Equities Outlook

Outlook. Expect the market to consolidate this week to 7,700-8,000 level but with an up-ward bias as investors bet on fresh global stimulus amid weak economic data from China, US and EU. More support measures are expected from China after its exports surprisingly drop in August as shipments to the US sharply declined, while weakening jobs trend in the US further stoked recession fears and expectation of another 25-bp Fed rate cut on September 19 (PH time). Locally, the government appeased fears of inflation upticks from higher food prices after the Department of Agriculture’s confirmation of the presence of African swine flu (ASF) in some parts of Luzon. NEDA said that ASF has no significant impact to inflation for the remainder of the year as consumers can seek alternatives to pork such as poultry, beef and fish.

Key economic data to be released this week are the external trade for July (Sept. 10).

Market Review. The PSEi ended lower last week by 46.2 points to 7,933.5 (-0.6% week-on-week, w/w) amid jittery markets overseas due to escalation of US-China trade war. The first two trading sessions saw the index dropped by a huge 174.9 points as investors digested the new round of US-China tariff increases beginning September 1. However, risk-on sentiment returned for the rest of the week on news that US and China would resume trade talks in Washington next month. Year-to-date (YTD), the local bellwether has eked 6.3% gains, on the back of the P9.6bn net foreign inflows for the year.

Regional Markets. Most markets rallied last week, with China (+3.9%) and Hong Kong (+3.8%) markets posting the best weekly gains on prospects of the de-escalation of US-China trade tension and China’s further loosening of monetary policy thru RRR cut to arrest its slowing economy. Meanwhile, India (-0.9%), the Philippines (-0.6%), Malaysia (-0.5%) and Indonesia (-0.3%) bucked global market rally .

Currencies. The Philippine peso firmed up against the USD for the third straight week, gaining 14 centavos (+0.3% w/w) to close on Friday at P51.90/$. This came following the release of lower-than-expected August inflation of 1.7% vs consensus of 1.8% and renewed optimism over US-China trade talks.

Economic News

The House of Representatives approved yesterday on the third and final reading House Bill 304 or the proposed Passive Income and Financial Intermediary Tax Act (PIFITA), which encompasses the fourth package of the government’s Comprehensive Tax Reform Package (CTRP). PIFITA aims to make passive income and financial intermediary taxes simpler, fairer, and regionally competitive. Some of the provisions of the bills are:

• Unified 15% income tax rate on interest, dividend, and capital gains from the cur-rent range of zero to 30%

• Reduction of the stock transaction tax from 0.6% to 0.1% by 2025 and removal of IPO tax

• Imposition of a 0.1% transaction tax on debt instruments listed and traded in PDEx• Imposition of a uniform 5% gross receipt tax on banks and other financial interme-

diaries• Reduction of the 12% VAT to a 2% premium tax on HMO, pension and pre-need

Meanwhile, Congress also approved on the second reading House Bill 4157, or the proposed Corporate Income Tax and Incentives Reform Act (CITIRA), which seeks to cut the corporate tax rate by 1% annually from 30% to 20% by 2029, while at the same time rationalizing fiscal incentives.

Corporate News

Globe Telecom (GLO) hopes to turn its fintech arm Globe Fintech Innovation, Inc. (Mynt), the operator of its mobile wallet GCash, into a billion dollar company in the next two years. Mynt is owned by GLO, Ayala Corporation and Alibaba’s Ant Financial. GCash has 20mn reg-istered users and more than 63,000 partner merchants nationwide. GLO closed yesterday at P1,980/share, up 4.2% YTD.

PSEi 2019 Performance

Weekly Equitiesand Economic Outlook

September 10, 2019Betting on Global Stimulus

Sources: PSE data, Bloomberg

Foreign Indices

Value W-o-W YTD P/E

Dow Jones 26,797.5 1.5% 14.9% 17.6

S&P 500 2,978.7 1.8% 18.8% 18.0

FTSE 100 7,282.3 1.0% 8.2% 12.8

DAX 12,191.7 2.1% 15.5% 14.3

Nikkei 21,199.6 2.4% 5.9% 15.4

Hang Seng 26,690.8 3.8% 3.3% 10.8

Shanghai 2,999.6 3.9% 20.3% 11.8

Weekly PSEi Performance

As ofSept. 6, 2019

W-o-W Change

YTDChange

WeightIn the Index

PSEi 7,933.5 -0.6% 6.3% -

FMETF 118.9 -0.6% 6.6% -

All Shares 4,785.0 -0.5% 5.9% -

Financials 1,804.2 -1.6% 1.4% 17.8

Industrial 10,915.0 -1.9% -0.3% 11.1

Services 1,595.0 -1.8% 10.6% 10.6

Property 4,051.0 1.3% 11.7% 20.8

Holdings 7,908.1 -0.2% 7.7% 38.9

Mining & Oil 9,269.5 12.3% 13.0% 0.6

Market Statistics (in Php bn)

Sept. 6, 2019 YTD

Ave. Daily Value Turnover 6.7 7.6

Foreign Buying 15.6 699.4

Foreign Selling 17.6 689.8

Net Foreign Buying/(Selling) (2.0) 9.6

% of Foreign to Total 50 55

6,000

6,500

7,000

7,500

8,000

8,500

9,000

9/2018 10/2018 11/2018 12/2018 1/2019 2/2019 3/2019 4/2019 5/2019 6/2019 7/2019 8/2019 9/2019

Index Performer (Year-to-date)

Gainers Losers

Stock Price % Chg P/E Stock Price % Chg P/E

URC 168.50 33% 31.4 DMC 8.82 -31% 7.4

FGEN 26.50 33% 7.2 JFC 229.00 -22% 30.4

SECB 203.40 31% 13.3 MBT 70.10 -13% 9.3

ICT 131.00 31% 19.0 LTG 15.00 -10% 7.6

JGS 71.00 27% 16.1 MER 358.00 -6% 18.3

Index Performer (Week-on-Week)

Gainers Losers

Stock Price % Chg P/E Stock Price % Chg P/E

BLOOM 11.12 8% 13.8 BDO 142.50 -4% 14.8

MPI 5.20 5% 10.5 AP 36.40 -4% 9.8

ALI 49.50 5% 18.7 GLO 1,947.00 -4% 11.9

SM 1,048.00 2% 25.9 AGI 12.20 -4% 6.3

LTG 15.00 1% 7.6 JFC 229.00 -4% 30.4

Commodities (in USD)

Value W-o-W YTD

Gold (per troy ounce) 1,506.8 -0.9% 17.5%

Nickel (per metric tons) 17,685.0 -1.2% 65.4%

Copper (per lbs) 263.4 3.2% -0.5%

WTI (per barrel) 56.5 2.6% 24.5%

Sugar (per lbs) 11.0 -1.1% -12.1%

Rice (per cwt) 11.7 0.2% 15.8%

Market Calendar

Monday Tuesday Wednesday Thursday Friday

9/9/2019 9/10/2019 9/11/2019 9/12/2019 9/13/2019

PH: External Trade (July) US: Inflation (Aug) US: Retail Sales (Advance) (Aug)

9/16/2019 9/17/2019 9/18/2019 9/19/2019 9/20/2019

PH: OFW Remittances (July)

CH: Industrial Production and Retail Sales (Aug)

US: Industrial Production (Aug) PH: BOP (Aug)US: FOMC Rate Decision