Latest Views



The overall outlook has turned rosier. At the macro level, huge employment gains in 2019 and the rapid decline in poverty rates from 2015 to 2018, plus low inflation rates (well within targets), renewed vigor in infrastructure spending, and robust OFW remittances should spur above-average consumer spending growth. Meanwhile, bond investors took a more cautious stance in November which showed tenders in auctions and volumes in secondary markets tumble, albeit with little effect on yields. The equity market proved resilient to the foreign selling (due to MSCI-EM rebalancing) and a more solid, consolidated base should provide a good springboard for PSEi’s upward thrust in 2020.



Vindicated for our view of a strong economic recovery starting H2, we see it at even a faster pace in Q4 and into 2020 than the 6.2% GDP growth recorded in Q3-2019. Lowest poverty rates (SWS) and low inflation should keep consumer spending at a quickened pace. Infrastructure spending will benefit not only from the 34.5% jump in NG budget for it but also from reactivation of Public-Private Partnership (PPP) into the Build, Build, Build (BBB) program of the administration. Resulting muscular domestic demand should offset external demand weakness, if any.



We see GDP growth accelerating to 6% in Q3 and faster in Q4, as domestic demand revs up further. With inflation holding below the 2% BSP floor in H2, and huge employment gains (supported by 2nd lowest self-rated poverty rate of 42% in Q3 as estimated by SWS), consumer spending shall show even more robust growth. Significantly lower interest rates from last year and NG catching up on infrastructure spending in H2 should drive investment spending higher. The two together and a neutral external account support our view. However, financial markets seemed unfriendly in September, although we see a likely rebound in the bond market in Q4, while the stock market outlook remains iffy.
















View all The Market Call issues


Rising Risk Aversion

Rising Risk Aversion

January 21, 2020


Philippine market has biggest loss among Asia Pacific bourses, down year-to-date by 3.4% as of yesterday’s close to 7552.60. It sustained its drop today to 7466.65, lower by 85.9 points on close and much of that due to the stepped up regulatory scrutiny of existing contracts involving index heavyweight companies, latest of which were the Ayala Land’s leasing deal with the University of the Philippines in Fig. 2 below and and its LRT1 project joint venture with Metro Pacific Investment Corp. Today’s market value turnover is a hefty Php7.1bn with net foreign selling totalling $82m year-to-date as of yesterday, making the Philippines one of five countries in Asia Pacific on equity foreign selling mode.

200117 Market Outlook

BSP’s New Weapon

January 17, 2020


Expect the BSP to be confidently reducing bank reserve requirement until BSP Governor Diokno’s term ends in 2023 but only in an environment of price stability defined as 2%-4% medium term inflation target. BSP’s confidence arises from a new open market instrument set to be launched soon intended to “sterilize” inflationary money supply from the triple R cuts. It’s being longer than term deposit facility of the BSP (TDF) makes it more potent and it being a bond makes it tradeable.

200103 Market Outlook

2020 Global and EM Market Views

January 3, 2020


“2020 is not a year of recession,” said Rick Lacaille, global chief investment officer at State Street Global Advisors. “We expect the global economic recovery to continue into 2020 against a backdrop of continued monetary easing, policy shifts and persistent pockets of resilience. Low inflation, robust consumer spending and a relatively strong global services sector combine to propel the cycle forwards. There are clear risk factors but overall, we expect world real GDP growth of 3.4 percent, up from our projection of 3.2 percent in 2019.”