Peso weakens on geopolitical concerns

The peso weakened against the dollar on Wednesday as heightened geopolitical concerns affected market sentiment.

The local unit closed at PHP 55.66 per dollar, dropping by three centavos from its PHP 55.63 finish on Tuesday, Bankers Association of the Philippines data showed.

The peso opened Wednesday’s session stronger at PHP 55.58 against the dollar. It dropped to as low as PHP 55.70, while its intraday best was at PHP 55.56 versus the greenback.

Dollars exchanged went down to USD 1.51 billion on Wednesday from USD 1.999 billion on Tuesday.

“The dollar-peso initially [rose] to PHP 55.56, still on pressure on the dollar following Moody’s US credit rating downgrade, but risk-off sentiment due to ongoing tension between Israel and Iran lifted the dollar against the peso to PHP 55.70,” a trader said in a phone interview.

The news about Israel’s plan to strike Iran’s nuclear facilities also led to higher global crude oil prices on Wednesday, which dragged the peso further, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For Wednesday, the trader expects the peso to move between PHP 55.50 and PHP 55.80 per dollar on Tuesday, while Mr. Ricafort sees it ranging from PHP 55.55 to PHP 55.75.

New intelligence obtained by the United States suggests that Israel is making preparations to strike Iranian nuclear facilities, CNN reported on Tuesday, citing multiple US officials familiar with the intelligence, Reuters reported.

It was not clear whether Israeli leaders have made a final decision and there was disagreement within the US government about whether the Israelis would ultimately decide to carry out strikes, CNN added, citing the officials.

Reuters could not immediately confirm the report, which contributed to a rise in oil prices by more than 1% on concern such a strike might upset Iranian flows. The National Security Council did not immediately respond to a request for comment.

The Israeli Embassy in Washington, the Israeli Prime Minister’s Office and the Israeli military did not immediately respond to requests for comment.

One source familiar with the intelligence told CNN the likelihood of an Israeli strike on an Iranian nuclear facility “has gone up significantly in recent months.”

The person added that the chance of a strike would be more likely if the US reached a deal with Iran that did not remove all of the country’s uranium, CNN added.

US President Donald J. Trump’s administration has been conducting negotiations with Iran aimed at achieving a diplomatic deal over its nuclear program.

The new intelligence was based on the public and private communications from senior Israeli officials as well as intercepted Israeli communications and observations of Israeli military movements that could suggest an imminent strike, CNN reported.

CNN cited two sources saying that among the military preparations the US had observed were the movement of air munitions and the completion of an air exercise.

Earlier on Tuesday, Iran’s Supreme Leader Ayatollah Ali Khamenei said US demands that Tehran stop enriching uranium are “excessive and outrageous,” state media reported, voicing doubts over whether talks on a new nuclear deal will succeed. — Aaron Michael C. Sy with Reuters

Philippines falls in global startup index

The PHilippines dropped four spots in the 2025 Global Startup Ecosystem Index amid persistent gaps in infrastructure and regulations, according to global research firm StartupBlink.

In this year’s index, the Philippines slipped to 64^th place out of 100 countries with a score of 2.237.

This was the fourth straight year of decline for the Philippines, which ranked 52^nd in 2021, 57^th in 2022, 59^th in 2023 and 60^th in 2024.

“The ecosystem growth of the Philippines is around 0.56% this year, and it’s being overtaken even by locations that are also decreasing in the rankings,” StartupBlink Head of Data & Consulting Ghers Fisman said in a virtual briefing on Tuesday.

The Philippines’ annual ecosystem growth rate was the lowest in Southeast Asia.

To increase the Philippines’ score, Mr. Fisman said the process of establishing a startup at the business level should be easier. He also noted the importance of faster and wider internet access for Philippine entrepreneurs.

The Global Startup Ecosystem Index evaluates startup ecosystems across 100 countries and 1,000 cities, using scores that assess the quantity and quality of startups and their existing business environment.

“The Philippines is making progress toward becoming a formidable startup ecosystem in the Asia-Pacific region,” StartupBlink said in the report.

The Philippines received total funding of $273.6 million (around P15.22 billion) last year, according to the report.

“The Philippines’ startup ecosystem is anchored by robust sectors such as fintech (financial technology), e-commerce, healthtech, edtech, and software-as-a-service. This diversification is propelled by a large digital consumer base and increasing regional demand,” it said.

StartupBlink noted the Philippines’ attractiveness to foreign entrepreneurs and digital nomads “should allow for successful ecosystem growth — provided more of the local population embraces entrepreneurship.”

The Philippines has six cities in the global top 1,000, led by Manila.

Manila ranked 112^th globally, dropping 11 spots from the previous year. It also dropped to 6^th place in Southeast Asia rankings and was the only city to see a decline.

“The Philippines’ startup scene remains centralized in Manila, whose ecosystem is twelve times larger than Cebu City’s. This gap has more than doubled since 2020,” StartupBlink said.

However, Manila had the lowest ecosystem annual growth rate among cities in the Philippines at 2.6%.

Cebu City fell 10 spots globally to rank 469^th, with an annual growth rate of 9%.

Davao City rose 163 spots to 580^th spot globally, as its startup ecosystem grew by 97.7% last year.

Cagayan de Oro and Naga climbed the global rankings at 693^rd and 767^th, respectively.

New entrants to the global rankings include Iloilo City (744^th), Cauayan City, Isabela (1,040^th), and Solana City in Cagayan (1,170^th).

“The Philippines stands as Southeast Asia’s fastest-growing digital economy, reflecting a dynamic consumer market ripe for innovative startups,” StartupBlink said.

However, the Philippines faces several challenges that are hampering its development as a mature startup ecosystem.

“The lack of infrastructure is a limiting factor to the country’s economic growth, and entrepreneurs struggle with slow regulatory support for their startups,” it added.

John Paolo R. Rivera, senior research fellow at the Philippine Institute for Development Studies, said the country’s continued decline in the global startup rankings reflect structural gaps in the ecosystem.

“Improving our rank will depend not on isolated programs but on building a dynamic innovation ecosystem with strong interlinkages across the government, academe, industry, and startup founders themselves,” he said in a Viber message.

Key gaps in the local startup scene include poor early-stage funding support, uneven regional startup development, regulatory bottlenecks, and a “brain drain” of digital and entrepreneurial talent, Mr. Rivera said.

To address this, the Philippine government must adequately fund and fully implement the Philippine Startup Development Program, reduce bureaucratic red tape, and harmonize startup registrations and incentives, he added.

Venture capitalists and the private sector should also expand early-stage funding, mentorship, and link Filipino startups to global markets. Academic institutions can support student-founded ventures through incubation, intellectual property protection, and seed grants, Mr. Rivera said. – Beatriz Marie D. Cruz, Reporter

Philippine banks’ profit up nearly 11% in 1Q

The Philippine banking industry’s combined net earnings jumped by 10.6% in the first quarter as both interest and non-interest income rose, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Central bank data showed the banking industry’s net profits climbed to PHP 101.9 billion at end-March from PHP 92.11 billion in the same period a year ago.

This as net interest income went up by 11.6% to PHP 276.23 billion in the first three months from PHP 247.41 billion in the same quarter in 2024.

Interest income increased by 11.1% to PHP 395.99 billion in the first quarter from PHP 356.43 billion a year ago, while interest expense rose by 9.6% to PHP 119.32 billion at end-March from PHP 108.86 billion last year.

Meanwhile, banks’ non-interest income stood at PHP 60.67 billion in the January-March period, higher by 14.5% from PHP 52.98 billion a year earlier.

Earnings from fees and commissions increased by 19.2% to PHP 44.59 billion as of end-March from PHP 37.42 billion a year ago.

However, trading income registered a net loss of PHP 1.17 billion in the first quarter, a reversal of the PHP 1.5-billion gain a year ago.

Lenders’ non-interest expenses rose by 13.1% to PHP 191.01 billion in the period ending March from PHP 168.95 billion year on year.

Meanwhile, the industry’s losses on financial assets widened to PHP 29.83 billion in the first three months of 2025 from PHP 21.81 billion a year ago. Provisions for credit losses likewise grew to PHP 34.89 billion from PHP 25.11 billion last year.

“Faster loan growth this 2025 relative to last year may have driven higher income growth for the banking industry this year,” Reinielle Matt M. Erece, an economist at Oikonomia Research and Advisory, Inc. said in a Viber message.

Latest data from the BSP showed bank lending rose by 11.8% year on year to PHP 13.19 trillion in March.

“This increased the volume of products they were able to sell, i.e. financial products, as interest rates are expected to go down,” he added.

Alfred Benjamin R. Garcia, research head at AP Securities, Inc., said the higher profits are “partly volume-driven,” noting the growth in high-yielding consumer loans.

Earlier BSP data showed consumer loans to residents jumped by an annual 23.6% to PHP 1.64 trillion in March.

“This helped keep net interest margins high even though interest rate levels are lower than where they were at the same time last year,” Mr. Garcia said.

The central bank began its easing cycle in August last year and has reduced borrowing costs by a total of 100 basis points (bps) so far, bringing the key rate to 5.5%.

The Monetary Board has delivered 25-bp rate cuts at each of its policy meetings in August, October, December last year and April this year.

Mr. Erece added that while lower interest rates reduce the margins of banks, it can also spur higher demand for financing services.

Banking system assets

Separate BSP data showed the banking industry’s total assets amounted to PHP 27.64 trillion as of end-March, higher by 7.8% from the PHP 25.65 trillion in the same period in 2024.

Banks’ assets are mainly supported by deposits, loans, and investments. These include cash and due from banks as well as interbank loans receivable (IBL) and reverse repurchase (RRP), net of allowances for credit losses.

The banking sector’s total loan portfolio inclusive of IBL and RRP jumped by 14.5% to PHP 15.14 trillion as of end-March from PHP 13.22 trillion a year ago.

Net investments, or financial assets and equity investments in subsidiaries, increased by 12% year on year to PHP 8.23 trillion.

Net real and other properties acquired stood at PHP 119 billion, up 11.2% year on year.

Banks’ other assets went up by 1.9% to PHP 2.06 trillion as of end-March.

On the other hand, cash and due from banks fell by 29% to PHP 2.1 trillion at the end of the first quarter.

“The continued growth in banks’ total resources may still be largely attributed to the growth in loans and in investments,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

“Also supported by the continued growth in bank deposits that partly helped fund the growth in loans and investments,” he added.

Meanwhile, the total liabilities of the banking system grew by 7.4% to PHP 24.18 trillion at end-March from PHP 22.53 trillion a year earlier. – Luisa Maria Jacinta C. Jocson, Senior Reporter

PSEi falls to 6,300 level as BoP deficit widens

Philippine stocks slid further on Tuesday, with the main index falling to the 6,300 level, following weak data on the country’s external position and amid heightened cautiousness after Moody’s cut the United States’ credit rating.

The bellwether Philippine Stock Exchange index (PSEi) fell by 1.85% or 119.51 points to close at 6,335.33, while the broader all shares index dropped by 1.19% or 45.09 points to 3,720.57.

This was the PSEi’s lowest close in three weeks or since its 6,252.19 finish on April 29. The index has now ended in the red for five consecutive sessions.

“The local market plunged as investors dealt with the further widening of the Philippines’ balance of payments (BoP) deficit last April, which hit USD 5.52 billion,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also digested the 10% drop in new vehicle sales in the Philippines, taking it as a sign of challenged consumption in the country.”

The Bangko Sentral ng Pilipinas said on Monday that the country’s BoP deficit widened to USD 2.56 billion in April from the USD 639-million gap in the same period last year and the USD 1.97-billion shortfall in March as the government paid back its external debt.

For the first four months, the country’s external position was at a USD 5.52-billion deficit, wider than the USD 401-million gap last year.

“Philippine shares extended their decline as investors grew more wary, opting to scale back their holdings after initial optimism waned following Moody’s US downgrade,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

On Friday, Moody’s lowered the US sovereign credit rating to “Aa1” from “Aaa” amid concerns over the country’s growing USD 36-trillion outstanding debt.

Asian stocks rose on Tuesday as investors took stock of the debt load of the world’s biggest economy and awaited trade deals, Reuters reported. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.33% higher, hovering near the seven-month high touched last week.

All sectoral indices closed lower on Tuesday. Services sank by 2.2% or 47.54 points to 2,107.80; financials went down by 1.98% or 47.66 points to 2,350.33; holding firms declined by 1.83% or 100.21 points to 5,375.35; mining and oil shed 1.64% or 151.05 points to end at 9,033.68; property retreated by 0.98% or 22.41 points to 2,249.85; and industrials decreased by 0.47% or 43.54 points to 9,037.10.

“LT Group, Inc. was the day’s index leader, climbing 1.14% to PHP 12.46. International Container Terminal Services, Inc. was the day’s worst index performer, dropping 3.85% to PHp 400,” Mr. Tantiangco said.

Value turnover went up to PHP 7.32 billion on Tuesday with 1.35 billion shares traded from the PHP 6.19 billion with 755.08 million issues exchanged on Monday.

Decliners overwhelmed advancers, 126 versus 62, while 55 names closed unchanged.

Net foreign selling grew to PHP 886.21 million on Tuesday from PHP 223.77 million on Monday. — Revin Mikhael D. Ochave

BoP deficit widens to USD 2.56B in April

The Philippines’ balance of payments (BoP) deficit widened further in April as the government paid back its external debt, data from the Bangko Sentral ng Pilipinas (BSP) showed.

The BSP on Monday said the BoP deficit stood at USD 2.56 billion in April, wider than the USD 639-million gap a year ago and the USD 1.97-billion shortfall in March.

The BoP measures the country’s transactions with the rest of the world. A deficit indicates more funds exited the Philippines while a surplus means more money entered the country than left.

“The BoP deficit reflected the National Government’s (NG) drawdowns on its foreign currency deposits with the BSP to meet its external debt obligations and pay for its various expenditures, and the BSP’s net foreign exchange operations,” the central bank said.

Latest data from the BSP showed the Philippines’ outstanding external debt rose by an annual 9.8% to USD 137.63 billion as of end-December 2024.

This brought the external debt-to-gross domestic product (GDP) ratio to 29.8% at the end of 2024 from 28.7% in the previous year.

The country’s BoP position stood at a USD 5.52-billion deficit in the first four months of 2025, ballooning from the USD 401-million gap a year ago.

“Based on preliminary data, this year-to-date BoP deficit reflected mainly the widening trade in goods deficit,” the central bank said.

The country’s trade balance in goods stood at a USD 4.13-billion deficit in March, 23% higher than a year ago. This brought the first-quarter trade deficit to USD 12.71 billion, also widening by 12.8% year on year.

“This decline was partly muted, however, by the continued net inflows from personal remittances from overseas Filipinos and foreign borrowings by the NG,” it added.

Cash remittances rose by 2.6% in March to USD 2.81 billion, though this was the slowest growth in nine months.

The NG’s gross borrowings declined by 7.15% to P192.45 billion in March as gross external debt fell by 31.89%.

Meanwhile, the BoP reflected a final gross international reserve (GIR) level of USD 105.3 billion at its end-April position, lower than USD 106.7 billion as of end-March.

“This latest GIR level provides a robust external liquidity buffer,” the central bank said.

The dollar reserves were enough to cover 3.7 times the country’s short-term external debt based on residual maturity.

An ample level of foreign exchange buffers safeguards an economy from market volatility and is an assurance of the country’s capability to pay debt in the event of an economic downturn.

The GIR was also equivalent to 7.3 months’ worth of imports of goods and payments of services and primary income.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the wider BoP deficit was due to the continued trade gap and repayment of foreign currency debts and other foreign obligations.

However, he also noted the decline in foreign investments amid volatilities in financial markets due to the United States’ tariff policies.

For the coming months, Mr. Ricafort said the BoP position could improve due to proceeds from the NG’s foreign-currency debt that could add to the GIR.

He also cited “continued growth in OFW remittances, BPO revenues, exports, foreign tourism receipts, and other structural US dollar inflows of the country.”

“Going forward, any improvement in BoP data and in GIR data for the coming months could still help provide greater cushion for the peso exchange,” Mr. Ricafort said.

This year, the BSP expects the country’s BoP position to end at a USD 4-billion deficit, equivalent to -0.8% of gross domestic product.

The BoP position stood at a surplus of USD 609 million in 2024, plunging by 83.4% from the USD 3.672-billion surplus as of end-2023. – Luisa Maria Jacinta C. Jocson, Senior Reporter

Auto sales drop 10% in April

Philippine automotive sales slid by 10% in April, the biggest annual decline in more than three years, amid a double-digit decline in passenger car sales, an industry report showed.

A joint report by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA) showed new vehicle sales fell by 10% to 33,580 units in April from 37,314 units in the same month a year ago.

April saw the biggest annual decline since the 11.2% drop in January 2022. It was also the first time that sales fell since the 7.3% decline in February 2022.

Month on month, car sales also slumped by 16.7% from 40,306 units sold in March.

“While the overall market trajectory remains positive, the recent slowdown may be attributed to seasonal factors, economic conditions, or evolving consumer demands,” said CAMPI President Rommel R. Gutierrez in a statement on Monday.

“Industry leaders continue to monitor market trends and expect further developments in the months ahead,” he added.

Data from CAMPI-TMA showed passenger car sales plunged by 35.5% in April to 6,498 from 10,069 a year prior. Passenger cars made up 19.35% of the total industry sales in April.

Month on month, sales of passenger cars slid by 23.1% from 8,449 cars sold in March.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said the slump in passenger car sales reflects “ongoing price sensitivity in the mass market.”

“The decline in April car sales was driven by fewer selling days due to holidays, high base effects from last year’s strong performance, and lingering consumer caution amid tight loan conditions,” he said in a Viber message.

On the other hand, commercial vehicle sales, which accounted for 80.65% of the total, dipped by 0.6% to 27,082 in April from 27,245 a year ago.

Month on month, commercial vehicle sales declined by 15% from 31,857 in March.

Broken down, light commercial vehicle sales rose by 3.2% year on year to 20,185, while Asian utility vehicle (AUV) sales declined by 12.1% to 5,992.

Sales of light-duty trucks and buses inched up by 1.6% to 499 in April, while sales of medium-duty trucks and buses dropped 18% to 291.

In April, sales of heavy-duty trucks and buses surged 134.7% to 115 units.

For the first four months of the year, vehicle sales inched up by 2.5% year on year to 150,654 units from 146,920 in the same period in 2024.

Commercial vehicle sales increased by 10.3% to 119,824, while passenger car sales dropped by 19.5% to 30,830 in the January-to-April period.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the Trump administration’s recent tariff policies may have hurt consumer confidence, affecting car sales.

“Trump’s announcement of reciprocal tariffs somewhat weighed on sentiment by consumers, businesses, and other institutions, as higher US import tariffs could slow down global trade, investments, employment, and overall economic growth worldwide,” he said in a Viber message.

“Possible slowdown in sales, incomes, employment, and other economic activities led to a more cautious attitude for some buyers of big-ticket items such as vehicles until the uncertainties settle regarding the Trump risk factor,” he added.

Mr. Ricafort said the ban on some government spending, including purchases of vehicles, ahead of the midterm election may have also affected overall industry sales.

“We expect a gradual recovery in the latter half of the year as demand picks up, inflation stabilizes, and hybrid and electric vehicle (EV) adoption grows. However, the outlook remains tempered by broader economic headwinds and cautious spending behavior,” Mr. Limlingan said.

Year to date, Toyota Motor Philippines Corp. remained the market leader with a 47.74% share as sales rose by 6.4% to 71,927 units.

Mitsubishi Motors Philippines Corp. came in second with a 7% increase in sales to 29,770 units in the January-to-April period. It accounted for 19.76% market share.

In third spot is Nissan Philippines, Inc. which saw a 12.7% drop in sales to 8,182 units in the first four months.

Rounding out the top five were Suzuki Phils., Inc., which saw a 14.5% increase in sales to 7,002 units, and Ford Motor Co. Phils., Inc. which posted a 30.6% drop in sales to 6,728 units.

The CAMPI-TMA report showed that 1,509 EVs were sold in April, bringing four-month sales to 6,820 units. This represented a 5.69% market share.

However, month-on-month EV sales dropped 20.4% from 1,895 units sold in March.

Broken down, hybrid EVs accounted for 5,744 units sold in the first four months. There were 978 battery EVs and 98 plug-in hybrid EVs sold as of end-April.

Toyota Motor sold the most hybrid EVs so far this year with 4,942, followed by Honda Cars Philippines with 442.

Nissan Philippines posted the highest sales of battery EVs with 409, followed by Tesla Motors Philippines with 396 units. – Justine Irish D. Tabile, Reporter

Agencies’ budget proposals reach PHP 11T for 2026

Government agencies’ budget proposals for the 2026 national budget have surged to PHP 11 trillion, up from the P9.2 trillion in funding requests made for the 2025 budget, according to the Department of Budget and Management (DBM).

“It is not finished yet and only three bureaus were finalized. But based on the submissions, because there are a lot of them, there’s a 200-300% increase in agency submissions. So, they’re looking at approximately PHP 11 trillion,” DBM Undersecretary Goddes Hope O. Libiran told reporters on the sidelines of the 2025 Open Government Week on Monday.

This is 20% higher than the P9.2 trillion in funding requests from government agencies last year.

“There are a lot of agencies that want to do a lot and maybe, like, for example, the Armed Forces of the Philippines raised their request for a modernization program,” she added.

The DBM’s estimate also accounted for both Tier 1 and Tier 2 proposals.

The government employs a two-tier budget process; ongoing spending is considered in Tier 1 and proposals for new and expanded spending are evaluated in Tier 2.

The P11-trillion proposals will be later reviewed under the Preliminary Executive Review Board.

Once they finalize it, they will defend it to the Executive Review Board, which includes Budget Secretary Amenah [F. Pangandaman] and the senior officials like us,” she said.

The final budget will be based on available fiscal space.

“The work of DBM is to determine which ones are really aligned with our Medium-Term Fiscal Framework to the Philippine Development Plan to the priorities of the administration and which are implementation-ready,” she said.

“If we put their proposal in the National Expenditure Program, won’t the budget be wasted? Will they be able to implement that? We’re in the process of that,” Ms. Libiran said.

In 2026, the overall National Expenditure Program will hit a record PHP 6.793 trillion, up 7.38% from the PHP 6.326-trillion national budget signed in 2025.

At the same event, Ms. Pangandaman expressed optimism that the Freedom of Information (FOI) bill will be passed by the incoming Congress.

“We conducted a series of roundtable discussions with the government, CSOs (civil society organizations), academic, and private sector to advance the passage of Freedom of Information bill in the 20^th Congress,” she said. “With the support of President Ferdinand R. Marcos, Jr., I am confident that we will soon pass our very own FOI.”

The DBM and the Presidential Communications Office are set to incorporate the results from the discussions to strengthen the draft FOI bill. The draft bill will be presented to the Legislative-Executive Development Advisory Council meeting on May 26. — Aubrey Rose A. Inosante

Stocks inch lower on US credit rating downgrade

Philippine shares slipped on Monday as investors monitor the potential impact of Moody’s move to downgrade the United States’ credit rating.

The bellwether Philippine Stock Exchange index (PSEi) inched down by 0.16% or 10.69 points to close at 6,454.84, while the broader all shares index dropped by 0.09% or 3.71 points to 3,765.66.

“The PSEi ended the trading session slightly lower, reflecting the local market’s tepid reaction to Moody’s credit rating downgrade of the US,” Juan Paolo E. Colet, managing director at China Bank Capital Corp., said in a Viber message. “While the downgrade itself was not a surprise, investors are waiting to see whether the move triggers a more adverse movement in US Treasury yields that could potentially unsettle equity markets.”

“Philippine shares tracked global indices lower as investors evaluate credit risks after Moody’s downgraded the US’ credit rating,” Alfred Benjamin R. Garcia, research head at AP Securities, Inc., likewise said.

Moody’s Ratings on Friday cut the US’ long-term issuer and senior unsecured ratings to “Aa1” from “Aaa” and changed the outlook to “stable” from “negative.”

Moody’s said in a statement that the downgrade in US’ rating “reflects the increase over more than a decade in government debt and interest payment ratios to levels that are significantly higher than similarly rated sovereigns.”

Treasury yields rose and US stock futures slipped with the dollar on Monday due to concerns about US debt and rising deficits after Moody’s downgraded its US sovereign credit rating late on Friday, Reuters reported.

The US 10-year yield rose 7 basis points to 4.51%. The 30-year yield rose above 5% for the first time since April 9, the day US President Donald J. Trump paused most of his so-called reciprocal tariffs for 90 days.

“Philippine shares kicked off the week on a muted note, as the local market continued to digest corporate earnings and monitor potential political shifts post-election,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., added in a Viber message.

Sectoral indices were split on Monday. Property dropped by 1.69% or 39.27 points to 2,272.26; industrials went down by 0.99% or 91.59 points to 9,080.64; and financials declined 0.88% or 21.30 points to 2,397.99.

Meanwhile, mining and oil increased by 1.15% or 104.65 points to 9,184.73; services climbed by 1.14% or 24.45 points to 2,155.34; and holdings firms rose by 1.1% or 59.57 points to 5,475.56.

Value turnover dropped to PHP 6.19 billion on Monday with 755.08 million shares traded from the PHP 6.59 billion with 730.87 million issues exchanged on Friday.

Decliners outnumbered advancers, 109 versus 86, while 49 names were unchanged.

Net foreign selling dropped to PHP 223.77 million on Monday from PHP 406.52 million on Friday. — Sheldeen Joy Talavera with Reuters

PSE hikes capital-raising goal to PHP 170B

The Philippine Stock Exchange Inc. is increasing its capital raising target this year to PHP 170 billion from PHP 120 billion and from PHP 82.4 billion in actual capital raised last year, amid an easing trade war between the world’s two biggest economies that had fed fears of a global recession.

The new goal is based on capital-raising activities that have been applied for and does not yet take into account GCash’s planned initial public offering (IPO), PSE President and Chief Executive Officer Ramon S. Monzon told a virtual news briefing last week.

“We expect this year to be a very high capital-raising year, a very successful year for PSE,” he added.

Mr. Monzon said capital raised at the PSE had reached PHP 42.42 billion as of May 14.

Some of the big IPOs expected include those from west zone water concessionaire Maynilad Water Services, Inc. and mobile wallet operator GCash.

“I’m really looking at IPOs, follow-on offerings, stock rights offerings and private placements because after all, the exchange is the platform where companies are supposed to raise capital,” the PSE chief said.

Mr. Monzon hinted that GCash might end up proceeding with its IPO later this year but said it had not yet applied.

“GCash has been talking to us,” he said. “While there has been no formal application yet, I know they are preparing to do an IPO later this year.”

“As to the actual timing, we don’t know when it will be. There are some issues that they are trying to resolve, mainly the valuation and determining what size of IPO they should have that can be absorbed by the market,” he added.

Globe Telecom, Inc., which has a 36% stake in Globe Fintech Innovations, Inc. (Mynt), which owns GCash operator G-Xchange, Inc., last month said its IPO for the e-wallet would proceed, but the timing remained uncertain due to market volatility caused by US tariffs.

The US and China last week announced a 90-day pause on most of their recent tariffs on each other, fueling hopes of a cooldown in their trade war.

The combined US duties on Chinese imports will be cut to 30% from 145%, while China’s levies on US imports will fall to 10% from 125%.

But some analysts have noted that tariffs remain far higher than before Mr. Trump regained office, suggesting that prices of many consumer goods — from cars and food to clothing — would still go up.

Maynilad is targeting a July 17 listing for its PHP 45.8-billion IPO, based on its latest prospectus dated May 14. It is required to offer at least 30% of its outstanding capital stock to the public by January 2027 under its legislative franchise.

Jarrod Leighton M. Tin, an equity research analyst at DragonFi Securities, Inc., thinks the PSE’s capital-raising target this year is attainable.

“It is achievable since Maynilad is required by law to list on the PSE,” he said in a Viber message. “The stock right offerings and follow-on offerings should be straightforward.”

“Now is a better time to conduct IPOs since the US markets have bottomed out with the de-escalation of the trade war,” he added.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., also cited better stock market conditions locally and in the US.

“It follows that more fund-raising is possible locally, as companies that will sell shares will be able to sell at a higher price and maximize the proceeds that they would be able to raise,” he said in a Viber message.

PDS Interst

Meanwhile, Mr. Monzon said the PSE is seeking to increase its stake in the Philippine Dealing System Holdings Corp. (PDS) to as much as 97% as the market operator awaits developments on three government banks that are selling their interest.

“We’re talking to three government institutions that still own shares in PDS,” he said, referring to Development Bank of the Philippines with 3%, Land Bank of the Philippines with more than 2.5% and Philippine Deposit Insurance Corp. with less than 1%.

“It’s taking a long time for us to acquire this because being government banks, they’re subject to certain rules before they can dispose of their investments,” the PSE chief said. “Right now, they’re trying to get an exemption to go into another public bidding before they can sell to PSE.”

Last week, the PSE increased its beneficial ownership stake in PDS to 91.6% after it closed accession deals for the 17,500 PDS shares held by two members of the Bankers Association of the Philippines (BAP) equivalent to a 0.28% stake.

The PDS operates the Philippine Dealing and Exchange Corp. (PDEx), Philippine Depository and Trust Corp. and Philippine Securities Settlement Corp.

After the market operator’s acquisition of PDS, Mr. Monzon said the PSE had agreed to sell part of its ownership in bond trading platform PDEx to BAP.

“After some serious negotiations, we finally reached an agreement that PSE would be willing to sell part of the PDEx ownership to BAP, but PSE would remain in control at 51%,” he said.

“It’s the banks that do a lot of the trading and generate the revenues for PDEx,” he pointed out. “You want to have them as a partner, not as an adversary.”

“Being the primary stakeholders of the fixed-income market, I think they would be very helpful in coming up with new products that they could trade and offer to their clients,” he added.

In December, the PSE reached a PHP 2.32-billion deal to acquire a 61.92% stake in PDS. The deal involved the acquisition of 3.87 million shares at PHP 600 each.

On Friday, the bellwether PSE index shed 0.02% or 1.33 points to 6,465.53, while the broader all-share index added 0.02% or 0.93 point to 3,769.37. – Revin Mikhael D. Ochave, Reporter

Election-tied spending may shield growth from tariffs

Household consumption during the election period and state expenditures once the ban on spending on certain infrastructure projects is lifted are expected to cushion the effects of higher US tariffs on Philippine economic growth.

“We project that the impact of US tariffs can be offset by election spending activities and lifting of the ban on certain public works after the elections,” Budget Secretary Amenah F. Pangandaman told BusinessWorld in a Viber Message last week.

Ms. Pangandaman, who heads the Development Budget Coordination Committee (DBCC), said government capital spending is likely to accelerate in the coming quarters.

The Commission on Elections’ 45-day ban on public works spending started on March 28 and ended with the May 12 elections.

The Philippine economy grew slower than expected in the first quarter at 5.4% from 5.9% a year earlier. It was below the government’s 6-8% target for the year.

The slowdown was partly attributed to heightened uncertainty from US President Donald J. Trump’s reciprocal tariffs announced in April. The higher duties, including a 17% tariff on Philippine exports, were suspended for 90 days pending negotiations.

Ms. Pangandaman expects election-related spending to lift economic growth after the 18.7% increase in state expenditures as agencies front-loaded ahead of the election ban.

Department of Economy, Planning, and Development Undersecretary Rosemarie G. Edillon said state spending could moderate in the second quarter since it was covered by the ban in April and parts of May.

Ms. Pangandaman said disbursements are expected to pick up toward the latter part of May to June after the election ban is lifted.

However, analysts warned the boost could be short-lived.

Election-related spending could only provide a “short-term” boost, said John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies.

“This may partially offset the drag from external headwinds like the US tariffs, especially if government agencies frontload infrastructure projects and political campaigns sustain high levels of economic activity,” he said in a Viber Message on Sunday.

He said the momentum from election spending might not be enough to sustain growth beyond the second quarter if export-facing sectors suffer losses or investment slows.

The benefits are “transitory,” while higher tariffs could have longer-term structural effects such as reduced export competitiveness, supply-chain shifts and investor uncertainty, he added.

Philippine export growth slowed to 6.2% in the last quarter from 8.1% a year earlier as companies remained cautious about trade.

Reinielle Matt M. Erece, an economist at Oikonomia Research and Advisory, Inc., said relying on government spending to drive growth is unsustainable and could exhaust the state budget and trigger more borrowings.

He urged the government to pursue trade deals and improve the investment climate instead.

Trade Secretary Maria Cristina A. Roque, Special Assistant to the President for Investment and Economic Affairs Frederick D. Go and Philippine Ambassador to the US Jose Manuel D. Romualdez met with US Trade Representative (USTR) Jamieson Greer in Washington on May 2 to discuss tariffs.

Ms. Roque earlier said the meeting “went very well,” adding that they expect more meetings.

Ms. Pangandaman said they would continue to monitor agencies’ budget use rates, while catch-up plans for delayed programs would be prioritized post-election. — Aubrey Rose A. Inosante

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