Latest Views



The economy expanded only by 5.6% in Q1, due to the delayed approval of 2019 National Government (NG) budget resulting in slower infrastructure spending (-8.6%) and a larger current account deficit (which alone cut growth by almost 0.7% points). However, consumer spending gained a lot, with lower inflation and widespread election spending. Bangko Sentral ng Pilipinas’ (BSP) policy rate cut by 25 bps and reserve requirement ratio cut by 200 bps (phased from end May to end-July) should support a strong recovery starting Q2. The bond markets will likely fully benefit from the cuts more by July. The stock market, which managed to eke out a slight 0.4% rise, may have to wait until after the “ghost month” to break away from its trading range.



Encouraging economic data in March, i.e., further slump in inflation, ramped up spending by the National Government (NG) in February, and unabated gains in OFW remittances, keep us upbeat for Q1 GDP growth. Besides, weak money growth and the easing of inflation allow the Bangko Sentral ng Pilipinas (BSP) to cut reserve requirements (RRR) in Q2. Slower inflation sparked secondary bond trading to a 4-year high, but failed to thrust the equities market beyond its trading range.



The unabated easing of inflation to 3.8% in February and unemployment rate down to 5.2% in January 2019 showed the bright spots in the economy, while Overseas Filipino Workers (OFW) remittances in December and FY 2018 reached record levels. The dampeners included the declines in capital goods imports, exports, manufacturing, and weaker money growth in January. These had mixed effects on the financial markets. Demand for long-term T-bonds pulled yields down, while the PSEi dropped in February as foreign investors began to exit.









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Wobbly at 8,000

Wobbly at 8,000

June 7, 2019


The market will likely hold steady at the 8,000-level this week even with the escalation of the trade war and ensuing likely preponderance of weak global economic data reminding investors of the slowdown in both developed and emerging markets. We believe that the pending policy stimulus in the US such as an early US Fed rate cut or more fiscal measures in China would help lift sentiment and share prices. Also, Trump has already reneged on his threat of imposing 5% tariff on Mexican exports.

Eyes on Inflation

Eyes on inflation

May 31, 2019


After retesting the index’s resistance of 8,200 yesterday, we expect some profit taking in the market as some names have charted new 52wk high. Also shortened trading week this week (Eid’l Fitr) and next week (Independence Day) may prompt some investors to take profits. We expect that May inflation figure (June 5, 2019) coupled with anticipation of further monetary easing shall provide support for the market.

Further Easing Ahead

Further Easing Ahead

May 31, 2019


Bangko Sentral (BSP) governor Benjamin Diokno promised for more policy rate and reserve requirement (RRR) cuts in the future, but the timing will depend on economic data. Diokno expects inflation to ease below 2% on base effect as soon as this quarter, while he expects GDP will to reach at least 6% again now that the budget has been passed. The BSP expects May inflation to have slowed to 2.8%-3.6% from 3.0% last April and 4.5% in the same period last year.















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