Philippines Microeconomic Weekly Update #35

MACROECONOMICS WEEKLY UPDATE

The country’s trade balance of goods showed a USD4.5 billion deficit in April, the lowest in two months, with a decrease from March’s USD5.1 billion deficit and April last year’s USD5.3 billion deficit. Although exports and imports both declined by 20.2% YoY to USD4.9 billion and 17.7% YoY to USD9.4 billion respectively, the four-month trade deficit expanded to USD19.3 billion from last year’s USD18.4 billion. Nevertheless, the government targets a 1% growth in exports and a 2% growth in imports. On the other hand, the country’s manufacturing output, measured by the VoPI, experienced a robust 8.2% YoY growth in April, reaching a three-month high, fueled by strong domestic demand. This growth surpassed March’s 3.4% and reversed last April’s -1.3% decline, primarily driven by food products, transport equipment, and other nonmetallic mineral products. Despite concerns about inflation, the Philippine Exporters Confederation expects the growth trend to continue.

INDUSTRY UPDATE

BANKING AND FINANCE 

 The BSP disclosed that it will be reducing the banks’ reserve requirement ratio (RRR) effective June 30. The reduction spans 250bps for universal and commercial banks and non-bank financial institutions with quasi-banking functions, 200bps for digital banks, and 100bps for thrift banks, rural and cooperative banks. Governor Felipe M. Medalla anticipates some liquidity effects to occur, prompting the BSP to simultaneously introduce 56-day bills to absorb excess liquidity. This translates to a 11.5% RRR for commercial and digital banks, and 2% for Rural Banks.

PROPERTY AND CONSTRUCTION

 The BSP disclosed that it will be reducing the banks’ reserve requirement ratio (RRR) effective June 30. The reduction spans 250bps for universal and commercial banks and non-bank financial institutions with quasi-banking functions, 200bps for digital banks, and 100bps for thrift banks, rural and cooperative banks. Governor Felipe M. Medalla anticipates some liquidity effects to occur, prompting the BSP to simultaneously introduce 56-day bills to absorb excess liquidity. This translates to a 11.5% RRR for commercial and digital banks, and 2% for Rural Banks.

TELLECOMMUNICATIONS 

Globe (GLO) has expanded its 5G roaming coverage to 67 countries and territories through partnerships with international telecom providers, including ten new locations. Users can access surfing offers via GCash or the GlobeOne application. Meanwhile, PLDT’s (TEL) e-wallet service, TEL, is seeking to raise USD100-150 million in new funds this year. Maya, managed by TEL, is in discussions with foreign investors and considering a potential market listing, but the primary focus remains on strengthening the bank’s fundamentals, such as deposits, loans, and loan books.

INFRUSRACTURE AND LOGISTICS

International Container Terminal Services Inc. (ICT) plans to commence operations for its port extension in Melbourne, Australia by 2024. The Php8.9 bn project will permit the VICT to service larger ships and host two 336-meter vessels concurrently. Upon completion, operations are set to increase, adding 10 new automatic stacking cranes and boosting yard capacity by 50%.

CONSUMER DISCRETIONARY

  Shakeys (PIZZA) anticipates a minimum of 20% growth in revenues and earnings this year. Despite obstacles such as cost challenges and inflation, the company is confident in maintaining its growth, supported by initiatives that include the acquisition of Potato Corner last year. As of March, PIZZA has 1,857 global outlets across various brands with 85 new outlets launched in the first quarter.

 

 

LOCAL MARKET UPDATE

The PSEi closed at 6,461.42 (+0.43%) after a rally, with a value turnover of approximately Php5.17 billion, including cross transactions worth Php1.32 billion.

Among sectoral indices, Financials (+0.78%), Holdings (+0.31%), and Property (+1.43%) ended in positive territory, while Industrials (-0.09%), Mining & Oil (-0.93%), and Services (-0.98%) ended in the negative. TEL (+4.20%) and UBP (+3.58%) were the top gainers, whereas WLCON (-5.36%) and PGOLD (-5.25%) were the top decliners in the index.

 

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