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CAB likely to OK airlines’ fuel surcharge applications

THE Civil Aeronautics Board (CAB) is expected to issue on Monday its decision on several local airlines’ application to impose a fuel surcharge.
“We will make the announcement on Sept. 10. But right now, we are not making the announcement yet kasi meron pang [because there’s still] procedure being undertaken, legal procedures…. We’re just completing the process,” CAB Executive Director Carmelo L. Arcilla told reporters on the sidelines of an aviation forum on Friday.
Philippine Airlines (PAL), Cebu Pacific and Philippines AirAsia have asked the CAB to allow them to pass the additional costs from rising jet fuel prices to their passengers.
At the same time, the Department of Transportation (DoTr) said it has already approved the “fuel surcharge matrix,” which will serve as the guide for future surcharge applications whenever jet fuel prices spike.
“The one that we approved as far as DoTr is concerned is the matrix that was prepared by CAB, which is between a higher matrix proposal and a lower one. Nandun sa gitna [Somewhere in between]. Pero everything naman will depend upon the cost of fuel, yung mga ganyan [But everything will depend upon the cost of fuel, those things],” Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo told reporters during the same event.
The surcharge matrix, which was crafted by the CAB and airline companies, will still need CAB’s final approval.
“We followed the model for Japan, because we want to have a matrix where every time there is an increase in fuel or an increase in anything, or mag-decrease [or there’s a decrease], talagang pupunta pa sa’min [do you need to go to us]? You have a matrix naman, just follow it [Now you have a matrix, just follow it],” Mr. Tamayo said.
The International Air Transport Association (IATA) said the global price of jet fuel has surged 24.5% to $92.4 per barrel as of Aug. 31 compared to a year ago.
PAL asked for a fuel surcharge of between P158 to P405 for domestic flights, while Cebu Pacific and CebGo are seeking a fuel surcharge of between P70 to P280. AirAsia applied for a fuel surcharge of P120 to P240 for domestic flights and P300 to P750 for international flights.
PAL and Cebu Pacific both said rising jet fuel prices hurt their earnings in the first half.
Philippines AirAsia also cited the rising price of fuel as one of the factors that affected its plan to list in the stock exchange.
“We’re still working on (the initial public offering), but I think it might get delayed. Probably next year. There are too many problems at the moment, especially the fuel prices, the foreign exchange rate, plus the Boracay closure,” Philippines AirAsia Chief Executive Officer (CEO) Dexter M. Comendador told reporters in Makati City on Friday. — Denise A. Valdez

China detects African swine fever in four farms in single day

BEIJING — China reported four cases of African swine fever on Thursday alone, bringing the number of outbreaks to 13 since the virus was discovered in the country just over a month ago.
The agriculture ministry said it had identified the disease on three small farms in Jiamusi in Heilongjiang province in China’s northeast and the cities of Wuhu and Xuancheng in the eastern province of Anhui.
The largest of the three farms had 203 pigs, while the smallest had only 30 pigs.
Earlier on Thursday the ministry had reported a case in the city of Chuzhou in Anhui, on a farm which had over 800 pigs. The disease killed 22 of them, while another 62 were infected.
The new outbreaks bring the number discovered since Sunday to eight, stirring worry about the increasing speed of infection around the country.
All of the new cases were in cities already infected, or in the case of Chuzhou, relatively close to earlier outbreaks.
The disease has traveled vast distances in the world’s largest pork producer from Jiamusi, Heilongjiang, on the border with Russia to Wenzhou, in Zhejiang province, which is 3,000 km (1,865 miles) to the south.
Efforts to control the rapid spread of the disease by banning transport of live hogs from and through infected areas has left traders idle, farm pens bursting with pigs, and slaughterhouses short of stock.
The outbreaks have pushed up pork prices in the country’s south as demand grows ahead of a week-long holiday in October and also raised the prospect of more imports.
While most of the cases have been discovered on smallholder farms, the infected farm in Chuzhou was relatively big, underscoring the risk to some of the huge, modern farms that have opened in China in recent years.
Experts say backyard farms are typically more vulnerable to infection as they have lower biosecurity measures in place.
Swine fever is transmitted by ticks and direct contact between animals, and can also travel via contaminated food, animal feed, and people traveling from one place to another. There is no vaccine. It is not harmful to humans. — Reuters

Kate Spade honors late founder


KATE SPADE put the sparkle into New York Fashion Week on Friday, paying tribute in a riot of color to the handbag brand’s founder, three months after her tragic death.
It was the label’s first runway show at the bi-annual style fest, having previously opted for Instagram-able presentations, held this time in the lofty surrounds of the iconic New York Public Library.
The new creative director, Northern Ireland-born Nicola Glass, was already working on her debut collection when 55-year-old Spade, who founded the company with her husband, committed suicide in June.
Silver glitter ran down the center of the pale pink-carpeted runway, a nod to the woman whose brand has been synonymous with a joyful outlook on life since its founding in 1993.
“She left a little sparkle everywhere she went,” said a pink note left on the seat of every guest. “In loving memory 1962-2018.”
“Even though she hasn’t been here for over 10 years, her spirit’s definitely still here at the company,” Ms. Glass, a former Gucci handbag and jewelry designer who previously worked at Michael Kors, told AFP.
The collection was rooted in the brand’s DNA: color, fun, joyfulness for spirited women, sophisticated and feminine, yet wearable from day to evening.
Kate Spade’s spring/summer 2019 is one of pale lilac, hot pink, dark green, chartreuse, florals and print, with block-heeled sandals and knee-high boots, and liberal use of the spade symbol.
“It feels more modern, less retro, there’s more polished ease to it and prints, they’ve been evolved in a way where they’re a little bit more graphic with unexpected details,” Ms. Glass told AFP.
Pale white balloon-style lights were suspended from the ceiling and an unusually diverse stream of models, although each very slim, strode the runway before taking their places on silver diases.
Besides the silk dresses, cropped pants, checked suiting and buttoned mini-skirts, they sported purses, sunglasses and silk headscarves knotted at the nape of the neck.
“She’s a woman who, I think, is in love with life and has a sense of purpose,” said Ms. Glass.
Spade sold her last shares in her namesake brand in the mid-2000s. The company is now owned by Tapestry, but Glass hailed Spade as a role model woman, entrepreneur and designer.
Spade committed suicide in her Park Avenue apartment on June 5, having battled with depression and anxiety for years despite a dazzling career that made her the darling of American career women.
DRESSING AMERICA
Guests of honor were Oprah Winfrey, Anne Hathaway, Jessica Chastain, Blake Lively, Pierce Brosnan, Kanye West and Priyanka Chopra, as well as Donna Karan, Michael Kors and Carolina Herrera were in attendance.
Models sashayed through the oriental rug-lined Bethesda Terrace fountain in Central Park, before a frail looking Lauren, dressed in jeans, dress shirt and black tux, came out to a standing ovation, doing a lap of honor and tenderly embraced by his guests of honor.
Dozens of models, of every conceivable color, ranging from almost babes in arms to grey-haired men, encapsulated 50 years in which the 78-year-old has literally dressed America—his Ralph Lauren and Polo labels a one-stop shop for evening, day, business and sportswear.
“In celebration of 50 years, I celebrate a woman’s freedom of expression, her strength and individuality,” he said simply.
TORY BURCH CRUISES
The American founder of the global lifestyle brand Tory Burch was upbeat and happy, unveiling a collection, imbued with the memory of her wealthy parents and their Mediterranean cruises.
The clothes were inspired by their steamer-hopping trips from Italy to Greece, and from Spain to Morocco, full of contrast from Cyprus lace to North African djellabas, and from flamenco flounces to safari suits
Schlepping out to deepest Brooklyn and sitting on soggy benches in a downpour might not have been the fashion pack’s idea of fun.
‘BLACK IS BEAUTIFUL’
But those who made the journey were wowed by the burgeoning talent of up and coming label Pyer Moss, their all-black models, band and gospel choir in an historic black setting for his latest show.
“I wanted to show what African-American leisure looks like,” designer Kerby Jean-Raymond told reporters backstage. “We just wanted to make that modernized, simple and young.”
In addition to his collaboration with Reebok, the silhouette for the Pyer Moss woman was sophisticated, flowing gowns, waterfall hemlines and kaftan-inspired evening wear in white, pale pink and yellow.
Stunning prints made out of portraits by painter Derrick Adams were blown up onto organza, jacquard and pleats, and a cocktail dress studded with 200,000 Swarovski crystals.
“It’s people that look like my friends and people who are constantly overlooked in normal bookings,” Mr. Jean-Raymond told reporters when asked about his all-black casting.
“I want to show that black can be beautiful and not just always sensationalized, not always tragic, not always just like for your entertainment. It can exist on the sole purpose of us being us.”
The show was held at the Weeksville Heritage Center, which preserves one of the first 19th-century free African-American communities.
The choir, dressed in white robes, belted out a stirring soundtrack to rapturous applause, deliberately chosen and opening with “Be Real Black For Me.” — AFP

Peso to move sideways amid ongoing trade tensions

THE PESO will likely move sideways against the dollar this week as investors look at the continuous trade tensions abroad amid strong labor data in the United States.
The local unit ended last week at P53.73 versus the greenback, easing slightly from the previous close rate of P53.80, which was its weakest level in nearly 13 years.
Week on week, the peso sank from its P53.475-per-dollar finish on Aug. 31.
A foreign exchange trader said markets will be looking at “geopolitical risks from the US” such as its trade spat with China as well as talks to revamp the North American Free Trade Agreement.
US President Donald J. Trump warned on Friday he was ready to slap tariffs on another $267 billion worth of Chinese imports on top of the $200 billion set to be imposed soon, Reuters reported
Meanwhile, Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines, said the dollar could move sideways with a slight downward bias versus the local unit amid “relatively balanced pressures domestically and abroad.”
The dollar might start the week on a strong note on the back of “upbeat” US labor report.
The US added 201,000 more jobs in August, more than the 192,000 expected by the market. Meanwhile, unemployment rate remained unchanged at 3.9%.
“These strong reports suggest that the US central bank remains on track to hiking rates again in September and December this year,” Mr. Dumalagan said.
On Tuesday and Wednesday, the peso may bounce back as Mr. Dumalagan noted the dollar may “move with a downward bias” as traders lock in gains amid speculations of another rate hike from the Bangko Sentral ng Pilipinas as well as the potential annual rebound of Philippine exports.
“Separately, Philippine exports are expected to show an annual growth in July after a series of softening annual declines,” Mr. Dumalagan added. “These should help improve the peso’s appeal, tempering the dollar’s strength against the local currency.”
Toward the end of the week, the market economist noted, the dollar may bounce back due to “possibly strong” US data on producer and consumer price inflation. This may be reinforced by “safe-haven buying amid lingering US-China trade tension.”
For this week, Mr. Dumalagan expects the peso to move between P53.40 and P54, while the trader gave a P53.55-P53.95 range. — Karl Angelo N. Vidal

NEA backs venture’s P2.5-B Zamcelco deal

STATE-LED National Electrification Administration (NEA) has backed the investor-manager contract (IMC) forged by Zamboanga City Electric Cooperative (Zamcelco) as it advised the board of the distribution utility to proceed with a meeting this week for its members to approve the P2.5-billion deal.
NEA Administrator Edgardo R. Masonsong told reporters the offer to take over Zamcelco was “truly great” and a deal that the utility could not refuse.
On Aug. 31, the board of Zamcelco awarded the contract to the joint venture of Crown investments Holdings, Inc. and Desco, Inc. The joint venture won the bid to manage the operations of the utility and address its financial woes.
Zamcelco is saddled with more than P2 billion in debts to its power suppliers.
Mr. Masongsong advised Zamcelco to proceed with its Sept. 11 general membership meeting and ensure compliance with all notice and consultation rules.
“To consummate that (IMC contract), [Zamcelco] needs the annual general membership confirmation after that it will be forwarded to NEA for evaluation and confirmation,” he said.
Mr. Masongsong admitted the offer of the Crown investments-Desco joint venture is “too tempting, adding further delaying the process could result in the cooperative incurring more debts.
The NEA chief said the agency was looking at similar deals for other ailing cooperatives, while exploring other options such as an executive order from President Rodrigo R. Duterte that would pave the way for debt condonation.
He said NEA along with the Department of Energy and the Department of Finance have backed the government takeover of Lanao del Sur Electric Cooperative, the utility within war-torn Marawi City, through a law.
Mr. Masongsong said the draft executive order had already been submitted to the Office of the President for signing.
“[It’s now] beyond our control,” he said. — Victor V. Saulon

Western Australia set for near-record wheat crop

SINGAPORE — Western Australia, the country’s biggest wheat exporting state, is poised for near-record harvests of the crop this year after rains in the region in August, even as the eastern grain belt grapples with its second
Wheat yields in the state, a key supplier to the world’s biggest importer Indonesia, are expected to be better than average in most areas, analysts and traders said.
“Western Australia had very good rains in August and even if it does not rain much in September, the crop is pretty much made,” said Phin Ziebell, an agribusiness economist with National Australia Bank.
“We are looking at above-average yields and half of Australia’s production or more will come from Western Australia this year.”
Higher output in the state could help temper worries about overall supply from Australia, historically the world’s fourth largest exporting nation, where fields in the east have been hit hard by another year of scorching conditions.
Australia’s latest dry spell overlapped with a lack of rains in other key exporting countries in the northern hemisphere, including the world’s biggest exporter Russia, stoking global supply concerns.
Benchmark Chicago Board of Trade wheat futures have gained more than a fifth this year in the face of tighter supply, after enjoying five consecutive years of record production and lower prices.
Wheat output in Western Australia, which has a short voyage of 5-7 days to Indonesia, is expected to reach close to an all-time high of 11 million tonnes compared with an average of 8.4 million tonnes in the last decade, according to the analysts and traders.
They said that overall Australian production would come in at around 20 million tonnes this year, down from last year’s 21.2 million tonnes and well below a record 31.8 million tonnes in 2016/17.
However, despite the larger overall crop size in Western Australia, grain quality is expected to be below average.
“(The state) will have more Australian Standard White wheat and less Australian Premium wheat,” said a Singapore-based trader at an international trading company.
“For higher quality wheat, buyers will have to look at Canadian or U.S. spring wheat,” he added, declining to be identified as hew was not authorized to speak with media.
In the southern states of Victoria and South Australia, wheat production is expected to be average or below average.
“It has been a bit patchy in South Australia and Victoria,” said Ziebell. “Some areas have done very well, while others have remained dry.”
The drought across Australia’s east coast has recently intensified, the country’s weather bureau said on Wednesday.
Final wheat exports from Australia will depend on how much wheat eastern states ship in from Western Australian to meet local demand. The country exported 15.99 million tonnes last year, official data shows.
“It all depends on feed and milling wheat demand on the east coast and how the summer sorghum crop does,” said a second Singapore-based trader.
“But they have to export, maybe around 10-11 million tonnes, and Australia prices have to come down. As of now the Black Sea region is dominating.”
Australian Premium White wheat is being quoted around $290 a tonne, cost and freight (C&F), into Indonesia for December shipment, compared with Russian wheat trading at $250 a tonne, C&F. — Reuters

Uniqlo Manila shines light on local heroes


THE PHILIPPINES’ first Uniqlo global flagship store is set to open in Manila on Oct. 5. As part of its communication campaign called “Our Future Is Here,” the Japanese clothing retailer introduced its Future Heroes—10 local game-changers who were nominated via social media from June to July.
Coming from different industries and backgrounds, they were chosen for their individuality and ability to innovate. The list is composed of eight persons and two collectives. There’s Sam Lee, film director, multimedia editor for CNN Philippines Life, and advocate for women’s and LGBTQ+ rights; Leeroy New, contemporary artist and designer whose creative collaborations are often tied to social and urban development; Cecile Dominguez-Yujuico, entrepreneur and NGO worker at Teach for the Philippines who believes in the use of technology for social good; King Puentespina (CRWN), music producer known for pushing the local music scene forward; Aya Fernandez, dancer and social entrepreneur behind Project Lily PH, which aims to provide livelihood opportunities for persons with disabilities; Jolo Marcelo, free runner, parkour athlete, and freelance videographer who has used his skills to explore Manila from a different view; Eloiza Fagsao, student and captain of the University of the Philippines’ Women’s Football team; and Arts Serrano, architect and Escolta advocate.
Joining them are Toyo Eatery, a contemporary Filipino restaurant led by chef Jordy Navarra that champions local cuisine and transforms everyday dishes into fine dining experiences; and the Escolta Block—composed of artists and entrepreneurs Vince Africa, Reymart Cerin, Carmel Laurino, Mikki del Rea, and Aliver Cedillo—responsible for breathing new life into Manila’s historic streets by showcasing contemporary Filipino culture through music, art, and food.
As part of the campaign, a series of digital and graphic pieces have been created together with the chosen personalities, alongside influencers Pia Wurtzbach and Atom Araullo.
The campaign video entitled Our Future Is Here can be viewed on Uniqlo’s official Facebook page, facebook.com/uniqlo.ph.

BSP to set up CSF in Dinagat Islands

THE BANGKO SENTRAL ng Pilipinas (BSP) will open a new credit facility in Dinagat Islands this week, which is expected to help small businesses gain access to bank financing.
In a statement, the central bank said a credit surety fund (CSF) facility will be opened in the province on Tuesday, marking the second to be started this year.
The BSP and the provincial government are set to sign an agreement this week, which will pave the way for the creation of the first-ever credit surety program across the Caraga Administrative Region.
The central bank’s CSF program provides alternative collateral for micro, small, and medium-scale enterprises (MSMEs) by organizing them into cooperatives entitled to a pooled fund. CSF units then serve as guarantor for its member businesses and nongovernment organizations as they apply for credit lines from banks.
In Dinagat, 16 cooperatives have pledged a total of P2.1 million as seed funding for the CSF while the capitol has committed P3 million, the BSP said.
There are currently 52 CSF facilities, spread across 32 provinces and 20 cities nationwide. Two more facilities will be opened this year in the province of Ifugao as well as in Tacurong City in Sultan Kudarat. — Melissa Luz T. Lopez

Yields on government securities climb as inflation picks up to fresh peak in Aug.

By Mark T. Amoguis, Researcher
GOVERNMENT securities’ (GS) yields rose across-the-board last week after the release of surprising August inflation print, which could bolster the case for another rate hike by the central bank in its upcoming policy meeting.
Bond prices dipped as GS yields went up by an average of 42.19 basis points (bps) week on week, data from the Philippine Dealing & Exchange Corp. as of Sept. 7 showed.
Analysts attributed this increase to the faster-than-expected August inflation figure.
“Elevated domestic inflation increased the likelihood of another rate hike from the BSP (Bangko Sentral ng Pilipinas) this month. The rise in yields was tempered by lingering trade concerns abroad, especially between the US and China,” said Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (LANDBANK).
“During the week, yields fell only on Tuesday and rose for all other days of the week,” he noted.
Carlyn Therese X. Dulay, first vice-president and head of institutional sales at Security Bank Corp., agreed: “The higher-than -expected inflation figure at 6.4% versus estimates between 5.90%-6.10% caused yields to inch upward across-the-board as traders and market participants impute the possibility of more aggressive movement from the Monetary Board in the upcoming meeting scheduled for Sept. 27.”
The Philippine Statistics Authority reported last week that prices of widely used goods surged by 6.4% in August, higher than 5.7% in July and 2.6% in August last year, due to higher food costs. The latest reading was the fastest in nearly a decade or since March 2009’s 6.6%.
The August print also surpassed the 5.5-6.2% estimate range given by the BSP Department of Economic Research and the 5.9% median in BusinessWorld’s poll of economists, which was also the estimate of the Department of Finance.
Headline inflation for the year thus far averaged at 4.8%, already beyond the central bank’s 2-4% target range but below its upwardly revised 4.9% forecast for 2018.
With this result, the market now expects the BSP’s Monetary Board to hike its policy rates again in its Sept. 27 meeting. Benchmark rates currently range from 3.5-4.5%.
At the secondary market last Friday, yields climbed across the curve with rates of the 91-, 182-, and 364-day Treasury bills at the short end increasing by 86.67 bps, 9.33 bps, and 4.17 bps, respectively, to fetch 4.0804%, 4.1836%, and 4.9065%.
In the belly, yields on the two-, three-, four-, five-, and seven-year Treasury bonds (T-bond) surged by 69.50 bps, 45.03 bps, 38.39 bps, 77.79 bps, and 48.93 bps, respectively, to end at 5.6661%, 5.5237%, 6.2607%, 6.5696%, and 6.619%.
At the long end, the 10- and 20-year bonds went up 30.27 bps and 11.79 bps to yield 6.6727% and 7.4396%, respectively.
For this week, Security Bank’s Ms. Dulay expects yields to continue to inch upward “as market participants adjust their portfolios and while dealers determine the levels at which market will find an equilibrium, especially with risks of both supply and NFP (non-farm payrolls) figures out Friday night.”
LANDBANK’s Mr. Dumalagan concurred, saying: “GS yields are still expected to remain elevated [this] week amid possibly more hawkish cues from the BSP, ECB (European Central Bank) and US Federal Reserve.”
“Likely upbeat US labor reports…could further solidify views of another rate hike from the US central bank this month. This, along with bets of more tightening moves from the BSP, could push yields higher. The rise in interest rates might be tempered by safe-haven buying amid lingering geopolitical tensions abroad,” Mr. Dumalagan added.
Last Friday, the US Bureau of Labor Statistics reported that non-farm payrolls increased by 201,000 in August.
Meanwhile, Helen G. Oleta, trust trading head at Rizal Commercial Banking Corp., said trading this week is “definitely still going to be sideways.”
“We’re going to have a 10-year bond auction. So market is saying, ‘Are we going to see higher levels with BTr (Bureau of the Treasury) to accept as high as 6.875% to near 7%?’ But I think with this being temporary — we believe it’s temporary — they (BTr) might not accept this higher rate,” she said.
For her part, Security Bank’s Ms. Dulay said: “T-bills are expected to trend higher by 10-20 (bps) across the curve in [this] week’s auction, while the 10-63 reissuance is expected to print between 6.9%-7.20%.”

Sentiment to stay negative after inflation shock

SENTIMENT at the local market may still be dampened over last week’s report of a faster-than-expected inflation rate, but investors will be on the lookout for optimistic prospects here and abroad.
The bellwether Philippine Stock Exchange index dropped 3.3% week on week to finish at 7,598.64 on Friday. Net foreign selling stood around P895 million for the week.
All sectors closed in the red. Financials slumped hardest with a 5.2% weekly loss while property followed with a 4.9% decline. Both sectors expect the central bank to raise interest rates after August’s 6.4% inflation print exceeded government and market estimates.
Analysts expect last week’s disappointing factors to continue weighing on the market’s mood.
“Trading windows exist at 7,500-7,880, since the bourse took off from a base of about 6,929. Movements might be limited within this zone for now, until significant positive catalysts arise,” 2TradeAsia.com said in a statement.
“These may come from win-win arrangement on trade spats, approval of sequel on corporate income tax cut via TRABAHO. Choices meanwhile, might be limited on inflation hedge picks, defensives, and those with sequel stories to unlock for the remainder this year,” the online brokerage firm added.
TRABAHO or the Tax Reform for Attracting Better and High-quality Opportunities is a substitute bill to the second package of the government’s tax reform program.
Support hovers between 7,400 and 7,500 and resistance between 7,700 and 7,750, 2TradeAsia.com said.
Luis A. Limlingan, managing director at Regina Capital Development Corp., cited June’s foreign direct investments and July’s trade balance data — to be released today and Tuesday, respectively — as some of the local economic data “which may test either support or resistance this week.”
UPCC Securities Corp. Equity Trader Aristotle D. Reyes, Jr. said the action of government in response to the “looming overheating of the economy” will play a big role in reviving investor confidence.
“So the measures that the government will do will be crucial for the investors,” Mr. Reyes said in a phone message.
PNB Securities, Inc. President Manuel G. Lisbona noted, however, that Friday’s decline was “lesser in magnitude,” hinting that “at the very least, the market has finished digesting the inflation news and may consolidate in the absence of fresh leads.”
“If the market breaks below 7,500, the next support will be at 7,200,” Mr. Lisbona said in a mobile message yesterday.
Wall Street’s major indexes fell on Friday as U.S. President Donald Trump raised the possibility of additional tariffs on Chinese imports and Apple Inc indicated that some of its products could be subjected to such levies.
The Dow Jones Industrial Average fell 79.33 points or 0.31% to 25,916.54, the S&P 500 lost 6.37 points or 0.22% to 2,871.68 and the Nasdaq Composite dropped 20.19 points or 0.25% to 7,902.54. — JCL

OUTLIER: SM Investments Corp.

SM Investments Corp. is owned by the family of the Philippines’ richest man, Henry Sy, Sr.

DOMESTIC inflation concerns at home coupled with perceived weakness on emerging markets, in general, caused market players to unload some of their shares in Sy-led SM Investments Corp., making it one of the most traded stocks last week.
SM was the 7th most actively traded stock with a total of 1.18 million shares worth P1.125 billion having exchanged hands on the trading floor from Sept. 3-7, according to data from the Philippine Stock Exchange.
On a week-on-week basis, its share price was lower by 2.9% to P938 on Friday from its Aug. 31’s closing price of P966 apiece. Year to date, the conglomerate’s share price is down 9.8%.
“[T]he inflation report at 6.4% and the weak performance of the peso contributed to the bearish sentiment on SM Investments to test the support at P928 and P920 this week,” said Cristopher Adrian T. San Pedro, certified securities representative at Unicapital Securities, Inc.
Fiorenzo D. De Jesus, research analyst at RCBC Securities, Inc., was of the same assessment, saying investors “were generally risk-off on equity assets in general” attributing it to both the higher-than-expected domestic inflation and the lower confidence on assets of emerging markets.
The 6.4% August inflation reading was the fastest since March 2009, piercing government and market estimates for that month. So far, inflation averaged 4.8%, higher than the central bank’s 2-4% target range for the year and below its upwardly revised 4.9% forecast for 2018.
While the country’s “strong economic fundamentals” make it attractive to hold SM shares in the long-term, recent developments are clouding its short-term outlook, analysts said.
“[SM] is in many investors’ portfolios (both active and passive investors) because it is the largest ‘proxy’ stock for the Philippine economy,” RCBC Securities’ Mr. De Jesus said.
“Our long-term outlook for SM still remains strong. However, inflation may remain a headwind for now as it shows no sign of slowing down this year due to continued peso depreciation and elevated oil prices, exacerbated by the more recent supply issues of rice and sugar. Investors may be considering the impact of inflation remaining elevated until next year,” he added.
“Until investors are assured the government and [the central bank] is taking more steps to curb inflation, sentiment for consumer-spending driven names may continue to be negative,” Mr. De Jesus said, adding that investors might reallocate their assets to cash or in defensive stocks.
Valuations for the SM stock were already elevated last week with an estimated 33 times its price-to-earnings ratio as of end-August “so selling may take the counter to levels that will become more desirable for investors, given the recent headwinds,” Mr. De Jesus said.
Meanwhile, Unicapital’s Mr. San Pedro sees SM trading between P908 support and P980 resistance in the short term.
“Assuming a bearish scenario, I expect the next support levels at P878 and P850.50 if the PSEi (Philippine Stock Exchange index) goes below 7,400,” he said.
SM’s unaudited consolidated net income after taxes amount to P29.07 billion in the first half, 11.2% more than the P26.12 billion in the same semester last year, its latest financial statements showed. — Marissa Mae M. Ramos

World food prices stable in August vs July — FAO

ROME — World food prices were largely stable in August from the month before, with a rise in wheat prices offset by declines in sugar, vegetable oils and dairy indices, the United Nations food agency said on Thursday.
The Food and Agriculture Organization’s (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 167.6 points last month, against a downwardly revised 167.2 in July.
The July figure was previously given as 168.8.
FAO said global cereals output in 2018 was seen at 2.587 billion tons, down 64.5 million tons, or 2.4 percent, from 2017’s record production level. FAO’s forecast for world wheat production in 2018 was cut by 1.9 percent since July and now stands at almost 722 million tons, the smallest since 2013.
The drop in wheat production, blamed largely on a heatwave in Europe, has pushed prices for this crop up some 8 percent month-on-month, the largest rise for any of the FAO indices.
By contrast FAO’s sugar price index dropped 5.4 percent from July, the lowest level in a decade. The decline was largely due to the continued depreciation of the currencies of Brazil and India against the U.S. dollar, FAO said. — Reuters

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