What macro‑economic factors (e.g., inflation, consumer spending, exchange rates) could impact SM Investments' performance in the coming quarters?

Macro‑economic backdrop

SM Investments is a diversified conglomerate whose core earnings come from retail malls, residential/commercial real‑estate, and logistics. In the Philippines the next few quarters will still be shaped by three key macro‑variables:

1. Inflation & interest‑rate policy – CPI has been hovering around 4‑5% YoY in 2025, prompting the Bangko Sentral ng Pilipinas (BSP) to keep its policy rate in the 6.25‑6.50% band. Persistent food‑price inflation squeezes disposable‑income, which can dampen mall foot‑traffic and consumer‑spending growth. A moderation in inflation (e.g., CPI < 3.5% by Q4) would likely free the central bank to pause or cut rates, lowering funding costs for SM’s property projects and boosting retail demand.

2. Consumer‑spending trends – Real‑wage growth remains modest (≈2–3% YoY) while remittance inflows are steady. However, the “post‑pandemic travel boom” and a surge in e‑commerce logistics have lifted discretionary spending, especially in the mall and logistics segments. Any slowdown in tourism (e.g., a 10% dip in inbound arrivals) or a pull‑back in government stimulus could curb the 6% H1 net‑income lift, so analysts should keep a close eye on the Department of Tourism’s monthly visitor statistics and the Consumer Price Index for non‑essential goods.

3. Exchange‑rate dynamics – The PHP‑USD pair has been trading in a 55–58 range. A weaker peso (USD/PH > 58) raises the cost of imported construction materials and equipment, eroding margins on new‑development projects, while also inflating the USD‑denominated debt service. Conversely, a firmer peso improves profit‑margin stability and supports foreign‑investment inflows into SM’s REITs. Monitoring the central bank’s foreign‑exchange interventions and the U.S. Treasury yield curve will help gauge the direction of the peso.

Trading implications

Fundamentals: The 6% H1 net‑income growth signals resilient core operations, but the upside is contingent on inflation easing and consumer‑spending staying robust. A macro‑driven slowdown in mall traffic or a rise in construction‑costs could compress margins, so set a fundamental watch‑list for CPI releases (mid‑Oct & mid‑Dec) and remittance flow data (monthly).

Technical: SM’s shares have been trading above the 50‑day SMA (~PHP 68) and have recently found support near the 200‑day SMA (~PHP 64). The price is testing a resistance zone around PHP 72, which aligns with the recent high‑volume rally. A break above PHP 72 with strong volume could trigger a short‑term upside to the next resistance at PHP 76, while a retest of the 200‑day SMA with a bearish candle pattern would open a downside to the 50‑day SMA at PHP 68.

Actionable view

- Bullish bias if inflation shows signs of moderation (CPI < 3.5%) and the peso stabilises above 57/USD; consider buying on dips near PHP 66‑68 with a stop just below the 200‑day SMA.

- Defensive posture if CPI spikes above 5% or the peso weakens past 58/USD; tighten stops at PHP 68 and watch for a break below the 50‑day SMA to limit exposure.

Overall, the macro environment is the primary driver of SM’s quarterly trajectory; aligning position sizing with the inflation‑interest‑exchange‑rate outlook will help capture the upside while protecting against a consumer‑spending pull‑back.