MANILA, Philippines — Lower global oil prices could offer support to Philippine financial markets in the second half of the year, helping strengthen the peso and improve bond performance, according to Manulife Investment Management.
Murray Collis, head of Asia fixed income at Manulife Investment Management, said Philippine markets continue to be shaped largely by two external forces: global oil prices and the direction of US Federal Reserve policy.
Speaking during a media briefing on Manulife’s second-half Asia market outlook, Collis said the firm’s base case sees both Fed policy and oil prices remaining the key drivers for many local markets, the Philippines included.
He noted that the Fed is expected to proceed cautiously with policy moves, having held its benchmark rate steady at 3.50 to 3.75 percent in June. Should global oil prices stabilize or continue to ease, Collis said this would prove supportive for Philippine bonds, the peso, and broader financial conditions. He explained that lower inflation would ease policy concerns, and that a continued pullback in oil prices could give the Bangko Sentral ng Pilipinas (BSP) more room to shift toward a more neutral policy stance. He cautioned, however, that a renewed increase in oil prices would likely keep the BSP on a more hawkish path.
Philippine inflation has eased for two consecutive months, aided by a tentative US-Iran peace deal that pushed crude prices back toward pre-war levels. Even so, inflation remains above the BSP’s target range and close to its highest level in three years. This prompted the central bank to raise its benchmark interest rate by another 25 basis points to 4.75 percent in June, with markets anticipating further hikes later this year. BSP Governor Eli Remolona Jr. has indicated the economy could withstand one more rate increase.
Meanwhile, the peso has continued to face pressure against the US dollar amid ongoing global uncertainty, leading the Development Budget Coordination Committee to project an average exchange rate of P60 to P62 per dollar through 2030.
Investor caution has also been evident in the bond market. On Tuesday, the Bureau of the Treasury rejected all bids for its seven-year bond offering after investors demanded higher yields, with the average rate climbing to 7.575 percent from 7.16 percent in the previous auction. Total bids reached only P18 billion, falling short of the government’s P30-billion target.
Despite these pressures, Manulife struck an optimistic note on the broader regional picture, saying Asia’s fixed-income market remains well positioned thanks to higher yields and shorter-duration bonds that tend to hold up better against interest-rate swings than many global peers. Collis said the firm sees opportunities across both Asia dollar credits and select local currency bond markets, where supportive policy conditions and solid fundamentals can help anchor returns.
