Global macro volatility influences Philippine equities unevenly across sectors, creating opportunities for investors who understand differential sensitivities. The starting point is the rate and currency axis, which affects discount rates, funding costs, and the peso translation of revenues and inputs.
Property and REITs are most exposed to interest-rate expectations. Rising global and domestic yields typically compress cap rates and equity valuations. Developers face slower pre-sales if mortgage rates rise and sentiment weakens. REITs, which compete with bonds for income-seeking capital, can reprice quickly when risk-free rates move. Mitigants include high-quality tenants, long lease maturities with built-in escalations, and conservative debt structures.
Banks sit at the intersection of growth and rates. Initially, higher rates can expand net interest margins if deposit repricing lags. Over time, the credit cycle asserts itself: slower loan growth, rising non-performing loans, and provisioning needs weigh on earnings if macro conditions deteriorate. Balance sheet strength, CASA mix, and sector lending exposure (e.g., to property or SMEs) determine resilience.
Consumer names bifurcate into staples and discretionaries. Staples with strong brands can pass through costs, protecting margins against imported inflation from a weaker peso or elevated commodity prices. Discretionaries rely more on wage growth and sentiment, making them sensitive to real income erosion from inflation spikes. Retailers with efficient supply chains and data-driven inventory management handle cost volatility better.
Utilities and infrastructure offer defensive cash flows but are sensitive to regulation and the cost of capital. Projects funded during low-rate regimes may face refinancing risk if global yields remain elevated. Tariff mechanisms that allow fuel cost pass-through or inflation indexation can stabilize earnings, but regulatory lag is a real factor during rapid price changes.
Exporters, BPOs, and dollar earners benefit from peso weakness, which boosts local-currency revenues. For manufacturers, the net effect depends on the currency mix of revenues and inputs: a positive translation can be offset by higher import costs. Hedging policies and supply contracts matter; companies that lock in forex and raw material prices can smooth earnings through turbulent periods.
Mining and commodities-related plays ride global demand and supply disruptions. Tight markets for metals can translate to strong earnings and cash returns, but these names carry geopolitical, regulatory, and environmental risk premia. Due diligence on mine life, cost curves, and permitting timelines is essential.
From a valuation lens, global macro shifts change fair value inputs. Higher discount rates lower justified P/E multiples, particularly for long-duration growth stories. Investors should separate multiple compression from earnings deterioration; the former can create entry points if cash flow trajectories remain intact. Scenario analysis—varying rates, FX, and commodity prices—clarifies risk-reward.
Market microstructure also amplifies moves. The PSE’s relatively limited liquidity means foreign flows can drive short-term mispricings, especially in mid-caps. Long-only investors can use limit orders, staged entries, and liquidity windows around rebalancing events to improve execution.
Blending macro awareness with company-level fundamentals creates a durable edge: understand the transmission channels, then pick management teams with prudent balance sheets, pricing power, and disciplined capital allocation.
