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Russia eyes 2035 grain crop boom with $70 billion investment plan

MOSCOW — The Agriculture Ministry said on Tuesday it saw Russia’s grain crop rising as high as 150.3 million tonnes by 2035 in an “optimistic scenario” as it outlined a draft strategy to invest billions of dollars in grain infrastructure and logistics.

The 2035 strategy, which has been sent to the government for discussion, would cost more than 4.4 trillion roubles ($70 billion) in funds drawn from private investors, loans and government financing, the ministry said in a statement.

The proposal to ramp up investment in the sector comes as state-controlled VTB, Russia’s second-largest bank, has been buying grain export infrastructure assets.

Russian grain supplies could play a key role in President Vladimir Putin’s plan, announced a year ago, to increase the country’s exports of agricultural products to $45 billion by 2024. The Agriculture Ministry is in charge of that initiative.

Russia, the world’s largest wheat exporter, would produce 140 million tonnes of grain annually by 2035 in the draft strategy’s base-case scenario, while exporting 55.9 million tonnes, the ministry said.

In an optimistic scenario, the crop could rise to 150.3 million tonnes with exports totaling 63.6 million tonnes, it said, considerably higher than forecasts for this year.

This year, the grain crop will total 118 million tonnes with exports for the 2019/2020 marketing season at 45 million tonnes, according to the ministry.

The strategy prioritizes increasing grain production, improving its quality, increasing domestic demand and developing infrastructure and logistics, the ministry said.

The plan proposed increasing the capacity of port elevators, transloading and other infrastructure facilities, while raising grain storage capacity to 167.4 million tonnes by 2035 from 156.9 million tonnes now.

The combined measures should allow infrastructure costs on the price of grain to fall 10% by 2035, the ministry said.

VTB owns stakes in two grain export terminals in the Black Sea port of Novorossiisk and has said it is in talks to buy a stake in another terminal in the Black Sea port of Taman.

Other big names in Russian grain trading include Russian firm RIF and global trade giant Glencore, as well as Aston. — Reuters

Gov’t debt yields decline on monetary easing bets

YIELDS ON government securities (GS) fell across the board last week amid expectations of rate cuts by the Bangko Sentral ng Pilipinas (BSP) and the US Federal Reserve, as well as investors flocking to haven assets.

On average, GS yields went down by six basis points (bps) week on week, according to the PHP Bloomberg Valuation Service (BVAL) Reference Rates as of July 19 published on the Philippine Dealing System’s website.

At the short end of the curve, yields on the 91-, 192-, and 364-day Treasury bills (T-bills) declined by 0.3 basis point, two bps, and 4.3 bps, respectively, to 4.12%, 4.342%, and 4.772%.

At the belly, the rates of the two-, three-, four-, five- and seven-year Treasury bonds declined by 8.5 bps (4.769%), 7.5 bps (4.801%), 8.3 bps (4.830%), 10.1 bps (4.852%), and 11.4 bps (4.889%), respectively.

At the long end, the 10-, 20-, and 25-year debt papers declined by eight bps, 2.4 bps, and 2.8 bps, respectively, yielding 4.939%, 5.066%, and 5.063%.

“Local yields were generally on a downtrend as expectations of policy easing from the US Federal Reserve and the BSP continue to pull yields lower,” a bond trader said in an e-mail.

“Bets of a possible 50 bps Fed rate cut surged after New York Fed John Williams and Fed Vice Chair Clarida commented that the Fed needs to act proactively with a rate cut instead of waiting to see any negative impact on the US economy before doing so,” the bond trader added.

“BVAL yields continued to decline week-on-week…largely due to expectations on the possible easing of local monetary policy by way of a cut in local policy rates as early as the next monetary policy-setting meeting on August 8…amid continued easing trend in inflation, as well as increased possibility of a cut in the key US policy rates by the Federal Reserve as early as July 31,” Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort said in a separate e-mail.

The Fed is expected to cut rates for the first time in a decade at its July 30-31 policy meeting.

Fed chair Jerome Powell earlier hinted on a possible cut in interest rates, saying the US central bank will “act as appropriate” to sustain expansion given the headwinds that are weighing on the US economy.

Meanwhile, BSP Governor Benjamin E. Diokno also hinted on a likely cut in policy rates in the second half of the year before moving to reduce banks’ reserve requirement ratio (RRR).

Another 50-bp reduction in reserve ratios will be implemented this Friday, bringing the RRR of big banks to 16% and thrift banks to 6%, which completes the phased cuts the BSP announced in May.

Aside from monetary easing bets, the bond trader likewise attributed the fall in yields to the “re-escalation of trade tensions” between the US and China as well as new trade conflicts between Japan and South Korea that drove some safe-haven demand toward government bonds.

Japan is considering taking a dispute with South Korea over its compensation for wartime forced laborers to the International Court of Justice as the deadline for seeking third-country arbitration passes on Thursday, public broadcaster NHK reported.

The question of compensation for South Koreans for labor during Japan’s 1910-45 occupation of the Korean peninsula has soured the U.S. allies’ relations, which took a turn for the worse this month when Japan restricted exports of high-tech material to South Korea.

For this week, the analysts said yields may go down ahead of US data and the BSP’s RRR cut.

“Yields might move with a downward bias [this] week on expectations of weaker second-quarter US economic growth, bets of dovish guidance from the European Central Bank, and positioning ahead of the BSP’s July 2019 reduction of the RRR,” the bond trader said.

Likewise, RCBC’s Mr. Ricafort also expects GS yields to continue to ease this week “especially if US/global bond yields continued to remain relatively lower amid the recent easing in global oil prices, lingering US-China trade war, [and the] increasing odds recently of a bigger cut in federal fund rates.” — Beatrice M. Laforga with Reuters

Sinulid: The future of fashion

THE YOUTH are our future, so the Fashion Design and Merchandising students of the De La Salle College of St. Benilde (DLSU-CSB) showed the possibilities of the future of fashion through their culminating fashion show and exhibit, Sinulid, now on its fourth edition.

BusinessWorld took a tour through the exhibit last week at the atrium of SM Aura and saw what the students have learned and earned.

Favorites from the exhibit include three pieces by student Yukari Mañalac who took inspiration from Japanese art, showing mythical beasts such as dragons and phoenixes, executed through quilting, smocking, painting, and burning. Another favorite was an exhibit by Nicole Strawford which evoked the sari-sari store through printing labels onto fabric and sewing them into ternos, somehow reminiscent of Andy Warhol’s pop art pieces.

At the fashion show, the opening numbers by Bea Araza, which showed bell-shaped skirts, showing a mastery in technique and structure. Other favorites include Puritan-meets-The Handmaid’s Tale jumpsuits and bonnets by Steven Comandante, and then tough Girl Scout outfits by Rome Oamil.

The following students, meanwhile, were awarded for their efforts: Nicole Strawford, for the aforementioned sari-sari exhibit, Darlene Rivera for Best Design Concept; Kimble Quinto for Best in Surface Design; Bea Guerrero as the Top Student Designer; and Therese Melliza as the Sinulid Emerging Creative.

The show is the second of a series for CSB, beginning with Prologue last summer, Altered Translations for this season, and Epilogue in October.

Explaining the theme, Christine Benet, Chairperson of the Fashion Design and Merchandising program said, “We’re going beyond the human form. We’re going beyond design.” By this she puts an emphasis on teaching students fabric manipulation, hence the diverse techniques seen in the show and exhibit (there’s a student who used coffee and tea to dye clothes, and another who upcycled jeans and turned them into full outfits).

The shows follow the guidelines of inclusivity, diversity, and sustainability, lending themselves to touching stories such as a student who printed the artwork of her brother with autism on her fabric. “They have to find themselves first: understand their own aesthetics,” said Ms. Benet.

The students, to be launched in the world, have already had a taste of the hurdles faced by professionals in the fashion industry. One would point, for example, at the lack of a robust textile manufacturing industry: some students had to wait for months for their fabrics to arrive, while some were forced to innovate and develop their own yarns for their fabric.

Said Ms. Benet, “In fashion, sometimes people consider it as a shallow industry. That’s how we differentiate graduates of Benilde. We don’t want them to be limited to the catwalk. Our goal is not for them to be on top, but rather to stay the longest in the industry.” — Joseph L. Garcia

MG’s novel after-sales campaigns provide worry-free ownership

MG PHILIPPINES (The Covenant Car Company, Inc. or TCCCI) recently introduced its after-sales complements in a three-pronged approach: with the announcement of available spare parts for all MG models purchased from MG Philippines dealerships authorized by (TCCCI); the official launch of the Mobile Garage service caravan; and the My MG App that is designed to give MG owners the convenience of online bookings for scheduled periodic maintenance servicing (PMS).

“Our initiative is to provide innovative and customer-centric services to our clients, as we recognize that after-sales is a cornerstone of our business here at MG Philippines,” says Alberto B. Arcilla, president and CEO of MG Philippines-TCCCI. “Through our many after-sales complements, we want to make customers feel at ease with their purchase. Likewise, our after-sales services are designed and implemented to create a sense of confidence among our patrons, reassuring them that they made the right choice with MG Philippines.”

SPARE PARTS AVAILABILITY
MG Philippines dealerships nationwide are stocked with spare parts, and are staffed by MG-trained technicians accredited to perform the necessary service.

MOBILE GARAGE SERVICE CARAVAN
MG Philippines’ Mobile Garage is specially designed to cater to clients with technical, mechanical, electrical, and engine concerns. A client can phone in a request, and in the event that the MG service team identifies that a client’s MG requires home service, the Mobile Garage can make its way to the client’s address to perform the necessary repairs or service work on the unit.

The MG Philippines Mobile Garage offers coverage in NCR, Northern Luzon, Southern Luzon, and will soon offer its services in regional areas in the Visayas and Mindanao. Call the MG Philippines 24/7 Hotline at (02) 328-4664 to learn more about this service.

MY MG APP FOR CONVENIENT PMS SCHEDULING
The My MG App allows clients to schedule vehicle servicing appointments at their choice of MG Philippines-authorized service center; a dealership location tool that uses your smartphone’s built-in GPS to locate the dealership or service center nearest to you; and a way for you to inquire about parts availability and service.

The app also allows user to schedule test drives, make product inquiries, and check the map for MG dealerships and service centers around the country. It may also be used as a virtual garage, where clients can keep an orderly list of their vehicles and their maintenance history. And because the app is centralized between the MG Philippines head office and its dealer partners, clients are ensured that inquiries will be properly and professionally entertained.

The My MG app may be downloaded for free from play.google.com/store/apps/details?id=mymgconnect.com.mgapp

EXPANDED DEALERSHIP NETWORK
Aside from its updated after-sales complements, MG Philippines is also updating its nationwide dealership network. A total of nine fully functioning dealerships and two regional sales offices, all featuring after-sales service capabilities, are now open across the country, with another six full dealerships scheduled to be open for business by the end of 2019. The nine dealerships include MG BF Parañaque, MG EDSA Centris, MG Batangas, MG Carmona, MG Dasmariñas, MG Lipa, and MG Sta. Rosa, MG Cebu-Mandaue, MG Davao; the two regional sales offices are MG Cabanatuan and MG Iloilo (sales office); while the seven dealerships that are soon to rise are MG Alabang, MG Commonwealth, MG Quezon Avenue, MG Pampanga, MG Cabanatuan, MG Iloilo, and MG Makati.

Visit mgmotor.com.ph/dealers for more detailed contact information of the aforementioned MG Philippines dealerships.

The MG badge is synonymous with freedom, dynamism, innovation, individuality, and attainability. It represents a new wave of vehicles that allows discerning drivers and passengers to enjoy a distinctive automotive experience at very competitive price points. MG is a traditional UK brand established in 1924. It is an icon of British automotive history with a long-respected sporting heritage. Today, MG is a truly global brand, with financial backing of SAIC Motor: one of the world’s largest auto manufacturers and exporters, and a high-ranking Fortune 500 company. For MG, the present marks the most exciting chapter in what is an already very colorful brand story.

Visit www.mgmotor.com.ph for more information about MG Philippines products and services, and follow MG Philippines on social media: OfficialMGPhilippines (Facebook) and @mg_philippines (Instagram and Twitter). You may also call the 24/7 MG Philippines hot line at (02) 328-4664 for more inquiries. Book a test drive now at www.mgmotor.com.ph.

More foreign firms keen on LNG import terminal in PHL

THE Department of Energy (DoE) continues to receive interest from foreign entities that are keen on participating in the government’s plan to put up a liquefied natural gas (LNG) import terminal, an official of the agency said.

“There’s another US company that had a pre-application conference, New Fortress Energy,” DoE Assistant Secretary Leonido J. Pulido III told reporters last week.

The US company is the latest to have held a conference with the agency to express its plan to build an LNG facility, he said. He said a formal application has yet to be filed by the foreign entity.

He said those who had sought similar meetings with the DoE in the past were all interested in constructing the facility.

“We haven’t seen any proposal from them yet, it’s just a pre-application conference,” Mr. Pulido said, adding that the feedback from the DoE office in charge of the matter was “they will submit an application.”

In January, the DoE disclosed that Excelerate Energy L.P., a US-based company, joined the list of groups keen on building an LNG facility in the Philippines. The company filed its proposal on Dec. 27, 2018, the agency said.

Excelerate becomes the fourth company with an ambition to put up a facility ahead of the expected depletion of the Malampaya gas field, the country’s only natural gas fuel source.

The proposal of Excelerate is being evaluated by the DoE’s technical working group, which last looked into the application of First Gen Corp. and its Japanese partner Tokyo Gas Co., Ltd.

Ahead of Excelerate and First Gen’s LNG projects, the DoE office evaluated the application of two other proponents — the local unit of Australia’s Energy World Corp. Ltd., and the partnership between Phoenix Petroleum Philippines, Inc. and a unit of China National Offshore Oil Corp.

Mr. Pulido said Excelerate’s application has not been rejected, but continues to be on hold.

“They were asked to submit more documentation to substantiate their proposal. What was asked from them is to provide an after-market,” he said.

He said three weeks ago, the US company sent additional documents to the DoE, including a letter of intent between Excelerate and San Miguel Corp.’s Ilijan gas-fired plant.

“I don’t think they have a final agreement. It’s more of letter of intent slash MoU (memorandum of understanding). It’s still under evaluation,” he said.

The DoE previously issued a “notice to proceed” to both First Gen and Phoenix Petroleum. The latter sought for an extension for another six months. — Victor V. Saulon

China EV battery makers seeking PHL manufacturing partners

THE Philippine electric-vehicle industry is in talks with Chinese battery makers to set up shop in the Philippines due to the potential of the electric vehicle market here, an industry official said.

“Since last year, we’ve been talking to a lot of Chinese manufacturers of batteries — lithium-ion batteries. They’re really interested to locate here in the Philippines because they see that there’s a good market for electric vehicles from what they’ve seen, from what they’ve experienced in the last several years,” said Ferdinand I. Raquelsantos, chairman emeritus of the Electric Vehicle Association of the Philippines (EVAP), in an interview last week.

He said he and other industry officials have held talks with members of the Power Battery Application Branch of the China Industrial Association of Power Sources for possible partnerships.

“They’re talking to EVAP… and we’re matching them with different players, especially the raw material providers,” said Mr. Raquelsantos, who is also president of Philippine Utility Vehicle Inc.

He was referring to Philippine-sourced nickel, which is used in the manufacture of EV batteries. The existing arrangement is for the raw material to be exported to Chinese battery makers, he said.

“If they do the assembly here of the batteries, then they get the raw material here, locally. So it’s a perfect scenario,” he said.

Mr. Raquelsantos said the target of EV manufacturers is to reduce the cost of battery in making green cars. He said lowering the cost will help make vehicles more affordable.

“The target is about 15-20% of the vehicle should be the cost of the battery. Right now, it’s about 50-60%,” he said. “I’m talking about lithium ion.”

He said a business-to-business meeting was held last week between the Chinese group and “interest parties” from the Philippines. He declined to disclose the identity of the Filipino groups, but said only that the manufacture of EV batteries has similarities to the manufacture of semiconductors, and that members of the latter industry were involved.

“We’re hoping this year, we will find some concrete programs already and schedules,” he said.

“They brought their members and their members are talking to the local prospective partners,” he added. “We wanted to have one [partnership] at least first, and then hopefully they’ll follow — the rest.”

Should a partnership be forged, the resulting business will be more of an assembly of lithium batteries using existing Chinese technology and research.

“They find it very conducive to produce here because the cost of labor is cheaper. The cost in China is a lot more than us. And they have the engineers, technicals who can really support the production,” he said. “They just put up a plant here and produce.”

Mr. Raquelsantos said the possibility of bringing battery manufacturing to the Philippines could also result in the assembly of completely-knocked down EV units in the country.

“When it comes here, then we generate jobs, and then we can localize jobs, and it can really provide volume and lower cost,” he said. — Victor V. Saulon

US ethanol plants seen cutting output on poor margins, oversupply

NEW YORK — US ethanol plants are expected to sharply curtail production in the weeks ahead as steep Midwest corn prices and the US-China trade war have led to weak margins and oversupply, industry sources said.

Margins to produce ethanol in the Corn Belt — where most US production takes place — have fallen to a four-year seasonal low, while ethanol inventories are at the highest seasonally since at least 2010. Production hit its highest seasonal level since 2010, the earliest data available.

Industry sources said this glut makes future cuts inevitable, particularly as corn prices are making production even more expensive. That could boost fuel prices, as US law requires ethanol to be blended into gasoline.

“Plants have exhausted all resources and I think we will start seeing some real cuts to production,” said Josh Bailey, chief executive of Eco-Energy, a marketer and distributor of ethanol. He said most producers are losing money on every gallon produced given the weak margins. This downturn has been deeper than before, lasting more than a year instead of just a few months.

Corn futures on the Chicago Board of Trade traded at about $4.49 a bushel last week, the highest for this time of year since 2013. Corn is the primary feedstock for ethanol production, and wet Midwest conditions this year disrupted planting for farmers, creating uncertainty around corn supply and increasing price volatility.

Shares of ethanol producers Green Plains Inc and Pacific Ethanol Inc have slumped by more than 40% since April, Refinitiv Eikon data showed. Green Plains’ shares are at multi-year lows and Pacific is trading at all-time lows ahead of the companies’ quarterly earnings reports in coming weeks.

Producers have fought deteriorating market conditions over the last year. Pacific idled part of its Aurora, Nebraska, plant late last year with no near-term plans to restart it. Green Plains agreed in October to sell three of its ethanol plants to Valero Renewable Fuels Co, and in June suspended its quarterly dividend.

This year, Archer Daniels Midland Co said it may spin off three large dry mills, which primarily produce only ethanol.

Bailey said US President Donald Trump’s trade wars have dented ethanol exports, specifically with China, hurting domestic producers who have nowhere to dump excess production.

Midwest ethanol production totaled 991,000 barrels per day (bpd) last week, highest seasonally since 2010, the earliest data available, according to the US Energy Information Administration. Overall US production was at nearly 1.07 million bpd, the steepest for mid-July also since at least 2010, EIA data showed.

Ethanol inventories rose to 23.4 million barrels, highest seasonally since 2010.

“At some point it becomes a strong enough signal when [cuts] are going to have to come from multiple places and I think that’s about where we are right now,” the industry source said.

Trump earlier this year lifted the ban on summer sales of higher ethanol blends of gasoline, called E15, hoping to give a boost to Midwest farmers struggling under his trade wars. However, infrastructure such as gas station pumps and tankage to deliver E15 across the nation is not in place, blunting the positive impact. — Reuters

Peso likely to weaken

THE PESO is seen to weaken against the dollar this week following geopolitical tensions between the US and Iran as well as guidance from US Federal Reserve Bank of New York.

The local unit ended the week at P51.04 versus the greenback, down seven centavos from its previous close, following dovish pronouncements from a US Federal Reserve official.

Week on week, however, the peso strengthened from its P51.13-per-dollar finish on July 12.

In an e-mail, a market analyst said the dollar might “generally appreciate” in the first four days of the week after the New York Fed clarified that prior hawkish comments from its president John Williams were not meant to imply that there would be an aggressive US rate cut on July 31.

Mr. Williams said in a speech on Thursday that the US central bank needs to take “preventative measures” while interest rates are down and economic growth is easing than “to wait for disaster to unfold.”

“This less-hawkish confirmation might be bolstered by the upbeat US consumer sentiment for July 2019 as well as potentially firm US economic reports on manufacturing and housing,” the market watcher said.

Meanwhile, Rizal Commercial Banking Corp. economist Michael L. Ricafort said renewed tensions involving the US and Iran led to slight upward correction in global oil prices and in the dollar versus major global currencies and the peso.

On Thursday, the US shot down an Iranian drone near an American ship in the Strait of Hormuz, deepening tensions between Washington and Tehran. However, Iranian deputy foreign minister Abbas Araqchi denied the incident, saying in a tweet it didn’t lose any drone.

In another development, Iran’s Revolutionary Guards seized a British oil tanker and a Liberian-flagged ship also in the Strait of Hormuz, Mr. Ricafort said.

“Offsetting positive factor for the peso remains to be expectations about possible easing of local monetary policy by a way of a cut in local policy rates as early as the next monetary policy-setting meeting on Aug. 8,” he added.

Mr. Ricafort said a possible cut in interest rates by both the BSP and the Fed as well as easing inflation at home “have been positive for the local financial markets.”

For this week, Mr. Ricafort expects the peso to trade between P50.90 and P51.30 versus the dollar, while the market analyst gave a P50.70-P51.30 range. — Karl Angelo N. Vidal

Style (07/22/19)

Metro Retail holds mid-year clearance sale

METRO STORES’ annual Mid-Year Clearance Sale is ongoing at all Metro Department Stores and Hypermarks until July 31. Discounts of up to 50% are offered on travel gears, children’s clothing, toys, shoes men’s and ladies’ apparel, among others. Metro Retail is also holding a “Hooray for Rainy Days Sale,” with discounts offered on items like umbrellas, rain ponchos, and rain shoes, until July 31. In addition to the rainy day gear, select appliances, ladies”, men’s and Children’s wear are also on sale with discounts of up to 30%. For more information on the sale, visit www.metroretail.com.ph.

Philips Male Grooming booth in Rustan’s Makati

PHILIPS, a global leader for male electric shaving tools, has opened a booth at Rustan’s to show its wide range of shavers which address the root cause of irritation — friction between grooming tool and the skin. All the tools are designed to relieve discomfort and allow men to look their best. These include the Philips Wet and Dry Electric Shaver Series 7000 with SkinGlide rings to glide effortlessly across the face; the Philips AquaTouch Wet & Dry Electric Series 5000 shaver with a MultiPrecision Blade System with rounded profile heads; the Philips Multigroom 9-in-1 Series 5000 which offers nine tools to trim and style facial hair, head and body hair. Its DualCut technology includes 2x more blades and has self-sharpening blades with a battery life of up to 80 minutes; the Philips Hair Clipper Series 3000 with Trim-n-Flow technology prevents hair clogging; and the Philips Beard Trimmer Series 3000 with a Lift & Trim system for efficient trimming. The Philips Male Grooming booth is found in Rustan’s Makati.

PayMaya touchpoint network grows above 40,000

PAYMAYA tallied the highest number of touchpoints where clients can add money into their digital wallets in a bid to push financial inclusion.

In a statement over the weekend, PayMaya said it now has a network of over 40,000 touchpoints, the widest network tapped by any digital wallet in the country.

Orlando B. Vea, PayMaya chief executive officer and founder, said its touchpoint network is almost double the number of offices and branches of banks and other financial institutions regulated by the Bangko Sentral ng Pilipinas (BSP).

Latest central bank data showed there were 25,813 branches of BSP-supervised financial institutions as of end-June.

PayMaya customers can add money to their mobile wallets physically through banks, convenience stores, pawnshops, bills payment centers and kiosks.

They can also add and remit digitally through online banking via InstaPay, an electronic fund transfer system that processes real-time transfers worth P50,000 or lower across accounts or e-wallets from different banks or service providers.

“This is part of our efforts to make digital financial services more accessible to all Filipinos. For our customers, we are making it even more convenient for them to fund and use their PayMaya e-wallet — whether via online, mobile, or face-to-face,” Mr. Vea said.

“This is an important foundation of the cashless ecosystem that we are building to enable Filipinos to gain access to the growing digital economy,” he added.

According to the latest Financial Inclusion Survey conducted by the BSP in 2017, only 22.6%, or some 15.8 million Filipino adults, maintain formal bank accounts, citing lack of money and lack of need to have an account as the main reasons

The central bank is eyeing to raise the share of e-payments to 20% of all transactions in the Philippines by 2020, coming from a measly 1% share back in 2013.

PayMaya is handled by PLDT’s digital arm Voyager Innovations, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — KANV

Foreign banks see pickup in second half, GDP back on track

FOREIGN BANKS said they expect the Philippines to achieve gross domestic product (GDP) growth of about 6% this year, representing the low end of the national government’s target range of 6-7%, with second half investment helping offset the impact of the four-month delay in this year budget.

“Continued delays in government spending imply that GDP growth in 2019 is likely to be subdued compared to previous years. We expect full-year growth of 6.0%, factoring in a considerable pickup in investment in the second half,” HSBC Global Research said in a report.

HSBC noted that it expects the Bangko Sentral ng Pilipinas (BSP) to adjust monetary policy to boost growth, with an anticipated 25 basis-point cut in policy rates at the next Monetary Board meeting in August and another 25 basis-point cut in the fourth quarter.

“We expect monetary policy to step in and support growth. We forecast a 25bp cut in 3Q (likely on 8 August), in light of our expectation for tepid 2Q GDP growth (reported on the same day as the BSP meeting). We also expect another 25bp rate cut in 4Q and a 25bp cut in 1Q20 given our expectation for 50bp of rate cuts from the Fed by end-2019,” HSBC said.

“This would enable the BSP to unwind some of its policy rate hikes in 2018 and further support growth. Policy rate cuts, in addition to bank reserve requirement cuts and a pickup in government spending, should further lift growth in 2020, when we forecast full-year growth to bounce back up to 6.4%,” it added.

Standard Chartered Bank Asia Economist Chidu Narayanan meanwhile said in its Global Focus- Economic Outlook Q3 2019 that he is expecting a steady growth of 6.1% for this year caused by easing monetary policy and boost in public infrastructure spending.

“We expect steady overseas remittance growth of 3-5% over the next 12 months, supported by solid economic growth in the US and the rest of Asia. Tourism receipts are likely to increase over the next six months as tourist destinations that were shut down in 2018 for clean-ups are reopened; tourist arrivals from China and Korea, the two biggest sources, were already higher in Q1,” Mr. Narayanan said.

Mr. Narayanan said StanChart sees a 75-bp cut in policy rates before year’s end, to help reverse the 175-bp hike made last year to combat rising inflation which peaked in the second semester of 2018. The BSP has since reduced policy rate by 25 bp in May, and BSP Governor Benjamin E. Diokno has signaled a policy rate cut in the second half of 2019.

“We expect inflation to fall below 2% in H2, giving BSP room to cut policy rates further. We see another 75-bps (worth) of rate cuts this year, following an initial cut in May,” Mr. Narayanan said.

Meanwhile, Nicholas Antonio T. Mapa, senior economist at ING Bank Manila, said, “With 2Q GDP expected to remain subdued on lingering effects of rate hikes and budget delays, first half growth will likely slip below 6% as the speed bump hits home. 2H growth however appears to offer some hope as the Philippines attempts to achieve escape velocity and get growth back on a higher trajectory (6-7%).”

“Lower policy rates working in tandem with decelerating inflation will also boost already potent household consumption while the government implements catch up spending to complete the push for escape velocity. If the Philippine economy is able to get all three channels of growth up and running, we could see the Philippines post a strong 2H GDP growth performance both on the consumption and investment front, which should help the economy return to and remain in an elevated growth path of 6-7%,” Mr. Mapa added. — Reicelene Joy N. Ignacio

Mitsubishi’s downpour deals

THE RAINY SEASON has just started and Mitsubishi Motors Philippines Corporation (MMPC) is pouring irresistible offers with the Mitsubishi’s Downpour Deals promo. With this offer owning a brand new Mitsubishi is much easier with the available financing plans that you can choose from.

From July 3 to 31, MMPC is offering All-in Low Down deals on its best-selling models namely: the New Strada, Montero Sport, XPANDER and Mirage G4. Zero percent interest with low monthly plan is also available for the Montero Sport.

With the All-in Low Down deals customers can own the New Strada GLX Plus 2WD M/T for an affordable down payment of P74,000, while for the XPANDER GLX M/T with just P18,000 down payment you can already drive home a brand new unit and if you’re in the look for a practical sedan the Mirage G4 GLX M/T is available for a down payment of only P12,000.

Included also on this great deals is the Montero Sport GLX 2WD M/T with an option for an All-in Low Down of just P48,000 or a zero-percent interest low monthly plans. Under the Low monthly, amortization of the Montero Sport will certainly fit your budget with just P13,042 monthly payments for a 60-month term. A 50% down payment is required to avail the zero-interest low monthly package for the Montero Sport.

All-in Low Down deals include 3-year LTO registration, 1-year comprehensive insurance and chattel mortgage. (Financing plan is subject to bank approval.) Take advantage of this offer to own a brand new Mitsubishi vehicle that will perfectly suit your lifestyle and needs.

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