Compostela Valley celebrates Bulawan Festival this week, investment conference set March 5

March 4, 2019 | 9:20 pm

COMPOSTELA VALLEY, which will be renamed Davao de Oro when the Congress-approved bill is signed into law, is celebrating its 21^st founding anniversary this week alongside the 12^th Bulawan Festival. Among the highlights of the festivities are the 2019 De oro Business and Investment Conference on March 5 at the newly-opened Lubi Plantation Island managed by the Dusit group. The gathering aims to promote Compostela Valley as a “the next investment hub in Mindanao. Other activities for the Bulawan, which means gold in Visayan, are nightly stage performances, sporting events, food bazaar, and a job fair. March 8 will be a holiday in the province as declared in a presidential proclamation. Compostela Valley, which used to be part of Davao del Norte, has an agriculture-based economy, including high-value commodities, and is home to one of the country’s richest mineral resources, particularly gold and copper.

Nation at a Glance — (03/05/19)

March 4, 2019 | 9:09 pm

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Peso declines on profit taking

March 4, 2019 | 9:00 pm

THE PESO slipped on profit taking after last week’s rally.

THE PESO depreciated slightly against the dollar on Monday as market players took profit following the local unit’s rally last week.
The local currency closed at P51.72 versus the greenback yesterday, two centavos weaker than the P51.70-per-dollar finish on Friday.
The peso opened the session weaker at P51.765 against the greenback, slipping to as low as P51.84 intraday. Its best showing, on the other hand, stood at P51.68 against the dollar.
Trading volume grew to $1.094 billion from the $872.31 million that switched hands in the previous session.
“The peso made a new low this morning, although it continued to trade within a wide range. The trading was still erratic, although he offshore market was quite biddish,” a trader said in a phone interview on Monday.
“From our end, we saw inflows that supported the peso. The pressure for the peso to move higher comes from the offshore market.”
Another trader said the local unit weakened a tad as market players took the opportunity to pile up on the greenback following the previous week’s rally.
The peso rallied last week, reaching a nine-month high of P51.70 against the greenback, buoyed by optimism on US-China trade relations.
Late last month, US President Donald J. Trump postponed indefinitely the imposition of $200 million in tariffs on Chinese goods — originally scheduled to take effect on March 1 — citing “substantial progress” in Washington’s trade talks with Beijing.
Mr. Trump is set to meet with his Chinese counterpart Xi Jinping in Mar-a-Lago, Florida a few weeks from now to seal a trade deal.
For today, the first trader expects the peso to trade within P51.70 and P52 versus the dollar, while the other gave a P51.60-P51.80 range.
Most Asian currencies likewise were slightly weaker on Monday, with the exception of the Chinese yuan, as investors anticipated an imminent resolution to the US-China trade dispute and new policies from Beijing aimed at boosting Asia’s largest economy.
The yuan strengthened 0.3% to 6.691 per dollar on expectations that the United States and China were close to striking a deal to roll back tit-for-tat tariffs, paving the way to end a bitter year-long dispute.
Meanwhile, investors will also be closely watching China’s annual parliamentary meeting starting on Tuesday that may provide details on how Beijing plans to reignite its slowing economy as well as its economic growth targets over the year. — KANV with Reuters

Shares climb as US-China trade talks progress

March 4, 2019 | 9:00 pm

LOCAL EQUITIES firmed up on Monday as reports of trade negotiations happening between the United States and China boosted investor optimism.
The benchmark Philippine Stock Exchange index (PSEi) snapped its three-day losing streak yesterday after it climbed 0.44% or 33.70 points to close at 7,675.47.
The broader all-shares index likewise gained 0.4% or 19.04 points to 4,748.97.
“Philippine markets bounced back on some trade optimism as according to Bloomberg news, US officials were preparing for a summit between President Donald Trump and Chinese Leader Xi Jinping at which a 150-page agreement could be signed,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile phone message.
Reports over the weekend stated that both sides are now in the final stages of negotiating a deal which could involve the lowering of Chinese tariffs on some US goods if Mr. Trump agrees to remove broad sanctions against Beijing. The potential meeting could happen on March 27.
From a technical standpoint, Summit Securities, Inc. President Harry G. Liu said the PSEi is tracking a long-term moving average with 7,500 as a support level.
“We would still see some reaction but I think the reaction, unless a very positive fundamental news changes the game today, we should see rallies along the way will only be within the window of 7,500 to roughly 8,000 for the moment,” Mr. Liu said in a phone interview on Monday.
Mr. Liu added that investors are still looking at how the US-China trade war plays out, alongside other global and local events such as the midterm elections and state of economic growth in the next six months.
Mining and oil was the lone counter that ended in negative territory, losing 2.51% or 210.31 points to 8,149.42.
The rest went up, led by financials which jumped 1.08% or 18.34 points to 1,701.73. Property rose 0.34% or 13.72 points to 3,939.71; holding firms gained 0.32% or 24.87 points to 7,717.84; industrials added 0.23% or 26.78 points to 11,364.79; while services eked out a gain of 0.01% or 0.27 point to 1,518.69.
Value turnover thinned to P6.21 billion yesterday after some 1.02 billion issues switched hands, compared to Friday’s P8.47 billion.
Decliners outpaced advancers, 103 to 94, while 52 names were unchanged.
Foreign investors turned net buyers, albeit at a meager amount of P80.52 million. This is compared to the previous session’s P1.64-billion worth of net outflows.
Meanwhile, Wall Street indices ended Friday’s session on a positive note. The Dow Jones Industrial Average edged higher by 0.43% or 110.32 points to 26,026.32. The S&P 500 index jumped 0.69% or 19.20 points to 2,803.69, while the Nasdaq Composite index rallied 0.83% or 62.82 points to 7,595.35. — Arra B. Francia

Inflation likely slowed further in Feb.

March 4, 2019 | 12:33 am

By Melissa Luz T. Lopez
Senior Reporter
INFLATION likely maintained its descent in February as rice prices continued to drop, analysts said in a BusinessWorld poll, with some even betting the rate slid to below four percent.
A poll among 13 economists yielded a median estimate of 4.1%, which, if realized, will be lower than January’s 4.4% rate and will mean a four-month streak of declining inflation. This also falls within the 3.7-4.5% estimate given by the Bangko Sentral ng Pilipinas (BSP) last week.

Inflation settled at 3.8% in February 2018. The Philippine Statistics Authority will release official inflation data tomorrow.
“We think Philippines inflation will continue to slow down in February to 4.3% year-on-year, from 4.4% in January as the impact of increased excise taxes has continued to disappear. In addition, lower rice price in February might also contribute to lower inflation pressure,” said Masyita Crystallin, economist from DBS Bank.
Security Bank economist Robert Dan J. Roces added that the signing of the rice tariffication law, which will replace import limits with tax duties, also provided some relief and has “already tamed inflation expectations” ahead of its March 5 effectivity.
Rice supply constraints led to faster inflation in the second half of 2018, which saw prices rise by as fast as 6.7%.
Five market watchers are even betting that inflation likely settled below four percent last month, which would mark the first time in a year the headline rate would settle within the 2-4% BSP target.
ING Bank senior economist Nicholas Antonio T. Mapa said lower prices of chicken, pork, fish and vegetables may have pulled inflation down to 3.8%, even if fuel rates went up during the month.
The stronger peso, which returned to the P51 level versus the dollar during the last two days of February, may have also helped temper import prices, they added.
However, there are mixed views about how this latest data will be taken by the BSP’s Monetary Board as they review policy settings during their March 21 meeting.
“This expected inflation level further fortifies a steady monetary stance,” said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines, Inc.
Benchmark rates have remained at the 4.25-5.25% range since the BSP fired off a series of hikes worth 175 basis points in 2018. Central bank officials said they now have time to let these rate increases work their way through the system before choosing their next move.
On the other hand, a rate cut or even a reduction in the 18% reserve requirement ratio “is already possible” this month should average inflation fall back to the 2-4% target, according to Michael L. Ricafort, economist at the Rizal Commercial Banking Corp.
The late BSP Governor Nestor A. Espenilla, Jr. vowed to continue slashing the level of bank reserves to reduce the cost of money in the local financial system. However, some officials have said they will need to see real tightness in money supply before another reserve cut is introduced.

PHL slips to 5th in Women in Business survey

March 4, 2019 | 12:32 am

A NEW SURVEY showed 37% of senior management positions at Philippine companies are occupied by women, well above the global average of 29%.

While the Philippines ranked first in Asia, the country’s global ranking slipped to fifth this year from first in 2018, according to the “Women in Business 2019” report released by Grant Thornton International Ltd.
The “Women in Business” report, which surveyed 4,900 senior executives in 35 countries, showed New Zealand had the highest proportion of women in senior leadership positions at 43.9%, followed by Australia with 41.94%. Nigeria ranked third with 38.47%, while Botswana was in fourth with 38.25%.
The Philippines’ global ranking dropped to fifth due to a 10-percentage-point drop in the proportion of Filipino women in senior management from 47% in 2018. The percentage of Filipino women in senior management was 40% in 2017, and 39% in 2016.
“The dip does not yet take into account the government’s recent measures to provide flexible working arrangements for women,” the report said.
Marivic C. Españo, P&A Grant Thornton chairperson and chief executive officer, said Filipinas still play significant roles in their organizations. The top three roles of Filipino women in business are human resources director at 75%, chief finance officer at 66%, and chief operating officer at 53%.
“If we want to continue seeing female representation in senior positions, more deliberate action needs to be taken and leaders will play a crucial role,” she said in a statement.
The Women in Business report noted Philippine businesses are taking various measures to improve or preserve the gender balance in leadership teams. These measures include ensuring equal access to development work opportunities (70%), providing mentoring and coaching (66%), and enabling flexible working (56%).
However, the report noted that women leaders still need to take action. In the survey, Filipina executives had cited lack of access to developmental work opportunities (55%), finding time alongside core job responsibilities (51%), and caring responsibilities outside work and lack of access to networking opportunities (both at 47%) as barriers that have blocked them from acquiring the skills and attributes to be successful in their roles.
“Policies that address equal opportunity in careers, bias in recruitment, and flexible working cannot just be nice to have. To achieve meaningful progress, they must be adhered to, enforced, and regularly revisited to assess their effectiveness and, when that is combined with real commitment from senior leadership, you begin creating a truly inclusive culture,” Ms. Españo said.
“In addition to gender diversity being the right thing to do, it is right for business. There is compelling evidence of the relationship between diversity of thought and innovation, leading to enhanced business performance. Furthermore, women and men are equally capable of good leadership; the critical point is that diverse leadership teams tend to outperform their socially homogenous rivals,” she added.
Globally, the percentage of businesses with at least one woman in senior management has risen to 87%, an increase of 12 percentage points since last year. Publicly owned companies are almost twice as likely to have women in senior management positions.
Overall, women now hold 29% of senior leadership positions globally. While this is up only 10 percentage points over the past 15 years of research, half of this increase has been achieved in the past 12 months alone, the report said.
Francesca Lagerberg, global leader at Grant Thornton International, said the figures are “incredibly encouraging and a strong indication that gender parity is starting to be taken seriously by businesses.”
“External factors, such as increasing organizational transparency, gender pay gap reporting, and highly visible public dialogue like the #MeToo movement appear to be making businesses wake up to the change that is needed,” she said.
Grant Thornton is one of the world’s leading independent assurance, tax and advisory firms. — Victor V. Saulon

BSP targets further charter amendments to look into deposits, conglomerates

March 4, 2019 | 12:31 am

THE CENTRAL BANK will seek further amendments to its charter to relax deposit secrecy rules and look into conglomerates that own banks to further boost their regulatory powers.
Bangko Sentral ng Pilipinas (BSP) General Counsel Elmore O. Capule said these two key reforms were left out by Congress when it approved what is now Republic Act (RA) 11211, which installed numerous changes to the central bank’s charter.
“We were not granted that authority, so perhaps at some future time we will again try to amend the remaining provisions which we think can enhance our powers better,” Mr. Capule told reporters during a recent press chat.
RA 11211 was signed into law on Feb. 14.
A key provision removed from the regulator’s original proposal was a clause that eases the secrecy rules covering bank deposits, which was a power bestowed upon the BSP’s predecessor, the Central Bank of the Philippines.
The BSP wants to have the power to peer into bank deposits to better guard against illegal fund flows.
The Bureau of Internal Revenue was likewise counting on this reform so it can go after more tax evaders, but the same power was not given by Congress when it approved the Tax Amnesty Act. In turn, President Rodrigo R. Duterte had to veto the general tax amnesty program as it could not be carried out without this authority.
Mr. Capule added that the BSP wants to have the ability to look into conglomerates that own banks and similar financial firms, saying this would enhance its oversight over the banking system.
“You have to know what is happening. Conglomerates can play around with subsidiaries,” the BSP’s top lawyer added, noting that parent corporations could be using their subsidiary banks to borrow and simply rotate the money within their group.
“We want to look at contracts — where does the money go? And when you implement a contract, you can only see half. What really happens upstairs? If you want to have a holistic approach, especially with the authority over financial stability, you have to have a bigger picture.”
Mr. Capule said they will considering asking Congress for these amendments.
Bills seeking to update the New Central Bank Act have been pending before Congress for roughly 20 years since its passage in 1993. The changes, which take effect tomorrow, are touted to strengthen the BSP’s monetary and regulatory functions.
Among the key reforms include higher penalties and fines for errant banks and financial entities, legal protection for BSP officials and staff when performing their official duties, a P150-billion capital boost, the restoration of the BSP’s authority to issue its own debt papers, and the creation of a reserve fund for foreign exchange fluctuations, to name a few. — Melissa Luz T. Lopez

Analysts’ February Inflation Rate Estimates

March 4, 2019 | 12:31 am

INFLATION likely maintained its descent in February as rice prices continued to drop, analysts said in a BusinessWorld poll, with some even betting the rate slid to below four percent. Read the full story.

Peso beats Asian peers in surprise win

March 4, 2019 | 12:30 am

THE PHILIPPINE peso has defied a yawning current-account deficit to emerge as Asia’s best-performing currency in February. And it may continue to surpass its peers.
Peso bulls say record remittances, rising investment and a buoyant domestic economy will propel further gains in the currency. Easing inflation could also lend a hand, as higher real yields burnish the appeal of Philippine bonds.
The peso is among Asia’s biggest turnaround stories, as the currency bounced back from a 13-year low after a slew of economic reforms and a $170-billion infrastructure spending plan revived sentiment. Proactive central bank policy has also helped win over skeptics.
“The peso has been stronger recently and could continue to outperform in the region, amid sustained net foreign portfolio investments on a widely expected further declining trend of local inflation,” said Mike Ricafort, economist at Rizal Commercial Banking Corp. in Manila.
The Philippine currency strengthened 0.8% in February to P51.70 per dollar, the best performance among Asian currencies. It has climbed since the start of the year, as a pause in Federal Reserve tightening and easing global trade tensions fueled demand for developing-nation assets.
The peso was among the hardest hit in the emerging-market sell-off last year, tumbling to a 13-year low of P54.41 in October as investors punished economies running current-account deficits.
Technicals back the case for further peso gains. The dollar-peso currency pair remains in a bear trend, hovering above initial support at 51.90, its Feb. 13 low. The pair’s slow stochastics, a momentum indicator, signals it may drop further in the near term, with the %D line reading 43 and falling.
Sentiment toward the peso has recovered even after the central bank forecast the nation’s current-account deficit will widen to 2.3% of gross domestic product in 2019, the biggest shortfall since 2001. The recent rebound in crude prices threatens to worsen the gap, as the Philippines imports almost all its oil requirements.
Investors are betting on the peso after foreign investment into Philippine stocks and bonds recorded a net inflow of $763 million in January, more than four times the level a year ago. Remittances from Filipinos working abroad climbed to an all-time high of $2.85 billion in December.
Inflation data due March 5 could provide more fodder for peso bulls. Consumer-price gains may have eased to a one-year low of 4% in February, according to a Bloomberg survey of economists on Friday afternoon, and within the central bank’s target band of two to four percent. Price pressures have waned since touching a nine-year high in September, thanks to government measures to boost food supplies.
This augurs well for peso government bonds, which gained 0.4 percent in February, the seventh-best performer among 34 sovereign markets tracked by Bloomberg. Waning price pressures will boost real yields on Philippine debt, particularly as the central bank remains in hawkish mode for now.
Ten-year peso bonds offer a real yield of two percent, compared with about five percent for Indonesian securities and Indian debt.
But for peso bears, the outlook is less certain.
“Peso outperformance is unlikely to persist,” said Divya Devesh, head of Asean and South-Asia FX research at Standard Charted Bank in Singapore. “Monthly trade deficits are likely to persist, leading to strong dollar demand onshore. In addition, monetary policy is likely to remain unchanged in 2019, with risks skewed towards rate cuts.” — Bloomberg

Percentage of Women in Senior Management Positions

March 4, 2019 | 12:30 am

A NEW SURVEY showed 37% of senior management positions at Philippine companies are occupied by women, well above the global average of 29%. Read the full story.

Aboitiz gets original proponent status for Laguindingan airport

March 4, 2019 | 12:08 am

By Denise A. Valdez
Reporter
ABOITIZ INFRACAPITAL, Inc. has been awarded original proponent status (OPS) by the Civil Aviation Authority of the Philippines (CAAP) for its proposal to develop the Laguindingan airport, a top official from the Department of Transportation (DoTr) said.
“Laguindingan, may OPS na… It was only (Tuesday) afternoon that was issued by the CAAP Board. So since may OPS na, babalik sa DoTr sandali, tapos ibabato natin sa NEDA [Since there’s OPS already, it will be given to the DoTr, then we’ll give it to the National Economic and Development Authority (NEDA)],” Transportation Undersecretary for Aviation Manuel Antonio L. Tamayo told reporters on Wednesday.
Last year, Aboitiz InfraCapital submitted to the DoTr a P42.7-billion unsolicited proposal to operate, maintain and expand the Laguindingan airport in Misamis Oriental. The proposal was evaluated by the CAAP Board, the DoTr agency directly in charge of the airport.
Transportation Undersecretary for Planning Ruben S. Reinoso, Jr. said on Sunday the DoTr is still waiting for the documents from the CAAP Board for it to evaluate before endorsing to the NEDA Investment Coordination Committee (NEDA-ICC).
“I still don’t have copy. CAAP as grantor should submit NEDA-ICC requirements to DoTr for review and endorsement to NEDA,” he said in a text message when asked for an update on the OPS.
Mr. Tamayo said the target of the DoTr is to conduct the Swiss challenge for the Laguindingan airport by the second quarter. Under a Swiss challenge, other firms can submit counter proposals. As the original proponent, Aboitiz InfraCapital will have the right to match the new offer.
“We’re talking about it already. Even the composition of the technical working group, it has been formed… Basta kami nagmamadali [We’re rushing],” he said.
Last September, Aboitiz InfraCapital also received OPS for its unsolicited proposal for the New Bohol (Panglao) International Airport. It said earlier this year that it wants to start operating both the Laguindingan and Panglao airports by end-2019.
The two airports were part of the P148-billion bundled proposal of Aboitiz InfraCapital in April 2018 to develop regional airports, together with the Iloilo International Airport and the Bacolod-Silay Airport. It was rejected by the DoTr, which preferred to handle separate proposals for each airport.
Aboitiz InfraCapital is also part of the consortium of seven conglomerates proposing to rehabilitate the Ninoy Aquino International Airport (NAIA). The so-called NAIA consortium received OPS for the project in September.

Office vacancy rates to reach 7.1% this year

March 4, 2019 | 12:07 am

By Arra B. Francia
Reporter
AVERAGE VACANCY rate for office spaces in Metro Manila will likely hit 7.1% this year as more than 800,000 square meters (sq.m.) of new office supply is seen to enter the market in 2019, according to real estate services firm KMC Savills.
“Vacancy could hit 7.1% in the short term, largely caused by Quezon City,” KMC Savills Managing Director Michael McCullough said during the company’s fourth-quarter office briefing in Taguig City last week.
Quezon City currently has the highest vacancy rate among Metro Manila office markets at 16.4% as of the end of the fourth quarter of 2018, compared to 8.7% during the third quarter. This could further rise as it has 92,048 sq.m. of office spaces in the development pipeline until 2022.
KMC Savills Research and Consultancy Manager Fredrick H. Rara said the largest supply pressure will come this year, before eventually easing in 2020. The company said 746,900 sq.m. of new Grade A office supply were completed in 2018, while only less than 600,000 sq.m. are set to be finished in 2020.
With the high vacancy rate in Quezon City, rents also declined by 0.2% to an average of P747.4 per sq.m. every month.
“But in the long term, our data shows that vacancy will be manageable. Anything less than 10% is very good,” Mr. McCullough said.
While recording a two percent vacancy rate by the end of the fourth quarter, Ortigas Center is seen to post double-digit vacancy rates this year as new supply will come in from the Podium West Tower in the first quarter.
“Although elevated vacancies typically pull rental growth down, improvement in the quality of the overall stock in Ortigas Center should correct the rental disparity between the established central business districts,” according to KMC Savills.
Recording the second-highest vacancy rate by the end of the fourth quarter was Bonifacio Global City, following the addition of 26,000 sq.m. from Century Properties Group, Inc.’s Asian Century Tower.
The higher vacancy rate, however, did not temper the rise in rental rates at 5% year on year, averaging at P972.8 per sq.m. due to the sustained demand from the outsourcing and offshoring industry.
The Bay Area recorded the lowest vacancy rate at the end of the fourth quarter at only 0.6%, which KMC Savills attributed to the steady demand from Philippine offshore gaming operators.
“The Bay Area is a really interesting story because of the entertainment district, there are three casinos currently fully functioning and a fourth one under construction. I think it’s set to exceed Makati’s Grade A office in the coming years, and given how close it is to the airport and infrastructure projects, it will really be a force to be reckoned with,” Mr. McCullough said.