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Marcos SONA Gives Peso A Shot In The Arm

PHP

The Philippine peso comfortably outperforms its peers from the Asia EM basket as participants digest President Marcos' policy agenda and comments from BSP Governor Medalla.

  • Most analysts assessed the first State of the Nation Address from President Marcos positively, as the leader pledged commitment to "prudent" fiscal management and laid out plans to boost economic growth to an ambitious target of +8% Y/Y. Marcos vowed to keep infrastructure spending at 5% of GDP, improve spending and administrative efficiency, and revamp the tax system to increase revenue collection. He also committed not to declare another lockdown, citing the need to balance public health and economic concerns.
  • With the new President's maiden SONA seen removing some near-term uncertainties and having pro-growth implications, local equities may now get some reprieve. Benchmark stock index flirted with bear market last month as the peso cratered (see Figure 1), which means Marcos' pro-growth agenda will be much welcomed.

Fig. 1: Philippines Stock Exchange PSEi Index vs. USD/PHP (inversed)

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The Philippine peso comfortably outperforms its peers from the Asia EM basket as participants digest President Marcos' policy agenda and comments from BSP Governor Medalla.

  • Most analysts assessed the first State of the Nation Address from President Marcos positively, as the leader pledged commitment to "prudent" fiscal management and laid out plans to boost economic growth to an ambitious target of +8% Y/Y. Marcos vowed to keep infrastructure spending at 5% of GDP, improve spending and administrative efficiency, and revamp the tax system to increase revenue collection. He also committed not to declare another lockdown, citing the need to balance public health and economic concerns.
  • With the new President's maiden SONA seen removing some near-term uncertainties and having pro-growth implications, local equities may now get some reprieve. Benchmark stock index flirted with bear market last month as the peso cratered (see Figure 1), which means Marcos' pro-growth agenda will be much welcomed.

Fig. 1: Philippines Stock Exchange PSEi Index vs. USD/PHP (inversed)

Keep reading...Show less