 20, 50, and 100). The technical indicator MACD also confirms the bullish momentum.

MREIT continues to provide steady yield and value-accretive growth hinged on: (i) high occupancy rate maintained at 95% as of end-Sep 2022; (ii) embedded rental escalation rates of 5-10% (5% for offices and 10% retail); (iii) long-term office leases with an overall Weighted Average Lease Expiry of 3.7 years as of Mar-2022; and (iv) a quality and resilient tenant base comprised of 75% BPOs.

MREIT has demonstrated its inorganic growth ability through two tranches of asset acquisitions, growing its gross leasable area (GLA) by 1.5x a year post-IPO. Accumulating once MREIT touches PHP 13.50 is advisable. Set stop limit orders below PHP 12.90. Take profit at around PHP 15.79/16.00.

D&L Industries, Inc. (DNL) — BUY ON PULLBACKS

DNL is on track to hit the measured price target of PHP 8.50 to PHP 8.80 that we mentioned from our previous report. As for company guidance, the management is optimistic that full year 2023 earnings will widely surpass the record net income booked in full year 18 (PHP 3.2 billion) amid the economic reopening and the expected launch of the company’s Batangas expansion plants in 2Q 2023, allowing DNL to ramp up its export business, which currently accounts for 33% of total revenues.

The reopening of the Chinese economy is also seen to boost exports to China which account for 5% of DNL’s overseas sales. Those who bought from our buying level of PHP 7.50 should continue to hold. Meanwhile, those looking to accumulate can buy DNL once the stock pulls back to PHP 8.00. Set stop limit orders below PHP 7.50 and take profits at around PHP 8.80/PHP 9.00.

Bloomberry Resorts Corp. (BLOOM) — BUY ON PULLBACKS

Though the stock broke above its two-year resistance level of PHP 8.00 and is now trading at overbought levels, it is optimal to wait for the pullback before accumulating. Meanwhile, those with exposure and who bought from our buying level can take some profits.

As for the fundamental outlook, BLOOM’s earnings performance is expected to sustain its strong recovery as it continues to benefit from the policy that allows vaccinated foreigners to enter the Philippines as well as the reopening of borders across Asia.

Similarly, the Philippine government’s stance of not implementing lockdowns moving forward allows BLOOM to resume their activities to full capacity, which will further improve the company’s mass table and electronic gaming machine volumes. Those who bought from our buying level of PHP 7.20 can begin taking profits. Meanwhile, those looking to accumulate can buy BLOOM once the stock pulls back to PHP 8.00. Set stop limit orders below PHP 7.60 and take profits at around PHP 9.00.


Resistance: 6,800
Support: 6,400 / 6,600

The PSEi broke above 6,600. The technical indicator MACD confirms the bullish momentum, with the MACD line above both the trading and signal lines. However, the 6,800 level once again acted as a resistance with the market quickly pulling back to the 6,600 level. On a positive note, the sharp correction last Friday provides long-term investors enough room to accumulate.


Gradually accumulate at current levels. Buy more once the PSEi breaks above 6,800. Set stop limit orders below 6,300.


Tuesday, January 10, 2023
– Philippine exports Year-on-Year for November 2022 (consensus estimate: 11.5%; actual for October 2022: 20.0%)
– Philippine imports Year-on-Year for November 2022 (consensus estimate: 3.1%; actual for October 2022: 7.5%)

Thursday, January 12, 2023
– US CPI YoY for December 2022 (consensus estimate: 6.6%; actual for November 2022: 7.1%)

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Economy 2 MIN READ

Will Fitch downgrade the Philippines?

A lot of factors contribute to a country’s credit rating, which is given by credit rating agencies such as Fitch Ratings. It appears that a positive or negative outlook may not necessarily lead to an upgrade or downgrade.

January 4, 2023By Anna Cudia

This article is exclusive to Metrobank preferred clients.

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Over a year into the pandemic, in July 2021, Fitch Ratings revised its outlook for the Philippines from stable to negative, citing heightened economic, fiscal, and political risks.

With regard to economic risks, Fitch mentioned the setback faced by the country in terms of its slow recovery given the highly transmissible COVID-19 variants as well as the stringent mobility restrictions.

As for fiscal risks, it highlighted the pandemic-induced weaker fiscal finances, both in absolute terms and against peers, as well as the 2018 Supreme Court ruling requiring higher revenue transfers from the central to local governments.

Political risks also influenced its view, pointing out uncertainties about the 2022 presidential elections as well as other factors such as political stability, rule of law, human rights, political freedom, etc.

Outlook still negative

A lot has changed since Fitch released that negative outlook – mobility is back and has even outpaced pre-pandemic levels, government revenues started to recover, and the 2022 presidential elections proved to be peaceful.

However, in October 2022, Fitch kept the Philippines

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Equities 4 MIN READ

Stock Market Weekly: Sideways trading, cautiousness welcome 2023

The exuberance of the holidays won’t necessarily spread to the market in its opening week as cautiousness remains as people continue to be worried about a recession and the spread of COVID outside China.

January 3, 2023By First Metro Securities Research


Last week, the Philippine Stock Exchange index (PSEi) marginally inched higher by 0.38% week-on-week to close at 6,566.39 (+25.36 points). The market saw thin trade volumes last week amid the shortened trading week and holiday festivities.

The index managed to edge higher in the first two trading days amid window dressing activities but closed flat on Thursday despite the broad sell-off in US markets. Investors also digested Bangko Sentral ng Pilipinas’ (BSP) headline inflation forecast of 7.8% to 8.6% for December 2022 due to higher electricity rates and elevated prices of agricultural goods.

Top index performers were Converge (CNVRG) (+13.4%), PLDT (TEL) (+5.4%), and Meralco (MER) (+4.1%), while index laggards were Megaworld (MEG) (-6.1%), Metrobank (MBT) (-4.1%), and SM Investments (SM) (-2.8%). The index breadth was neutral with 15 gainers versus 15 losers. The average daily turnover value was PHP 4.1 billion. Foreigners were net buyers by PHP 39.8 million.


We expect the market to trade sideways in the opening week of 2023 as investors are likely to remain cautious with the ongoing fears of recession and the spread of COVID-19 cases outside of China. Investors will also be monitoring the following:

(i) developments on the ongoing Philippine airspace outage over the weekend which left thousands of passengers affected amid peak travel season, and

(ii) price hikes on oil products, with gasoline set to increase by PHP 2.9/liter, diesel by PHP 2.10/liter, and kerosene by PHP 3.05/liter today, January 3, 2023.

In addition, the results of key data points such as the Purchasing Managers Index (PMI) and inflation will likely influence the tone of the first trading week of the year.


Citicore Energy REIT Corp. (CREIT) — BUY

Its recent pullback to its support level of PHP 2.19 offers opportunity for aggressive short-term traders/ bargain hunters to take advantage of the stock to ride the probable bounce. On fundamentals, as mentioned in our company report, CREIT offers investors a niche exposure to the country’s growing renewable energy sector with a risk-to-reward profile similar to the REIT asset class.

Compared to listed peers, CREIT’s metrics are superior – with a weighted average lease expiry (WALE) of 20.8 years, 1:1 asset-to-tenant ratio, and 100% occupancy. Moreover, CREIT’s unique revenue model shields the company from any downside risks owing to potential operational losses from tenants’ solar power plants.

Hence, CREIT can provide guaranteed revenues and dividends to unitholders like bonds. Therefore, we view CREIT as a beneficiary of the central bank’s pivot and investors can lock-in higher yields at current prices. Accumulating CREIT at current levels is advisable. Set stop limit orders below PHP 2.08. Take profit at around PHP 2.50 to PHP 2.60.


RASLAG Corp.’s (ASLAG) share price hit all-time lows this month after trading to as low as PHP 1.56 last December 19, 2022. ASLAG’s share price fell below its trading range, suggesting that ASLAG is entering a new downtrend. The measured price target after ASLAG broke down is from PHP 1.40 to PHP 1.43. According to Technical Insight, our automated chart pattern recognition program, lightening positions once ASLAG breaks below PHP 1.60 is advisable. Next support levels are at PHP 1.40/PHP 1.20.


Now Corp.’s (NOW) share price has rallied by 59.2% last December on news that the company secured a grant funding from the United States Trade and Development Agency (USTDA) for technical assistance to advance critical digital infrastructure projects in the Philippines. After the sharp rise, it is now showing signs of peaking. While NOW is on a short-term uptrend, there is a high probability that the counter will pull back, especially given the overbought readings. Taking profit once NOW breaks below ~PHP 1.90 is advisable. Next support levels are at PHP 1.60/PHP 1.50.


Resistance: 6,600

Support: 6,400

After the retest on the 100-day moving average price (MA) / 6,400 level, the PSEi quickly rebounded and is now settling above the 200-day MA / ~6,529. We believe that a break above 6,600 would propel the market to retest 6,800.


Look to accumulate once the market breaks above the 6,600 level. Set stop limit orders below 6,300.


Tuesday, January 3, 2023
– PH manufacturing PMI for December 2022 (November 2022: 52.7)
– US manufacturing PMI for December 2022 (consensus estimate is 46.2; actual for November 2022: 46.2)

Wednesday, January 4, 2023
– PH inflation for December 2022 (BSP estimate: 7.8%-8.6%; actual for November 2022: 8.0%)

Friday, January 6, 2023
– US jobs report for December 2022 (consensus estimate is 200,000; actual for November 2022: 263,000)

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