The Market Call | June 2017

 

Macroeconomy

 

The Philippine economy is expected to record a stronger growth in H1 and hit a 7% (or higher) full-year growth as robust investment spending continues and foreign direct investments perks up. Higher peso equivalent of the remittances and the slower inflation upticks should encourage more consumption. NG’s promise to accelerate infrastructure spending should shore up domestic demand. Moreover, the improved external demand should be a positive catalyst to GDP growth.         

 

Fixed Income Market

 

Amidst an imminent 25 bp Fed hike in June, domestic factors such as liquidity, stable to lower inflation and lower-than-expected NG deficits should keep domestic bond markets active until Q3-2017. The yield curve may steepen as short-end demand continues to exceed long-end, despite a possible softening of yields for the latter. Investors may look to take advantage of opportunities when the market overshoots (either upside or downside).

 

Equities Market

 

PSEi’s ebullient run up of 7.8% in April and May suggest short-term correction, especially in the light of the usually weak months of July and August. However, the positive sentiment, especially among foreign investors, in the light of the approval of the first package of the Comprehensive Tax Reform Program (in the Lower House) and the “Build-build-build” plan move to improve infrastructure, will provide the market sufficient fuel to retain a positive outlook for the rest of the year.

 

 

 

The Market Call | June 2017

 

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