Philippine Country Report Asia Securities Forum 2018 November 1-3, Bali, Indonesia Ismael G. Cruz Philippine Association Of Securities Brokers Dealers
The Philippine Economic Miracle (1980 To 2018) Four Decades of Rising GDP Growth: 2% 80’s, 2.8% 90’s, 4.5% 00’s And 6.3% Past Eight Years GDP Growth Target Of 6.5% to 6.9% in 2018 and 7% to 8% from 2019 to 2022 Four Decades of Rising Philippine GDP Growth Official Philippine GDP Growth Forecast (2018-2022) 6.5%- 2018 6.9% 7.0 – 7.0 – 8.0 % 8.0 % 2022 2019
Drivers Of Philippine GDP Growth Fixed Investments Has Been Growing 17% And Account For 27.2% Of GDP, Highest In Two Decades Foreign Direct Investments Rose By 22% To A Record $10B Or 3.2% Of GDP OF Remittances Rose 4.3% to $28.1B in 2017 Or 9% of GDP; BPO Revenues Rose 9.6% to $22.2B Or 7% of GDP Fixed Investments as % of GDP 27.2% Foreign Direct Investments (US$ Billions)
Build! Build! Build! Infrastructure Program 75 Flagship Projects Worth P2.3T, Of Which NEDA Has Approved 35 Projects Or P1.24T Infrastructure Spending From 3.0% Of GDP In 2010 – 2016 To 5.4% Of GDP In 2017, And 7.3% Of GDP By 2022
Financing Build! Build! Build! Higher Budget Ceiling And Comprehensive Tax Reform Program With A Combined Contribution Of 1.5% To 2% Of GDP Per Year Budget Deficit Ceiling Has Been Raised To 3% of GDP; Tax Package 1 Was Implemented At The Start Of This Year
Inflation And Central Bank Response Inflation Accelerated To 5% In The First Eight Months BSP Raised Policy Rate 4x Or 150 Bps, From 3.0% In May To 4.5% In September Inflation Is Expected To Moderate To 4.3% In 2019 And 3.2% in 2020 BSP POLICY RATE AND INFLATION 2018 2019 2020 INFLATION 5.2% 4.3% 3.2% Policy Rate (%) Inflation Rate (%) FORECAST 8,0 7,0 6,0 5,0 4,0 3,0 2,0 1,0 0,0 -1,0 2012 2013 2014 2015 2016 2017 2018 Source: BSP
Current Account and Oil Bill CA Deficit Doubled To $2.5B Or 0.8% of GDP in 2017 On Account Of Higher Oil Bill, Which Rose 31% or $2.3B To $9.9B The 1H18 CA Deficit Has Reached $3.1B, Of Which $1.6B Is The Increase In The Oil Bill Full-Year 2017 First Half 2018 Balance of Payments Balance of -$860M Payments -$3.3B Current Account -$2.5B Current Account -$3.1B Increase in Oil Bill Increase in $2.3B Oil Bill $1.6B Source: BSP, DOE
The Peso And Real Interest Rates The Philippines Peso Has Depreciated By 8% To 54.02 Narrowing Of Real Interest Rate Differential Between U.S. And Philippine Sovereigns By 1% To 1.47% NEDA Is Projecting a Peso-Dollar Exchange Rate of P52.50-P53 This Year and P52-P55 from 2019 to 2022 USD/PHP End-September 2018 Beginning 2018 56 55 P52-P55 54 53 10-yr. Real 10-yr. Real (2019-2022) Inflation Inflation 52 Treasury Interest Treasury Interest Rate Rate Yield Rate Yield Rate 51 50 49 48 Philippines 7.23% 5.0% 2.23% 5.69% 2.9% 2.79% 47 46 45 44 U.S. 3.06% 2.5% 0.76% 2.41% 2.1% 0.31% 43 42 41 40 Differential 4.17% 2.5% 1.47% 3.28% 0.8% 2.48%
The Philippine Stock Exchange Index Is On the Road to Recovery San Miguel Food and Beverage, Inc., Which Owns San Miguel Brewery Is Conducting a P57-B Follow-On Offering, Which Will Add To the Equity Capital Raisings of P181B YTD vs. P147B In 2017 Philippine Stock Exchange Index (2009-2018) P57-B Follow-On Offering
Philippine Stock Exchange Financial Technology Initiatives The PSE EDGE Disclosure System, PSETradex Mobile Order Management System, Clearing and Settlement System
Philippine Stock Exchange Financial Technology Initiatives Securities Borrowing and Lending, Co-Location Services For Trading Participants and Local Small Investors Portal
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