ORGANIZERS of Edinburgh’s performing arts festival took hedges on the pound earlier this year in order to sign up international artists amid Brexit-induced currency volatility.
Managers hedged most of their currency dealings between six and eight months ago, shielding the festival’s budget from sterling swings, director Fergus Linehan said in an interview with the Financial Times. The three-week event features theater, dance and musical events with performers from 41 countries, from Russia to Nigeria.
“No one wants to do deals in sterling any more,” Linehan said. “So you’ve got to do all the arrangements in dollars and euros.”
The arrangements highlight how sterling’s volatility is affecting economic activity across the UK there may be further weakness if Prime Minister Boris Johnson takes the country closer to leaving the European Union without a deal.
The pound lost almost 6.5% against the dollar in the last 12 months, and more than 2.5% since Johnson became leader on July 24, putting at risk the purchasing power of the festival organizers. Last year, their budget was £13 million ($16 million), according to the Financial Times.
“Our buying power is down” with the pound at these levels, Linehan said. “Obviously our currency being in the toilet doesn’t help.”
Uncertainty over Brexit is also triggering a paralysis in long-term planning with some of the Edinburgh Festival’s partners, Linehan said.
“No one wants to say ‘OK, in five years’ time this is what we are going to do’ because there are so many variables that haven’t been really established yet,” he said. — Bloomberg
THE RESERVE Bank of Australia held rates at an all-time low even as the US-China tensions continue to roil markets. — REUTERS
SYDNEY — Australia’s central bank held rates at an all-time low of 1% on Tuesday as it weighed the impact of past easing, though markets are wagering the tide of policy stimulus sweeping the world will compel it to cut again before yearend.
The Reserve Bank of Australia’s (RBA) quarter-point cuts in June and July have, in reality, struggled to gain traction in the face of hard-pressed consumers at home and global uncertainty cast by the Sino-US trade dispute.
RBA Governor Philip Lowe acknowledged there might be more to do after its monthly board meeting, adding it was “reasonable” to expect lower for longer interest rates to help boost employment growth and inflation.
Futures are pricing in a cut to 0.75% by October, and 0.5% by early next year.
“You do get the sense that if they are concerned about the unemployment rate going in an upward trajectory they will move again,” said JPMorgan Chase & Co economist Ben Jarman.
JPMorgan expects the RBA will pause this year before resuming easing in early 2020.
The RBA will issue updated economic forecasts this Friday and Lowe offered a taster on the outlook, noting that consumer prices would stay subdued for a long time to come.
Inflation is not seen reaching the floor of the RBA’s 2% to 3% target band over 2020. The jobless rate is also not seen hitting the RBA’s aspirational 4.5% target over the next two years.
Governor Lowe will appear before a parliamentary economics committee on Friday where he will field questions from lawmakers on the economy and the future course of monetary policy.
Lowe has already taken what is seen as a step toward forward guidance by saying it was “reasonable to expect that an extended period of low interest rates will be required in Australia.”
This tactic has been used by many central banks to put downward pressure on both long-term borrowing costs and their currencies.
The ploy has had some success with Australia’s 10-year bond yield diving 21 basis points in just the past month to hit an historic trough of 0.993%.
The local currency has shed 1.2% in the same period to touch seven-month lows at $0.6748, a huge boost to export earnings from resources which are priced in US dollars.
TRADE BOOM AMID THE GLOOM
Data out Tuesday showed the country’s trade surplus ballooned to a record A$8 billion ($5.43 billion) in June capping easily the best quarter on record for exports.
Australia may have even enjoyed its first quarterly current account surplus since 1975, lessening its reliance on foreign funding at a time when global markets are stressed and providing scope for some fiscal stimulus.
“We do think…there will be capacity for fiscal policy at some point,” JPMorgan’s Jarman noted. “That will certainly take some pressure off the RBA but we don’t think that’s coming anytime soon.”
Economists are unsure whether Australia can maintain its strong trade position in the face of a sudden flare-up in Sino-US trade tensions, which is prompting a new round of global policy easing.
New Zealand’s central bank is considered certain to cut its rates on Wednesday while markets are now pricing in 115 basis points of easing from the Federal Reserve out to the end of next year.
There was no mention in the RBA’s statement of the most recent tariff war escalation. But Lowe will likely be asked about the impact from trade war at his Friday testimony while Deputy Governor Guy Debelle speaks on “Risks To Outlook” next week.
“Given Governor Lowe’s previous concerns about adverse trade developments, Australia’s stronger external position and resilience in key exports to key export destinations is a marginal argument in favor of stable monetary policy right now,” Citi economist Josh Williamson said.
“However, we aren’t expecting further gains in the trade surplus and instead expect some moderation in the second half of the year,” he added.
“Regardless, domestic labor market developments are likely to be the key behind ongoing RBA policy discussions going forward outside of the risk of negative global shocks.” — Reuters
NICKEL ASIA Corp. reported a 48% decrease in attributable net income for the first half of 2019, due to foreign exchange losses.
In a disclosure on Tuesday, the listed miner said earnings dropped to P713.75 million during the six-month period from P1.39 billion it booked in the same period last year.
Revenues went up 1.14% to P7.46 billion during the January to June period.
Nickel Asia attributed the earnings decline “primarily to the impact of a stronger peso relative to the US Dollar which resulted to a net foreign exchange loss of P198.8 million, a turnaround from a gain of P525.4 million recognized last year.”
The company said it incurred P81-million net loss from its equity investments in Coral Bay Nickel Corp. and Taganito HPAL Nickel Corp. (THPAL) versus net earnings of P526 million last year due to lower nickel and cobalt prices.
The miner sold 9.08 million wet metric tons (WMT) of nickel ore during the January to June period, 2% up from last year’s 8.89 million WMT. Limonite ore deliveries also increased 10% to 4.41 million WMT, which offset the decline in ore export volumes by 4% to 4.67 million WMT.
“The Company realized an average of $5.56 per pound of payable nickel on its shipments of ore to the two THPAL plants, the pricing of which are linked to the LME [London Metal Exchange]. This compares to an average price of $6.27 per pound of payable nickel sold in 2018. With respect to export sales, the Company realized a higher average price of $20.70 per WMT compared to $18.77 per WMT in the prior year,” Nickel Asia said.
It noted the higher ore export price was due to increase in average nickel ore grade of 1.44% from 1.35% last year.
“Nickel ore shipments from Indonesia increased significantly in the first half of 2019 as compared to last year, dampening ore export prices. Nevertheless, we remain positive as to the outlook for LME nickel on the back of expectations of the stainless steel industry and the steep rise in electronic vehicle production over the next five years. The LME nickel-linked segment of our market accounts for close to 50% of our total shipments,” Martin Antonio G. Zamora, president of Nickel Asia, said in a statement. — VMPG
IT IS time to draw up your shopping lists as the Manila International Book Fair (MIBF), the country’s longest-running book fair, returns for its 40th edition on Sept. 11-15, at the SMX Convention Center, Mall of Asia Complex, Pasay City. The book fair will have over a hundred exhibitors ranging from big bookstore chains to local indie publishers spread across two floors of exhibit space.
MIBF’s second floor will be dedicated to special exhibitions featuring children’s and young adult book publishers, as well as crafts and stationery items. Aside from exclusive deals, and special features like new releases, bestsellers, and even collector’s items, there will be events such as book signings, book launches, meet and greets, storytelling sessions for children, special contests, workshops,and other activities for book fair attendees.
Returning at this year’s MIBF is the POP HUB: Comic Splash x Fandom Fest Vol. 2. Geek out with the country’s largest fandoms, including the FightSaber, a Lucasfilm-recognized worldwide costuming organization. There will be renowned comic book creators, artists, writers, and collectors attending over the weekend.
The MIBF is organized by Primetrade Asia, Inc. For details, call 896-0661 or 896-0682, e-mail bookfair@primetradeasia.com, or follow @ManilaBookFair on Facebook, Twitter, and Instagram.
ASIA UNITED Bank Corp. (AUB) booked a double-digit growth in net income during the first semester, it said yesterday.
In a disclosure on Tuesday, the listed bank said its consolidated net income during the first six months of the year reached P2.6 billion, up by 63% from the same period last year.
This translated to a return on equity of 17.6% and return on assets of 2.2%, compared to last year’s 12% and 1.6%, respectively, the lender said.
The bank attributed the improvement of its bottom line to securities trading and loan growth.
“We remain bullish with growth that AUB and all its subsidiaries have been exhibiting for the past six months,” AUB President Manuel A. Gomez was quoted in the statement as saying.
“Our customers’ continued patronage to all our core services has helped boost AUB group’s total assets, and this is something that we will continue to improve on year on year,” he added.
Shares in AUB went down five centavos or 0.09% to close at P57.60 apiece on Tuesday. — Mark T. Amoguis
VINYL ON VINYL art gallery will be opening multiple exhibits today. These are Family Day by Reen Barrera, elements of the Past by Dennis Bato, Lurking Creatures in Paradise by Demosthenes Campos, and the group exhibit 032 which features the works of Basti Penayes, Carlos Dela Torre, Ed Brian Lazarraga, Lhee Taneo, Soika, Kriss Milan, Mykill, Khriss Bajade, Daot, Lean Reboja, Lean Reboja, GI Pongase, Jan Sunday, John Villoria, Mark Copino, Jess Codeniera, and Wyndelle Remonde. The gallery is at 2241 Pasillo 18, La Fuerza Compound 1, Chino Roces Ave., Makati.
Artist Walk-through
THERE will be an artist walk-though of Poklong Anading’s exhibit Current at 4 p.m. on Aug. 10 at 1335 Mabini. This event is free and open to the public. The gallery is at C18 Karrivin Plaza, Chino Ave., Ext., Makati.
Three shows at Silverlens
SILVERSLENS will be opening three shows on Aug. 17, namely Bare Necessities featuring works by the late Santiago Bose and curated by Patrick Flores, Wawi Navarroza’s Self-Portraits & The Tropical Gothic, and, James Clar’s Noise Field #1. The first is part of an exhibition series Santiago Bose: Painter, Magician which revisits Bose’s art through selected pieces from his extensive practice, marking turns in expression and the social contexts shaping it. The first phase is Bare Necessities. Wawi Navarroza: Self-Portraits & The Tropical Gothic is the artist’s 12th exhibition with the gallery. Self-portraits have been a recurring theme in her 20-year practice, but this is the first exhibition focusing solely on the form. Navarroza will be showing eight new pieces alongside three older works from different years. Noise Field #1 is James Clar’s first exhibition in the Philippines and with the gallery. The artist used laser scanners to create a 2D plane of light that is installed outside during the monsoon season. As it rains, the drops pass through the plane, sparkling as the laser hits them, and making a random field of noise. The three exhibits will be on view from Aug. 17 to Sept. 14 at Silverlens, 2263 Don Chino Roces Ave. Ext., Makati City.
Tan, Evangelista at MO_Space
MO_SPACE presents (for)getting sugimoto, a solo exhibit by Gerardo Tan, featuring an interdisciplinary approach to investigating creative identity through the deconstruction of concepts on representation. It will also he holding Carina Evangelista’s first solo exhibition, Las Flores del Mal. Based loosely on Charles Baudelaire’s collection of poems first published in 1857, Les Fleurs du mal (Flowers of Evil) which was censored and condemned in its time and celebrated later, the works in Ms. Evangelista’s exhibit comment on the treachery of beauty. (for)getting sugimoto and Las Flores del Mal open at MO_Space on Aug. 10 and will run until Sept. 8. MO_Space is at the 3rd level, MOs Design, B2, Bonifacio High Street, 9th Ave., Bonifacio Global City, Taguig.
GLOBE Telecom, Inc. said it may put on hold its plan to lease or sell its tower assets, as the government is still finalizing rules on shared telecommunications infrastructure.
Ernest L. Cu, president and chief executive officer of the Ayala-led telco firm, said at the company’s second-quarter financial results briefing Monday that its plan to form a tower company is still in limbo.
“It’s hard to go into a business where the rules are uncertain,” he said, when asked about the company’s plan for tower sharing.
Globe last year incorporated GTowers, Inc. as it seeks to generate income from some of its passive infrastructure assets to fund its capital expenditures (capex).
Since then, the telco has waited for the Department of Information and Communications Technology (DICT) to come up with a common tower policy, as initial draft rules disallowed network operators such as Globe from building their own towers.
In July, DICT Undersecretary Eliseo M. Rio, Jr. said the government may no longer issue written rules on the establishment of common towers.
To this, Mr. Cu said they will wait for rules to be finalized before proceeding with the plans for GTowers.
“We’ll have to wait until rules have been finalized. As you can imagine, it’s hard to enter into a transaction with someone with all the rules changed,” he said.
“Sometimes we hear things like there’s no more tower policy, yet at the same time, they’re (DICT) calling another meeting to discuss it. So I think it is good to let things settle down,” he added.
The DICT scheduled today a meeting with stakeholders to discuss concerns on tower sharing, steps to hasten the roll out of towers and possible government incentives for independent tower providers.
In an announcement on its website, DICT said the meeting will be the first in a series, as it aims to have an “overall participative and synoptic process…that will inform its overall department policy direction.”
While waiting for the government to firm up its plans, Globe has inked deals with two joint ventures of tower providers: ISOC Infrastructure, Inc. and edotco Group Sdn. Bhd.; and Aboitiz InfraCapital, Inc. and Frontier Tower Associates Philippines.
As for the company’s existing tower assets, Mr. Cu said the preference remains the same: “that the tower assets be turned back to cash.”
“The first thing that has to happen is the towers have to be acquired by a dedicated tower company so that they can perform the necessary activity to upgrade the tower facility to enable multi-tenants,” he said.
“We’re not in the business of renting towers, we’re in the business of building networks. All of our capex naturally should go between building and expanding our capacity…,” he said.
“That (GTowers), I guess, will have to wait… Once everything has been finalized and set in stone, then I think the process can continue and start once again.” — Denise A. Valdez
WASHINGTON — The four living former chairs of the Federal Reserve on Monday called for the US central bank to remain free to work independently and without fear of political reprisals in a rare joint public statement.
President Donald Trump has repeatedly railed against the Fed for raising rates four times last year, saying that Chairman Jerome Powell’s monetary policies have held back economic growth. Trump has publicly said he could fire or demote Powell, his own nominee as chair.
The public pressure on the Fed by a US president has been unprecedented, as the institution has traditionally been viewed as independent.
“As former chairs of the board of governors of the Federal Reserve System, we are united in the conviction that the Fed and its chair must be permitted to act independently and in the best interests of the economy, free of short-term political pressures and, in particular, without the threat of removal or demotion of Fed leaders for political reasons,” the four former Fed chairs — Paul Volcker, Alan Greenspan, Ben Bernanke and Janet Yellen — wrote in an opinion essay published in the Wall Street Journal.
“It is critical to preserve the Federal Reserve’s ability to make decisions based on the best interests of the nation, not the interests of a small group of politicians,” the former Fed chairs wrote.
The US central bank lowered interest rates to historically low rates and accumulated bonds on its ledger in a bid to stimulate growth after the 2008 financial crisis.
But amid a lengthy economic recovery, the Fed has raised borrowing costs and winnowed bond holdings, measures that Trump has criticized.
On Monday, as trade tensions with China heated up, Trump referred to the Fed yet again in response to Beijing’s move to devalue its currency. — Reuters
THE new Department of Agriculture (DA) secretary said his focus will be to achieve food security by achieving a rise in output outpacing population growth, while also boosting the earnings of farmers and fisherfolk.
“Kung ang (If the) population growth rate is up to 1.8%, dapat naman we (should) aim higher than that pero dapat naman meron kang konting (but there should be) allowance na sapat ang pagkain (that is enough for food). Again food security is the goal,” Acting Agriculture Secretary William D. Dar told reporters Tuesday.
Agriculture outut rose 0.67% in the first quarter of 2019.
“With all the constraints that are there in Philippine agriculture, lack of water, climate change and the like, pest and diseases, so it will be better to have a more practical approach and goal which is anchored on ensuring food security and with the elevation of the farmers and fisherfolk to be more prosperous,” he added.
The ongoing programs of the Department of Agriculture will be continued but reconfigured to bring them in line with the primary goals, while also building new programs from the ground up that meet these objectives.
Mr. Dar said that importing commodities will be resorted to in order to fill in domestic production shortfalls, following due consultation with stakeholders.
“If we need to import I have some ideas, but I will consult with them. Dapat may (There should be) consensus… Food security… is the overarching goal. Ensuring food security means let’s produce enough under the conditions, but any gaps you need to bring as imports,” he said.
He said that he is also targeting to reach out to 3 million farmers in the next 100 days, in collaboration with agencies that will implement the Rice Competitiveness Enhancement Fund (RCEF).
“Planting is almost over. Halos (It’s almost) harvest time. Dapat, of course overall, maganda sana kung mas naumpisahan pa ng maaga ’yung intervention para sila na ang nakikinabang (It would be better if this was started earlier so that they are able to benefit from te interventions)…. Let’s do what is possible now and let’s make it much, much better (in the) next planting season,” he said in a chance interview after his news conference.
He said he will propose a 2020 budget of about P90 billion, and possibly top P100 billion in 2021 to fund more programs. The DA’s current budge is P49.8 billion. — Vincent Mariel P. Galang
THE House of Representatives hopes to avoid Presidential vetoes of bills approved by the 18th Congress by working more closely with the Cabinet and the Senate, according to two senior legislators.
“We are eyeing zero veto for all bills to be approved by the Senate and the House. We hope to avoid any possibility of a Presidential veto by working closely with Cabinet members and Senate officials,” Rep. Martin G. Romualdez of Leyte’s 1st district, the chamber’s majority leader, said in a statement Tuesday.
“We discussed the comments of some Secretaries bago mafinalize ang bill para magkakaintindihan (before bills are finalized to come to an understanding) what deal breakers and red lines both are on both sides (legislators and Malacañang) pag dating sa crucial na bills (when it comes to crucial bills),” Speaker Alan Peter S. Cayetano said in a chance interview with reporters in Quezon City.
On Monday, members of the House and Senate met with executive branch officials and economic managers at Malacañang.
“The House leaders will exhaust all means possible to make sure that the executive and the legislative departments are in sync with regard to priority and certified bills filed in the 18th Congress. We do not want to put to waste all the money, time and effort which are normally spent in passing bills,” Mr. Romualdez said.
Aside from the 2020 national budget, among the agreed priorities of the officials during the meeting are the proposed increase in excise tax on alcohol products, amendments to the 82-year-old Commonwealth Act No. 146, or the Public Service Act, establishment of the Department of Overseas Filipino Workers (OFW), the proposed Corporate Income Tax and Incentive Rationalization Act, among others.
During the 17th Congress, President Rodrigo R. Duterte vetoed parts of the 2018 General Appropriations Act; an act declaring Dec. 9 as a special working holiday; a measure strengthening the Philippine Coconut Authority; a bill creating the Coconut Farmers and Industry Trust Fund; a measure banning corporal punishment on children; a bill strengthening the Office of the Solicitor General; a measure granting survivorship benefits to children of deceased retired members of the Commission on Audit, Civil Service Commission, Commission on Elections, and Office of the Ombudsman; and a bill creating a regional investment and infrastructure coordinating hub in Central Luzon.
In February, Mr. Duterte said after vetoing the anti-corporal child punishment bill that he does not agree with the “overly sweeping condemnation” of such disciplinary measures.
In the same month, the President also objected to the Coconut Levy fund measure, citing the need for stronger safeguards in the fund’s disbursal.
Last month, Mr. Duterte also vetoed the Security of Tenure bill noting that the enrolled bill “unduly broadens” the scope of labor-only contracting, which is already banned by law.
“We were informed by Palace officials that the President was not against the approval of most of the bills. The Executive department has issues only with certain provisions which Congress could have accommodated with proper representation and coordination,” Mr. Romualdez said.
The Majority leader noted that the Congressional Planning and Budget Office estimates that at least P3 million are being spent for the approval of any bill until third reading.
“We aim to work closely also with the PLLO (Presidential Legislative Liaison Office) so that they can alert us (on) certain provisions of the bills that may need thorough discussion with Cabinet members concerned,” Mr. Romualdez added.
CHARTER CHANGE
In July, the President renewed his call for charter change after naming Mr. Cayetano as his candidate for the Speakership.
When asked if amending the Constitution is still a priority, Mr. Romualdez said in a press briefing: “Never say die, this measure has to be initiated somehow. My personal opinion is that until that matter is brought up, gains the proper support and momentum. For the time being, it is not the top priority.”
He added, “Maybe it’s a priority, but it is not top priority at this point.” — Vince Angelo C. Ferreras
THE Department of Finance (DoF) signaled its intent to curb the granting of tax incentives, releasing an estimate that such “giveaways” cost the government about P1.2 trillion between 2015 and 2017.
The DoF said in a statement that foregone revenue from incentives amounted to P1.2 trillion in the three years to 2017, granted to 3,150 companies and ranging from tax breaks on customs duties and value-added tax.
“To put things in the right perspective, the P1.12 trillion that we gave away in incentives over that three-year period is over twice the current [P549.4-billion] budget of the Department of Public Works and Highways (DPWH),”Undersecretary Karl Kendrick Chua was quoted as saying in the statement.
The DoF estimated that around P301.2 billion worth of incentives were granted to companies in 2015, P380.7 billion in 2016, and P441.1 billion in 2017.
The Philippine Economic Zone Authority (PEZA) accounted for P879.1 billion, or 78% of the P1.2-trillion total.
According to Mr. Chua, Package 2 of the Comprehensive Tax Reform Program (CTRP) will address this issue by implementing a “fair and more accountable incentive regime.”
President Rodrigo R. Duterte during his fourth State of the Nation Address (SONA) urged the 18th Congress to pass the remaining packages of CTRP by the end of 2019.
Package 2 of CTRP includes an overhaul of tax incentives and the gradual reduction of corporate income tax to 20% from 30% by 2029.
Mr. Chua has said that he hopes to pass the remaining tax reform measures by the end of the year.
While tax incentives increased direct investment flows which consequently generated more jobs, he said there is a need to “modernize” the incentive regime and make it as “performance-based, time-bound, targeted and transparent.
The government has so far passed Republic Act (RA) No. 10963, which slashed personal income tax rates and increased or added levies on several goods and services; RA 11213; the Tax Amnesty Act of 2019 which granted an estate tax amnesty and an amnesty on delinquent accounts that remain unpaid even after final assessment; and RA 11346, which will gradually increase the excise tax rate on tobacco products to P60 per pack by 2023 from P35 currently.
“The proposal under Package 2 does not eliminate incentives… [But] we need to make sure that the companies who get to enjoy these incentives truly help us achieve inclusive development,” he said. — Beatrice M. Laforga
