Market recap of 2023

Philequity Corner - Wilson Sy - The Philippine Star

In 2023, the US dollar experienced its first decline since 2020 as the market perceived inflation and US interest rates to have peaked. The dollar index (DXY), which holds a substantial euro weighting, declined by 2.1 percent. Among major currencies, the Swiss franc emerged as the top performer last year with a gain of 9.9 percent. The Japanese yen was the weakest, declining seven percent against the greenback. The performance of Asian currencies was mixed, with the Philippine peso showing a modest increase of 0.6 percent.

Dovish Fed boosts bonds

Global bonds surged in the last two months of 2023 on expectations that the Fed will rates this year. Yields across various US Treasuries (30-year, 10-year, and five-year) dropped below four percent after reaching 15-year highs above five percent in October. The Bloomberg Global Aggregate bond market index marked a notable recovery, surging 5.7 percent from the preceding year’s 13 percent loss. While the US Aggregate bond index rebounded by 5.5 percent, bonds in international markets registered higher gains.

US production shakes oil market

Despite geopolitical tensions, such as the Russia-Ukraine war and Israel-Hamas conflict, as well as efforts by OPEC+ to curtail output, crude oil prices witnessed a surprising 10 percent decline in 2023. This decline was primarily fuelled by the unprecedented surge in US oil production, setting a record output of 13 million barrels per day. Reduced demand from China and Europe further contributed to the fall in energy prices, leading to a 44 percent decrease in natural gas prices and a 14.6 percent drop in gasoline prices.

Rice and sugar prices fall

In 2023, agricultural commodity prices took divergent paths. Cocoa and orange juice prices surged by 61.4 percent and 53.1 percent, respectively. This is due to supply shortages caused by swollen shoot disease affecting West African cocoa and citrus greening impacting US oranges. Conversely, the prices of wheat, corn, soybean, and rice declined due to abundant harvests in key producing regions. Despite sugar’s substantial surge of 40 percent by November, a sharp 21 percent drop in December due to favorable weather conditions in Brazil and Thailand resulted in a modest 2.7 percent gain for sugar by the year’s end. The drop in rice and sugar prices bodes well for the Philippine inflation outlook.

China’s impact on metal prices

Nickel prices plummeted 45.2 percent in 2023 following a surge in supply from Indonesia and rising inventory at the London Metals Exchange and the Shanghai Futures Exchange. Meanwhile, copper and tin initially surged upon China’s reopening, but ended the year with moderate gains as China’s performance fell short of expectations, impacting the metals market.

Crypto’s remarkable 2023 resurgence

Last year witnessed a remarkable resurgence in Bitcoin and other cryptocurrencies. Bitcoin’s impressive 156 percent rally managed to reverse much of its losses from 2022. Bitcoin surged from $16,500 at the beginning of the year to $42,000 by December, while Ethereum also saw an 81 percent increase. The anticipation of bitcoin ETFs awaiting approval from the SEC remained a highlight throughout the year.

Phl stocks: a relative value play

After notable gains in November and December, US stocks took a breather in the first week of the year. The Nasdaq 100 saw a 3.1 percent decline, and the S&P 500 index dropped by 1.5 percent for the week, signaling a pause after nine consecutive weeks of gains. This move also indicates a market broadening and a rotation from mega-cap tech stocks towards sectors like financials, utilities, energy, and healthcare, which showed positive performance last week.

Part of this broadening is going into other countries that underperformed in 2023, including the Philippines and most ASEAN markets. Notably, the PSE Index (PSEi) surged impressively by 2.78 percent last week. This shift highlights a scenario where stocks outside the US appear notably undervalued, potentially offering investors an opportunity in 2024. The recent surge in the Philippine stock market suggests an emerging interest among investors possibly drawn to its relative value.


Philequity Management is the fund manager of the leading mutual funds in the Philippines. Visit www.philequity.net to learn more about Philequity’s managed funds or to view previous articles. For inquiries or to send feedback, please call (02) 8250-8700 or email [email protected].

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