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THE MORNING VIEW



News Briefs
October 27, 2020
 
Local Key Events
  • The Bangko Sentral ng Pilipinas (BSP) reported that the country’s balance of payments (BoP) position increased from $38 million in September 2019 to $2.104 billion in September 2020, the highest since May’s $2.431 billion surplus. The current BoP surplus was supported primarily by the surge in the national government’s foreign borrowings by 85% to Php509.69 billion as of August year to date, and lower merchandise trade deficit from $27.071 billion to $14.61 billion deficit as of August year-to-date.  
  • Emperador Inc. (PSE Ticker: EMP) grew its net income by 11% year-to-date to Php5.9 billion, this was attributed to the robust sales of its brandy and whisky products in international markets. EMP stated that their overseas expansion enhanced company earnings amid the COVID-19 distress. The Fundador brand recorded a 200% sales growth in Canada, a 185% sales growth in the United Kingdom, a 23% sales growth in North America, a 15% sales growth in Italy, and an 8% sales growth in Mexico for the nine-month period.
Local Indices
  • Local equities were flat. Profit taking was seen in early trading with the PSEi reaching a low of 6,453.20. In the last minutes of trading, investors quickly picked up stocks. The PSEI closed at 6,491.19 (+0.11% DoD).
  • Local fixed income yields declined on average as the government awarded Php20 billion Treasury bills yesterday. This was four times oversubscribed. National Treasurer De Leon said that the full award with hefty submission and with rates aligned with secondary levels demonstrated sustained liquidity onshore. On average, yields fell 0.07 bps DoD, led by the belly which went down 0.56 bps DoD.
  • The Philippine peso strengthened as foreign investors regained confidence in the recovering economy. Net foreign buying was $91.83mn. The USD/PHP pair closed at 48.395 (-0.18% DoD). 
US and Europe Indices
  • US equities fell driven by the fear of COVID-19 resurgence and with the  uncertainty over reaching a fiscal policy package before elections. Despite White House increasing its proposal to nearly $1.9 trillion, with the bill close to being passed, the House Democrats still demanded an additional $500 billion aid. The DJIA closed at 27,685.38 (-2.29% DoD) while the S&P 500 closed at 3,400.97 (-1.86% DoD).
  • European equities declined amid new restriction protocols imposed by Italy and Spain to limit the growing number of COVID-19 cases. Fresh protocols include closing of restaurants by 6pm and shutting down of gyms and cinemas. The MSCI Europe closed at 118.02 (-1.73% DoD).
  • US Treasury yields fell amid the fast-rising COVID-19 case count and waning timely US stimulus hopes. On average, US Treasury yields decreased by 2.27 DoD, with the 2Y ending at 0.1494% (-0.6 bps) and the 10Y closing at 0.8010% (-4.19 bps).
  • The US dollar strengthened as investors fled to safe-haven assets following slow progress on the stimulus bill as well as the rising COVID-19 cases in the US and Europe. The DXY closed at 93.0450 (+0.299% DoD).
Asia Pacific Indices
  • Asian equities declined as investors remained pessimistic that US lawmakers will pass a new stimulus package before the US presidential election next week. Rising COVID-19 cases in the US also affected investor sentiment. The MSCI APxJ closed at 583.48 (-0.26% DoD).
Sources: BPI, Business World, PDI, Phil Star, Manila Bulletin, Reuters, Briefing, Bloomberg, CNN, Dow Jones, The Wall Street Journal, CNBC , Market Watch
 

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