Philippine Country Report Asia Securities Forum 2018 November 1-3, - - PowerPoint PPT Presentation

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

2018

6.5%- 6.9%

2019 2022 7.0 – 8.0 % 7.0 – 8.0 %

Four Decades of Rising Philippine GDP Growth Official Philippine GDP Growth Forecast (2018-2022)

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 Foreign Direct Investments (US$ Billions)

27.2%

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

• 1,0

0,0 1,0 2,0 3,0 4,0 5,0 6,0 7,0 8,0 2012 2013 2014 2015 2016 2017 2018

BSP POLICY RATE AND INFLATION

Policy Rate (%) Inflation Rate (%) Source: BSP

2018 2019 2020 INFLATION FORECAST 5.2% 4.3% 3.2%

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

• $3.3B

Current Account

• $3.1B

Increase in Oil Bill

$1.6B

Balance of Payments

• $860M

Current Account

• $2.5B

Increase in Oil Bill

$2.3B

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

End-September 2018 Beginning 2018 10-yr. Treasury Yield Inflation Rate Real Interest Rate 10-yr. Treasury Yield Inflation Rate Real Interest Rate Philippines 7.23% 5.0% 2.23% 5.69% 2.9% 2.79% U.S. 3.06% 2.5% 0.76% 2.41% 2.1% 0.31% Differential 4.17% 2.5% 1.47% 3.28% 0.8% 2.48%

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56

USD/PHP

P52-P55

(2019-2022)

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

P57-B Follow-On Offering

Philippine Stock Exchange Index (2009-2018)

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