'Bayanihan 3' takes shape as oil shock intensifies
From AB Capital's The Opening Bell: Three Moves
Event
Sen. Legarda has filed SB 2020 ("Bayanihan 3"), which proposes potential zero VAT on fuel, excise tax suspension, and P5,000 to P10,000 monthly subsidies. The package also explores windfall taxes and emergency powers to address rising fuel and electricity costs.
View
In our view, the proposal signals a shift toward aggressive fiscal intervention as the oil shock deepens. While targeted support can cushion demand, broad tax cuts risk diluting fiscal buffers, especially if oil prices remain elevated for an extended period.
Catalyst
Policy design and oil trajectory are key. At sustained high oil prices, inflation and food costs could accelerate through transport and production channels. More expansive stimulus may stabilize consumption but could widen deficits depending on funding mix and duration.
Action
We think investors should monitor fiscal execution risks closely. Favor defensive sectors and staples benefiting from subsidy support, while remaining cautious on rate-sensitive and consumption names if deficits widen and inflation expectations become less anchored in the near term.
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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