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National Government’s (NG) decision to impose and extend Enhanced Community Quarantine (ECQ) for Luzon due to the fast spread of COVID-19 had the unintended consequence of knocking down the economy and the stock market. After all, Luzon’s accounted for 72.9% of GDP in 2018. Earlier optimism for a V-recovery has dissipated as supply chains, both domestic and international, got disrupted. Only the bond market showed brisk activity as bond yields fell back to pre-COVID crisis levels thanks to liquidity provided by BSP [via RRR and policy rate cuts] and National Government (NG) deficit spending to ensure safety nets for low-income families. We expect a robust recovery in H2 led by government’s strengthened infrastructure spending and weak inflation.



COVID-19 has morphed into a pandemic that has reached more than 100 countries by mid-March. Global and PH GDP growth will slow down significantly in Q1 as governments have taken more draconian measures and global supply chains have fractured. Lower inflation, a big BSP policy rate cut and acceleration of infrastructure and government spending should soften the blow. But while we feel more optimistic for H2, this may vanish if the virus’s spread and death toll do not significantly ease. Morbid fear and hysteria have driven investors to turn to cash rather than coldly stick to a risk-return approach.



Suddenly, it’s all about the new 2019 coronavirus (COVID-19) inflicting harm on the global economy and the financial markets. We expect it to slash PH tourism and Q1 GDP growth. But assuming that it ends in the summer like SARS, we see the economy roaring back starting Q2. Ramped up infrastructure and expansive private construction and consumer spending should lead domestic demand back into the driver seat. Renewed global economic slowdown which will drag down foreign interest rates, together with more favorable domestic developments easing inflation and another 25 bps cut in policy rates make bonds especially attractive in H1. However, the negative sentiment it has stirred, coupled with regulatory uncertainties, bodes ill for the PSEi for the same period. We do expect robust GDP rebound and strong corporate earnings.










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Market Outlook

COVID19: Philippine Industry Transformation and Possibilities

May 29, 2020


Recession risk estimates are getting more precise. From just -1% GDP growth dip this year, Government forecasts the slide could be -3.4% at most, lower than the estimates of more pessimistic research houses abroad like Capital Economics based on how tough and long the Philippine lockdown has been.

Property Outlook

Philippine Property: How to Price a Firesale

May 20, 2020


Brutal to property earnings, the pandemic is at the same time opening once-in-a-lifetime opportunities in real estate. Private equity firms worldwide are with an estimated $328bn in dry powder for real estate deployment, according to the data firm Preqin Ltd. New York-based Blackstone, with $538bn in assets under management, is “starting to see some rescue situations.” The sector weakness is everywhere but next year hopes are up for an early recovery in Asia Pacific after a likely drop of 25% in transaction values this year and -35% in the US.


Philippine Utilities: Earnings Dip

May 14, 2020


Except for Meralco’s earnings gain of 2% to Php5.7bn on the back of electricity sales of 5%, Philippine utilities, the so called defensive plays, suffered income drops with those in power generation dipping more severely— Aboitiz Power Corp.’s -49% to Php2.09bn; Semirara Mining and Power Corp.’s (SCC) -43% to Php1.2bn and Manila Water Corp.’s (MWC) -12%.










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