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First Metro Investment Releases May Philippines 'Market Call'


June 26, 2012 - Manila

First Metro Investment Corp (FMIC) and University of Asia and the Pacific (UA&P) have published the May issue of "The Market Call, Capital Markets Research". The report, which covers the Philippines' Macroeconomy, Fixed Income Securities, Equity Markets and Economic Indicators, includes the following highlights:

"Macro-Economy: PH Shrugs Off Eurozone Crisis, Revs up to Fast Start -

The world economic slowdown notwithstanding, the economic performance of the country was off to a fast start.After all, first quarter Gross Domestic Product (GDP) growth was at 6.4%, second highest in Asia, tax revenues soared double-digit in Q1 and April when it posted the largest budget surplus since 2007, inflation up
by a modest 3.0% (year-on-year), and a credit rating improvement by Moody's from stable to positive.

The way-beyond-expectations GDP growth was underpinned by surging infrastructure expenditures and solid consumer spending. Besides, this occurred despite slow money growth, which in March moved up by less than 6%. The main bad news was the -1.2% slide in exports for the same month. On the whole, we see Q2 and the rest of the year to continue with the robust growth, as the government with a lot of money to spend and a slightlyweakening peso would enable the economy to ride the momentum.

"Fixed Income Securities: The Bull's Indigestion -

Underlying economic fundamentals have never been better for interest rates and bond investments yet a widely expected decline yields cannot seem to materialize.
Inflation remains investor friendly hovering in the lower range of government targets, but investors have expressed wariness that the price level measure would
be moving higher. Generally, the market appears to be anxious with their existing bond positions indicating indigestion among the big players. The jumbo sized auction of retail treasury bonds early in the year may be taking their toll. With the yields in the long end bouncing up from their historical lows,many institutional investors are looking to bank in their profits while the opportunity still exists.

A P2.9 billion year to date fiscal surplus puts the National Government (NG) in a very comfortable cash position, giving it flexibility to acceptor reject tenders that would raise borrowing costs significantly. This was demonstrated in rejections and partial awards in all four of the scheduled auctions this month.

"Equity Markets: Euro-zone Woes Pull Down Share Prices -

For the 3rd consecutive year, May continued to the bete noire month for bullish investors in the Philippine equities market. Uncertainty in the euro-zone (Greek exit and pain in Spain) have put global risky assets on a slippery slope. Moving forward, we remain constructive on the Philippine equities medium- to long-term due
to our robust economic and earnings outlook for 2012. First quarter Gross Domestic Product (GDP) surprised at 6.4%. And out of the 30 companies listed in the PSEi, only 2 (or 6.67%) reported lower-than-expected first quarter earnings. However, in the near-term, we view high risks to equitiesas an asset class due to the potential of malaise in the euro-zone.

To download this full Market call, and all recent reports, please visit http://firstmetro.com.ph/publications_marketcalls.asp.

About First Metro Investment Corporation

Founded in 1972, First Metro Investment Corporation is the investment banking arm of Metropolitan Bank and Trust Co. (Metrobank) - the Philippines' largest financial conglomerate. With over 100 employees, First Metro provides investment banking services through its four strategic business units: Investment Banking, Treasury, Investment Advisory and Corporate Lending and the Regional Business Development Desk. First Metro holds the distinction of being the sole publicly listed investment house among the member institutions of the Investment House Association of the Philippines (IHAP) and has been ranked among the Top 11 Philippine Companies and among the Best ASEAN 100 Companies based on Relative Wealth Added Index by NY-Based management consulting firm, Stern Stewart & Co. In 2009, First Metro was awarded the Best Bond House in the Philippines by Finance Asia. In the last two years, it was also awarded the Best Bond House by The Asset Magazine of Hong Kong. For more information on First Metro, visit www.firstmetro.com.ph.

Source: First Metro Investment Corporation

Contact:

Anna Marie Tuprio
Corporate Planning & Affairs Department
Tel: +63-2-858-7951
E-mail: marie.tuprio@firstmetro.com.ph





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