February 12, 2025 – Manila’s stock market was poised for its best week in nearly four years, despite global trade tensions and fears of a looming trade war. Investors have been encouraged by the expectation that the Philippines’ central bank will ease its monetary policy next week to stimulate growth.
The Philippine benchmark index, although down by 0.8% on Friday, is set to rise 5.6% for the week, marking its strongest weekly performance since May 2021. The local currency, the peso, was up about 1% for the week, putting it on track for its best performance since December 2024. These gains reflect growing optimism about the central bank’s anticipated policy adjustments, which could support continued economic growth in the Southeast Asian nation.
The Philippine economy, which declared a food security emergency on Monday to address rising rice prices, has been grappling with slower-than-expected growth. In fact, the country’s economic expansion has remained slightly below the central bank’s target for two consecutive years. This weak economic data could potentially prompt the Bangko Sentral ng Pilipinas (BSP) to cut its benchmark interest rate at its upcoming meeting. Currently, the key interest rate stands at 5.75%, and the BSP had previously cut rates by 75 basis points in 2024 to bring borrowing costs to their lowest levels in two years.
Ruben Carlo O. Asuncion, the chief economist at Union Bank of the Philippines, commented, “While a quarter-point rate cut may not address all macroeconomic risks, it will contribute to lowering the cost of funding and doing business. This can lay the groundwork for investment-driven growth that can create jobs and increase incomes.” Asuncion’s comments underline the importance of continued easing in order to foster a more resilient economy.
Analysts from Citi also weighed in on the potential rate cut, predicting that the BSP would continue easing its monetary policy despite a slight inflation surprise in January. As a result, investors remain confident that the BSP’s actions could help further stabilize the economy and improve business conditions.
Despite the positive outlook for the Philippines, other regional stock markets faced more challenges. Shares in Indonesia dropped by as much as 3.2%, reaching their lowest level since November 2023. The declines were primarily driven by a sharp fall in stocks of PT Barito Renewables Energy, PT Petrosea Tbk, and PT Petrindo Jaya Kreasi, which saw losses of 19.9%, 23%, and 20%, respectively. The dip followed a decision by global index provider Morgan Stanley not to include these firms in its upcoming index reshuffling for February 2025. The losses contributed to Jakarta’s worst week since May 2022.
Emerging Asian currencies were largely subdued, with the US dollar holding steady as markets awaited further policy developments from U.S. President Donald Trump and the release of U.S. non-farm payroll data. The Taiwan dollar and Singapore dollar remained largely unchanged, while the Thai baht saw a slight uptick of 0.3%.
India’s financial markets were also closely monitoring the country’s central bank for any signs of policy changes, with many analysts expecting the Reserve Bank of India (RBI) to cut its key interest rate for the first time in nearly five years. This anticipated move is aimed at providing relief to India’s sluggish economy.
Regional stocks responded differently, with Taiwan, Singapore, and Thailand all showing modest gains on Friday. Taiwan’s stock market rose by 0.4%, Singapore’s added 0.5%, and Thailand saw a smaller uptick of 0.1%.
Despite the broader uncertainty in global markets, the Philippines stands out with its positive stock performance, driven in large part by expectations of central bank policy easing that could help boost economic growth in the coming months.