The Experts

Equity markets holding on gains as investors find value in stocks

The appointment of two technocrats to Finance and BSP suggests the new president is delegating management of the economy to experts.

FWD Investment Team

Global and Philippine Market Update

May 26 to June 1, 2022


Global Markets 

Global Stocks moved higher building on gains from the previous week.

  • The global economy will likely experience a period of low growth and high inflation in the next 12 months, according to Simon Baptist, global chief economist at the Economist Intelligence Unit. However, a global recession is not imminent. Growth has slowed down in many parts of the world, but job markets have not collapsed. Unemployment levels are at their lowest levels in decades across many economies.
  • Beijing and Shanghai begin to relax Covid lockdown measures as cases drop. Businesses could reopen without government approval and public transportation can resume. However, restaurants can only operate on a takeout or delivery basis. The easing of restrictions should boost growth, but the Chinese economy will likely experience some scarring effects from the anti-pandemic measures.
  • US ISM manufacturing, also known as purchasing managers index (PMI), improved by 0.7 points to 56.1 in May. A number higher than 50 means an expansion of the manufacturing segment compared to the previous month. The shutdown in China and war in Ukraine did not add to existing supply chain issues but concerns over price increases and supply shortages remain.


Philippine Stocks

Philippine Stocks gained as the incoming administration announced its economic team.

  • Capital Economics senior Asia economist Gareth Leather and Asia economist Alex Holmes believe that the incoming administration took the right step in appointing Benjamin Diokno as Department of Finance secretary and Felipe Medalla as BSP governor. The appointment of two technocrats, who have spent their careers in government, suggests that the new president is delegating management of the economy to experts.
  • The incoming administration will also appoint Arsenio Balisacan to the National Economic and Development Authority (NEDA), a post he held during the Aquino administration, and former UP president Alfredo Pascual to the Department of Trade and Industry (DTI). The economic team is shaping up to be run by competent bureaucrats, which should ease investor concerns. 


Philippine Bonds

Philippine Bond Yields moved higher by an average of 0.015%. This was a lower increase from the large spikes seen the previous weeks.  

  • The Bureau of Treasury (BTr) partially awarded the latest 3-year bond auction at an average yield of 4.994%. The BTr awarded Php 9.3 billion out of the Php 35 billion offered. This rejection is the first sign shown by the BTr that it is willing to cap the rise in yields. 
  • The Bangko Sentral ng Pilipinas (BSP) upwardly revised its average inflation forecast higher for 2022 to 4.6% from 4.3%, beyond their 2-4% target. The 2023 target was also revised to 3.9% from 3.6% previously. The BSP is expected to hike rates in the coming monetary board meeting as it aims to ease inflationary pressures.


FWD Guidance: Uncertainty leads to downside risks, but diversification and a long-term investment horizon still provide the best chance for financial success.

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Disclaimer: The purpose of this article is to inform and should not be taken as an advice or offer to purchase securities. Seek professional advice before making a decision based on this presentation. Information given does not represent the views of FWD and its agents and employees.

The information here is compiled from various credible sources and is a summary of a particular period only. Though we strive to provide accurate and complete information, we cannot guarantee that this article will be error-free.