shutterstock_1018769956
MANILA, July 26 (Bloomberg): Philippine stocks and the peso rose after the nation’s President Ferdinand Marcos Jr.’s pledge to pursue "prudent” fiscal management and press ahead with tax reforms.
Marcos, in his maiden state-of-the-nation speech on Monday, said he aims to raise revenue and sustain infrastructure spending at 5% of gross domestic product to spur annual economic growth of up to 8% from 2023 through 2028.
The South-East Asian nation is targeting to expand the economy by 6.5% to 7.5% this year.
The country’s benchmark stock index advanced as much as 0.4% Tuesday before closing 0.2% higher while the peso jumped as much as 1.5%, the most since November 2007.
The Philippine Stock Exchange Index has slumped more than 17% from its peak in February as a weakening peso, combined with rising interest rates and elevated inflation, spooked investors.
The policy direction, however, provides a clear and positive path for Philippine’s equities in the next six years and may deliver an attractive payback for those buying stocks amid the current downturn, analysts said.
A gauge of the nation’s biggest listed holding companies, which are expected to benefit under Marcos’ policy focus, led gains among sectoral measures. JG Summit Holdings Inc. and Aboitiz Equity Ventures Inc. climbed at least 2.3% each.
Energy stocks such as ACE Enexor Inc. and Aboitiz Power Corp. also advanced as Marcos pushes for solar power and an expansion of the local natural gas industry to bring down power costs and boost the nation’s energy sufficiency.
Still, some analysts are hesitant about Marcos’ broad economic policies. "There is cautious optimism but given the headwinds and until it materializes, it may be too soon to tell,” said Robert Dan Roces, chief economist at Security Bank Co. in Manila.
Marcos asked Congress to prioritize laws to right-size the government, raise agricultural productivity, attract investments and expand the nation’s power supply by increasing renewables, back the development of the natural gas industry and explore nuclear plants. He also wants financial assistance extended to distressed enterprises critical to the economic recovery.
Meanwhile, Philippine central bank Governor Felipe Medalla narrowed the options for the next policy decision to a quarter or half-a-point interest-rate increase, after the bank earlier this month delivered a surprise, out-of-schedule 75-basis-point increase on its benchmark overnight borrowing rate to 3.25%. - Bloomberg
