November 4, 2019

Global equities advanced over the week amid strong corporate earnings from the US and reduced risk over a no-deal Brexit. Meanwhile, US Treasury yields, German bund yields, and Japanese bond yields fell on the back of uncertainties surrounding the US-China trade talks. Global oil prices decreased due to the rise in oil production from the US and OPEC.

Global Equities  US equities advanced week-on-week on the back of strong third quarter US corporate earnings and the policy rate cut by the Federal 2.0% Reserve last Wednesday. Among the companies whose reported earnings exceeded expectations include Apple, Starbucks, and 1.50% 1.44% 1.47% Facebook. The DJIA closed at 27,347.36 (+1.44% WoW), while the 1.32% S&P closed at 3,066.91 (+1.47% WoW).  Asian equities went up despite resurfacing doubts regarding the US-China trade negotiations. The APEC Summit in Chile where 1.0% President Trump and President Xi were scheduled to meet for trade talks was cancelled due to transport protests. During the latter part of the week, optimism surrounded the market amid the anticipated rate 0.30% cut by the Fed and the creation of a potential bloc between ASEAN countries, Australia, Japan, New Zealand and South Korea. The 0.0% MSCI APxJ closed at 524.97 (+1.50% WoW). MSCI MSCI MSCI Asia DJIA S&P 500  European equities rose over the week as strong corporate earnings World Europe ex-Japan led by the automative sector and reduced risk of a no-deal Brexit lifted investors' sentiment. The MSCI Europe closed at 134.40 (+0.30% WoW). US Treasuries German Bunds

3.000 0.500 25-Oct 1-Nov 0.147 25-Oct 1-Nov 2.287 -0.088 0.000 0.169 1.794 2.000 1.661 1.647 -0.382 1.618 1.619 2.190 -0.064 -0.620 -0.613 -0.500 -0.656 1.710 -0.362 1.514 1.531 1.552 1.542 1.000 -0.625 -0.653 -0.600 -1.000

0.000 -1.500 3m 6m 2y 5y 10y 30y 1y 2y 5y 10y 20y 30y  US Treasury yields slumped on average following the US Fed's policy rate cut and the cancellation of the November APEC summit in Chile. Yields fell by 9.79 Japanese Government Bonds bps on average, with the 10Y closing at 1.7103% (-8.4 bps DoD).  German Bund yields closed slightly lower on fading optimism surrounding the 0.300 0.2380 U.S.-China trade talks. Yields fell by 1.28 bps WoW, with the 10Y decreasing by 2.00 bps WoW to -0.38%. 25-Oct 1-Nov  Japanese bond yields dropped as renewed doubts on the trade negotiations 0.100 0.1910 between the US and China drove demand for safe-haven assets. Yields fell by 2.73 bps WoW on average, with the 10Y note closing at -0.185 % (-4.00 bps -0.1450 WoW). -0.100  Key events that transpired during the week: -0.2350 -0.2370 -0.241 -0.26  US Fed lowered its federal funds rate target by 25 bps to a range of 1.5% to 1.75% on October 29. -0.300 -0.232 -0.1850  Government of Chile called off the November 16-17 summit of nations from the -0.2440 -0.2700 -0.31 Asian-Pacific Economic Cooperation (APEC), where US hoped to sign the phase-one trade agreement with China on October 30. -0.500  The European Union (EU) granted the UK's request for a three-month Brexit 3m 6m 2y 5y 10y 30y extension, averting concerns relating to no-deal exit from the EU.

Commodities  Global oil prices fell amid the increase in production from the U.S. and OPEC. US oil production rose by almost 600,000 barrels per day $bbl 1-Nov-2019 % Change (bpd) brought mostly by the 30% surge in ouput for the Gulf of Mexico. Meanwhile, a Reuters survey showed that OPEC production Brent 61.69 -0.53% also rose by 690,000 bpd in October, which brought the total supply WTI 56.20 -0.81% back up of the Middle-East dominated group to 29.59 million bpd. Brent crude oil closed at 61.69 (-0.53% WoW) per barrel, while WTI BBG Commodity index 80.26 0.96% crude closed at 56.20 (-0.81% WoW) per barrel.

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. November 4, 2019

The Philippine Stock Exchange index rallied on the back of strong earnings reports led by the financial sector, while local fixed income yields fell on the effectivity of the reserve ratio requirement cut in November. Meanwhile, the Philippine Peso strengthened amid positive Brexit talks and the US Fed's cut on its interest rate.

 The PSEi climbed week-on-week, peaking at 8020.06, amid strong corporate earnings season led by the financial sector. The Federal Reserve cutting its policy rate also boosted the index. The PSEi rose to 7,977.12 (+0.47% PSEi Snapshot WoW). Total Net Foreign Flows (USD Mn)  The top performer of the week was Metropolitan Bank and Trust (PSE 8,100 Ticker: MBT) which rose 6.61% WoW. Similarly, BDO Unibank Inc (PSE +0.69% WoW; Ticker: BDO) rose 4.8% WoW as the company reported a 43.35% YoY jump Net Foreign Buying: $27.59 Mn in net earnings for the third quarter. Manila Electric Company (PSE Ticker: 8,000 MER) was bottom performer for the week, falling by 5.00% WoW, followed by Globe Telecom Inc (PSE Ticker: GLO) as it declined by 4.75% WoW. 7,900  Key events that transpired during the week:  BDO Unibank, Inc (PSE Ticker: BDO) reported a net income growth of -10 7,800 43.35% YoY for the third quarter of 2019, translating to a 49.3% growth year to date. The bank said the increase in net earnings was mainly attributed to 10/25 10/28 10/29 10/30 10/31 the expansion of its current revenue sources, which resulted to a 12.5% PSEi Top/Bottom Performers return on common equity.  DMC Project Developers, Inc (DMCI Homes), the real estate subsidiary of MBT 6.61% DMCI Holdings (PSE Ticker: DMC) announced its Php14.36 sales target for BDO its new two-tower residential condominium in Pasig City. DMCI Homes said it 4.80% started on the construction of Allegra Garden Place along Pasig Boulevard JGS 4.17% and Bonifacio Global City. The real estate unit hopes to complete the first tower by July 2024. RRHI -3.99% GLO -4.75% MER-5.00% -6% -4% -2% 0% 2% 4% 6% 8% Local Bond Market Movements  Local fixed income yields fell week-on-week in anticipation of the effectivity of the reserve requirement ratio cut in November. On average, the yields decreased by 0.79 bps WoW, with declines mostly in the long-end and belly of the curve. 5.0  Key events that happened during the week: 4.0  The Bangko Sentral ng Pilipinas (BSP) seeks to impose a cap on interest rates and other fees that lending and financing companies charge consumers, as requested by the Securities and Exchange Commission (SEC). The SEC 3.0 reported that high interest rates can reach up to 2.5% per day, in addition to 10/25 10/28 10/29 10/30 10/31 other fees and services. The potential rate caps will only apply to consumer and payday loans and not the entire financial sector. 2Y PDST-R2 10Y PDST-R2  The Department of Energy (DOE) announced its intention to revive the country's nuclear energy development program. The government agency will present its plan to the United Nations' International Atomic Energy Agency next  The Philippine Peso strengthened as the US Federal Reserve month. The DOE said nuclear power's reliability and efficiency makes it ideal to (Fed) decided to reduce their interest rate last Thursday. The meet the country's ever-growing energy demands. USD/PHP pair ended at 50.740 (-0.77% WoW). Foreign Exchange  The Euro strengthened versus the US Dollar on the back of USD/PHP Previous Close 10/25/19 51.135 positive developments from Brexit negotiations and interest rate Closing 10/31/19 50.740 cut from the US Fed The EUR/USD closed at 1.1080 (+0.78% EUR/USD Previous Close 10/25/19 1.1080 WoW). Closing 11/01/19 1.1166

Foreign Exchange USD/PHP EUR/USD 51.25 51.08 51.09 1.1400 50.89 1.1155 1.1166 51.00 1.1095 1.1090 1.1200 50.74 50.74 50.75 1.1122 1.1000 50.50 1.0800 28-Oct 29-Oct 30-Oct 31-Oct 1-Nov

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.