Latest Views

November 2021


PSEi pierced through the 7,000 barrier in October and never looked back, as GDP swelled by above-expectations of 7.1% in Q3-2021. Seasonally adjusted data showed even more robust rebounds in consumer spending and services output, shoring further the positive sentiment already evident in the equities market. We think that infrastructure spending will accelerate anew in Q4 with the official start of election campaign season in October, while slower inflation to below 4% by November and the Christmas season should fuel stronger consumer spending. Bond yields moved up in October in response to the faster U.S. inflation amidst elevated crude oil prices, but we expect these to reverse by yearend.

October 2021


Huge foreign direct investments appear to anticipate the local stock market rally. In September, Japan's largest power generator bought 27% stake in Aboitiz Power (AP) for some $1.58-B. KKR paid some $175.0- M to raise its holdings in FGEN. Earlier in the year, we saw large participation in the IPOs of Monde Nissin (largest ever IPO) and Converge (a telco), likely in excess of $1.0-B. PSEi broke through the major resistance of 7,000 by early October and has stayed there with large volumes. Since the stock market is a leading economic indicator, this may provide additional support to the most recent data which suggest a relatively robust Q3 GDP growth. After all, the Manufacturing sector posted extra strong performance in the last three months to August, while exports and capital goods also accelerated their growth pace in August. The former continued to create jobs which totaled 2.6-M for the entire economy in August. Despite 7-year highs in crude oil prices, we should see headline inflation below 4% by December, which should lead to improved consumer confidence.

September 2021


Escaping from the "ghost" month, the Philippine economy’s Q2 robust recovery and positive economic data brightened investor outlook hurtling the PSEi to a 9.3% growth besting ASEAN and East Asian markets, and inducing foreigners to return to the local market. Strong performances in the Manufacturing sector (up +537.9%), capital goods imports (+13.6%) and exports (+12.7%) somehow overshadowed the bump of headline inflation to 4.9% and the mixed July employment report. The bond market moved sideways, but began to weaken mildly in early September. The lighter quarantine restrictions in Metro Manila+ amidst a deceleration in Covid-19 cases and faster vaccine rollouts would help keep the momentum. With the strong emergence of the new asset class—Real Estate Investment Trusts (REITs)—we provide a feature article on REITs and the performance of listed ones, its basic information, and those about to be/newly issued.

August 2021


The economy’s 11.8% jump in Q2, together with other economic indicators flashing green, has rekindled confidence for H2 onwards. Job creation remained positive, while Manufacturing expanded by triple-digits for the second month. With exports already much above Jan-Feb 2020 levels, and capital goods imports still rising at a fast pace, a brighter outlook for the rest of the year and 2022 appear well-supported. The rise in Covid cases due to the new variants, however, may still upend high hopes. The bond markets moved sideways as U.S. Treasuries trended lower, and we don’t see much upside to local long-term yields as U.S. inflation slows and the Fed has reassured markets of an extended low interest rate regime. The local equities market undergoes upbeat trading range in line with our expectation of a strong rebound in Q4, based on robust Q2 earnings and faster vaccination rollouts for the rest of 2021.

July 2021


June ushered in a happy month as key economic indicators flashed green lights with manufacturing’s second month of triple-digit growth in May, employment hitting a new high of 44.8-M, and NG expenditures overcoming April’s weakness. Inflation slowed down to just above 4% as the fall in transport prices offset the slight rise in food prices. Contrary to the peso’s feebleness in June, exports and OFW remittances both posted big gains in May. Bond markets saw yields sliding across the board, while the PSEi’s jump in June bested the rest of the region. The onset of a new Covid-variant and the likely stricter restrictions that would follow and the approaching “ghost month” have doused some cold water in the equities market and could also trickle into the real economy in Q3.

June 2021


Some economic data in April, e.g., exports (+72% YoY), volume of production (+162%), and capital goods imports (+120%), suggest a recovery underway. However, new jobs in April slumping by -2.1-M tell a different story. The latter weakened in April due partly to still high covid-19 cases starting mid-March. This may have a bigger negative impact in Q2 since consumption spending accounts for more than 70% of Gross Domestic Product (GDP). Q2 GDP (for release 1st week of August) may dampen growing optimism. Financial markets have seen better risk appetite in May as bond markets staged a minor rally, while the equities market’s 4% gain in May carried on through mid-June. But the Fed’s more hawkish outlook would likely provide a major pause for bonds and a good correction for equities.

May 2021


Huge gains in job creation, infrastructure spending and exports have remained in the shadows as Q1-2021 GDP fell déjà vu even beyond market expectations. Inflation remained at 4.5% in April but should move sideways for the rest of H1. And the peso again appreciated amidst a weaker U.S. dollar, but faster economic recovery may not occur given the extended quarantine measures in Metro Manila+ and some delays in the arrival of vaccines. The bond markets revived in April as 10-year yields both in the U.S. and PH trended downwards, but we don’t see that kind of movement for the rest of H1. The PSEi will likely trade in range unless consumers and firms get out of their financial holes sooner than now expected.

April 2021


The economy has posted good numbers in March in terms of more jobs, a surge in National Gov ernment (NG) spending, expanding Manufactur ing sector, and capital goods imports getting back into positive territory. However, a renewed tight ening of quarantine (ECQ and MECQ) in Metro Manila+ due to the spike of COVID-19 cases and deaths to new records, has provided a headwind to a faster recovery. Bond markets will continue to recover from the huge jump in PH 10-year bond yields as the earlier views of even higher inflation has waned and U.S. Treasuries also on a downswing. The stock market will remain volatile due to the ECQ-MECQ and delays in vacci nations, even though some issues will become attractive.

March 2021


New positive economic data have emerged, such as an improved jobs situation, slight YoY gain in BIR tax take in December, and Manufacturing PMI still in expansion mode. These provide reasons for greater optimism on the recovery. Headwinds still do exist, with inflation running faster, lower exports and OFW remittances at onset of 2021. But we think the nascent rebound would gain traction if the government works closely with the private sector for faster vaccine rollouts, ease on restrictions on medication (emergency situation), and simplify and unify LGU restrictions that have constrained people and goods movements.

February 2021


Accelerating inflation, driven by the usual suspects (food and crude oil prices, the latter racing to a 13-month high by late February) and U.S. 10-year T-bond yields surging to around 1.5%, have dampened the beginning year optimism to a more somber mood in February. A resurgent Manufacturing sector provides a glimmer of hope for faster economic recovery, but the overhaul of fractured supply chains could take a little more time, aggravated in the past by the multiplicity of health certifications by city/municipality. Full-year GDP recovery may come only by end-2022. To be sure, financial markets have seen restiveness in February. Local 10-year T-bond yields climbed closer to 4.0% towards end-February, while PSEi has eased to sub-7,000 and may remain range bound until the economy and firms report significant month-on-month output gains.

January 2021


The Philippine economy appears on the mend, even though its pace may not satisfy workers and small businesses who are still out in a limb. However, positive economic data—elevated government spending, increase in exports and in Overseas Filipino Workers’ (OFW) remittances support the hope for economy to normalize, albeit in a new way starting 2021. The country’s Gross International Reserves (GIR) has reached a record-high level of $109.8-B by the end of 2020, equivalent to 11.7 months of imports, the latter only lower than Taiwan, India, China and Thailand. The positives have kept investors active in the country’s equities and bond markets and its ROPs performing better than equivalent U.S. Treasuries.










View all The Market Call issues







Market Outlook

Will Gov’t Sustain Fastest 2020 Pandemic Spending in Decades?

October 9, 2020


Despite the lockdown that hobbled infrastructure spending, down by 9.4% eight months into the year, government (gov’t) total spending for the period jumped 21% versus last year, same period. While there’s been a deceleration of gov’t spending in the last three months until last August, the pace of growth has never been this fast since 1995. It was only in 2018 when growth matched the current 21% upturn.

Weak Consumer Amid Higher Rates

Weak Consumer Sector Face Interest Rate Challenge

September 18, 2020


Unfortunately, interest rate upticks come at this time of still weak Philippine consumer sector based on several indicators: mobility index, consumer sentiment (reflected in a lowest reading since 2009 based on Social Weather Station survey), widespread joblessness and the still raging virus infection (increase in new daily Covid-19 cases to 3,903 in the past seven days compared to 2,593 in the first week of September).

NG Financing

Peso Yield Curve Inches Up

September 7, 2020


The country’s fiscal program has evolved faster than expected. The National Government (gov’t) budget deficit was revised higher to Php1.8T as the GDP growth forecast deteriorated to -6% based on last July’s revision by economic planners from -2% last March. The deficit came from a lower full year forecast of Php678bn this year.







View all Research Reports