ASEAN, China seal upgraded free trade deal

KUALA LUMPUR — The Association of Southeast Asian Nations (ASEAN) and China on Tuesday signed an upgraded free trade pact that seeks to deepen regional integration in the face of increased protectionism from the US.

Closer economic cooperation instead of confrontation could help overcome global uncertainties amid coercion and bullying, Chinese Premier Li Qiang told the ASEAN-China Summit meeting after the signing, in a swipe at the US.

ASEAN leaders including Philippine President Ferdinand R. Marcos, Jr. witnessed the signing of the third revision of the deal that was first inked in 2002 and took effect in 2010.

“The ACFTA (ASEAN-China Free Trade Area) 3.0 Upgrade Protocol seeks to expand ASEAN-China cooperation into new and emerging areas, including the digital and green economies, supply-chain resilience, competition and consumer protection, as well as support for micro, small, and medium enterprises (MSME),” according to a statement from Mr. Marcos’ office.

The free trade agreement (FTA) lowers tariffs on goods and boosts the flow of services and investment in an area that covers a combined market of more than two billion people.

Chinese trade with the 11-member bloc reached USD 771 billion last year, making ASEAN its biggest trading partner, according to ASEAN data.

Beijing is looking to deepen its engagement with the region, which has a combined gross domestic product (GDP) of USD 3.8 trillion, as it seeks to offset the impact of steep import tariffs imposed globally by US President Donald J. Trump’s administration.

China and ASEAN are also members of the Regional Comprehensive Economic Partnership, the world’s largest trade bloc, encompassing nearly one-third of the global population and around 30% of global GDP.

Mr. Trump slapped almost all of its trading partners with varying tariff levels. He imposed a 30% tariff on Chinese exports to the US in a bid to protect his country’s industries.

The US has also imposed a 19% duty on many goods from the Philippines, Cambodia, Malaysia, Thailand and Indonesia since Aug. 7.

The Philippine Department of Foreign Affairs (DFA) earlier said the new protocol aims to make the regional trade framework “more modern, more comprehensive, and better aligned with today’s global realities.”

The enhanced deal expands the scope of the original ACFTA — which focused on goods, services, and investment — to include new areas such as fair competition, consumer protection, digital transformation, green growth, and supply-chain connectivity.

It also strengthens mechanisms to support MSMEs, helping them integrate more effectively into regional value chains.

According to the DFA, the upgrade will “open new opportunities for high-impact cooperation” in critical areas that are key to the region’s long-term resilience and sustainability.

It also introduces frameworks to promote inclusive and broad-based growth across member economies.

The original ASEAN-China FTA, launched in 2010, covers trade in goods, rules of origin, customs and trade facilitation, technical regulations, sanitary measures, and investment cooperation.

The latest revision reflects both sides’ efforts to future-proof their trade ties amid shifting global economic conditions.

ASEAN Studies lecturer at De La Salle-College of St. Benilde Josue Raphael J. Cortez said the ACFTA 3.0 serves as Beijing’s strategic move to strengthen its regional influence amid intensifying US efforts to expand its own economic foothold in Southeast Asia through tariff-based policies.

While the Philippines can use the upgraded pact as limited leverage, its complex political and security ties with China temper this advantage, he added.

“With the Philippines trying to widen its trading relations both with traditional and new markets, the promise this agreement holds is a challenge for Washington to overcome by proving that the alliance we share goes beyond issues of mutual benefit in the political and security sphere. And as treaty allies, we show the same extent of commitment as well to the geoeconomic challenges of our time,” he said via Facebook Messenger. — Chloe Mari A. Hufana

Shares rise on bargain-hunting before Fed move

PHILIPPINE STOCKS closed higher on Tuesday as players picked up cheap stocks following the market’s two-day slide, but sentiment remained cautious before the US Federal Reserve’s policy decision.

The benchmark Philippine Stock Exchange index (PSEi) went up by 0.32% or 19.40 points to close at 5,953.16, while the broader all shares index rose by 0.21% or 7.78 points to 3,589.51.

“The Philippine market ended higher, driven by bargain-hunting after two consecutive days of strong selling. Investors remained cautious, closely monitoring upcoming earnings reports and the anticipated next move by the US Federal Reserve, which could influence market direction,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

“The market snapped its losing streak, but the rebound of a third of a percent was unconvincing as investors await the Fed’s rate cut decision,” AP Securities, Inc. Research Head Alfred Benjamin R. Garcia said in a Viber message.

Fed policymakers are widely expected to reduce US short-term borrowing costs this week by a quarter of a percentage point for the second time this year as they look to prevent further slowing in the labor market, Reuters reported.

Odds are it won’t be the last of the series.

Climbing unemployment insurance claims suggest that labor market demand continues to cool, even as the government shutdown delays publication of most official economic statistics, including the unemployment rate, last estimated at 4.3% in August.

Milder-than-expected inflation readings, including last week’s report that the consumer price index rose 3% in the 12 months through September, have put worries of tariff-driven price pressures on the back burner.

A quarter-point rate cut on Wednesday at the close of the Fed’s two-day meeting would put the policy rate in the 3.75%-4% range. Financial markets are betting heavily on further rate cuts in both December and January.

Back home, sectoral indices closed mixed on Tuesday. Mining and oil slumped by 4.42% or 565.68 points to 12,230.69; industrials dropped by 0.27% or 24.08 points to 8,772.47; and property slipped by 0.01% or 0.39 point to 2,198.54.

“The mining sector counter was the biggest loser with a decline of 4.4% as gold prices continue to slump,” Mr. Garcia said.

Meanwhile, financials rose by 1.15% or 22.44 points to 1,970.64; services increased by 0.42% or 9.76 points to 2,282.42; and holding firms edged up by 0.05% or 2.43 points to 4,807.25.

Advancers narrowly beat decliners, 95 to 94, while 62 names closed unchanged.

Value turnover went down to P4.64 billion on Tuesday with 1.18 billion shares changing hands from Monday’s P18.77 billion with 11.82 billion issues traded.

Net foreign selling increased to P432.57 million from P313.66 million. — Alexandria Grace C. Magno with Reuters

Nomura slashes Philippine growth forecast amid graft scandal

PHILIPPINE ECONOMIC GROWTH may slow to 4.7% this year, as government spending is expected to further decline amid the corruption investigation in infrastructure projects, Nomura Global Markets Research said.

In a report dated Oct. 27, Nomura Chief ASEAN (Association of Southeast Asian Nations) Economist Euben Paracuelles and Macroeconomic Research Analyst Yiru Chen said the gross domestic product (GDP) forecast was slashed to 4.7% this year from 5.3% previously as downside risks increased due to the corruption scandal involving flood control projects.

“This pencils in GDP growth slowing to just 4% in the second half from 5.4% in the first half and is based on the assumption that the decline in government expenditures in September will worsen in the next 3-4 months,” they said.

Nomura’s latest forecast is below the government’s 5.5-6.5% GDP growth target for the year and is slower than the 5.7% growth in 2024.

“Taking into account the sharp drop in fiscal spending in September, we think the ‘bad scenario’ on the growth impact of the ongoing corruption scandal is materializing,” they said.

Third-quarter GDP data will be released on Nov. 7.

President Ferdinand R. Marcos, Jr. had flagged anomalous flood control projects during his State of the Nation Address in late July. This sparked several investigations into alleged corruption involving lawmakers, government officials, and private contractors.

Latest Treasury data showed government expenditures declined by 7.53% in September, worsening from the 0.7% drop in August, mainly due to lower spending by the Department of Public Works and Highways. Nomura also noted that government spending declined by 2.8% in the third quarter, a reversal of 1.6% growth in the second quarter.

“Excluding interest payments and debt servicing, expenditure growth slumped even more to -10.2% y-o-y (year on year) in September from -3.5% in August, the weakest since 2020. This suggests a relatively rapid deterioration in the pace of budget disbursements after President Marcos brought to light the corruption scandal of flood control projects,” they said.

Nomura also noted that the reallocation of funds to other types of capital expenditures such as school buildings has been “challenging” to implement.

“In addition, we incorporate some spillovers into other components of domestic demand, which were also evident in these previous episodes, including household consumption spending. Our forecast continues to take into account the impact of the US tariffs, which, as we have argued before, pose significant headwinds for goods exports,” they said.

The US had imposed a 19% duty on many goods from the Philippines starting Aug. 7.

Nomura also maintained its fiscal deficit forecast at 5.5% of GDP for this year.

“The decline in government expenditures, which we now assume in the coming months (under the ‘bad’ scenario), puts the MTFF (medium-term fiscal framework) target of 5.5% still within reach. Nevertheless, our fiscal deficit forecast implies a weaker fiscal impulse in Q4, when the output gap will likely remain negative,” they said.

For 2026, Nomura maintained its Philippine GDP forecast at 5.6%, but uncertainty over the timely passage of the 2026 national budget poses risks to the outlook.

“For now, we monitor signs of whether the budget can be passed on time, i.e. by December. If not, the ‘severe’ scenario could play out, potentially prolonging fiscal tightening with no new disbursements allowed until a new budget is enacted,” they said.

RATE CUTS
Meanwhile, the Bangko Sentral ng Pilipinas (BSP) will likely implement another 50 basis points (bps) worth of cuts in this easing cycle, bringing the benchmark rate to 4.25%.

“We still pencil in a 25-bp cut at BSP’s next meeting in December and another 25 bps in Q1 2026, i.e. a more frontloaded trajectory, based on our view that the corruption scandal could hit growth in the near term significantly,” Nomura said.

The central bank lowered borrowing costs earlier this month by 25 bps to 4.75%. Its latest move brought its total reductions to 175 bps since it began its easing cycle in August 2024.

“Still, we continue to see the risk of BSP delivering additional policy rate cuts next year if the more ‘severe’ scenario materializes, including a delay in the enactment of the 2026 budget,” they added.

Separately, Budget Assistant Secretary Romeo Matthew T. Balanquit said easing inflation rates and low borrowing costs could still drive the country’s third-quarter growth.

“My only good hope is that we have a low inflation rate, 1.7% year to date,” he told reporters on the sidelines of an event on Monday. “So, with that, I am expecting a high contribution [from household] consumption.”

Inflation accelerated to 1.7% in September, faster than 1.5% in August but slower than the 1.9% in the same month last year. In the nine-month period, headline inflation matched the Bangko Sentral ng Pilipinas’ (BSP) 1.7% full-year target.

“And one more would be the investment because of the CREATE MORE (Corporate Recovery and Tax Incentives for Enterprises to Maximize Opportunities for Reinvigorating the Economy) and also the low interest rates. I am hopeful that the private sector will step up,” Mr. Balanquit added.

IMPACT ON LUXURY GOODS, SERVICES
Meanwhile, Capital Economics said the corruption scandal may not just affect investments but also hurt sales of luxury goods in the country.

“The experience from other emerging markets suggest that, even if the ongoing corruption scandal in the Philippines doesn’t fuel further unrest, a more concerted effort by the government to clamp down on graft could hurt investment as well as purchases of luxury goods and services,” it said in an Oct. 22 report.

Even if unrest is avoided, Capital Economics said there could be more concerted effort to look into corruption across the economy.

“The resulting backdrop of heightened political uncertainty and fear of getting caught up in corruption allegations could prompt firms to delay investment,” it said.

It noted individuals may also avoid buying land or property, while others with illicit gains could move assets abroad “which may result in a spike in capital outflows and weigh on the currency.”

“The government could also try to clamp down on ostentatious public sector consumption. That could weigh on demand for luxury goods and services,” Capital Economics said.

It also said the Philippine government could try other policies to curb corruption such as demonetization.

BSP Governor Eli M. Remolona, Jr. has already rejected a proposal to demonetize P1,000 and P500 bills as an anti-money laundering measure, saying it may do more harm than good.

“We’ve warned before that if the government turns to populist measures, investors could build in higher risk premia on Filipino assets,” Capital Economics said. — K.K.Chan

Tighter US immigration policies, weak job market could hurt PHL remittances

Stricter visa and immigration policies in the United States could slow demand for Filipino workers and potentially dampen remittance inflows, analysts said.

Pantheon Macroeconomics Chief Emerging Asia Economist Miguel Chanco said a weakening US labor market has started to affect remittances from US-based migrant Filipino workers.

“We’re arguably already starting to see the softening in the US job market impact remittances from Filipinos there,” Mr. Chanco told BusinessWorld in an e-mail.

He noted that the growth in remittances from US-based Filipinos has slowed to 0.5% in August, “a far cry from its previous peak of 4.2% in the middle of last year.”

“This ongoing slowdown certainly poses a downside risk to the BSP’s (Bangko Sentral ng Pilipinas) 3% growth assumption for remittances,” he added.

In August, cash remittances grew by 3.2% to USD 2.977 billion from USD 2.885 billion a year ago.

This brought the cumulative cash remittances in the January-to-August period to USD 22.909 billion, 3.1% higher than the USD 22.217 billion seen in the same period last year. The bulk or 40.4% of the remittances came from US-based Filipino workers.

The BSP projects cash remittances to increase by 3% to USD 35.5 billion this year.

Since assuming office in late January, US President Donald J. Trump has tightened border enforcement, ordered a crackdown on illegal immigration and has moved to limit foreign workers.

“Such policies tend to make OFWs more cautious, possibly reducing remittance amounts or sending frequency,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

“Given that the US is a major source of Philippine remittances, these developments could make it harder to hit the BSP’s 3% growth target for remittances,” he added.

Visa issue

Meanwhile, the International Monetary Fund (IMF) said the US government’s move to impose a USD 100,000 fee on new H-1B visas may pose a risk to remittances from the US.

“The fee on H-1B visas could impact remittances from the US, but we do not have specific estimates at this point,” an IMF spokesperson told BusinessWorld in an e-mail, adding that they will monitor further developments and evaluate its impact once additional information becomes available.

In September, Mr. Trump issued a proclamation that required employers who are sponsoring foreign-born workers through the H-1B work visa to pay a one-time fee of USD 100,000 fee to the US government.

H-1B visas allow foreign workers to temporarily work for US companies in industries such as science, information technology, engineering and finance. The fees are typically shouldered by employers.

Angelo B. Taningco, research head and chief economist at Security Bank, said stricter US immigration and visa policies may have a moderate to minimal effect on overseas Filipino workers (OFWs) remittances.

“I think OF remittance flows from US to the Philippines would be moderately impacted by restrictive US immigration policy, but minimally affected by the hefty USD 100k H-1B visa fee because there are not many Filipino H-1B visa applicants,” he told BusinessWorld in an e-mail.

Workers from India account for the majority or about 70% of the total H-1B visa approvals.

On the other hand, Filipinos hold less than 1% of the total number of H-1B visas, according to IT & Business Process Association of the Philippines President and CEO Jonathan R. Madrid.

Nonetheless, Mr. Rivera said the new visa fee could reduce future remittance inflows by discouraging new applicants.

“The new USD 100,000 fee on new H-1B visa petitions raises the cost of working legally in the US, which could discourage new entrants or slow the growth of that skilled migrant stock, thus dampening future remittance volumes,” he said.

Reinielle Matt M. Erece, an economist at Oikonomia Advisory and Research, Inc., noted that lower remittances could hit the economy as it might limit household spending.

“Lower remittances may show lower disposable income of families with OFWs, thus lower disposable income may result in lower spending,” he said in a Viber message. “Lower spending results in slower jobs and income growth within the domestic economy.”

Mr. Rivera also said weaker inflows could also put a strain on foreign exchange reserves as well as put more pressure on the peso and external balance.

“The Filipino diaspora in the US is still the largest globally — by far — so I highly doubt that making it difficult for new entrants to come into the country in the future will instantly affect the US’ position as the largest origin market for remittance inflows,” Mr. Chanco said.

“For now, with total remittance growth holding fairly steady at 3%, these aforementioned developments in the US shouldn’t have a significant bearing on the Philippines growth prospects,” Mr. Chanco added. — Katherine K. Chan

ASEAN, South Korea launch FTA upgrade talks

KUALA LUMPUR — Philippine President Ferdinand R. Marcos, Jr. on Monday pushed for an expanded free trade deal between the Association of Southeast Asian Nations (ASEAN) and South Korea, saying this would keep markets open and counter growing protectionist trends in the global economy.

Mr. Marcos said a review of the ASEAN-Korea Free Trade Agreement (AKFTA) marks a “shared determination” to ensure the partnership remains relevant amid global economic uncertainty.

“The Philippines welcomes the launch of the negotiations to upgrade the ASEAN-Korea Free Trade Area, a timely step in strengthening ASEAN-Korea economic ties and ensuring that our partnership remains relevant in today’s rapidly changing global economy,” he said during the 26^thASEAN-Republic of Korea Summit in Kuala Lumpur.

The President added that enhancing the trade pact would reaffirm both sides’ commitment to transparency, fairness and cooperation in trade.

Trade between ASEAN and South Korea reached USD 187.1 billion in 2023, according to the South Korean Ministry of Foreign Affairs.

Seoul is the regional bloc’s second-largest trading partner, while ASEAN is South Korea’s second-largest investment destination, with foreign direct investment inflows reaching USD 10.8 billion in 2022 and USD 7.31 billion in 2023.

ASEAN Studies lecturer at De La Salle-College of St. Benilde Josue Raphael J. Cortez said the review of the AKFTA underscores the need for trade partnerships to adapt to current geoeconomic challenges.

As ASEAN’s second-largest trading partner, South Korea plays a key role in ensuring mutual economic resilience amid global shifts, he noted.

“This strengthening of partnership is undoubtedly a win-win situation, especially since trade diversification is not an alternative anymore today, but is an imperative that every nation-state must embrace,” he said via Facebook Messenger.

If realized, the upgraded FTA would boost trade in agriculture and machinery, enhance tourism-driven growth, and attract more South Korean investments to the region, he added.

For the Philippines, the deal could strengthen its electronics exports and provide alternative sources of oil, petroleum, and agricultural goods, supporting both energy stability and food security, Mr. Cortez noted.

RCEP

During the 5^th Regional Comprehensive Economic Partnership (RCEP) Leaders’ Summit on Monday, Mr. Marcos urged the member states to accelerate the accession process to expand the bloc’s membership and ensure that businesses, especially micro, small, and medium enterprises (MSMEs), fully benefit from the world’s largest free trade agreement.

He noted that early expansion would deepen regional integration, reinforce supply-chain resilience, and reaffirm ASEAN’s central role in shaping Asia’s economic future.

“It is in our collective interest to advance the accession process without delay,” Mr. Marcos said.

The RCEP brings together the ASEAN member states along with China, Japan, South Korea, Australia and New Zealand, covering nearly a third of global gross domestic product (GDP) and trade.

“RCEP exemplifies ASEAN’s commitment to a rules-based trading system — our strongest anchor amid today’s global uncertainties,” the Philippine president said.

“It provides a stable and predictable framework for trade and investments, allowing our economies to grow and develop together in an environment of trust, fairness, and transparency.”

Mr. Marcos called on all RCEP parties to enhance cooperation on awareness-building and capacity development, enabling MSMEs to utilize the pact’s benefits better.

He added that Manila is ready to collaborate with other members on a regional campaign to promote the pact and facilitate dialogue, business matching and cross-border collaboration.

“To further demonstrate our commitment, the Philippines will be pleased to host this International Trade Forum in November next year,” he said.

The President also underscored the need for RCEP to evolve with global trends, highlighting the importance of cooperation in digital trade, the creative economy, green transition, and innovation.

According to Mr. Cortez, the President’s remarks highlighted the Philippines’ openness to collaborate with other nations and underscore the importance of multilateral approaches to today’s economic challenges.

He noted the regional trade pact offers a framework for both developed and developing members to protect their economic interests amid global market volatility and geopolitical uncertainty.

“One has to bear in mind that trade is not merely affected by skyrocketing tariffs, but also political and armed conflicts. With every part of the world today seemingly challenged by political uncertainty, trade disruptions are inevitable,” Mr. Cortez said.

“Hence, it is in the best interest of RCEP not only to devise collective frameworks, but also to widen its membership as these new signatories, in one way or another, will always be an alternative should the need arise.”

He urged the bloc to expand its focus beyond traditional industries to emerging sectors like the creative economy and innovation — while ensuring such progress does not disadvantage low-skilled workers, in line with RCEP’s founding principles.

Tariff talks continue

Palace Press Officer Clarissa A. Castro quoted Special Assistant to the President for Investment and Economic Affairs Frederick D. Go as saying the tariff negotiations between Manila and Washington continue.

This as Malaysia and Cambodia signed trade pacts with the US over the weekend, while framework trade agreements with Vietnam and Thailand were also inked.

“There are also some issues that we can describe as comprehensive, particularly concerning trade rules and regulations, as well as nontariff measures like services and investments,” Ms. Castro said in Filipino during a briefing at the Kuala Lumpur Convention Center on Monday.

“These involve issues related to protecting our country’s interests, especially in sectors such as agricultural products — like coconuts, pineapples, sugar, cocoa — and electronic products,” Ms. Castro said, noting these are among the areas Manila cannot easily address at the moment.

Since Aug. 7, the US has imposed a 19% duty on many goods from the Philippines, Cambodia, Malaysia, Thailand and Indonesia.

“ASEAN values its partnership with the United States and seeks to build practical, strategic, and forward-looking collaboration that delivers concrete outcomes for our businesses and citizens alike,” Mr. Marcos said during the 13^th ASEAN-US Summit on Sunday. — Chloe Mari A. Hufana, Reporter

Peso sinks near record low on dovish BSP hints

The peso plunged against the dollar on Monday to log its weakest close so far this year following signals of further easing from a Monetary Board member to help cushion the Philippine economy from the impact of a widening graft scandal on growth prospects.

The local unit closed at PHP 58.90 versus the greenback, sinking by 27.5 centavos from its PHP 58.625 finish on Friday, Bankers Association of the Philippines data showed, extending its slide to an eighth consecutive session.

This was an over 10-month low for the peso as this marked its worst close since it finished at its record low of PHP 59 on Dec. 19, 2024.

The peso opened Monday’s session slightly stronger at PHP 58.60 versus the dollar. It climbed to as high as PHP 58.50, while its weakest showing was at PHP 58.92 against the greenback.

Dollars exchanged rose to USD 1.6 billion on Monday from USD 1.39 billion on Friday.

The peso sank on Monday following dovish comments from Benjamin E. Diokno, who is a member of the Bangko Sentral ng Pilipinas’ (BSP) policy-setting Monetary Board, amid growth concerns, the first trader said in a Viber message

“The pair closed higher on a weaker peso due to former BSP Governor Diokno’s statement saying that he sees more easing this year, alongside dollar demand on stronger US-China trade deal expectations,” the second trader said in a phone interview.

“Local market sentiment is partly weighed by political noise in recent weeks as a potential distraction from the economy and reforms,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippine central bank may cut its key interest rate again in December and further next year, as the economic fallout from a corruption scandal may linger through the end of 2026, an official said, Bloomberg reported.

“I would expect another 25-basis-point cut” at the next meeting in December, Mr. Diokno said in an interview with Bloomberg Television’s Avril Hong on Monday.

Further rate cuts are possible “maybe sometime next year,” as policymakers assess economic growth and employment data, with inflation under control, according to Mr. Diokno.

The BSP reduced its benchmark interest rate by a quarter point this month as a corruption scandal in the government’s flood control projects has threatened the country’s economic outlook. Its next rate-setting meeting is scheduled for Dec. 11.

Mr. Diokno, who once helmed the central bank as well as the finance and budget departments, said the economy may “slow down a bit” due to the corruption controversy and trade uncertainties. He said 2026 will be “a transition period” as President Ferdinand R. Marcos, Jr. fixes the problem.

In July, Mr. Marcos exposed corruption in flood-control projects worth billions of pesos. Many of the projects were either substandard or nonexistent, leading to investigations that have implicated key public works officials and several lawmakers, who have denied wrongdoing. The allegations fueled a broad exit by foreign investors in the stock market.

“We will probably be able to recover from this mess by the end of next year. And 2027 and 2028, we’ll be back on track,” Mr. Diokno said.

For Tuesday, the first trader said the peso could rebound on profit taking and before an expected rate cut by the US Federal Reserve.

Both the first trader and Mr. Ricafort see the peso moving between PHP 58.75 and PHP 59 per dollar on Tuesday, while the second trader expects it to range from PHP 58.60 to PHP 58.90. — A.M.C. Sy with Bloomberg

PSEi sinks to seven-month low on selling pressure

Philippine stocks closed lower on Monday due to selling pressure and as the peso weakened further against the dollar.

The benchmark Philippine Stock Exchange index (PSEi) fell by 0.9% or 54.26 points to close at 5,933.76, while the broader all shares index dropped by 0.73% or 26.38 points to 3,581.73.

This was the PSEi’s worst finish in nearly seven months or since it closed at 5,822.85 on April 7.

“The market continued to track lower following last week’s breach below the key resistance at 6,000,” AP Securities, Inc. said in a market note on Monday.

“The Philippine market declined by nearly 1% as selling pressure persisted throughout the trading session. The depreciation of the Philippine peso against the US dollar continued to make investors trade cautiously,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.

On Monday, the peso plunged by 27.50 centavos to close at PHP 58.90 against the dollar from PHP 58.625 on Friday, data from the Bankers Association of the Philippines’ website showed, extending its losing run to an eighth consecutive session.

This was an over 10-month low for the peso as this marked its weakest showing since it finished at PHP 59 on Dec. 19, 2024, which was also its record low.

“Moreover, the release of some companies’ earnings also influenced today’s market performance,” Mr. Limlingan added.

Listed companies that released their financial results on Monday included lenders BDO Unibank, Inc., Union Bank of the Philippines, Inc., and Philippine National Bank.

All sectoral indices closed in the red. Mining and oil sank by 2.87% or 378.24 points to 12,796.37; services dropped by 1.25% or 28.80 points to 2,272.66; financials fell by 1.08% or 21.3 points to 1,948.20; industrials went down by 0.78% or 69.86 points to 8,796.55; property retreated by 0.76% or 16.87 points to 2,198.93; and holding firms decreased by 0.53% or 26.06 points to 4,804.82.

Market breadth was negative as decliners overwhelmed advancers, 131 to 55, while 59 issues were unchanged.

Value turnover went down to PHP 18.77 billion on Monday with 11.82 billion shares changing hands from Friday’s PHP 26.28 billion with 2.89 billion issues traded.

Net foreign selling decreased to PHP 313.66 million on Monday from PHP 648.37 million on Friday.

Meanwhile, global stocks bounced on Monday as signs of cooling trade tensions between China and the US encouraged investors, Reuters reported. Top Chinese and US economic officials on Sunday hashed out the framework of a trade deal for US President Donald J. Trump and his Chinese counterpart Xi Jinping to decide on later this week at a meeting in South Korea.

That sent stocks sharply higher in Asia, with indexes in South Korea, Taiwan and Japan hitting record highs. The upbeat mood spread to Europe, where shares rose modestly across the board, leaving the STOXX 600 up 0.1% around record highs. — A.G.C. Magno with Reuters

Gross borrowings fall in September

The National Government’s (NG) gross borrowings declined by 65% in September, reflecting a slowdown in public spending.

The latest data from the Treasury showed that total gross borrowings fell by 64.89% to PHP 128.913 billion in September from PHP 367.183 billion in the same month a year ago.

Month on month, gross borrowings slid by 74.65% from PHP 508.527 billion in August.

Domestic borrowings, which made up 93.51% of the total, slipped by 16.98% to PHP 120.548 billion in September from PHP 145.2 billion in the same month last year.

This was composed of PHP 111.848 billion in fixed-rate Treasury bonds (T-bonds) and PHP 8.7 billion in Treasury bills (T-bills).

External borrowings, which mainly consisted of project loans, plunged by 96.23% to PHP 8.365 billion in September from PHP 221.983 billion in the previous year.

“This (lower gross borrowings) could very much reflect the lower share of foreign borrowings to the total borrowing mix of the government and could also reflect prudence of some private sector borrowers by reducing US dollar-denominated and other foreign borrowings in view of foreign exchange risks involved,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The peso closed at PHP 58.196 per dollar on Sept. 30, down by 35.1 centavos from its PHP 57.845 finish on Dec. 27, 2024.

“(The) lower amount of approved foreign loans reflected that cautiousness vs. potential forex (foreign exchange) losses that entail US dollars and other foreign loans,” Mr. Ricafort said.

Philippine Institute for Development Studies Senior Research Fellow John Paolo R. Rivera said in a Viber message that the lower borrowings reflected slower government spending, particularly on infrastructure, and the government’s “deliberate recalibration of financing strategy” for the fourth quarter.

“While this moderation in borrowings can help ease immediate pressure on yields and debt servicing costs, it also raises two cautions such as if the underlying budget deficit remains large or rises further, the NG may need to ramp up borrowings again potentially at less favorable terms,” Mr. Rivera said.

The NG’s gross borrowings stood at PHP 2.4 trillion in the January-to-September period, up by 4.11% from PHP 2.3 trillion a year ago. This made up 92.11% of the revised PHP 2.6-trillion financing program for 2025.

Domestic debt rose by 9.16% to PHP 1.96 trillion in the period ending September from PHP 1.795 trillion a year ago. This accounted for 92.83% of the PHP 2.04-trillion domestic borrowing program this year.

Broken down, domestic debt was composed of PHP 1.05 trillion in fixed-rate Treasury bonds, PHP 425.61 billion in retail Treasury bonds, PHP 300 billion fixed-rate Treasury notes, and PHP 181.15 billion in T-bills.

As of end-September, gross external debt stood at PHP 434.597 billion, down by 13.84% from PHP 504.447 billion a year ago. This made up 89.03% of the PHP 488.174-billion external borrowing program this year.

Broken down, foreign debt was composed of PHP 191.965 billion in global bonds, PHP 171.307 billion in program loans, and PHP 71.325 billion in project loans.

External borrowings as of end-September were padded by the global bond issuance that raised USD 3.3 billion or PHP 192 billion in late January but settled in February. — Aaron Michael C. Sy

Philippines anticipates stronger trade flows from key ASEAN deals

KUALA LUMPUR — The Philippines expects stronger regional trade and investment flows as two key trade pacts — the Association of Southeast Asian Nations (ASEAN)-China Free Trade Area (ACFTA) 3.0 Upgrade and the Second Protocol to Amend the ASEAN Trade in Goods Agreement (ATIGA) — promise to modernize economic cooperation across the regional bloc.

At a news briefing here on Sunday, Palace Press Officer Clarissa A. Castro quoted Special Assistant to the President for Investment and Economic Affairs Frederick D. Go as saying the ATIGA upgrade will keep the intra-ASEAN trade pact relevant amid evolving global trade conditions.

“The enhanced agreement offers significant benefits, particularly through improvements in trade facilitation measures, transparency provisions, dispute settlement mechanisms, and the inclusion of new and emerging trade elements,” she said.

The amended ATIGA was inked by Trade Secretary Ma. Cristina A. Roque on Saturday and was turned over to the ASEAN leaders on Sunday.

Ms. Castro said the new provisions, including mutual recognition of Authorized Economic Operators, will allow certified traders faster cargo clearance throughout ASEAN.

The agreement also promotes self-declaration of origin, electronic certification (e-form B), and the acceptance of digital documentation, making cross-border trade easier for Philippine businesses.

“Businesses will find it easier to comply with administrative requirements self-declaration of origin, the implementation of the Electronic Certificate of Origin (e-Form D), and the acceptance of digital documentation,” Ms. Castro added.

Meanwhile, the Philippines and Canada aim to finish free trade agreement negotiations by 2026, vowing to accelerate talks following a bilateral meeting at the 47^th ASEAN Summit between President Ferdinand R. Marcos, Jr. and Canadian Prime Minister Mark Joseph Carney.

They talked about efforts to deepen a trade relationship valued at more than USD 3 billion, covering sectors such as manufacturing, defense, and both conventional and clean energy.

Mr. Carney, in a separate statement, outlined Canada’s strategy to double its non-US exports over the next decade, positioning Southeast Asia as a key partner in that effort.

Canada and the Philippines agreed to fast-track negotiations on a bilateral free trade agreement, with the goal of completing talks by 2026.

They also committed to advancing a broader Canada-ASEAN free trade pact, which they aim to conclude during the Philippines’ ASEAN chairmanship the same year.

The two leaders also welcomed the prospect of a bilateral visit “at the earliest opportunity” and agreed to maintain close coordination as both countries look to expand trade and investment cooperation.

Meanwhile, Ms. Castro said the ACFTA 3.0 upgrade will make the ASEAN-China partnership “more modern, more comprehensive, and better aligned with today’s global realities.”

Citing Foreign Affairs Secretary Ma. Theresa P. Lazaro, Ms. Castro said the revised framework will deepen cooperation in digital and green economies, enhance sustainable supply-chain connectivity, and promote the empowerment of micro, small and medium enterprises (MSMEs) within regional value chains.

The ACFTA 3.0 Upgrade expands the original pact, which was signed in 2002, by introducing provisions on competition, consumer protection, digital economy, green economy, and supply-chain connectivity, on top of trade in goods, customs procedures, and investment cooperation.

The pact with China was ASEAN’s first FTA outside the bloc and remains one of the most important partnerships of the bloc.

Beijing is the largest trading partner of the bloc since 2019, reaching USD 507.9 billion in 2019, according to ASEAN’s website.

The ASEAN-China FTA in 2005 quadrupled the trade between the two.

ASEAN studies lecturer at De La Salle-College of St. Benilde Josue Raphael J. Cortez said the upcoming signing of the ACFTA 3.0 Upgrade underscores ASEAN’s commitment to strengthening ties with major global powers while ensuring its economies remain adaptable and competitive.

The enhanced pact reflects the bloc’s readiness to address global trade challenges, green transition, and sustainable growth — priorities shared with key partners such as China, the US, and the European Union, he added.

“With China showing further commitment to embrace green prosperity, we may expect that this partnership will signal deepened ties between the 11-country membership and Beijing not just on tech transfer, but also in devising ways on how we may effectively navigate green transition together,” he said via Facebook Messenger.

“At the same time, in recognition of the integral role MSMEs play in bolstering the Southeast Asian economies, this may also be a way for the sector to gradually embrace digitalization, which is now the name of the game in conducting business.” — Chloe Mari A. Hufana, Reporter

Fiscal gap shrinks as spending slows

The Philippines’ budget deficit narrowed in September, the Bureau of the Treasury (BTr) said on Thursday, as corruption probes into flood control projects slowed government spending.

The fiscal gap shrank 9.22% year on year to PHP 248.1 billion, while month on month, it nearly tripled from August’s PHP 84.8-billion shortfall. Total government spending dropped 7.53% to PHP 529.8 billion from a year earlier, reflecting a slowdown in project implementation.

Primary expenditures — total spending minus interest payments — fell 10.22% to PHP 448.1 billion, while interest payments rose 10.63% to PHP 81.7 billion.

Revenue collection also weakened, slipping 5.99% to PHP 281.7 billion as nontax revenues plunged by almost two-thirds. Treasury profits fell 21.73% to PHP 7.8 billion, while income from other offices dropped 77.82% to P8 billion.

Tax revenues provided some relief, increasing 4.91% year on year to PHP 265.9 billion. The Bureau of Internal Revenue (BIR) collected PHP 183 billion, up 4.74%, while Bureau of Customs (BoC) receipts rose 5.25% to PHP 80.3 billion.

The primary deficit, which excludes interest payments, narrowed by 15.67% to PHP 166.4 billion.

The narrower gap likely reflected delayed public disbursements “especially in infrastructure amid ongoing investigations in flood control spending,” John Paolo R. Rivera, a senior research fellow at the Philippine Institute for Development Studies, said in a Viber message.

From January to September, the budget deficit widened 15.15% year on year to PHP 1.117 trillion, or 71.6% of the government’s PHP 1.56-trillion full-year target. Expenditures rose 5.18% to PHP 4.484 trillion — about 73.7% of the PHP 6.082-trillion spending program.

Primary spending during the period increased 3.76% to PHP 3.818 trillion, while interest payments jumped 14.15% to PHP 665.8 billion.

Revenues climbed 2.24% to PHP 3.367 trillion, equivalent to 74.49% of the PHP 4.52-trillion goal. Tax collections grew 8.56% to PHP 3.053 trillion, while nontax revenues fell 34.71% to PHP 314.1 billion.

The BIR collected PHP 2.323 trillion, up 10.88%, and Customs’ take rose 1.59% to PHP 701.7 billion. The Treasury attributed stronger tax performance to higher corporate and personal income taxes, as well as gains in value-added, tobacco and bank taxes.

Despite the decline, nontax revenues already exceeded their full-year goal, supported by dividends from state companies and income from gaming and airport operations.

As of September, the primary deficit had widened 16.66% to PHP 451.4 billion.

Michael L. Ricafort, chief economist at Rizal Commercial Banking Corp., said spending could remain subdued amid heightened scrutiny of government contracts.

“There is a risk of slower government spending in the coming months amid anti-corruption measures that could slow down economic growth,” he said in a Viber message.

Mr. Rivera said the sustainability of a narrower deficit remained uncertain. “While slower spending might temporarily improve the numbers, it is not a substitute for revenue growth or healthy public investment,” he added.

BMI, a unit of Fitch Solutions, expects the Philippines’ budget deficit to slightly narrow this year as spending remains constrained by election-related restrictions and weak infrastructure disbursements.

It projects the fiscal deficit to reach 5.5% of gross domestic product (GDP), matching the ceiling set by the Development Budget Coordination Committee (DBCC). That would be a modest improvement from last year’s 5.7%.

“We forecast a narrower Philippine fiscal deficit of 5.5% for 2025 as spending has lagged programmed expenditures in the fiscal program,” BMI said in an Oct. 22 note.

Government revenue collection as of August had exceeded monthly targets, but spending continued to trail expectations due to curbs on pre-election disbursements and slower rollout of infrastructure projects.

Budget Secretary Amenah F. Pangandaman earlier warned that infrastructure spending could decelerate as the Department of Public Works and Highways faces investigation over irregularities in flood control projects.

BMI expects the fiscal gap to narrow further to 5.4% next year, helped by one-off privatization proceeds and new trade agreements with the US. Still, the estimate is slightly above the DBCC’s 5.3% target.

The report noted that tariff concessions under the US-Philippine trade deal could reduce government revenue by as much as PHP 30 billion, after Manila agreed to eliminate duties on select American exports such as vehicles, pharmaceuticals and soybeans.

Customs Commissioner Ariel F. Nepomuceno earlier said the government could lose PHP 27 billion to PHP 30 billion in revenue this year due to the zero-tariff policy.

BMI added that the proposed PHP 6.793-trillion budget for 2026 could strain fiscal consolidation efforts, as plans to expand the tax base remain limited.

The government aims to keep the deficit at PHP 1.56 trillion this year and gradually bring it down to PHP 1.55 trillion, or 4.3% of GDP, by 2028. — Katherine K. Chan

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