Sustained inflation slowdown to benefit bond, equities market

THE outlook for the domestic bond and equities market looks bright if the domestic inflation rate sustains its deceleration, executives of Manulife Investment Management (IM) and Trust Corp. Philippines said Thursday. In a commentary, Manulife IM Philippines head of fixed income Jean de Castro said a further slowdown in the rate of price increases in April to 6.6 percent from 7.6 percent the previous month affirms “that inflation may have already peaked for the Philippines.” She cited the likelihood that negative base effects in the succeeding months would “significantly result in slower inflation data in line with the BSP (Bangko Sentral ng Pilipinas) inflation forecast for May.” “Looking ahead to 4Q (fourth quarter), local inflation can be expected to fall within the BSP’s 2 (percent) to 4 percent target range, barring any sharp increases in global oil prices. The moderating inflation environment coupled with the pause in monetary policy actions supports the positive local bond outlook for the second half of 2023,” she added. Inflation rate posted a slower annual rate for the third consecutive month in April after hitting a 14year high of 8.7 percent in January. This is the reason for the cut in the central

Diokno said.

The MIF bill, approved by both the Senate and the House of Representatives on May 31, is currently awaiting the signature of President Ferdinand R. Marcos Jr.

The finance department earlier said the MIF would be the Philippines’ first-ever sovereign wealth fund that will optimize national funds by generating returns to support the administration’s economic goals as set in the Medium-Term Fiscal Framework, the 8-point Socioeconomic Agenda, and the Philippine Development Plan 2023-2028.

The Fund will be invested in a wide range of assets, including foreign currencies, fixed-income instruments, domestic and foreign corporate bonds, joint ventures, mergers and acquisitions, real estate and high-impact infrastructure projects, and projects that contribute to attain sustainable development. (PNA)