Latest Views



We are bullish on the economic growth and inflation fronts. We expect Philippine growth to expand by 6.0% in Q3 and accelerate further to 6.5% in Q4 on the back of formidable new job creation by July 2019, inflation falling to 1.7% in August on track to go sub-1.5% by September and signs of resurgence in National Government (NG) spending to boost domestic demand starting Q3. We remain optimistic about the bond markets, but neutral on the equity market.



Despite PH inflation continuing to tumble to a 31-month low of 2.4% in July, and exports growth slightly positive for entire Q1, GDP growth in Q2 remained feeble at 5.5% only a tad slower than Q1. This resulted from a sizeable fall in National Government (NG) spending (esp. on infrastructure) in June and April, and in capital goods spending as well as weak agriculture output gains. This put an added downward push to equity prices, but the opposite, positive effect on bonds. Trading in the latter reached a 55-month high of P767.7-B led a plunge in yields for all tenors, especially at the short end.



June didn’t bring in strong rains, but rather more positive signs of economic recovery. These included: the plunge of inflation to 2.7%, the rally in National Government (NG) spending in May (up 8.9%, excluding interest payments), exports growth remaining in the black for the second month in a row, and more leeway for the Bangko Sentral ng Pilipinas (BSP) to further cut policy rates and reserve requirements ratio (RRR) with M3 meekly rising by 6.4% in May. The peso appreciated by 0.9% as the balance of trade deficit narrowed. These and the prospect of continuing lower interests in the US, fueled more optimism that spilled into the bond and stock markets by early July.













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Wall Street

Wall Street at New High; Risk Indicators also Higher

July 11, 2019


Wall Street closed at new peak. Boom! America’s S&P 500 index has closed at a new all-time high last night. And it’s again about the Fed’s dovish tone. Federal Reserve Chair Jerome Powell told the US Congress about a pending rate cut this month, citing risks from the trade truce with China and that June’s strong U.S. jobs report (higher than expected at 224k versus average of 160k monthly in recent months) had not shifted the outlook.

Yields Fall on Short Supply

Yields Fall on Short Supply

July 5, 2019


Expect local bond yields to remain subdued with appetite still mainly in the short-end, which fell last week by an average of 16bps against the long-end’s 9-bp average decline. Buying interest in the short-end was reflected in the dramatic 50-bp drop of the 91-day bill rate to 3.88% and the slight correction in the long end from of 4.9% to 5.10%.

Profit taking

Profit taking

July 5, 2019


This week, we expect the resistance of 8,100 to hold, meaning PSEi will again struggle to break above it as the market recently sold on news of the June inflation beat and ahead of Fed’s Powell Congressional appearance amid the US markets’ correction after hitting new all-time highs. US and Philippine second quarter earnings results are coming out in the next two to three weeks and guidance for the rest of the year will be closely watched.

















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