Latest Views



Even as the Philippine economy revs up to race faster, bond yields appear to have galloped uncontrollaby as earnings yields (E/P) to 10-year bond yield spreads suggest and US Treasuries have tracked a downward trend since its peak in mid-February. The PH economy appears to have had roaring 2018 start as capital goods imports rose by 16.9%, while National Government spending (exclusive of interest payments) to boost Infrastructure expenditures climbed by 25.2% in January, and Manufacturing output surged by 24.8%, the fastest in seven years.



Superb annual job growth to January 2018, record $10 B FDIs, and strong finish for infrastructure in FY 2017 all point to an acceleration in the growth path. Significant upticks in the manufacturing sector and capital goods imports in January add to our optimism of above-7% GDP growth in Q1-2018.



Foreign direct investments (FDI) into the country streaked to a record-high of $8.7-B YTD in November even as domestic investors and government infrastructure spending drove Gross Domestic Product (GDP) to a 6.7% full-year growth in 2017. These translated into a 16.1% surge in capital goods imports in November. As added booster, exports posted slightly positive gains, while Overseas Filipino Workers? (OFW) remittances continued to expand. The fly-in-the-ointment came from the sharp rise in inflation to 4% in January from 3.3% in December, mostly attributable to higher food and crude oil prices, as well anticipated increases in fuel taxes and some other indirect taxes. While trading volumes and auctions gained in the GS bond market, yields headed north as US Treasuries showed the way. The stock market racked up 6 new records in January but consolidation appeared underway as the market looked overbought, while the US stock market?s plunge into early February pulled the local bourse in the same direction.




View all The Market Call issues


Will the BSP Pull the Trigger in May?

Philippine Strategy Update: Will the BSP pull the trigger in May?

April 26, 2018


Our main scenario is that the BSP is likely to pull the trigger against rising inflation in its next policy meeting come May 10. See basis for the outlook below. Consensus bet but unconfirmed by BSP is a likely 25 bps rate hike, signalling a very gradualist approach.

Banking: Higher Float and Profitability Are Key to Heavier MSCI Weights

Banking: Higher float and profitability are key to heavier MSCI weights

April 23, 2018


BDO announced management guidance of 11% profit growth to Php31bn after achieving Php28.1bn net profits in 2017 and Php25bn in 2016, a consistent progression that’s unmatched in the industry. It reported flat earnings of Php5.9bn in the first quarter of this year vs. Php5.8bn last year on account of mtm losses related to PFRS9 compliance. The flatness is less of an issue than a reflection of its business cycle. Last year, it was also flat for the same period but management correctly predicted profits will ramp up in the next three quarters to achieve the profit guidance of Php28bn. It might follow the same cycle this year.

PSEi Trips on Weak Sentiment

PSEi trips on weak sentiment

April 20, 2018


We expect the PSEi to hover between 7,400-7,700 amidst weak sentiment over the country’s accelerating inflation, overheating risks, and rising US bond yields ahead of Q1 earnings results. Last Friday, BDO announced its Q1 2018’s core earnings (+16% y-o-y, underperformed), while CHP and MER will disclose their Q1 results on April 27 and April 30, respectively.




View all Equity Research issues