Philippine President Ferdinand Marcos Jr.’s pledge to pursue “prudent” fiscal management and press ahead with tax reforms may boost the nation’s equities, which are trading near bear-market territory. The peso surged.

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 Southeast Asian nation is targeting to expand the economy by 6.5% to 7.5% this year.

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.

The country’s benchmark advanced as much as 0.4% Tuesday. All sectors, except for a gauge of property developers, rose. The peso jumped as much as 0.9%, the most in more than two years. 

Speech Power

Philippine stocks tend to gain after the president makes a state-of-the-nation speech

Still, some investors remain 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.

Source:
courtesy of BLOOMBERG

by Ian C Sayson

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