ACCORD CAPITAL EQUITIES CORPORATION

GF EC-058B East Tower, PSE Center, Exchange Road, Ortigas Center, Pasig City, PHILIPPINES 1605 (632)687-5071 (trunk)
Outlook for Week 9_February 28 to March 4, 2011_TD 041 to 045
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ANALYSIS & OUTLOOK:

Last week, we saw the main index fall below our 3,780
support line, but managing to hold the 3,730-mark at
the end, even as it reached a low of 3,705.58. The
-3.0 percent drop completely overturned the preceding
week's 2.7 percent gains, pulling the index to levels
last seen in September 2010.

There is no mistaking that the market remains in a

defined downtrend. Price-wise, there is very little
hint of an impending reversal of this action. Even
the underlying technical indicators we follow, ADL,
AccDist Line, STO(10,6,6) and MACD(12,29,6) supports
the bearish outlook for next week.

The market's situation and investors' apparent

quandary is accurately captured by a remark by
Madelynn Matlock of Huntington Asset Advisors as quoted in a www.bloomberg.com report, “Valuation isn't bad and
the economy is doing well.”
40.00
This observation is evident in the PE of the market
and its sub-sectors over the first eight weeks of the
MINING & OIL SECTOR year. The Mining & Oil and Property is trading at
over 30x earnings, consistently at the 33x area while
Property stocks are valued at roughly 18x, a
30.00
significant slide from its 21.5x PE after the first
week. The other sectors are tightly woven at between
ALL SHARES 12x to 14x with the PSE composite at 12.7x. All
registers lower than their first week levels.
20.00
Furthermore, only the Holding Firms and Service
PROPERTY
sectors have below-PSEi P.E.s at 11.7x and 12.0x,
respectively. The market's historical average is
around 15-16x with the 2007 bull reaching the 17x to
10.00 21x range.

In addition to the relative low valuations vis-a-vis

trailing earnings, most of the PSEi component counters
- have managed to hold at or above their daily and
WK1 WK2 WK3 WK5 WK6 WK7 WK8
weekly support levels (refer to previous technical
PSEI ALL FIN IND HDG PRO SVC M&0
trading guides) even as the Main Index has broken
through its own support levels.

In our recent reports, we have discussed the sustained positive economic numbers at least through Q4 2010. This
is likewise reflected in substantial year-on-year bottomline growths reported by listed firms. The major threat
remains inflation which came in at 3.5% in Janaury 2011. The Middle East crises raises this concern even higher.
Naturally, a protracted crisis may keep world oil prices elevated and even as the country's dependence on the
commodity has been reduced, it continues to be significant to cause upward price pressures. This in turn may
compel the BSP to tweak rates sooner-than-anticipated. Obviously, this is among the factors that dampens
confidence in local equities.

On a positive note, international pressures on Libyan leader Muammar Qaddafi has built up. Frech President
Nikolai Sarkozy took the initiative as first leader of a global power to openly call for Mr. Qaddafi's
resignation. The US, in turn, after having pulled out their personnel from Tripoli, have shifted to a more
aggressive stance, vowing to impose sanctions, both unilaterally and in cooperation with other nations. Allies
of the beleaguered but still dangerous leader have begun to defect to the protesters side, including the
Ambassador to the UN and a close relative of Qaddafi. The quicker the Middle East crisis is resolved, and its
spread across other similarly situated nations, including North Korea is pre-empted, the earlier investors can
re-focus on the improving economic numbers – the better for equities.

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