August 17, 2021

August 17, 2021

US and European equities rose on strong corporate earnings and the passage of the $1 trillion infrastructure bill in the US Senate. US Treasury and German bund yields declined as US CPI slowed in July. Global oil prices were mixed as concerns over a slow demand recovery continued with the new waves of COVID-19 cases in Asia.

Global Equities  US equities rose, amid positive sentiment driven by the passage of the $1 trillion infrastructure bill in the US Senate. The bill focuses on rebuilding roads and bridges, modernizing the public works system, and upgrading internet 2.0% 1.24% 0.87% 0.87% infrastructure. This was further supported by positive economic data and strong 1.0% 0.71% corporate earnings. The DJIA closed at 35,515.38 (+0.87% WoW), while the S&P 500 closed at 4,468.00 (+0.71% WoW).  Asian equities declined as the Chinese government signaled a prolonged 0.0% crackdown on its technology sector and tighter rules for other key industries. The slower vaccination rate combined with the continuing threat of the Delta -1.0% variant also dampened market sentiment in the region. The MSCI APxJ closed -0.90% at 656.31 (-0.90% WoW). -2.0%  European equities hit all-time highs as corporate earnings continued to drive positive sentiment. The MSCI Europe closed at 157.38 (+1.24% WoW). -3.0% -4.0% MSCI MSCI MSCI DJIA S&P 500 World Europe Asia ex- Japan US Treasuries German Bunds

0.000 -0.022 2.270 6-Aug 13-Aug 1.945 6-Aug 13-Aug -0.001 -0.266 1.770 1.929 1.297 -0.467 -0.245 1.270 -0.500 0.768 1.277 -0.660 -0.456 0.770 -0.739 -0.730 0.208 0.773 -0.661 0.043 0.043 0.270 -0.757 -0.728 0.207 -0.230 0.046 0.041 -1.000 3m 6m 2y 5y 10y 30y 1y 2y 5y 10y 20y 30y  US Treasury yields dipped after US CPI slowed to 0.5% MoM in July from 0.9% in June, easing concerns over the potential for runaway inflation. Japanese Government Bonds Moreover, investors weighed the drop in US consumer confidence in August to its lowest level since December 2011 amid fears over the Delta variant. The 0.500 0.3910 consumer sentiment index fell to 70.2, below expectations of 81.3. On average, yields went down by -0.54 bps WoW, with the 10Y closing at 1.28% (-2.02 6-Aug 13-Aug bps). 0.300 0.4020  German bund yields moved mixed but declined on average during the week as the market took a hint on easing inflationary pressures in the U.S., with some weight on a possible lag in Euro area economic recovery amid the Delta 0.100 0.0100 variant threat. On average, yields fell by 0.60 bps with the 10Y yield closing at -0.47% (-1.10 bps WoW). -0.113 -0.1300 -0.1330 -0.13  Japanese bond yields rose ahead of the release of the 2Q21 GDP data in -0.100 0.0240 Japan which came out higher than expected at +0.3% QoQ. On average, yields -0.120 -0.1280 -0.1310 -0.12 rose by 0.52 bps WoW with the 10Y closing at 0.02% (+1.40 bps WoW). -0.300 Key events that transpired during the week:  The US Senate passed a $1 trillion infrastructure bill which aims to rebuild traditional transportation infrastructure, IT infrastructure in rural areas, and -0.500 upgrade the existing water and electricity infrastructure.  Chinese CPI rose by 1.0% YoY in July, below the 1.1% YoY posted a month 3m 6m 2y 5y 10y 30y prior. The July print is slightly above consensus expectations of 0.8% YoY%. Commodities  Global oil prices remained fairly flat WoW, as concerns over a slow demand recovery continued with the new waves of COVID-19 cases in Asia. Brent oil $bbl 13-Aug-2021 % Change closed at $70.59 per barrel (-0.16% WoW), while WTI crude closed at $68.44 per barrel (+0.23% WoW). Brent 70.59 -0.16%

WTI 68.44 0.23%

BBG Commodity index 95.17 0.51%

This material, which is strictly for information purposes only, is for your sole use, does not constitute a recommendation or an offer to sell or a solicitation to buy any financial product. Any information is subject to change without notice and BPI is not under any obligation to update or keep current the information contained herein. You are advised to make your own independent judgment with respect to the matter contained in this document. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. All funds managed by BPI Asset Management and affiliates are Trust and/or Investment Management Funds, which do not carry any guarantee of income or principal, and are NOT covered by the Philippine Deposit Insurance Corporation. Past performance is not a guarantee of future results. BPI Investment Funds are valued daily using the marked-to-market method. August 17, 2021

Local equities fell as investors weighed the increasing number of daily COVID-19 cases and the possible extension of the stricter lockdown measures imposed nationwide. Local yields rose following the release of the 2Q21 PH GDP data and the upward revision of the BSP’s inflation forecasts. The Philippine peso weakened amid negative sentiment on the decrease in net inflow of FDI.

 Local equities fell down as investors sold off some blue chip stocks during the latter part of the week to align their portfolios with the PSEi rebalancing. Investors also put weight on the increasing number of daily COVID-19 PSEi Snapshot cases and the possible extension of the stricter lockdown measures imposed nationwide. The PSEi closed at 6,320.19 (-3.36% WoW). Total Net Foreign Flows (USD Mn) PCOMP  ains were led by Electric Company (MER; +5.07%), Bank of the 50 -4.71% WoW; 6,900 Philippine Islands (BPI; +4.54%) and (MEG; Net Foreign Buying: $12.43 Mn +3.32%). Meanwhile, Alliance Global Group Inc. (AGI; -10.0%), Emperador, 25 6,750 Inc. (EMP; -10.29%), and Resorts Corporation (BLOOM; - 11.83%) were the laggards of the week. 0 6,600  Key events that transpired during the week:  DMCI HOLDINGS, INC. (PSE TICKER: DMC) reported a net income of -25 6,450 Php9.5 billion for the period of January to June this year, higher than the Php2 billion reported in 2020, due to the increase in revenues of its -50 6,300 subsidiaries Semirara Mining and Power Corp. (SCC), DMCI Homes and 8/9 8/10 8/11 8/12 8/13 DMCI Mining Corp.  Jollibee Foods Corporation (PSE TICKER: JFC) announced its PSEi Top/Bottom Performers acquisition of the remaining 15% stake in Titan Dini ng LP, owner of the Tim Ho Wan brand, for SGD71.6 million (Php2.7 billion). This increases the MER 5.07% company’s stake to 100%, in line with its plan to expand its presence in mainland China with a target of reaching 100 restaurant outlets within the BPI 4.54% next four years. MEG 3.32% AGI -10.00% EMP -10.29% BLOOM -11.83%

Local Bond Market Movements -20% -10% 0% 10% 20%  Local fixed income yields rose amid optimism following the report of the PSA that the ’ GDP grew by 11.8% YoY in 2Q21. This was a reversal 5.0 from the revised 3.9% drop in 1Q21 and the record 17.0% contraction in the 2Q20. Investors also weighed the revision of BSP’s inflation forecasts from 4.5 3.877 3.888 3.887 3.902 3.902 3.916 4.0% to 4.1% in 2021, and from 3.0% to 3.1% for 2022 and 2023. On average, 4.0 yields went up by 5.52 bps WoW with the 10Y closing at 3.92% (+3.89 bps 3.5 WoW).  Key events that happened during the week: 3.0  The Philippine Statistics Authority (PSA) reported that the country’s 2.5 1.877 1.887 1.879 1.885 1.902 1.898 economy posted an 11.8% YoY growth in 2Q21, rebounding from the 17% contraction in 2Q20. Nonetheless, the increase in COVID-19 cases and the 2.0 stricter mobility restrictions add risks to economic growth for the rest of the 1.5 year. 8/5 8/6 8/9 8/10 8/11 8/12  Fitch Solutions reported that it forecasts the PH’s gross domestic product (GDP) will only grow by 4.2% for 2021, lower than its previous estimate of 2Y BVAL 10Y BVAL 5.3%. The research firm also stated that the economy will face continuous  The Philippine peso weakened, amid negative sentiment following the disruptions from the pandemic due to the slow vaccination pace and challenges decrease in the net inflow of foreign direct investments (FDI) which fell in containing outbreaks. Likewise, their GDP growth outlook for 2022 was also by 25% to $429 million in May. The USD/PHP pair closed at 50.48 cut down to 6.8% from 6.9%. (+0.16% WoW). Foreign Exchange  The Euro strengthened slightly as COVID-19 cases in Europe began to USD/PHP Previous Close 08/06/21 50.400 stabilize. The EUR/USD pair closed at 1.18 (+0.30% WoW). Closing 08/13/21 50.481 EUR/USD Previous Close 08/06/21 1.1762

Closing 08/13/21 1.1797

Foreign Exchange USD/PHP EUR/USD 51.50 1.1864 1.1919 1.1940 1.1926 1.1932 1.3000

50.00 1.1000 50.40 50.39 50.40 50.38 50.39

48.50 0.9000 6-Aug 9-Aug 10-Aug 11-Aug 12-Aug

Sources: BPI, Business World, PDI, Phil Star, Manila Bulletin, Reuters, Briefing, Bloomberg, CNN, Dow Jones, The Wall Street Journal, CNBC

This material, which is strictly for information purposes only, is for your sole use, does not constitute a recommendation or an offer to sell or a solicitation to buy any financial product. Any information is subject to change without notice and BPI is not under any obligation to update or keep current the information contained herein. You are advised to make your own independent judgment with respect to the matter contained in this document. No liability whatsoever is accepted for any loss that may arise (whether direct or consequential) from any use of the information contained herein. All funds managed by BPI Asset Management and affiliates are Trust and/or Investment Management Funds, which do not carry any guarantee of income or principal, and are NOT covered by the Philippine Deposit Insurance Corporation. Past performance is not a guarantee of future results. BPI Investment Funds are valued daily using the marked-to-market method.