A PROPOSAL FOR MONTH YEAR (ALL CAPS) CHARTBOOK. Market Indicators

Transcription

1 A PROPOSAL FOR MONTH YEAR (ALL CAPS) CHARTBOOK Market Indicators November 2015

2 For more information, contact: Janlo de los Reyes Manager Research and Consultancy Leo De Leon Senior Analyst Research and Consultancy Cushman & Wakefield, Inc. 9/F Ecotower 32nd Street corner 9 th Avenue, Bonifacio Global City Taguig City, Metro Manila 1634 Philippines Cushman & Wakefield P a g e 1

3 Summary MACROECONOMY Gross domestic product (GDP) for the second quarter improved relative to the previous quarter, expanding by 9.5% quarter-on-quarter (QoQ) and 5.6% year-onyear (YoY). The service sector continues to drive the economy, despite decelerating to 6.2% YoY. Growth of prices hit a new low for the year, as inflation was measured at 0.4% as of the end of September due to stable food, oil, and power rates. The last two quarters should see the economy improve further as household consumption and government spending are expected to increase in the last half of the year. EQUITY The PSEi closed below the 7,000-mark at the end of September, as investors have become more cautious. Many eyes are fixed on China s recent economic slowdown and the US Federal Reserve s possible decision to raise interest rates. Approved foreign investments (FI) in the second quarter improved to PHP 36.2 billion, a slight improvement from the first quarter. However, total approved FI for the first half of the year saw a drop by 21% YoY. DEBT Lending activity continues to grow at a healthy rate, posting year-to-date (YTD) growth of 6.4% as of August month-end. Real estate activities possesses the largest share at the amount of PHP million, or 19.4% of total outstanding loans. Interest rates remain steady at 4%, as Bangko Sentral ng Pilipinas (BSP) feel existing rates and economic conditions are sufficient to stimulate growth. BUSINESS Business confidence for the current quarter fell in the third quarter of 2015 to 41.4, a substantial drop from the 49.2 recorded for the previous quarter. Overall, businesses are more upbeat for next quarter, due to increased economic activity and spending. The producer price index (PPI) and general wholesale price index (GWPI) both decreased by 0.1% and 4.1%, respectively. CONSUMER Consumer confidence improved in the third quarter of 2015, with several households anticipating more available jobs, higher income, and increased production of goods due to the upcoming holiday season. The same optimism is expected to carry over the next 12 months, as well. Cushman & Wakefield P a g e 2

4 Macroeconomic Environment The economy s growth fared better in Q2, expanding by 5.6% YoY, though still lower than expected. FIGURE 1.1 QUARTERLY GDP INDEX (MAR 1981 = 100) While household consumption, government spending, and capital formation improved on their Q growth, exports decelerated to just 3.7% growth, while imports increased to 12.7%. FIGURE 1.2 QUARTERLY GDP (IN PHP MILLIONS) Cushman & Wakefield P a g e 3

5 Services persisted to push growth forward, contributing 3.5 percentage points (pp) to total GDP growth for the quarter. Other services, in particular, improved to 9.0% growth YoY in Q2. FIGURE 1.3 QUARTERLY GDP INDEX: INCOME BY SECTOR (MAR 1981 = 100) 57.7% of total GDP is attributed to the services sector, while agriculture contracted by 0.5% YoY, and only makes up 7.2% of total GDP as of Q FIGURE 1.4 QUARTERLY GDP: INCOME BY SECTOR (IN PHP MILLIONS) Average annual GDP growth at the end of 2014 was 6.1%. While the government has maintained a 7-8% target for 2015, they have realistically admitted to a more probable 6-6.5% growth rate for the year. FIGURE 1.5 ANNUAL GDP INDEX (1981 = 100) Cushman & Wakefield P a g e 4

6 Household consumption, which constituted 72% of total GDP in 2014, is expected to remain as the strongest contributor to growth as it picks up further in the last half of FIGURE 1.6 ANNUAL GDP (IN PHP MILLIONS) As of the end of 2014, the services sector was the primary driver of the economy, while the industry sector grew by 8.9% to help boost Q4 GDP growth to 6.6%. YTD value of services as of Q in real terms is PHP 2.1 billion, greater than PHP 2.0 billion logged in the same period in FIGURE 1.7 ANNUAL GDP INDEX: INCOME BY SECTOR (1982 = 100) Annual GDP summed up to PHP 7.2 trillion, with services making up 57% of the total. Industry increased to 33%, while agriculture took up the remaining 10%. FIGURE 1.8 ANNUAL GDP: INCOME BY SECTOR (IN PHP MILLIONS) Cushman & Wakefield P a g e 5

7 Construction and Real Estate, Renting and Business Activities grew by a combined 9.5% YoY in Q FIGURE 1.9 GDP COMPONENTS INDEX: GROWTH OF SELECTED INDUSTRIES increasing their share to 18.2% of total GDP. FIGURE 1.10 GDP COMPONENTS: SELECTED INDUSTRIES, % OF GDP Overall price levels decelerated further in September, as headline inflation and core inflation slowed down to 0.4% and 1.4%, respectively, due to stable food, gas, and power rates. FIGURE 1.11 INFLATION RATE: HEADLINE AND CORE Cushman & Wakefield P a g e 6

8 Inflation in the NCR fell 0.1 pp month-on-month (MoM) to 0.1%, and inflation in AONCR dropped by 0.4 pp to 0.4%. FIGURE 1.12 INFLATION RATE: NCR AND AONCR The PHP breached the PHP 47- mark in September, and closed at a rate of PHP against the USD, the lowest month-end rate since FIGURE 1.13 CROSS RATES WITH SELECTED CURRENCIES (PHP PER FOREIGN CURRENCY; JAN 2002 = 100) GIR jumped up slightly to USD 80.6 billion in August 2015, from USD 80.3 billion the previous month. This translates to an annual growth rate of 1.2%. FIGURE 1.14 GROSS INTERNATIONAL RESERVES INDEX (JAN 2000 = 100) Cushman & Wakefield P a g e 7

9 Foreign Exchange continued to rise, hitting the USD 1.1 billionmark by September month-end, which is a 95.8% rise YTD. FIGURE 1.15 GROSS INTERNATIONAL RESERVES (IN USD MILLIONS) Cushman & Wakefield P a g e 8

10 Equity Environment The PSEi closed at 6,893.98, the lowest end-of-period close since July of FIGURE 2.1 PHILIPPINE STOCK EXCHANGE INDICES (JAN 2006 = 100) Total Market Capitalization stood at PHP 13.3 trillion, a YTD fall of 8.1%, as investors remain cautious amidst a global economic slowdown. FIGURE 2.2 PHILIPPINE STOCK MARKET CAPITALIZATION Cushman & Wakefield P a g e 9

11 The PSEi s P/E also hit its lowest of 2015 at 19.5x. FIGURE 2.3 PSEI HISTORICAL PRICE-TO-EARNINGS RATIO The market capitalization to GDP ratio was measured at 754.8% in June 2015, which is lower than the 848.4% posted in March, but better than the 728.7% in the June of last year. FIGURE 2.4 TOTAL PSEI CAPITALIZATION-TO-GDP RATIO Q registered portfolio investment outflows of USD 1.4 billion, a turnaround from the inflows of USD 1.2 billion in the same period last year. FIGURE 2.5 NET FOREIGN PORTFOLIO INVESTMENTS INDEX (JAN 1999 = 100) Cushman & Wakefield P a g e 10

12 Total Approved Foreign Direct Investments for Q improved by just 0.5% YoY, While investments via BOI, PEZA, SBMA, and CEZA grew, investments from CDC and contracted by 90.5% and 93.3%, respectively, YoY. FIGURE 2.6 APPROVED FOREIGN DIRECT INVESTMENTS (IN PHP MILLIONS) BSP remains steady in maintaining policy rates as is, insisting that there is no need for stimulus from the central bank to promote growth. Movements from the Federal Reserve continue to be monitored closely. FIGURE 3.1 SELECTED BSP INTEREST RATES Bank average lending rate was 5.56% in August 2015, with rates ranging from 4.50% to 6.98%. Short-term and long-term deposit rates increased slightly to 1.47% and 3.13% respectively. FIGURE 3.2 SELECTED BANK INTEREST RATES Cushman & Wakefield P a g e 11

13 Total loan growth was recorded at 13.9% YoY in August 2015, due in large part to loan increases in construction, real estate and business activities, health, and education. FIGURE 3.3 BANKS OUTSTANDING LOANS INDEX (SEPT 2008 = 100) Construction, real estate and business activities remained robust as the largest contributor to outstanding loans at 23.9%. Manufacturing follows at 17.1%. FIGURE 3.4 BANKS OUTSTANDING LOANS (IN PHP MILLIONS) Total real estate loans (REL) grew further by 25.8% YoY in Q2 2015, amounting to PHP 1.2 trillion. FIGURE 3.5 REAL ESTATE EXPOSURE (MAR 2013 = 100) Cushman & Wakefield P a g e 12

14 Commercial loans continues to outpace residential loans, with the former amounting to PHP billion, and the latter, PHP billion. FIGURE 3.6 REAL ESTATE LOANS (IN PHP BILLIONS) Real estate investments (REI), measured via debt and equity securities, amounted to PHP billion in Q2 2015, reflecting 0.6% YoY growth. FIGURE 3.7 REAL ESTATE INVESTMENTS (IN PHP BILLIONS) Total Non-performing loans (NPLs) improved from 1.90% in July to 1.86% as of August Despite the growing amount of loans, NPLs remain consistently low in comparison. FIGURE 3.8 NON-PERFORMING LOANS INDEX (JAN 2010 = 100) Cushman & Wakefield P a g e 13

15 Universal banks had NPLs of 1.79%, while commercial banks NPLs worsened slightly to 4.52%. FIGURE 3.9 NON-PERFORMING LOANS VS. TOTAL OUTSTANDING LOANS (IN PHP MILLIONS) The interest rate spread between 2-year and 10-year treasury bills increased marginally to 119 basis points (bps) as of September 2015, relative to 113 basis points in August. FIGURE 3.10 INTEREST RATE SPREAD: 2-YEAR VS. 10-YEAR TREASURY BILLS (IN BPS) Cushman & Wakefield P a g e 14

16 Business Environment Overall business confidence took a slight dip to 41.4% in Q3 2015, as demand was expected to be weaker due to the poor weather conditions, lower crop production, and increased spending on education, among other reasons. FIGURE 4.1 BUSINESS EXPECTATIONS: CURRENT QUARTER Businesses expect a better Q4 (53.1%) as economic activity picks up and stronger demand stimulates production processes. FIGURE 4.2 BUSINESS EXPECTATIONS: NEXT QUARTER Cushman & Wakefield P a g e 15

17 Sharp decreases in industry expectations from Q2 to Q3 across several sectors dimmed the business outlook for the quarter. Hotel and restaurants (up to 32.2% from 31.5%) and business activities (up to 52.2% from 45.7%) were the only subsectors to improve in Q3. FIGURE 4.3 INDUSTRY EXPECTATIONS: CURRENT QUARTER Optimism for Q4, in turn, is very high, as services such as financial intermediation (72.3%), hotel and restaurants (72.2%) and real estate (68.5%) are expected to rebound. FIGURE 4.4 INDUSTRY EXPECTATIONS: NEXT QUARTER Businesses still view competition as the most difficult constraint in Q3 (55.4%). Insufficient demand, which increased 3.6 pp, is considered a constraint for 29% of businesses. FIGURE 4.5 BUSINESS CONSTRAINTS Cushman & Wakefield P a g e 16

18 The Producer Price Index (PPI) remained flat from July to August, changing from to Prices remained relatively flat, with non-ferrous metals registering the largest MoM decrease (-2.4%). FIGURE 4.6 PRODUCER PRICE INDEX (2000 = 100) After rising slightly in June to 226.9, the General Wholesale Price Index (GWPI) continued its downward trend to Crude materials and mineral fuel lubricants had the largest MoM decreases, -2.0% and -4.5%, respectively. FIGURE 4.7 WHOLESALE PRICE INDEX (1998 = 100) While 2014 finished with 4.8 million tourist arrivals, 2015 is on pace to eclipse that mark. Arrivals from January to August 2015 was marked at 3.6 million, a 9.9% increase from the same period in FIGURE 4.8 TOURISTS BY REGION OF ORIGIN INDEX (1996 = 100) Cushman & Wakefield P a g e 17

19 Similar to 2014, East Asia and North America drive tourist arrivals, helped along by South Korea and the United States, who provided the largest shares of tourists at the country level both in 2014 and for the first eight months of FIGURE 4.9 TOURISTS BY REGION OF ORIGIN Cushman & Wakefield P a g e 18

20 Consumer Environment Consumer perspective on the current quarter improved and were less pessimistic in Q3 at -11.6%. Greater job availability and higher salaries were among the contributing factors for a less negative outlook. FIGURE 5.1 CONSUMER EXPECTATIONS: CURRENT QUARTER Positive sentiment is expected to carry on into the final quarter of the year, as additional income, employment opportunities, and potentially more overseas Filipino (OF) workers amongst households pushed next-quarter sentiment up to 5.8% from -0.4% in Q2. FIGURE 5.2 CONSUMER EXPECTATIONS SURVEY: NEXT QUARTER Cushman & Wakefield P a g e 19

21 Future consumer outlook decreased slightly, changing from 16.4% to 15.8%. FIGURE 5.3 CONSUMER EXPECTATIONS: NEXT YEAR While consumption expectations on big-ticket items remained positive, there was a noticeable decline from 30.3% in Q2 to 27.4% in Q3. Households were looking to spend more on basic necessities for the quarter like food, education, and medication. FIGURE 5.4 HOUSEHOLDS THAT CONSIDER CURRENT QUARTER AS GOOD TIME TO BUY Spending on big-ticket items remains positive within the next 12 months, but there is a slight decrease to 11.6%. However, it was observed that households in Metro Manila are more optimistic about such purchases as opposed to those AONCR. FIGURE 5.5 BUYING INTENTIONS WITHIN A YEAR Cushman & Wakefield P a g e 20

22 Consumer Price Index (CPI) slipped to in September, from in August Food and non-alcoholic beverages had the largest decrease MoM at - 0.2%. FIGURE 5.6 CONSUMER PRICE INDEX (2006 = 100) The Retail Price Index (RPI) grew to in August 2015, as food and beverages and tobacco grew by 1.6% and 2.3% YTD. Crude materials, in turn, contracted by 2.0%. FIGURE 5.7 RETAIL PRICE INDEX (2000 = 100) Unemployment rate marginally increased from last quarter to 6.5% in Q3 2015, but improved from 6.7% last year. FIGURE 5.8 UNEMPLOYMENT RATE Cushman & Wakefield P a g e 21

23 With the best month of sales in history, car sales increased 29.4% YoY in September YTD total is now at 206,284 units sold. FIGURE 5.9 CAR SALES INDEX (JAN 2006 = 100) Commercial vehicles accounted for 60.5% of units sold in September 2015, while passenger cars made up the remaining 39.5%. FIGURE 5.10 MONTHLY CAR SALES (UNITS SOLD) OF Remittances experienced its first contraction since April 2003 in August 2015, as remittances declined by 0.6% to USD 2.04 billion. FIGURE 5.11 OF REMITTANCES INDEX (JAN 2008 = 100) Cushman & Wakefield P a g e 22

24 Amid the decrease in inflows, the United States increased its share of remittances to 43.6%, while Europe excluding the UK, improved from the previous month to 15.3%. FIGURE 5.12 OF REMITTANCES BY SOURCE (IN USD THOUSANDS) Cushman & Wakefield P a g e 23

25 Real Estate Environment Construction projects in the second quarter of 2015 grew by 0.7% from 32,729 last year to 32,974. FIGURE 6.1 NEW CONSTRUCTION PROJECTS INDEX (MAR 2001 = 100) For the Q2 2015, 74.4% of all projects were residential, while 12.0% were non-residential projects. FIGURE 6.2 NEW CONSTRUCTION PROJECTS Cushman & Wakefield P a g e 24

26 Overall Construction values in Q were higher than last year by 13%, due to a 26.3% YoY increase in the value of nonresidential projects. FIGURE 6.3 CONSTRUCTION VALUES INDEX (MAR 2001 = 100) Non-residential construction values increased to comprise 44.0% of the value of projects, while residential projects decreased from the previous quarter to 46.5%. FIGURE 6.4 CONSTRUCTION VALUES (IN PHP THOUSANDS) Average value per project increased by a mere 3.3% YoY for residential projects, and nonresidential project values grew by 13.9% YoY for Q FIGURE 6.5 AVERAGE VALUE PER PROJECT INDEX (MAR 2001 = 100) Cushman & Wakefield P a g e 25

27 Issued licenses to sell slowed to 216,503 in 2014, as opposed to the 225,051 recorded in FIGURE 6.6 ISSUED LICENSES TO SELL INDEX (2001 = 100) Condominium and Economic Housing made up the bulk of licenses, totalling a combined 139,811 licenses, or 64.6% of all licenses issued. FIGURE 6.7 ISSUED LICENSES TO SELL The CMWPI remained stable, recorded at in September 2015, as changes to materials prices were minimal. FIGURE 6.8 CONSTRUCTION MATERIALS WHOLESALE PRICE INDEX (2000 = 100) Cushman & Wakefield P a g e 26

28 Standard class hotels are the fastest-growing category of hotel rooms in the local market, having more than quadrupled in number since FIGURE 6.9 HOTEL ROOMS INDEX IN MANILA BY TYPE (1988 = 100) Of the 30,748 hotel rooms available, deluxe accommodations still outnumber other categories in the market at roughly 54.8% of the market share. FIGURE 6.10 HOTEL ROOMS IN MANILA BY TYPE Occupancy rates have remained relatively stable and healthy over the past four years, with overall occupancy recorded within the 64-69% range. FIGURE 6.11 HOTEL OCCUPANCY RATES BY TYPE Cushman & Wakefield P a g e 27

29 Summary Table FIGURE NAME FREQUENCY LAST UPDATE SOURCE MACROECONOMIC ENVIRONMENT 1.1 Quarterly GDP Index Quarterly June 2015 Philippine Statistics Authority (PSA), Cushman & Wakefield 1.2 Quarterly GDP Quarterly June 2015 PSA 1.3 Quarterly GDP Index: Income by Sector Quarterly June 2015 PSA, Cushman & Wakefield 1.4 Quarterly GDP: Income by Sector Quarterly June 2015 PSA 1.5 Annual GDP Index Annual December Annual GDP Annual December 2014 PSA, Cushman & Wakefield PSA, Cushman & Wakefield 1.7 Annual GDP Index: Income by Sector Annual December 2014 PSA, Cushman & Wakefield 1.8 Annual GDP: Income by Sector Annual December 2014 PSA, Cushman & Wakefield 1.9 GDP Components Index: Growth of Selected Industries Quarterly June 2015 PSA, Cushman & Wakefield GDP Components: Selected Industries, % of GDP Inflation Rate: Headline and Core Inflation Rate: NCR and AONCR Quarterly June 2015 PSA Monthly September 2015 Bangko Sentral ng Pilipinas (BSP) Monthly September 2015 BSP, PSA 1.13 Cross Rates with Selected Currencies Index Monthly September 2015 BSP, Cushman & Wakefield 1.14 Gross International Reserves Index Monthly September 2015 BSP, Cushman & Wakefield 1.15 Gross International Reserves Monthly September 2015 BSP EQUITY ENVIRONMENT 2.1 Philippine Stock Exchange Indices Monthly September 2015 Philippine Stock Exchange (PSE), BSP, Cushman & Wakefield 2.2 Philippine Stock Market Capitalization Monthly September 2015 BSP Cushman & Wakefield P a g e 28

30 FIGURE NAME FREQUENCY LAST UPDATE SOURCE 2.3 PSEi Historical Price-to- Earnings Ratio Monthly August 2015 BSP 2.4 Total PSEi Capitalization-to- GDP Ratio Quarterly June 2015 PSE, BSP, Cushman & Wakefield 2.5 Net Foreign Portfolio Investments Index Annual December 2014 BSP, Cushman & Wakefield 2.6 Approved Foreign Direct Investments Quarterly June 2015 PSA Debt Environment 3.1 Selected BSP Interest Rates Monthly September 2015 BSP 3.2 Selected Bank Interest Rates Monthly September 2015 BSP 3.3 Banks Outstanding Loans Index Monthly August 2015 BSP, Cushman & Wakefield 3.4 Banks Outstanding Loans Monthly August 2015 BSP 3.5 Real Estate Exposure Index Quarterly June 2015 BSP, Cushman & Wakefield 3.6 Real Estate Loans Quarterly June 2015 BSP 3.7 Real Estate Investments Monthly August 2015 BSP 3.8 Non-Performing Loans Index Monthly August 2015 BSP 3.9 Non-Performing Loans vs. Total Outstanding Loans Monthly August 2015 BSP 3.10 Interest Rate Spread: 2-Year vs. 10-Year Treasury Bills Monthly September 2015 Asia Development Bank Asian Bonds Online BUSINESS ENVIRONMENT Business Expectations: Current Quarter Business Expectations: Next Quarter Industry Expectations: Current Quarter Industry Expectations: Next Quarter Quarterly June 2015 BSP Quarterly June 2015 BSP Quarterly June 2015 BSP Quarterly June 2015 BSP 4.5 Business Constraints Quarterly June 2015 BSP 4.6 Producer Price Index Monthly August 2015 BSP, PSA 4.7 Wholesale Price Index Monthly August 2015 BSP, PSA Cushman & Wakefield P a g e 29

31 FIGURE NAME FREQUENCY LAST UPDATE SOURCE 4.8 Tourists by Region of Origin Index Annual December 2014 Department of Tourism (DOT) Philippines, PSA, Cushman & Wakefield 4.9 Tourists by Region of Origin Annual December 2014 DOT, PSA CONSUMER ENVIRONMENT Consumer Expectations: Current Quarter Consumer Expectations: Next Quarter Consumer Expectations: Next Year Households that Consider Current Quarter as Good Time to Buy Buying Intentions Within a Year Quarterly June 2015 BSP Quarterly June 2015 BSP Quarterly June 2015 BSP Quarterly June 2015 BSP Quarterly June 2015 BSP 5.6 Consumer Price Index Monthly September 2015 BSP 5.7 Retail Price Index Monthly December 2014 BSP, PSA 5.8 Unemployment Rate Quarterly July 2015 BSP 5.9 Car Sales Index Monthly June 2015 Chamber of Automotive Manufacturers of the Philippines Inc. (CAMPI), Cushman & Wakefield 5.10 Monthly Car Sales Monthly September 2015 CAMPI 5.11 OF Remittances Index Monthly August 2015 BSP, Cushman & Wakefield 5.12 OF Remittances by Source Monthly August 2015 BSP REAL ESTATE ENVIRONMENT 6.1 New Construction Projects Index Quarterly June 2015 Philippine Statistics Authority (PSA), Cushman & Wakefield 6.2 New Construction Projects Quarterly June 2015 PSA 6.3 Construction Values Index Quarterly June 2015 PSA, Cushman & Wakefield 6.4 Construction Values Quarterly June 2015 PSA 6.5 Average Value per Project Quarterly June 2015 PSA, Cushman & Wakefield Cushman & Wakefield P a g e 30

32 FIGURE NAME FREQUENCY LAST UPDATE SOURCE 6.6 Issued Licenses to Sell Index Annual December 2014 Housing and Land Use Regulatory Board (HLURB), Cushman & Wakefield 6.7 Issued Licenses to Sell Annual December 2014 HLURB 6.8 Construction Materials Wholesale Price Index Monthly September 2015 PSA 6.9 Hotel Rooms Index in Manila by Type Annual December 2014 DOT, PSA, Cushman & Wakefield Hotel Rooms in Manila by Type Hotel Occupancy Rates by Type Annual December 2014 DOT, PSA Annual December 2014 DOT, PSA Cushman & Wakefield P a g e 31