A quick survey of global markets and what the different charts are saying. This is for clients of BOH Society.

1. bohsociety Fourth Quarter 2016

2. “Risk happens slowly at first then all at once.”
Keith McCullough, Hedgeye Risk Management
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3. GLOBAL MARKETS
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4. Main Themes
Risk-on / Risk-off to dominate the rest of the year
 Key focus are global growth slowing and a potential Fed rate hike.
 Developed markets US, Europe, and Japan
 Emerging markets China, India Russia
 US government bond yields still trading near lows but vulnerable to a correction.
The Dollar Index looking increasingly bullish and can transition into a wider range.
 Historically, a strong US dollar is bad for risk assets like EM FX, EM equities and
commodities. We’re starting to see stresses in the EM FX and selectively in EM
equities.
 Base metals are still in a bearish trend while precious metals are struggling to
restart bullish trend.
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5. MSCI WORLD: POTENTIAL FAILED TRIANGLE BREAKOUT
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6. SPX INDEX: COMPLEX CONSOLIDATION, MUST STAY ABOVE 2090-2125
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It could just be
coiling for
another break
to new highs?

7. FTSE 100 INDEX: POST-BREXIT RALLY STALLING. MUST GET ABOVE 6900
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8. NIKKEI INDEX: BEARISH, RANGE BOUND, AND USELESS
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9. US10Y INDEX: TREASURY RALLY SHOWING COMPLETED 5 WAVES MOVE DOWN
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3
4
5
A
B
1
2

10. DXY INDEX: TIGHTENING RANGE IS BULLISH… UPSIDE BREAKOUT LIKELY?
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Transitioning
from bearish
to bullish?

11. GOLD: INABILITY TO BREAK ABOVE 1360 IS A CONCERN. IF IT BREAKS BELOW
1300 IT CAN TEST SUPPORT AT 1260.
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Must not
break below
1300!

12. WTI INDEX (OIL): IMPORTANT LOW IN PLACE BUT BREAK ABOVE 50 UNLIKELY
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13. COPPER: STILL STRUGGLING NEAR CYCLICAL LOWS
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LME NICKEL: RANGE TRANSITION UNDERWAY AFTER COMPLETION OF 3-PUSHES
1
2
3

15. MSCI EMERGING MARKETS: TOO MUCH TOO SOON
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16. PH MARKET
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17. Main Themes
Macro growth to limit downside but valuations and political risks capping upside
 The PCOMP Index fell to 7553 from a high of 8118. This is equivalent to a -7%
market correction and in-line with our expectation. The market is still up +8.7%
YTD with pullback orderly and driven primarily by a reversal in foreign inflows.
 Global macro represent bigger headwind but compared to other emerging
markets, where the slide has been muted, negative news flow about the new
government has exaggerated the slide.
 But once headwinds in global macro and domestic politics subside, we can go
back to focusing on PH secular growth story.
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18. Main Themes
 Projects under the Public Private Partnership (PPP) program have been approved. There
are 9 projects with an estimated cost of Php171 billion, these are:
 NAIA airport development project (est. Php74.6 billion)
 Metro Manila Bus Transit System (est. Php37.8 billion)
 Metro Manila Flood Management (est. Php23.5 billion)
 Agricultural Competitiveness project (Php10.2 billion)
 Maritime Safety Capability Improvement (Php8.0 billion)
 New Bohol airport (Php7.8 billion)
 Bicol airport passenger terminal (Php4.8 billion)
 Modernization of Tacloban hospital (Php2.4 billion)
 Modernisation of Tagbilaran hospital (Php2.2 billion)
 While it seems likely that large caps are done for the year, we believe there are pockets
of opportunities in mid, small, and micro cap segments. And if the market slides towards
7100, that would be our buying opportunity for large caps already.
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19. Positive and Negative Divergences
Sectors 1M Change (%) 3M Change (%)
Mining and Oil +2.3% -11.5%
Financial +0.5% +8.0%
Industrial -1.6% +1.8%
Holding -4.6% +0.3%
Service -8.0% -6.2%
Property -9.4% +1.4%
All Shares -3.3% +0.9%
PSE Composite Index -5.4% -0.1%
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20. bohsociety
Effective Range: 6954 to 8175
Tough trading environment since we’re
at the midpoint of the range but it
should feel better once we hit 7259

21. bohsociety
4261
Effective Range: 4353 to 5075
Easier to trade non-index names
since these are relatively less crowded
than large cap trades. Little overhead
resistance too!

22. bohsociety
Watch USDPHP closely.
Measured move 49-50.
49.00-50.00

23. THE END