Concepcion Industries Cools Off—And So Might GDP and the PLUS-Bound PSEi 30 (or Not?)

Wealth gained hastily will dwindle, but whoever gathers little by little will increase it—Proverbs 13:11 

Concepcion Industries Cools Off—And So Might GDP and the PLUS-Bound PSEi 30 (or Not?) 

Where weak demand meets benchmarking theater—CIC’s slump, index revisions, and PLUS as poster child—two short articles on CIC and PSE index rebalancing 

I. Concepcion’s Cooling Sales: A Summer Signal of Consumer Strain? 

Inquirer.net July 26, 2025: Concepcion Industrial Corp. (CIC), a consumer and industrial solutions provider, grew its attributable net profit by 15 percent to P355.4 million in the second quarter, driven by refrigeration and appliance businesses. This brought CIC’s first semester net profit to P534.3 million, up 30 percent from the past year, CIC said in its regulatory filing. 

Concepcion Industrials [PSE: CIC] posted a 15% rise in Q2 net income attributable to owners (PATAMI), hitting Php 355.4 million—an achievement media outlets framed as firm-wide strength. 

But this figure excludes minority interests and masks the broader softness in CIC’s core business. It’s technically accurate, rhetorically inflated. 

CIC’s official disclosure tells a different story. 

CIC official disclosure July 24, 2025: Net sales from the Consumer segment reached P3.7 billion, representing a 20% decline year-on-year. This was primarily due to weaker demand for air conditioning equipment caused by a shorter and less intense hot season, as well as a shift in consumer preference for lower-priced alternatives…In contrast, the Commercial segment posted P1.5 billion in net sales, reflecting 11% growth year-on-year…CIC posted net income of P498.1 million, a decline of 8% versus the same period last year, driven by weaker retail aircon demand, margin compression, and factory-related cost challenges.. Profit after tax and minority interest (PATAMI) was P355.4 million, up 15% year-on-year (bold added)

Figure 1

Net income fell 8% YoY to Php 498.1 million, dragged by a 20% plunge in consumer segment sales—despite record heat across parts of the country. Management blamed a shorter, less intense hot season and a shift toward lower-priced alternatives.(Figure 1, upper graph) 

That shift, amid falling CPI, near-record employment, all-time high consumer debt, historic fiscal deficit signals something deeper: households are flinching. 

CIC controls roughly 25–30% of the aircon market, making its performance a bellwether. 

Yet Q2 sales dropped 12.6% YoY, pulling H1 topline growth to a modest +3.2%. Net income still registered the second-highest peso level, but that was largely a base effect—margins held, but demand didn’t. (Figure 1, lower image) 

In a moment primed to amplify cooling demand, we instead find weakness refracted through both temperature and temperament. CIC’s heat-season fade reframes summer not as a demand accelerant, but as a mirror to creeping macro fragility.

Figure 2

Correlation does not imply causation, but the GDP linkage is hard to ignore. CIC’s sales growth fell from 37.4% in Q2 2024 to 4.6% in Q3 2024—mirroring the GDP’s drop from 6.5% to 5.2%. If that correlation holds, CIC’s Q2 slump may be a foreshock to a softer-than-expected GDP print. 

If CIC underperforms during the hottest months—when demand should be strongest—what does that say about the real health of household budgets and the trajectory of the economy? 

II. PSEi 30 Shake-Up: Will the PLUS Bubble Be Included or Buried? 

The Philippine Stock Exchange is expected to announce minor changes to its indices—including the PSEi 30—on August 1.

Figure 3 

Index rebalancing decisions are driven by trading activity, especially price performance, liquidity, and trading frequency. (Figure 3, upper table) 

As we've previously noted, share price surges have often been accompanied by rising volumes. 

Higher trade frequency helps filter out negotiated transactions such as cross trades, giving more weight to organic market activity. 

Despite the ongoing bear market and lingering volume inertia, a handful of stocks have outperformed. Mainboard volume (MBV) rose 7.03% year-on-year in the first half of 2025—pointing to selective engagement rather than broad-based participation. (Figure 3, lower chart) 

The PSE’s dynamic threshold model appears to rely heavily on survivorship bias—prioritizing recent winners as candidates for index inclusion. 

A case in point is DigiPlus Interactive Corp. (PLUS). 

According to the Inquirer (July 26, 2025): "DigiPlus Interactive Corp. still expects to be inducted into the Philippine Stock Exchange index, the benchmark index that consists of the 30 largest firms that trade on the local bourse, despite ongoing travails…We are not operationally affected, we’re on track with [our business plans]. It’s just our stock price that was affected. Nothing has changed except [there were] hurt feelings,” Tanco said."

Figure 4

Although full data from January to June is unavailable to us, its prominence in June is indisputable—accounting for 8.13% of MBV, with daily trades at times exceeding 10%. (Figure 4) 

Much of the current volume surge—over 25% of MBV—occurred amid the stock’s collapse in July. Yet since the PSE’s assessment period only spans January to June, July’s volatility is formally excluded. 

This introduces a hindsight bias in the official narrative: the stock crashed after the cutoff, but its strong June performance still boosts its qualifications for inclusion. 

And yet, PLUS mirrors the story of BW Resources—a politically inflated stock market bubble. Its fate depends on political calculus, particularly on how President Marcos Jr. addresses the issue of digital gambling in his SONA. 

An outright ban on online gambling could disqualify PLUS. However, if the administration opts for tighter regulation and higher taxation, it may still gain entry into the PSEi. 

Adding to the political layer, the Department of Finance has floated the idea of mandating public listings for gaming firms in the name of “transparency.” In such a case, PLUS’s inclusion in the index could serve as a showcase of the DOF’s Management by Example—which would be, quite literally, a “plus” for PLUS. 

But far from harmless, regulatory tightening or tax hikes would directly impact PLUS’s operations—despite public statements to the contrary. 

Regardless of the outcome, easy-money-fueled gambling fervor remains the defining feature of the current market, as investors chase speculative narratives in hopes of reclaiming the lost glory of a bygone bull market. 

This shift toward high time preference society—a fixation on short-term gains and speculative excess—is at the heart of what we call “The PLUS Economy.” 

But we reiterate: the PLUS stock bubble has already burst. 

Finally, viewed through the lens of the PSE’s dynamic model, the PSE doesn’t crown resilience—it rewards survivorship. And survivorship is just volatility dressed up as eligibility.

The CMEPA Delusion: How Fallacious Arguments Conceal the Risk of Systemic Blowback

As the cycle nears its end, a country is typically beset by chronic fiscal deficits. Low domestic savings and current account deficits render it dependent on foreign lenders. As lenders become wary, the average maturity of the public debt shortens. The central bank finds it impossible to set interest rates at the level which balances the needs of both creditors and borrowers. Once interest rates rise, governments’ debt servicing costs become increasingly onerous. Government finances come to resemble a Ponzi scheme, with new debt being issued to service old borrowing—Edward Chancellor 

In this issue

The CMEPA Delusion: How Fallacious Arguments Conceal the Risk of Systemic Blowback

I. Introduction: Evading the Real Issue

II. The Fallacies Behind the CMEPA’s Defense

A. False Equivalence

B. Red Herring

C. Categorical Error

D. Begging the Question

E. Ignoring Second-Order Effects (Bastiat’s “Seen and Unseen”)

F. Appeal to the General (Overgeneralization)

III. The Diminishing Role of Time and Savings Deposits in M2 and Bank Liabilities

IV. Defective Gross Domestic Savings, Near Record Savings-Investment Gap

V. Financing the ‘Twin Deficits’ with Record Systemic Leverage

VI. State-Driven Financial Repression: Time Deposits vs. RTBs & Pag-IBIG MP2

VII. Inflating Stock Market Bubbles: CMEPA’s Savers Lion’s Den

VIII. Conclusion: Sovereignty over Speculation, Economic Blowback 

The CMEPA Delusion: How Fallacious Arguments Conceal the Risk of Systemic Blowback 

Logical fallacies aren’t harmless—they shape policy narratives. In CMEPA’s case, they obscure financial repression and pave the way for systemic economic backlash. 

This is a follow-up on my original piece: The Seen, the Unseen, and the Taxed: CMEPA as Financial Repression by Design 

I. Introduction: Evading the Real Issue 

The Capital Market Efficiency Promotion Act (CMEPA) has stirred significant debate, not merely because of its tax provisions but because of what it signals about the evolving relationship between the state and citizen savings. 

While defenders of CMEPA claim it merely modernizes financial taxation and expands savings options, these arguments often rest on flawed logic and misleading equivalencies that mask the deeper issues: the erosion of true savings, the rise of speculation, and creeping state control over private capital.

Besides, in classical economic thought, savings is deferred consumption—a temporal anchor against uncertainty, a moral wager on future stability. Time-bound, low-risk instruments like term deposits have long served this function. They do not aspire; they buffer. When the state flattens the tax incentives protecting this buffer, it doesn’t merely tweak an equation—it alters the meaning of saving. 

II. The Fallacies Behind the CMEPA’s Defense 

CMEPA's defenders lean on several logical fallacies to support their case: 

A. False Equivalence: By equating time-bound savings with speculative financial assets such as stocks or REITs, proponents confuse two fundamentally different financial behaviors. Savings are deferred consumption; risk assets are bets on volatility. 

B. Red Herring: Arguments pointing to alternative investment vehicles like Pag-IBIG MP2 or Retail Treasury Bonds distract from the core concern: CMEPA disincentivizes bank-based, low-risk savings that traditionally fund long-term development. 

C. Categorical Error: To assume that financial markets can substitute for savings systems ignores the institutional role of savings in capital formation, stability, and intermediation. 

D. Begging the Question: CMEPA defenders assume what they must prove: that taxed savings instruments still count as savings (tax = savings or 1-1=2), or that savings will simply shift outside time deposits without consequence. This begs the question. 

It presumes that risk assets and government-managed schemes are natural substitutes for time deposits. It conflates taxation with neutrality, ignoring how incentives shape behavior.

In reality, aside from extraction, tax is a signal, not a passive overlay. And when the signal penalizes duration, it redefines savings itself. 

Worst, it also treats financial repression as benign without examining its structural damage to intermediation, capital formation, and systemic liquidity.

E. Ignoring Second-Order Effects (Bastiat’s “Seen and Unseen”) 

Defenders highlight only the seen—that capital might shift to “alternative” instruments like stocks or Pag-IBIG MP2. 

What is seen:

1. Lower taxes on REITs and stocks = more investment.

2. Flat tax on deposits = not new, fairness 

But they ignore the unseen: 

1. weakening of bank intermediation via the erosion of long-term bank funding,

2. The crowding out of private credit channels, and

3. The behavioral shift toward liquidity-chasing speculation, which gives rise to

4. increased market and economic volatility 

Policy must be judged not just by its immediate effects, but by its downstream damage. This is the classic Bastiat fallacy—what is unseen—the fragility, the distortion, the systemic cost—often matters more. 

F. Appeal to the General (Overgeneralization) 

CMEPA’s defenders argue that because some financial instruments like stocks, REITs, or Pag-IBIG MP2 exist, they can generally serve as adequate substitutes for traditional savings. 

But this overlooks key details: liquidity risk, volatility, transitional frictions or tensions, accessibility, ceilings, investor profile and behavioral inertia that constrain real-world reallocation. 

Not all instruments serve the same function—especially for households that need capital preservation over yield. 

This fallacy blurs crucial distinctions between risk assets and true savings vehicles. By appealing to broad categories, it sidesteps the very real limitations and risks of reallocating savings. In policy, the details are the difference between resilience and fragility. 

Policy design and evaluation demands specificity: Without disaggregated data on household savings patterns, bank funding structures, and instrument uptake, differentiating between resilience and fragility, the defense becomes narrative and rhetoric, not analysis. 

III. The Diminishing Role of Time and Savings Deposits in M2 and Bank Liabilities 

Since the BSP’s structural easing cycle began in the early 2000s, both the savings and time deposit shares of M2 have steadily declined. 

This erosion has profound implications for the liquidity foundations of the Philippine financial system. 

Figure 1 

Notably, time deposits briefly surged during two critical junctures: first, when the BSP’s policy rates hit record lows during the pandemic, and again when aggressive rate hikes resumed in 2022. Yet this rebound proved short-lived. (Figure 1, topmost pane) 

Subsequent M2 growth increasingly leaned on more liquid components—such as demand deposits and currency in circulation—rather than long-term savings. 

In effect, liquidity transformation has shifted away from stable deposits toward more volatile sources: demand-driven credit expansion and the banking system’s financing of government liabilities, as evidenced by the surge in net claims on the central government (NCoCG). (Figure 1, middle graph) 

The CMEPA tax will likely accelerate this liquidity vacuum by further penalizing traditional savings vehicles. 

This structural shift presents a systemic challenge. As deposits decline, credit expansion becomes increasingly unanchored from genuine savings. In tandem with both implicit liquidity support (via bank balance sheets) and direct quantitative easing (via the BSP), this dynamic becomes inherently inflationary and destabilizing. 

The dilemma is mirrored in bank balance sheets. 

The time deposit share of total bank liabilities has collapsed—from over 32% in 2008 to just 17.5% by mid-2022, before rebounding modestly in response to BSP’s tightening cycle. (Figure 1, lowest diagram) 

This plunge coincides with a decade of financial repression: persistently low real rates, high inflation, and the rise of state-directed instruments like RTBs, MP2, and PERA accounts. 

As traditional deposits dwindled, banks turned increasingly to borrowings to fill the liability gap. 

The share of bank borrowings from capital markets has been rising since 2015, ironically peaking just before the pandemic recession in 2019. This share temporarily declined to 5.4% by Q3 2023, as ‘tighter’ policy conditions set in. 

Yet as liquidity stress intensified, bank borrowing surged anew—hitting 7.9% in March 2025—before moderating after the BSP’s second leg of RRR cuts. 

In this context, what CMEPA promotes as capital market reform in practice amounts to an escalation of the erosion of the deposit base. It trades long-term stability for short-term borrowing, redirecting household savings away from private financial intermediation and into state debt. 

The result? A more fragile banking system, less private capital formation, and greater macro-financial risk. 

Moreover, these bank borrowings now compete directly with government financing needs and private sector credit demand—exacerbating the crowding-out effect and tightening liquidity conditions for the broader economy. 

This fragility is amplified by the growing concentration of liquidity within a handful of dominant players.

Figure 2

As of May, Philippine banks controlled 82% of total financial resources or assets, with universal-commercial banks accounting for 76%. (Figure 2, topmost image) 

Meanwhile, even as the M2-to-GDP ratio soared from 63% in 2019 to a pandemic-era peak of 76.2% in 2021, it dropped sharply to 66.3% by Q1 2025—a sign that not only has GDP become dependent on liquidity, but, importantly, money creation is no longer translating into real economic or savings growth. (Figure 2, middle chart) 

Taken together, as banks increasingly monopolize liquidity while time deposits diminish, the financial system becomes more fragile. It is precisely this growing instability that forced the BSP to roll out confidence-boosting measures—including the doubling of deposit insurance coverage and the second phase of the RRR cut. These are not signs of strength. They are signs of deepening systemic stress.

IV. Defective Gross Domestic Savings, Near Record Savings-Investment Gap 

At first glance, gross domestic savings (GDS) might seem useful for assessing national savings conditions, but its use to account for real savings conditions is generally misleading. 

First, as a derived indicator—not a strict accounting identity—it suffers from definitional inconsistency. 

For instance, the World Bank reports it at 9.3% in 2024, while Trading Economics, citing the same source, shows 29.24%. Same source, vastly different realities. (Figure 2, lowest window) 

Second, it is calculated as: 

GDS = GDP – Total Consumption (private + public). 

But GDP itself is indifferent to distributional nuances. As we always ask here: Cui bono or Who benefits? 

Is the savings outcome driven primarily by genuine productivity gains—or by increasing dependence on leverage? What is the quality of the growth? What ratios of cost, allocation, and extraction were involved? 

Third, the GDS measure masks household savings weakness—especially during capital flight or high profit repatriation. 

Fourth, how are these "savings" reflected in the banking system? 

Even when elevated GDS suggests high aggregate capacity, the reality is that available savings for productive intermediation—such as long-term deposits and investible capital—are scarce. CMEPA threatens to worsen this distortion by tilting incentives toward consumption and speculation. 

Put differently: while 2024 GDS appears deceptively high at over 29% of GDP, net national savings—after accounting for income and transfer leakages—is a mere 9.3%, per World Bank estimates. 

This reveals a deep structural fragility in the country's true capacity to accumulate capital. By penalizing savings and redirecting flows into speculative capital markets, CMEPA threatens to widen this gap and exacerbate the very vulnerabilities it claims to address.

Figure 3

Yet—and this is key—BusinessWorld recently produced a chart based on Philippine Statistics Authority (PSA) data showing the second widest gap between saving rates (apparently from the World Bank) and investment rates —which we discussed last March. (Figure 3, topmost visual) 

If savings were truly robust, why does this gap persist? What finances this chasm? 

V. Financing the ‘Twin Deficits’ with Record Systemic Leverage 

Cherry-picking numbers to defend the law ignores that the savings-investment gap has been manifested through ‘twin deficits’—fiscal and external trade. Despite supposed normalization post-pandemic, the Philippine economy remains at pandemic-level dependency on credit. (Figure 3, middle graph) 

Here’s the key: public spending is part of those investment rates. 

Bureau of the Treasury data revealed that the 2025 first-half fiscal deficit hit a record Php 765.49 billion—even without a recession! This confirms earlier warnings, which we’ll expand on in another post. (Figure 3, lowest diagram) 

So, who finances this? Domestic banks and foreign lenders are now absorbing this growing imbalance. 

As previously noted: 

"A shrinking domestic savings pool limits capital accumulation, increases dependence on external financing, and exposes the economy to risks such as debt distress and currency fluctuations."— Prudent Investor, March 2025

Figure 4

As of May, public debt hit a record Php 16.918 trillion, with June data expected to breach Php 17 trillion —the all-time high deficit will accelerate its increase. Didn’t the administration hint at pushing up the debt-to-GDP corridor from 60% to 70%? (Figure 4, upper graph) 

Meanwhile, combined with total bank credit expansion, systemic leverage reached a new record of Php 31.225 trillion, or 118% of 2024 nominal GDP. (Figure 4, lower chart) 

And that figure excludes: 

• Capital market debt issuance (corporate bonds, CMBS)
• FDI-linked intercompany loans
• Informal debt (pawnshops, personal lending, unregulated finance)

Think of the costs: this credit buildup means rising debt servicing burdens, declining real incomes, and growing risks of delinquencies and defaults. 

More importantly, in the absence of productivity-led savings growth, the Philippine economy is running on borrowed money—and borrowed time.

VI. State-Driven Financial Repression: Time Deposits vs. RTBs & Pag-IBIG MP2 

Defenders of CMEPA point to alternatives like RTBs or Pag-IBIG’s MP2 as substitutes for taxed time deposits. 

But these are neither comprehensive nor scalable: 

MP2 has annual ceilings and requires Pag-IBIG membership. 

RTBs are state-managed, episodic, and offer limited liquidity.

Figure 5 

Latest BSP data: (Figure/Table 5) 

• Total time deposits in the PH banking system: Over Php 5 trillion
• Long-term deposits (>5 years): ~Php 500–Php 700 billion
• RTB retail uptake: ~Php 175 billion
• MP2 inflows: ~Php 30–Php 50 billion/year 

Combined, RTBs + MP2 absorb just 5–10% of the capital displaced by CMEPA’s flattening of tax incentives. The rest sits idle, chases risk, or exits the formal system. 

More critically, these instruments are not substitutes for a diverse, open savings ecosystem. They represent state-controlled pipelines—a form of financial repression where household capital is diverted into funding public consumption, and paid for by the diminishing purchasing power of the peso. And this is supposed to ‘encourage’ savings growth? Really?

This contradicts the narrative that these flows remain as ‘savings outside’ time deposits. On the contrary, it is a narrowing of financial autonomy. 

VII. Inflating Stock Market Bubbles: CMEPA’s Savers Lion’s Den 

As previously discussed, the policy-induced gambling mentality has migrated to the equity markets. Instead of encouraging true savings, CMEPA will foster boom-bust cycles that further erode wealth and fuel capital consumption. 

This week’s coordinated pre-closing and afternoon pumps illustrate how institution-dominated markets manage the main index for optics—what we might call "benchmark-ism." (Figure 5, lower graph)

Though it escapes the Overton Window, this behavior—like CMEPA—distorts the price signal function of capital markets, leading to the misallocation of capital goods in the economy. 

By stoking gambling instincts, markets become casinos where savings and credit—someone else’s savings or bank-issued liquidity—is converted into house profits. 

When capital markets are manipulated for non-market goals, the effect is the same: momentum cloaking a wealth transfer. 

CMEPA leads savers straight into the lion’s den. 

VIII. Conclusion: Sovereignty over Speculation, Economic Blowback 

In an age where reform rewards liquidity and penalizes patience, true saving becomes a philosophical—and revolutionary—act. It’s no longer just economic prudence. It’s resistance to engineered ephemerality. 

The ideology driving CMEPA whispers: Be fast. Be fluid. Be speculative. Be extravagant. Be taxable. Be subservient to the state. 

The public must reply: Be steady. Be real. Be cautious. And above all—be sovereign. 

This is not academic critique—it’s a warning. When incentives distort prudence, the fallout is material, not theoretical. 

CMEPA does not act alone. It fuses with a wider architecture of distortion:

• BSP’s redistributionist easing cycle
• Record deficit spending
• An implicit USDPHP soft peg
• Accelerating bureaucratization and economic centralization 

Together, they form the scaffolding of financial and social maladjustment. 

And when crises surface—households hemorrhaging stability, banks scrambling for duration, systems unraveling under engineered fragility—the reckoning will be felt everywhere. 

In that moment, accountability will matter. 

We must remember: Who authored this distortion? Who rationalized it as progress? 

And we must prepare—for its backlash. 

___

References

Prudent Investor Newsletter, 2024’s Savings-Investment Gap Reaches Second-Widest Level as Fiscal Deficit Shrinks on Non-Tax Windfalls March 9, 2025, Substack

 

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.  

The Ghost of BW Resources: The Bursting of the Philippine Gaming Stock Bubble

An inflation tends to demoralize those who gain by it as well as those who lose by it. They become used to “unearned increment.” They want to hold on to their rela­tive gains. Those who have made money from speculation prefer to continue this way of making money to the former method of working for it…The trend in an inflation is toward less work and produc­tion, more speculation and gam­bling—Henry Hazlitt

In this issue: 

The Ghost of BW Resources: The Bursting of the Philippine Gaming Stock Bubble

I. Why Our Prescient Warning? Seven Disturbing Parallels

II. One: Gaming at the Core

III. Two: Distortions: Market Dominance and Turnover

IV. Three: Post-Crisis Timing

V. Four: Inflation and the Illusion of Prosperity

VI. Five: Prohibition, the Satirical Theater of Morality and Potential Political Controversies

VII. Six: The South Sea Parallel

VIII. Seven: Bull Traps and Secular Cycles

IX. Conclusion: Bubble Cycles: The Rhyming of History 

The Ghost of BW Resources: The Bursting of the Philippine Gaming Stock Bubble 

From BW Resources to PLUS and BLOOM: The Anatomy of a Gaming Stock Market Bubble Reborn, 7 disturbing parallels

I. Why Our Prescient Warning? Seven Disturbing Parallels 

At the peak of the euphoria surrounding the Philippine gambling bubble, I issued a subtle warning via tweet (x.com post): (Figure 1)

Figure 1

"Strange fascination with gaming bubbles. Has the Philippine financial community forgotten the BW Resources bubble, w/c soared in a bear market's 'bull-trap' phase & crashed in 1999, exposing unsustainability & 'manipulation?' Learn from history—recurring bubbles in market cycles"

Certainly, 2025 is not 1999. The economy, financial architecture, and technological landscape have evolved. The composition of the Phisix—now the PSEi 30—has changed. The circumstances behind the BW scandal were unique. 

Despite the passage of time and evolution of market instruments, a troubling déjà vu grips the Philippine financial landscape. The current gaming bubble echoes the BW Resources scandal with unsettling fidelity—both in structure and in consequence. 

Below are seven disturbing parallels that merit scrutiny, not dismissal. 

II. One: Gaming at the Core 

BW Resources began as an online bingo firm with a nationwide franchise. It was, fundamentally, a gaming enterprise. 

Today’s speculative darlings—Digiplus Interactive Corporation [PSE: PLUS] and Bloomberry Resorts Corporation [PSE: BLOOM]—are likewise gaming firms, riding a digital demand boom.

Figure 2

PLUS has enjoyed a windfall: retail sales surged 181% (YOY) year-on-year in 2024, while net income growth vaulted 207%. In Q1 2025, net income soared 110% to Php 4.2 billion. (Figure 2, topmost window) 

Riding on the coattails of PLUS, BLOOM—a relative newcomer to online gaming—launched its digital platform in April, coinciding with a sharp rally in its share price. The timing fueled market excitement, further amplifying speculative fervor toward the sector. 

III. Two: Distortions: Market Dominance and Turnover 

BW Resources once commanded a disproportionate share of market turnover. (Figure 2, middle graph) 

At its peak, its market cap eclipsed stalwarts like San Miguel and Ayala Corporation (Hamlin, 2000). 

In mid-June 2025, PLUS and BLOOM’s combined turnover reached over 20% of the mainboard. (Figure 2, lowest image) 

As the bubble began to deflate, their aggregate volume still accounted for 16.9% of June’s total. 

The collapse saw a further explosion in turnover: in June, PLUS plunged 48.15%, BLOOM fell 17.2%, and their combined turnover share spiked to 22.2%. PLUS alone captured 17.8% of weekly volume—33.3% on Friday alone! Astounding. 

The stunning magnitude of PLUS's volume share—a firm which used to be on the sidelines—suggests that this represents a corporate-specific boom-bust episode driven not by savings but by leverage. 

Remember that the banking system's credit portfolio stands at an all-time high, mostly powered by consumer credit. 

The spike in volume as PLUS shares collapsed may indicate ‘margin calls’ or the selling of other PSE-listed shares to bolster collateral backing leveraged PLUS positions. This could explain the PSEi 30's 1.13% drop last Friday. 

IV. Three: Post-Crisis Timing

Figure 3

BW Resources peaked and imploded in 1999, two years after the Asian Financial Crisis (AFC), when GDP contracted by 0.51% in 1998. (Figure 3, upper chart) 

The current bubble climaxed four years after the pandemic-induced recession of 2020, when GDP shrank by 9.6%. 

V. Four: Inflation and the Illusion of Prosperity 

The BW Scandal was a product of easy money-fueled inflation. 

Since peaking at 12.5% in 1994, the CPI headed downhill until the 9.4% spike in 1998, belatedly brought about by the AFC. The CPI dropped significantly to 6.1% in 1999 as the BW scandal unfolded. 

Similarly, CPI rose from 3.9% in 2021 to 6% in 2023, then plummeted to 3.2% in 2024. 

As the great economist Henry Hazlitt noted, 

"A vital function of the free market is to penalize inefficiency and misjudgment and to reward efficiency and good judgment. By distorting economic calculations and creating illusory profits, inflation will destroy this function. Because nearly everybody will seem to prosper, there will be all sorts of maladjustments and investments in the wrong lines. Honest work and sound production will tend to give way to speculation and gambling. There will be a deterioration in the quality of goods and services and in the real standard of living" (Hazlitt, 1969). [bold added] 

As Hazlitt warned, inflation distorts economic calculation, rewards speculation over production, and erodes real living standards. Despite disinflation, the purchasing power of the common tao continues to decline. 

Elevated self-rated poverty and hunger suggest a deteriorating standard of living. (Figure 3, middle and lowest panes) 

As a side note—and quite ironically—despite the falling rate of CPI, sentiment metrics such as self-rated poverty and hunger continue to trend upward, even in the face of recent declines. Consider this: the current environment operates under an easy money regime that has buoyed all-time highs in fiscal stimulus, near-record employment, unprecedented public debt, expanding bank credit, and systemic leverage. But what happens if this constellation of highs begins to unravel? 

Many turn to gambling not for leisure, but as a desperate attempt to bridge income gaps, service debt, and or as a coping mechanism—a form of psychological escapism from personal financial straits. 

In this prism, rising gaming revenues hardly represent economic progress, but rather a transfer from the vulnerable public to the house casino. 

VI. Five: Prohibition, the Satirical Theater of Morality and Potential Political Controversies 

The implosion of the BW Resources stock market bubble effectively opened a Pandora’s Box of political ramifications. It exposed systemic corruption, egregious stock market manipulation, and other conflicts of interest with connections reaching the highest echelons of power (Pascual and Lim, 2022). 

Following the contemporary political assault on Philippine Offshore Gaming Operators (POGO), political evangelists have opportunistically piggybacked on this sentiment, advocating for increasingly vocal and deeper prohibitions anchored on the supposed social sanctity or righteousness of a total ban on digital gambling. 

Yet the crackdown on POGOs appears entangled in deeper geopolitical currents—linked to Chinese interests under the previous administration and potentially reflecting the broader US–China hegemonic rivalry, made manifest through diverging diplomatic relations between alternating political regimes in the Philippines. 

Crucially, in a populist climate framed by social-democratic ideals, the magnitude of state intervention often becomes a currency of political capital—the larger the crackdown, the louder its resonance among voters. 

History repeats: the public once clamored to ban jueteng, which helped trigger People Power II and the ouster of President Joseph E. Estrada. Eventually, the state legalized it through STL under PCSO. 

Wikipedia notes: "One of the suggested reasons for legalization was to eliminate repeated corruption scandals... It has been compared to the tribulations in the United States regarding their prohibition of alcohol." 

Or rather, legalization signified the ‘nationalization’ of what was once a fragmented, decentralized, and implicitly local government (LGU) controlled shadow economy—effectively converting informal vice into formal state enterprise. 

In the same vein, one might ask: what became of the Philippine drug war, "Operation Tokhang"? 

Aside from the escalating calls for prohibition, will other political controversies emerge from this bubble bust? 

If history is a reliable compass, financial distortions often leave behind trails of corruption, regulatory compromise, and partisan leverage. The unraveling may reveal ties between speculative fervor and institutional patronage—suggesting that what began as financial exuberance could metastasize into yet another political saga. When markets deflate, the silence seldom lasts. 

Echoing the BW scandal, will malfeasance reemerge? As economic historian Charles Kindleberger once warned: "The propensity to swindle grows parallel with the propensity to speculate during a boom; the implosion of an asset price bubble always leads to the discovery of frauds and swindles" (Kindleberger & Aliber 2005) 

VII. Six: The South Sea Parallel

Figure 4 

While intense volume spikes amid a share collapse are associated with 'capitulation' or a theoretical ‘bottom,’ we harbor doubt that this is the case. 

From our humble perspective, whether a bounce occurs or not, the Philippine gaming bubble may have likely been pricked. 

PLUS’ chart, born of BSP’s easing cycle, evokes the South Sea Bubble of 1720—a spectacle of leverage, speculation, and political complicity. (Figure 4, upper and lower graphs) 

The South Sea Bubble was a major financial crisis that shook Britain in 1720, driven by wild speculation in the South Sea Company. The company had been granted a monopoly on trade with Spanish South America and took on a central role in managing the national debt by converting the King’s personal debt into the nation’s debt. Investors were drawn in by promises of immense profits. The company fueled the frenzy by allowing shareholders to borrow against their own South Sea stock as collateral, encouraging dangerous levels of leverage. The bubble was also part of a broader shift toward modern finance, including the creation of paper money and the rise of institutions like the Bank of England, which was established in 1694 to help manage government borrowing and stabilize the financial system. When confidence collapsed, share prices crashed, collateral became worthless, and forced liquidations deepened the ruin. The episode exposed corruption at the highest levels of government and business, leading to political fallout and reforms in financial regulation.  (Cwik, 2012) 

Isaac Newton, emblematic of intellectual prowess, became entangled in the bubble. After initially profiting, he reinvested heavily—and ultimately went broke. It’s often said the experience prompted him to declare: "I can calculate the motions of the heavenly bodies, but not the madness of people." (chart from Dr. Marc Faber) 

Ironically, Newton’s third law of motion—"for every action, there is an equal and opposite reaction"—finds metaphorical resonance here: South Sea shares returned to their starting point, as did the illusions of prosperity they once inspired. 

VIII. Seven: Bull Traps and Secular Cycles

Figure 5 

The BW scandal unfolded and climaxed in 1999 during a "bull trap" in a secular bear market. Once exposed, the market plunged until its 2002 trough—where the next bull cycle began. (Figure 5, upper chart) 

Today, the bear market persists. A “bull trap” rally is being engineered through easy money, fiscal stimulus, market interventions, and statistical optics—all framed within a carefully curated Overton Window, reminiscent of the ‘easing cycle’ powered "bull trap" of Q3 2024, as exhibited by prevailing media headlines. (links here, here and here) (Figure 5, lower diagram, Figure 6, media images)

Figure 6

IX. Conclusion: Bubble Cycles: The Rhyming of History 

The bursting of the Philippine gaming bubble represents more than a mere market correction—it embodies the cyclical nature of speculative excess that has plagued financial markets throughout history. 

The parallels between today's gaming bubble and the BW Resources scandal of 1999 are symptomatic of deeper structural patterns in market psychology, monetary policy and political misdeeds and imbroglios. 

As Mark Twain allegedly observed, "History doesn't repeat itself, but it often rhymes." Beneath the veneer of technological advancement and regulatory sophistication, the fundamental drivers of speculation—easy money, leverage, political interventions and human greed—remain unchanged. 

For those who understand the pattern, the current gaming bubble's burst may indeed signal the end of the artificial "bull trap" and the resumption of the secular bear market that never truly ended. 

In the end, the house always wins—not just in gaming, but in the grander casino of speculative markets where bubbles, once formed, must eventually burst. 

Yet, the silence after bubbles burst is rarely permanent. It’s often the prelude to scapegoating, reform, or reinvention—sometimes all three.  

___

References 

Henry Hazlitt, Comments on Inflation, May 1960 Fee.org 

Kevin Hamlin, Confidence Game, Institutional Investor, August 1, 2000 

CLARENCE PASCUAL AND JOSEPH LIM Corruption and Weak Markets: The BW Resources Stock Market Scam, March 2022 UP Center for Integrative and Development Studies, cids.up.edu. ph 

Henry Hazlitt, Man vs. The Welfare State p. 133 Arlington House, 1969, Mises.org 

Wikipedia, Jueteng 

Kindleberger, Charles P., and Robert Z. Aliber. Manias, Panics, and Crashes: A History of Financial Crises. 5th ed., Palgrave Macmillan, 2005. Chapter 9. 

Paul F. Cwik, The South Sea Bubble, April 3, 2012, Mises.org