Philippine Country Report Asia Securities Forum 2016 Ismael G. Cruz Philippine Association of Securities Brokers Dealers
PHL GDP Growth Of 6.2% from 2010 to 2015, Accelerating from 4.9% in 2000-2009, and 2.3% in 1990-1999 6.2% 6.2% 2.8% 4.5% 6.2% 2.8% 4.5% 4.5% Source: National Economic Development Authority 2.8% CHN 8.2% PHL 6.2% VNM 6.0% SGP 5.7% MYS 5.6% IDN 5.6% THA 3.7% 2010-2015 Source: Wall Street Journal More Importantly, The Quality of Growth Has Improved with Greater Contribution from Investment and Manufacturing
Robust GDP Growth Of 6.9% in 1H2016 Fixed Investment Growth And GDP Growth Contribution 27.7% Source: ADB Outlook 2016 (Update) Fixed Investment As A Percentage Of GDP 32.1 24.8 25.3 27.7 Source: ADB Outlook 2016 (Update) Fixed Investment Grew by 27.7% and Accounted for 23.7% of GDP, The Highest In More Than Ten Years and Closer to SE Asian Peers: Malaysia (24.8% of GDP), Thailand (25.3% of GDP) and Indonesia (32.1% of GDP)
Inflation Rate at Record Low Of 1.4% in 7M16 Philippine Central Bank Monetary Policy Remains Accommodative: Policy Rate Reduced by 100 bps to 3% in June 2016 In percentage Headline Inflation Core Inflation, Headline Inflation and BSP Key Policy Rate 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Core Inflation Headline Inflation BSP Key Policy Rate 4% 3% Source: World Bank: Philippines Economic Update (October 2016) Industry Capital Adequacy Ratio 15.7% Source: The Philippine Economy At A Turning Point, Cielito F. Habito Source: BSP Report on Economic and Financial Developments (2Q16) Stable And Well-Capitalized Banking System (NPL Ratio: 2.2%, CAR: 15.7%)
Robust Economic Growth and Low Inflation Have Resulted In Higher Job Creation Four Million New Jobs in the Last Six Years; Unemployment Rate Down to 5.4% Unemployment Rate (%) $25-B IT-BPO Industry 7 6.8 6.6 6.4 6.2 6 5.8 5.6 5.4 5.2 5 7.0 6.38 5.40 2004-09 2010-15 2016 2005 138k jobs 2014 1m jobs 2016 1.3m jobs Source: The Philippine Economy At A Turning Point, Cielito F. Habito Source: Wall Street Journal The $25-B Information Technology- Business Process Outsourcing (IT-BPO) Industry Has Contributed Significantly, From 138k Jobs in 2005 To 1m in 2014 and Expected To Reach 1.3m In 2016 As A Result, One Million Overseas Filipinos Have Come Home, Since the Peak of 10.2m in 2011
Having Achieved Fiscal Consolidation, i.e. Reduced Budget Deficit Of 1.7% Of GDP and Public Debt Of 43% Of GDP, The Country s Fiscal Position Will Be More Supportive of Growth In 2017 Fiscal Stimulus 2017 Budget of P3.35 Trillion, +11.5% y-y 3% Deficit Ceiling Infrastructure Spending: 5.4% of GDP Source ADB Outlook 2016 (Update) P7 Trillion Infrastructure Spending (2017-2022)
The Country Has Ample Buffer against External Shocks Record GIR of $85.3b, Equivalent to 10.4 Months of Imports Gross International Reserves, Current Account Balance (in % of GDP) $85.3b 3.5% FDI Inflows $4.2 billion (up 100%) Source: World Bank: Philippines Economic Update (October 2016) Current Account Surplus: 14 Consecutive Years; FDI Inflows Doubled To $4.2b in 1H16
The Strong Macro Fundamentals Is Reflected In the Strengthening Of The Peso The Peso Real Effective Exchange Rate (REER) Has Appreciated By 23% Over The Past 10 Years Or 2.3% per Year Real = Inflationadjusted Effective = Tradeweighted Source: Bank of International Settlements Aug 2016 2007 % Chg Jan 2016 %Chg Nominal Peso:Dollar P47.11 P49.03 +3.9% 47.06-0.1% Real Effective Peso 113.12 91.66 +23% 116.57-3.0% Nominal Peso: Dollar Rate Has Appreciated By Only 4%; YTD Nominal Peso:Dollar Is Down -0.1% vs. Peso REER -3.0%
Philippine Stock Market: World s Strongest Bull Market +308%, Or 41% Per Year 308% 305% Global Stocks Bull Market Performances 257% 217% 188% 178% 138% 115% 106% 93% 90% 87% 42% PSEi Indonesia Thailand S&P 500 Shenzen Dow MSCI World Euro StoxxHong Kong MSCI Asia UK Euro Zone Shanghai
Government Bond Yields Have Come Down Significantly YTD 20-Year LCY Government Bond Yield: -70 bps To 4.82% PH LCY Government Bonds Latest Closing (25-Oct-2016) YTD (bp) 1 Month 1.443 122.7 3 Month 1.477 119.0 6 Month 1.399 151.9 1 Year 1.595 77.6 2 Year 2.601 138.4 3 Year 3.705 4.3 4 Year 3.084 79.1 5 Year 3.927 0.2 7 Year 3.834 75.1 10 Year 3.801 29.9 20 Year 4.816 70.6 PH USD Denominated Government Bonds Latest Closing (25-Oct-2016) YTD (bp) 4 Year 1.617 44.2 5 Year 1.861 30.7 7 Year 2.348 67.6 9 Year 2.344 77.5 10 Year 2.620 71.0 15 Year 3.156 93.2 16 Year 3.226 75.4 19 Year 3.329 68.0 21 Year 3.327 49.3 24 Year 3.357 49.7 Source: Asia Bond Monitor LCY Bond Issuances (Php Bn) Source: BSP Report on Economic and Financial Developments (2Q16) Private Sector Bond Issuances (Php Bn) Source: FMIC Mid-year Economic Briefing P277b, up 30% LCY Bond Issuances Have Increased By 30% to P277b in 1H16; Private Sector Issuances Increased By 42% to 50b YTD July
2016 Being A National Election Year, We Present the Performances Of Past Philippine Presidents, In Terms of GDP and the Stock Market, During Their Respective Terms of Office President GDP Growth Term PSEi Performance Average 1992 +3.8% +79% +13% 1998 +2.3% 2004 +4.5% -34% (2.7 years) +124% (9.3 years) -13% +13% 2010 +6.2% +116% +19% Average +4.4% +89% +8% (Per Term) +20% (24 Years) 2016???