Equity Research


The Bear is Out

PSEI: The Bear is Out

March 9, 2020


Still due to the rising infection rates of COVID19 worldwide, global equity indices were down last week (wow) and year-to-date (ytd), continuing their path to correction territory; MSCI World Index, 0.38% wow and -8.87% ytd; MSCI Emerging Market 0.65%, wow, -9.20%; Stoxx Europe 600 Index, 0.34%, -11.20% ytd. After being flattish last week, up by 0.3%, PSEi collapsed to bear market ground in today’s closing (March 9, 2020), losing 457.77 pts or 7.2% to 6,312.61 after government announced a public health emergency due to COVID19’s local transmission, a more dangerous 2nd phase of spread.

Central Banks vs COVID-19

Central Banks vs COVID-19

March 3, 2020


Central banks and governments from US, Asia to Europe are on a bigger defensive stance against the virus hit on global growth, embarking or mulling further fiscal and monetary policy stimulus. The question is will the necessary stimulus be sufficient to avert a global recession?


Ayala Land’s AREIT: Will peers follow?

February 20, 2020



REIT is an asset class that could be ripe for the Philippine market, touted as a recession-hedged investment. It has a tendency to outperform equity indexes amid market volatility and weak market conditions. Thailand’s REIT is a case in point. Table 1 on the left shows the total return of the REIT index at 99.99% (2015 to Feb. 19, 2020), greater than the main market index’s +10.90% and property index of Thailand, -8.26%.

REITs have arrived

REITs Have Arrived

February 10, 2020


The Philippine REIT Law’s IRR has the following incentives: reduced or 33% minimum public ownership requirement from 67%; proceeds to be be reinvested in Philippine property or infrastructure within one year; 12% VAT on the transfer of assets to the REIT has been removed, zeroed out; zero tax on REIT company upon dividend declaration of at least 90% of income but rest of income subject to existing corporate income tax; and dividends accruing to corporate investors are tax-exempt while individual investors will be taxed the existing 10% on dividend income.

January Inflation

Inflation Surprise

February 5, 2020


Will the BSP cut or pause? It’s a surprise and cuts the odds of a BSP rate cut. Will the market sell today? Not necessarily as Asian markets are up and even the US. But what’s the month-on-month (MOM) inflation rate?

Worse than SARs

Worse than SARs?

February 4, 2020


China’s economy is bigger and weaker than during SARS in 2002-2003. The virus outbreak is already adversely affecting supply chains and commodities markets. It is denting growth prospects in SEA, even South America..

A World Economy Shock

A World Economy Shock?

January 28, 2020


The spread of the dangerous virus has spooked global markets. Timing is bad, right after the trade war deal that has helped the health of the global economy and improved sentiment. All should have been good and well going into the Lunar New Year 2020. But no, the world is worrying anew because of Wuhan corona virus that has sent markets into a wealth-destroying tailspin. Is the world heading into another shock?


4Q19 Growth Gains Steam: Fiscal Ramp-up Ahead

January 24, 2020


Philippine real GDP growth accelerated to +6.4% year-on-year (yoy) in 4Q 2019 on par with market consensus of 6.4% but below government’s own forecast of 6.6%. It puts 2019 GDP growth below 6% at 5.9% near the low end of the full year 2019 target growth range of 6.0%-6.5%.

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.”

Consumer Sector: On Firmer Ground

Consumer Sector: On Firmer Ground

January 2, 2020


Household consumption spending stabilization in 2019 cushioned Philippine GDP from the sustained deceleration to recent contraction of investments and decelerating exports, proving the former was a resilient pillar of domestic growth.