The Financial Stability Coordination Council (FSCC) is taking advantage of the country’s strengths in assessing opportunities as the global markets face enhanced uncertainties.
At its 3rd quarter meeting, the Council acknowledged that the slowdown in global growth is unfolding alongside an escalation of both the trade war between the US and China and various geo-political risks. As these conditions persist, the more likely will the market stay in a “risk-off” state.
A “risk-off” condition describes a market situation when risks are relatively high and investors respond by tempering their risk appetite.
Bangko Sentral ng Pilipinas (BSP) Governor and FSCC Chairman Benjamin E. Diokno pointed out that “while market volatilities have increased in recent weeks, the advantage of the Philippines is that the economy is growing at a pace that is relatively faster than in other jurisdictions.”
“There are global and domestic reasons why our own GDP growth has moderated but we should not overlook the fact that inflation is low, that we remain positive on our growth projections for the full year and we have the leeway to further enhance market liquidity as needed through a further calibration of the banks’ reserve ratio,” the FSCC Chairman added.
The FSCC noted that the government’s Build-Build-Build (BBB) program provides an excellent investment opportunity in a risk-off market scenario. Government securities issued to finance portions of the BBB program allow investors to take good returns on an investment-grade sovereign issuer. Investors will also benefit from higher market values on securities that can be traded or made available for sale as benchmark interest rates decline.
“Years of prudent reforms have put the country in a strong position to take advantage of opportunities even when there are increased volatilities in the market itself,” Governor Diokno noted.
The FSCC is an inter-agency council with the BSP, the Department of Finance, the Insurance Commission, the Philippine Deposit Insurance Corporation, and the Securities and Exchange Commission as member institutions. It is the venue for financial market authorities to identify, monitor, manage, and mitigate the build-up of systemic risk in the Philippine financial system.