Philippine CEOs remain confident in their revenue growth prospects over the next 12 months.

The Experts

Global markets steady amid inflation surge

Global stocks found support despite the surge in August inflation as the downward trend is expected to continue.

FWD Investment Team


Global and Philippine Market Update

Sept. 7  to Sept. 13, 2023


Global Markets

Global Stocks find support despite the surge in August inflation as the downward trend is expected to continue.

  • Treasury Secretary Janet Yelen expressed confidence in the US’ ability to contain inflation without inflicting substantial damage on the job market. She maintains an optimistic outlook that recession can be avoided while effectively managing consumer price increases. Notably, headline inflation has moderated to around 3% without any accompanying declines in payrolls or GDP. This decline in inflation occurred even as the unemployment rate reached its lowest level in half a century.
  • Economic growth in the eurozone slowed down faster than expected. Consumers are restraining their spending due to rising inflation, which is eroding disposable income, while the manufacturing sector has been in decline since mid-2022. Economic theory implies that these two factors should exert downward pressure, but time will tell. However, a counterargument suggests that inflation is primarily driven by supply side issues rather than demand, which may lead to prices being less responsive to economic weakness.
  • August saw US Inflation experience its highest monthly surge, jumping to 3.7%, an increase from the 3.2% observed in July. However, core inflation, which excludes volatile food and energy prices, increased by 4.3%, a decrease from the 4.7% reported in July. This is still a positive sign as the Federal Reserve (Fed) monitors this more closely and uses it as a gauge for inflation’s long-term trend. Housing remains a key contributor to the inflation figure, primarily due to rising rents. Nevertheless, recent data indicates a notable slowdown in rent, although it may take several months for changes in aggregate rent trends to show up in inflation measures.


Philippine Stocks

Philippine Stocks retreated amid the lack of foreign flows, but local heads maintain confidence in corporate earnings.

  • Net foreign direct investments (FDI) inflows reached their lowest point in five months, reflecting investor concerns about decelerating economic growth, elevate inflation, and high interest rates. The Bangko Sentral ng Pilipinas (BSP) attributed this decline to a reduction in nonresidents’ net investment in equity capital and reinvested earnings, which offset the growth in investment in debt instruments. ING Bank N.V Manila Senior Economist Nicholas Antonio T. Mapa suggest that global economic apprehensions and worries about the Philippines’ slowing growth might have deterred investors from making substantial investments. To regain investor confidence, the Philippines must demonstrate that the second-quarter growth was an anomaly, and the country remains on track for sustained high growth rates.
  • Despite inflation and economic uncertainties, a survey conducted by PwC Philippines in collaboration with the Management Association of the Philippines (MAP) reveals that Philippine CEOs remain confident in their revenue growth prospects over the next 12 months. Out of 157 CEOs surveyed, 79% express optimism about their companies achieving revenue growth in the coming year, while an even higher percentage, 88%, hold confidence in growth over the next three years. Notably, the survey also indicates that 62% of CEOs anticipate revenue growth returning to pre-pandemic levels this year.  


Philippine Bonds

Philippine Bond yields edged lower as the treasury moved to cap the spike in rates.

  • The Bureau of Treasury (BTr) partially awarded a reissued seven-year treasury bond with a remaining term of six years and 10 months at an average rate of 6.37%. The rate would have increased to 6.427% had a full award been made. The treasury is showing their resolve to keep rates at the current levels with multiple partial awards the past month.
  • Finance Secretary Benjamin E. Diokno affirmed that despite the faster inflation rate reported in August, inflation remains on track to return to the BSP’s 2-4% target range by the fourth quarter. The ongoing decrease in the year-to date inflation rate indicates that the government’s full-year average rate target of 5-6% is still attainable. However, university of Asia and the Pacific (UA&P) Senior Economist Cid l. Terosa holds a different view, suggesting that reaching the BSPs target might be challenging due to supply-side constraints causing price pressures. Inflation stemming from supply issues is generally unaffected by changes in monetary policy.
  • The Department of Finance (DOF) recommends a temporary reduction of tariff rates on rice imports to zero in order to mitigate the surge in retail prices. A comprehensive strategy is needed to guarantee an adequate supply of rice. Secretary Diokno believes that the existing cap on rice prices is likely to remain in place for only a month, as the government acknowledges the potential negative effects of an extended price cap.



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

Sources: (1) (2) (3) (4) (5) (6) (7) (8)

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.