The Market Call | August 2020




The PH economy will likely improve in Q4 as relaxation of strict quarantine measures kick in by mid-August. Month-on-month (m-o-m) pluses surfaced for manufacturing, capital goods imports, exports and construction, and should gain traction for the rest of the year. OFW remittances returned to positive growth in June. NG spending will increase especially for infrastructure and health. The Philippine peso will remain on the strong side for the rest of Q3, but may weaken by year-end.


Fixed Income Market

After the mild downward trend of U.S. 10-year bond yields in July, it rebounded and stayed above 0.6%. Domestically, trading in secondary market GS will remain active due to the outstanding bond issues. Mild inflation together with NG having funded most of its requirements for the year should keep yields from rising. We also do not expect ROPs to drop even more as the downside of U.S. bond yields appears limited.


Equities Market

PSEi clawed back above-6,000 by the second week of August despite unabated net foreign selling to cushion the impact of its 4.5% fall in July and the 16.5% plunge in GDP in Q2-2020. While Philippine equities broadly appear attractive, the index may temporarily hit 5,500 before trekking upwards to reach 6,500 to 7,000 by year-end as lockdowns ease. Hence, we still need selectivity and consider firms’ financial conditions, industry leadership and its external environment.

















2008 TMC August


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