Business sentiment steady but financing remains tight
From AB Capital's The Opening Bell: Three Moves
Event
The BSP’s Business Expectations Survey (BES) showed a marginally positive confidence index of 0.9% in January, sharply lower than 4Q25 levels. Firms cited higher demand expectations but flagged competition, weak demand pockets, and elevated borrowing costs as constraints.
View
In our view, sentiment remains constructive but fragile. The forward indices at 33.3% for next quarter and 38.6% for next 12-months suggest recovery expectations are intact, though negative financial and credit access indices indicate tighter liquidity may cap near-term capex momentum.
Catalyst
Key swing factors include policy rate direction, Php stability, and stable inflation. A 50bp easing cycle this year could improve credit access and lift utilization above the current 69.6%, supporting earnings recovery into 2026.
Action
We favor selective exposure to domestic cyclicals (i.e., particularly banks) which could benefit from improving loan demand if confidence stabilizes. We remain neutral on highly leveraged industrial names pending clearer signs of sustained capacity expansion.
Disclaimer: The information, analyses, and views contained herein is based on sources which we, AB Capital Securities, believe are reliable, but is not guaranteed by us and is not to be considered all inclusive. It is not to be construed as an offer or solicitation of an offer to sell or buy the securities herein mentioned. AB Capital Securities and its Directors and Officers and/or members of their families may have a position in the securities herein mentioned and may make purchases and/or sales of the securities from time to time in the open-market and otherwise.
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