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Foreign investors poured more than $6.0-B in corporate bond issuances abroad since mid-June signaling confidence in PH economy’s resilience, even as the economy takes steady steps towards normalization despite quarantine constraints. Manufacturing PMI continued its ascent almost to the 50 level and National Government (NG) spending remained robust. Inflation may have risen to 2.5% in June, much above expectations, but that will not move much since the main driver, spiraling crude oil prices, has limited upside. Exports and OFW remittances may have suffered, but the trade deficit has fallen sharply and enabled the peso to grow slightly stronger in June. The financial markets look fine, especially the bond market which has seen record tenders for auctions and all-time low for 10-year T-bond yields. Rising domestic liquidity, especially with the huge corporate issuances offshore, along with steady inflation give positive rating for the bond markets. The equities market has recovered to the 6,000 to 6,500 range and became one of the top performers in the world. However, the PSEi may hit a second bottom if domestic infections continue to rise, but still above 5,000 supported by robust corporate fundraising this year given the very liquid domestic and foreign markets.



As widely expected, negative economic data surfaced in April. These include the huge drop in manufacturing, exports and imports, as restrictions due to the strict Enhanced Community Quarantine (ECQ) curtailed movements of workers and some supplies. We see, however, some “green shoots” sprouting in May seen in the big jump in Manufacturing PMI to above-40 level after a record low of 31.6 in April and in National Government (NG) spending which rocketed by 108.1% in April. Besides, money growth accelerated further to faster than 15% pace despite slower loan growth. The bond market hailed in more investors shown in a surge in tenders and secondary market trading, sending bond yields lower across the board. PSEi gained another 2.4% in May, landed and stayed above 6,000 by early June.



Despite an acceleration of National Government (NG) spending by 15.9% in March, the economy still succumbed to the effects of COVID-19 as it contracted slightly by 0.2% in Q1. Only food and vital goods/services kept the economy going as the government put in place a tight Enhanced Community Quarantine (ECQ) in Luzon for most of Q2. Inflation, however, slowed to 2.2% y-o-y in April while OFW remittances and lower balance of trade deficits gave a little strength to the peso. The 2021 outlook, however, appears brighter with the 2020 lost output overtaken by a rapid 8% to 9% GDP expansion. Bonds remained as the asset of choice as seen in plunging yields. The equities market managed to get back to above 5,500 but needs positive news both in the macro- economic and corporate fronts to bounce back.










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Philippine Banks

Philippine Banks: Provisions Hit

August 4, 2020


Provisions were the key weak point of operations, causing Php4.5bn worth of net loss in 2Q20, wiping out half of the 1Q20 earnings of Php8.8bn. As a result, BDO’s 1H20 net income shrank by 78% to just Php4.3bn. That was sharper than BPI’s 15% drop in income to Php11.7bn.


Meralco: Dividend Play

August 4, 2020


First half core earnings down 14% to Php10.6bn as 2Q20 earnings dipped 28%, hit by the lockdown.

Stimulus Vs. Infection Rise

Stimulus Vs. Infection Rise

July 6, 2020


Is the Philippines ready for a bounce back? One setback is rising Covid19 infection which lags the flattened curves of peer countries.










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