The PLUS Economy: A Symptom of Policy-Driven Bubble

All is not hopeless. Markets are turbulent, deceptive, prone to bubbles, infested by false trends. It may well be that you cannot forecast prices. But evaluating risk is another matter entirely—Benoit Mandlebrot 

In this short issue

The PLUS Economy: A Symptom of Policy-Driven Bubble

I. The Philippine Gaming Bubble Is Bursting in Real Time

II. Implications: Sucked into a Cesspool of Losses

III. The Buyback Mirage

IV. The Deeper Malaise: A Speculative Society

V. Financial and Economic Policies as Catalysts; CMEPA: A Gamified Economy in the Making

VI. Regulators to the Rescue?

VII. The Damocles Sword Overhead: San Miguel’s Plummeting Share Prices

VIII. Conclusion: A System Engineered for Bubble Blowing 

The PLUS Economy: A Symptom of Policy-Driven Bubble 

Fiscal fragility and easy money laid the groundwork for a drift to a casino economy; tax distortion threatens to ignite the speculative tinder 

For continuity, this post follows my earlier piece: "The Ghost of BW Resources: The Bursting of the Philippine Gaming Stock Bubble" 

I. The Philippine Gaming Bubble Is Bursting in Real Time 

Trading activity now reveals raw emotion driving wild pendulum swings. 

As summarized:

Figure 1 

DigiPlus Interactive Corp. [PSE: PLUS] surged 15.7% on Friday, with turnover hitting Php 2.33 billion—an all-time high—accounting for 31.75% of mainboard volume! This marks the second-highest volume share after the July 4th collapse of 23.9%, when PLUS’s share skyrocketed to 33.33%. Friday’s rally mirrored the July 7th oversold recoil of +14.6%, when volume share hit 30.2%, the third highest on record. (Figure 1) 

This incredible volatility, backed by stunning trading volumes, shows that the bubble's deflation is still very much underway. 

II. Implications: Sucked into a Cesspool of Losses 

PLUS’s massive footprint in PSE volume underscores how deeply—both retail and institutional players—are entangled in its downside volatility vortex—sucked into a cesspool of losses, where investors have morphed into gamblers.

Figure 2

Many who suffered losses are pouring in more—anteing up or doubling down on losing positions to lower their average entry, hoping that a recovery might redeem them or restore their capital. This Martingale approach—catching a falling knife with both hands—only heightens the risk of ruin. (Figure 2, upper image)

Moreover, nursing drawdowns, many retail accounts will be sidelined, deactivated, or rendered inactive. 

Worse, we don’t know how much of this frenzy is credit-fueled or margin-driven. 

Yet, the biggest question: how exposed are financial institutions—and how compromised? 

III. The Buyback Mirage 

Bulls have pinned hopes on a Php 6 billion buyback. 

But as shown above, it’s a smidgen of total trade—worth less than this week’s volume. 

Down by 40.2%, PLUS’s weekly turnover hit Php 6.4 billion, or 19.3% of mainboard volume—an all-time high. 

Yet, the buyback is not capital formation—it’s capital consumption. Its intent is to support a price bubble, an unsustainable dynamic. Instead of being channeled into productive activity, capital is consumed in positional losses, resulting in both income shortfalls and balance sheet erosion. 

Other gaming issues, Bloomberry Resorts Corporation [PSE: BLOOM] and Philweb [PSE: WEB], likewise plummeted 6.32% and 17.4% week on week, respectively, reinforcing their recent price declines. (Figure 2, lower graph) 

IV. The Deeper Malaise: A Speculative Society 

This episode reveals just how desperate the market has become for a return to the bull days of the PSE. Chasing yields at any cost has become the new normal. 

But the gaming bubble is a symptom, not the disease. 

The gambling boom has gripped not only ordinary people reeling from inflation, but has also migrated into the PSE itself. 

The PLUS bubble has become a second front for digital gamblers. Or put differently, casino-style gambling has migrated to the stock market. 

Media and gaming apologists have deflected focus to the politics of a potential gambling ban. 

Yet given the sanctimonious cries of social democratic politicians who campaign to ban everything unpopular—should regulators now ban the stock market, too? 

Remember: drugs were the political obsession of the last administration. Now, gambling is the new public enemy. 

The war on POGOs has now morphed into a broader war on gambling. But do prohibitionists really think they can control human behavior through force alone? Will they succeed in imposing virtue—or will they help blow up the fiscal position (already at risk of hitting another record deficit) and magnify systemic corruption? 

Yet, haven’t you noticed? A political trend with every new administration is the use of its coercive political machinery to wage war against an unpopular minority—portrayed as evil. From drugs, to POGOs, to speculative finance—public enemies are manufactured, and the cycle repeats. 

These symptoms are not new.

Figure 3

The unraveling of the 1999 BW Resources bubble was followed by another boom-bust episode with the 2000 SSO-Philweb merger. These misallocations ultimately dragged the Phisix (now PSEi 30) to its knees by 2002. (Figure 3 upper diagram) 

Are we seeing echoes of that dynamic now? 

V. Financial and Economic Policies as Catalysts; CMEPA: A Gamified Economy in the Making 

Is this what the government had in mind with the Capital Market Efficiency Promotion Act (CMEPA)—a gamified economy modeled after PLUS? 

Read our earlier post on CMEPA "The Seen, the Unseen, and the Taxed: CMEPA as Financial Repression by Design" 

The claim that CMEPA is a tax reform to “benefit stocks” via reducing the stock transaction tax (STT) is superficial at best—a textbook case of the fallacy of division. 

In truth, CMEPA is a reprogramming of the public’s incentive structure—for households, corporations, and even government—towards short-termism, speculation, and consumption. 

Its standardized 20% tax on net income punishes savers, forcing them to seek speculative outlets—exactly what STT “reforms” aim to do. 

Add to this the BSP’s easy money and the crowding-out effects of deficit spending, and you have a perfect recipe for a bubble economy—the PLUS economy. 

Savings and borrowed money alike are being diverted into asset punts—not just in stocks, but in property as well, enabled by the BSP’s distorted, inflated Property Price Index. 

As part of the grand policy of inducing speculative juices—or animal spirits—in the real estate sector, the Social Security System (SSS) reportedly acquired Php 500 million worth of shares in Century Properties Group [PSE: CPG] via a special block sale. The purchase, equivalent to a 6.39% stake, was executed at a discount to market price. (Figure 3, lower chart) 

Since hitting its trough in Q2 2024, CPG’s share prices have more than doubled! 

This move not only signals institutional participation in the speculative drift but also raises questions about how public funds are being deployed to stimulate asset inflation. 

When pension reserves chase yield in property equities—backed by inflated indices and easy liquidity—it reinforces the very fragility the system claims to hedge against. 

VI. Regulators to the Rescue? 

Interestingly, regulators floated the idea of mandatory listings for online gambling firms—in the name of “transparency.” Was this a disguised attempt to rescue PLUS’s hissing bubble? 

Has the PSE been so starved of IPOs that it enlisted the help of regulators to bankroll listings—using mandates and the CMEPA’s policy nudges?

Figure 4

As of Q1 2025, the PSE has posted only one IPO (Topline Business Development, PSE: TOP) against two delistings (voluntary/involuntary)—Philab (DNA) and Keppel Philippines (KPH-KPHB). (Figure 4, upper visual) 

This proposed mandate reveals how authorities increasingly perceive the value of the stock market: a dopamine-laced feedback loop for short-term thrills or a market that hopes to accomplish "something for nothing" or share price inflation built on momentum and easy money. The very definition of a bubble. 

VII. The Damocles Sword Overhead: San Miguel’s Plummeting Share Prices 

As political and market attention fixates on gaming, another looming threat quietly unravels—the Damocles Sword hanging over the markets and the economy: San Miguel Corporation—a Php 1.5 TRILLION+ debt colossus—continues to see its share prices erode as liabilities climb—another potential catalyst for broader market instability. (Figure 4, lower window) 

VIII. Conclusion: A System Engineered for Bubble Blowing 

DigiPlus may be the flashpoint, but the broader market pathology runs far deeper. This is no rogue episode—it is the byproduct of a system engineered to reward velocity over value, status over functionality, dopamine over discipline. 

The convergence of fiscal fragility, monetary excess, and misaligned incentives has transformed the capital market into a gamified arena—one that pulls in both institutions and households into a void of unproductivity and capital consumption. 

CMEPA doesn’t fix this system— it formalizes its dysfunction. It deepens its institutionalization. 

The danger isn’t just the collapse of PLUS. It’s the normalization of a casino economy.