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Feb. M3 growth slowest in 6 years at 7.1%

MONEY supply growth eased further in February to post its slowest level in over six years, in line with softer growth in bank loans, the Bangko Sentral ng Pilipinas (BSP) said yesterday.
Domestic liquidity or M3, which is the broadest measure of money supply, grew 7.1%% year-on-year to P11.497 trillion. This was lower than the upwardly-revised 7.7% growth recorded in January, and the weakest since September 2012.
Money supply rose 0.7% month-on-month.
“Demand for credit eased but remained the principal driver of money supply growth,” the central bank said in a statement.
Net claims on the central government accelerated in February, posting a 8.3% rise against the 5.3% increase the previous month. However, domestic claims grew 11.7%, easing from January’s revised 12.4%, but still supported by strong borrowing by the private sector.
Meanwhile, net foreign assets (NFA) expressed in pesos declined 1.5% year-on-year after posting a 1.2% decline in January. NFAs of banks fell further even as foreign assets grew as a result of higher loans and investment in debt papers.
On the other hand, the central bank’s NFA position continued to expand for the month driven by foreign exchange inflows mainly from overseas Filipinos’ remittances, business process outsourcing receipts as well as foreign portfolio investments.
BSP officials voted to keep benchmark rates steady at the 4.25-5.25% range during their March 21 policy meeting, pointing out the need to be cautious even as with inflation steadily dropping.
The market is expecting a reduction in the 18% reserve requirement ratio (RRR), with a one percentage point cut expected to release around P90-100 billion into the economy.
Bank lending growth also slowed for a fourth straight month, dragged down by softer demand from corporate borrowers.
Outstanding loans rose 13.7% year-on-year in February, easing from the 15.3% pace in January. However, they declined 0.17% month-on-month.
Factoring in reverse repurchase agreements, bank lending growth also softened to 13.9% from 14.5%.
Production loans, accounting for the bulk of credit at 88.4%, grew at a slower pace of 13.6% in February from 15.5% previously.
Construction loans continued to see the biggest rise at 44.4%, followed by financial and insurance activities (22.2%); wholesale and retail trade, repair of motor vehicles and motorcycles (14.6%); and manufacturing (13.7%).
All other industries also received increased credit lines during the period, the BSP said, except professional, scientific and technical activities which slipped by 25.2%, as well as in other community, social and personal activities, declining 5.1%.
The slower pace of corporate borrowing was somehow tempered by the growth in household credit which accelerated by 14.9% from the upward-revised 13.2% in January.
This was due to a sustained growth in automobile loans as well as expansion of salary-based consumption loans and other types of credit.
“The BSP will continue to ensure that the expansion in domestic credit and liquidity proceeds in line with overall economic growth while remaining consistent with the BSP’s price and financial stability objectives,” the statement from the central bank read.
ING Bank N.V. Manila Senior Economist Nicholas Antonio T. Mapa said that money supply growth and bank lending continued to decline, with domestic liquidity “grinding to single digit growth for half a year now.”
“Market players have for some time noted some tightening conditions in domestic liquidity, pointing to both the supply (M3) and the demand (short term TD rates) as data to show this assertion,” Mr. Mapa said in an e-mail.
“BSP has vowed to remain data dependent in its dealings and has promised to deliver a RRR reduction for as long as data supports it.” — Karl Angelo N. Vidal

Thrift banks to expand outreach to unbanked Filipinos

THE Chamber of Thrift Banks (CTB) said its members will seek to reach more unbanked Filipinos through new technology, in compliance with a Bangko Sentral ng Pilipinas (BSP) mandate to increase inclusivess.
During its annual annual convention in Makati City on Friday, new CTB President Cecilio D. San Pedro said the thrift banking sector is well-positioned to reach out to unbanked persons.
“Thrift banks’ role within the communities that we serve puts us at a fundamental position that can contribute significantly to broadening access to financial services,” Mr. San Pedro said in a speech yesterday.
“We shall align our direction with the government’s agenda to decentralize economic activity and increase infrastructure development which is is targeted to boost economic growth through financial inclusion and digitalization.”
On the sidelines of the event, Mr. San Pedro told reporters: “We want to make sure that we serve those clients that are not tapped by the big banks. With that in mind, we fully support the central bank’s move to make sure that we reach out to the unbanked.”
According to the BSP’s latest Financial Inclusion Survey conducted in 2017, only 22.6%, or some 15.8 million Filipino adults, maintain a formal bank accounts. The unbanked cited lack of money and lack of need to have an account as the main reasons.
To address this, the central bank developed the National Retail Payment System (NRPS) framework with the objective of promoting a “cash-lite” economy where financial transactions will move away from cash and checks toward electronic fund transfers (EFT) and digital wallets.
The BSP targets to raise the share of digital payments to 20% of the total transactions by 2020 from 1% in 2013.
Mr. San Pedro said more savings lenders are tapping the Philippine EFT System and Operations Network (PESONet) as well as InstaPay, two automated clearing houses (ACH) under the NRPS framework.
“Marami na (there are many) but it’s all dependent on timing, capital requirement and how member banks are going to approach it,” he added.
PESONet collates transfer instructions and are processed in batches and are made available by the end of the banking day. Meanwhile, InstaPay is another ACH which processes real-time transfers worth P50,000 or lower, with the money credited to receivers after a few seconds.
The central bank targets to shift cash-heavy transactions to digital avenues — which, in turn, should help broaden access to financial services and spur increased economic activity.
Mr. San Pedro added that “most” of the thrift banks are gearing towards harnessing financial technologies (fintech), with some lenders already implementing them.
“With all these fintech companies around, all the new technologies that’s being introduced, we are all prepared for that,” said Mr. San Pedro, who is also the president of Sterling Bank of Asia.
According to central bank data, the thrift banking industry’s assets stood at P1.245 trillion in 2018, up 6.6%. Gross loans were at P916.02 billion, up 6.73%. — Karl Angelo N. Vidal

Peso stronger on risk-on sentiment amid developments in US-China trade talks

peso dollar
PHLSTAR/MIGUEL DE GUZMAN

THE peso strengthened against the dollar on Friday, as investors sought to park their funds in riskier currencies pending the outcome of the United States-China trade negotiations.
The peso ended the week at P52.50 against the dollar, against P52.75 on Thursday.
The peso traded stronger the whole day, opening the session at P52.70. The low for the day was P52.74, and the high was P52.46.
Trading volume declined to $901.77 million from the $929.72 million that changed hands the previous session.
“The peso appreciated today due to risk-on sentiment following the resumption of trade talks between the United States and China,” a trader said in an e-mail.
Reuters reported that US Trade Representatives Robert Lighthizer and Treasury Secretary Steven Mnuchin were in Beijing for a meeting with Chinese officials.
“We had a very productive working dinner last night, and we are looking forward to meeting today,” Mr. Mnuchin said.
The negotiations are expected to continue next week in Washington.
“Yes, the US-China trade talks contributed to the risk-on sentiment of the market,” another trader said in a phone interview.
He added that investors saw an opening to put their money after adopting a risk-off stance in the past few days.
“Exchanges are all green and that signals that there is already risk-on sentiment in the market, thus a weaker dollar.” — Karl Angelo N. Vidal

Window dressing, US-China trade hopes lift PSEi

THE MAIN INDEX ended March on a positive note, even as it was down from the previous week, partly on month-end window dressing and in step with other bourses that took heart from a fresh round of Sino-US trade talks well into next week.
The Philippine Stock Exchange index (PSEi) gained 44.53 points or 0.56% to finish 7,920.93 on Friday — though 1.15% down from its 8,013.42 finish a week ago on March 22 — while the all-shares index went up by 20.73 points or 0.42% to end 4,864.17.
“Philippine shares closed on an upbeat pace to end with a quarterly gain of more than six percent as part of window dressing and while investors watched developments between US and China. Steven Mnuchin and Robert Lighthizer are now in Beijing with China Vice-Premier [Liu He] heading to the US next month,” Luis A. Limlingan, Regina Capital managing director, said in a mobile phone message.
“Sentiment was also pushed from other regions. US markets recovered from earlier losses as investors focus on trade talks between China and the US, with US trade delegates in Beijing this week. This overshadows the weakness from a weaker US macro data and another huge depreciation in the Turkish Lira.”
A Stock Market Weekend Recap prepared by RCBC Securities, Inc. Research Analyst Fiorenzo D. de Jesus noted that “[t]he local market continued its advance, taking cue from Wall Street’s gains last night and supported by a surge in net foreign buying to almost P1.6 b[illion].”
He noted that “foreign funds picked up their buying” of International Container Terminal Services (ICTSI) that yielded P381 million in net foreign buying; as well as Ayala Land, Inc., P180 million; SM Prime Holdings, Inc., P343 million and JG Summit Holdings, Inc., P114 million.
Revived hopes from a fresh round of US-China trade talks fueled Wall Street’s rise on Thursday, with the Dow Jones Industrial Average rising 0.36% to 25,717.46, the S&P 500 increasing also by 0.36% to 2,815.44 and the Nasdaq Composite Index adding 0.34% to 7,669.16.
Much of Asia was up as well on Friday, with Japan’s Nikkei 225 and Topix, the Shanghai SE Composite, Hong Kong’s Hang Seng, South Korea’s KOSPI and India’s S&P BSE Sensex Index rising by 0.82%, 0.56%, 3.2%, 0.96%, 0.59% and 0.33%, respectively.
Five of the six sectoral indices at home gained: services by 21.65 points or 1.36% to 1,608.34, property by 47.99 points or 1.18% to 4,115.57, industrials by 62.2 points or 0.53% to 11,720.35, financials by 7.87% or 0.44% to 1,762.71 as well as mining & oil by 15.09 points or 0.19% to 7,930.78.
Only holding firms fell, by 10.09 points or 0.13% to 7,736.37.
Fifteen of Friday’s 20 most active stocks gained, led by MacroAsia Corp. whose stock increased by 5.16% to P22.40 apiece, extending the previous day’s gains after reporting strong P1.2-billion 2018 core net income that was a fourth bigger year-on-year.
It was followed by Max Group, Inc. that went up 4.7% to P13.80; ICTSI which rose 2.51% to P130.70; JG Summit which climbed 2.09% to P63.50 and Ayala Land that added 2.05% to P44.90 each.
Four on the same list dropped: GT Capital Holdings, Inc. by 4.95% to P931.50 apiece; SM Investments Corp. by 1.16% to P934; Metropolitan Bank & Trust Co. by 0.13% to P79.90 and Alliance Global Group, Inc. by 0.12% to P16.16 each.
Bank of the Philippine Islands finished Friday flat at P84.20 apiece.
Investors abroad remained predominantly optimistic for the seventh straight trading day, yielding P1.589-billion net buying that was more than double Thursday’s P699.008 million and was the biggest net inflow in those seven sessions.
Still, stocks that declined outnumbered those that gained 112 to 97, while 35 others ended flat.
Trading volume grew to 1.705 billion shares worth P6.679 billion from Thursday’s 900.566 million shares worth P5.086 billion. — with Reicelene Joy N. Ignacio

No filter: the challenging world of creative entrepreneurship

Do what you love and you’ll never have to work a day in your life. You might have heard this quote and its various iterations repeated all throughout your school years, or circulating on your social network feeds. When you think about it, it seems to make sense. How fun and awesome must it be to do your hobbies for a living, instead of being stuck in a cubicle for eight hours?

Creative jobs like game developer or photographer definitely seem like a more enjoyable alternative. But contrary to popular belief, they’re not always as peachy-keen as they seem.

During the Youth Entrepreneurship Summit held last March 8 at the World Trade Center, creative entrepreneurs discussed why creative work is still hard work, and how one can innovate in such a competitive industry.

(Not so) risky business

Choose a creative skill and make a business out of it: sounds pretty easy, right? Unfortunately, it’s not that simple. While many creative entrepreneurs have “creative” down pat, they tend to forget the other half of the equation.

Dan Matutina, graphic designer and illustrator, realized this when he and his partners — all creatives — founded Plus63 Design Co., a design studio. “We thought, like what we all thought when we were young, that [if you have] passion and you’re doing what you love, that’s enough,” he said. “Then you realize that doing what you love is just one aspect of it. Having the skills and also the business know-how… are also important.”

This may be a familiar scenario for many creatives, eager to pursue their passion but lacking the entrepreneurial mindset to sustain it. But the good thing is that creatives aren’t alone. There are people out there who can fill in the business void so that creatives can focus on their work.

For Matutina, he found mentors among established designers from whom he could ask solid business advice. Shaira Luna, a professional photographer, hired an agent after almost a decade of handling the business on her own. “[I realized that] I needed an agent to help me not just with the accounting but also talking to clients and also heading the meetings,” she said. “So I finally caved in and said, ‘I just want to shoot and want someone to take care of the business side for me.”

True grit

The process of growing the business with new partners can get tough, and that’s not yet considering the different challenges that any business can face. Therefore, it’s important to steel one’s nerves and be proactive.

“[Creative entrepreneurship] is both left-brain and right-brain thinking,” said Niel Dagondon, chairman of CIIT College of Arts and Technology. “So I had to complement my team and partner with people who are good with what they do… You need to be a complete package in order to be successful in creative entrepreneurship.”

Some creatives may find the idea of on-boarding new people quite unnerving, especially those who have a different mindset from their own. But this is an essential step if they want to keep their business sustainable.

“Grit is very important, being able to see things through whether it’s a failure or a success,” said Erwan Heusaff, founder of digital media production company The Fat Kid Inside. “Because a lot of times in creativity, you’re wearing your heart on your sleeve, so you need to be ready for heartache. And you need to be smart enough to regroup after that and figure out what you did wrong and how to move forward from it.”

An education

But it’s not enough to just learn from one’s mistakes. The creative industry is fast-paced and ever-changing, so it’s vital to continue innovating so that you don’t get left behind. Fortunately, there are many ways to do so — and everyone has their own unique way. For instance, Matutina draws fresh inspiration from non-design-related media. Dagondon makes it a consistent habit to read books instead of wasting time on unimportant things.
Whatever the techniques, it’s listening and humility that will ultimately drive a creative entrepreneur to innovate. “I think there’s a misconception that the only voice a creative should listen to is himself. That’s not true,” said director, producer, and writer Pepe Diokno. “You have to listen to many people… Creative work is being able to manage that collaboration through listening.”

He adds, “The key to learning from failure and also listening is humility. You have to be humble enough to know that you don’t have all of the ideas, and that you will always have more to learn.”

Viloria, Trinidad rule Go For Gold skateboarding Luzon leg qualifier

ABIGAIL VILORIA and Arianne Mae Trinidad have trained their sights on the 2019 Go For Gold Skateboarding National Championships as their passport to bring their act in the Southeast Asian Games.
Both earned the rare opportunity to be in the national finals on Aug. 24-25 in Sta. Rosa, Laguna after topping the women’s downhill and game of skate events during the Luzon qualifying leg recently.
Trinidad defeated Jennica Eunesse Gulapa and Gwen Cabangon in the game of skate held in Robinson’s Place Novaliches while Viloria, who hails from Cavite, was the fastest competitor in the women’s downhill race.
Airish Tenorio of Camarines Norte and Julieann Hilario of Batangas placed second and third behind Viloria, but they also booked a ticket to Sta. Rosa since the podium finishers are all qualified to the national championships.
“I believe skateboarding is a great sport to encourage our youth. It’s not so expensive and can be done almost anywhere,’’ said Go For Gold godfather Jeremy Go.
“We hope that our athletes can serve as role models to keep Filipino kids in sports and out of trouble,’’ added Go, also the vice president for marketing of Powerball Marketing and Logistics Corp., the company behind the Go For Gold program.
The national finals of the 2019 Go For Gold Skateboarding Championships also serves as the national qualifier for the SEA Games, which the Philippines will host on Nov. 30-Dec. 11.
In the men’s division, Charles Louise “CL’’ Paje ruled the game of skate after eliminating the equally talented and fearless Christian Louie Enconado and Mark Garcia.
Tomas Romualdez of Laguna was dauntless in the men’s downhill held in Taysan, Batangas to subdue fellow Laguna skater Sebastian Chanco and Duke Pandeagua of Camarines Norte.
According to skateboarding chief Monty Mendigoria, the Visayas leg will be held in Cebu City on April 6-7 where Asian Games gold medalist Margielyn Didal will inspire the participants right in her hometown.
Mendigoria, president of the Skateboarding and Roller Sports Association of the Philippines, said they will discover the best skaters in Mindanao when the regionals travel south to General Santos City on May 25-26.

Alvarez, Johnson not short in motivation heading into respective ONE Japan fights


By Michael Angelo S. Murillo, Senior Reporter
TOKYO — Doing mixed martial arts for quite a long time now and succeeding and having practically won everything in it, one would think that it is all going through the motions now for legends “The Underground King” Eddie Alvarez and Demetrious “Mighty Mouse” Johnson.
But that is hardly the case, more so that they are embarking on a new journey in their illustrious careers.
Part of ONE Championship’s first-ever event in Japan, “A New Era,” happening at the Ryogoku Kokugikan here on March 31, Messrs. Alvarez and Johnson said they remain go-getting and excited to showcase their talent in this part of the world.
The two fighters, who last fought in the Ultimate Fighting Championship (UFC), are to take part in the ONE Championship Grand Prix in the lightweight and flyweight divisions, respectively.
Mr. Alvarez (29-6) of the United States will battle Timofey Nastyukhin of Russia while American Johnson faces up with hometown bet Yuya Wakamatsu.
“So 13 years ago I had my first trip to Japan. I was a 23-year-old kid and I just remember being in a plane going here, excited to go on another country to fight to a different audience and see you new things. Fast-forward to 13 years and I still have the same excitement inside, There is a new feeling inside and the excitement of winning another world title,” said Mr. Alvarez of his upcoming fight, his first with ONE after signing with the promotion last year, at the press conference for A New Era held on Thursday at the Ritz-Carlton Hotel here.
“I would like to thank ONE for bringing me back here. This is where I made a name for the first time, in front of the Japanese audience, representing America. This is where exactly I’ll be, right here,” he added.
The 35-year-old Alvarez went on to say that the “mission” is still the same for him, which is to dominate and win.
“It’s always my intention to dominate my opponent. I’m here to dominate from start to finish. I’m super focused on the grand prix. I’m not thinking of anything. I have my eyes on the world title. It’s something that I don’t have,” said Mr. Alvarez, who was last seen fighting in the UFC in July 2018 against Dustin Poirier.
For longtime UFC flyweight champion Johnson (27-3-1), meanwhile, his fight with Mr. Wakamatsu is something he is viewing with much significance, particularly how it is part of his evolution as a fighter.
“For me this is the next step as an evolution of an athlete. My opponent is a great athlete and it’s going to be interesting. It’s long time coming to fight in front my Japanese fans,” said Mr. Johnson.
Mr. Johnson, 32, said that he is not leaving anything to chance and is working hard with his team to come up with a favorable result in his ONE debut.
Like Mr. Alvarez, the Kentucky native Johnson hooked up with ONE Championship last year after spending eight years with the UFC where he spent majority of the time as the flyweight champion, successfully defending his title 11 straight times before losing it to Henry Cejudo in August last year.
Headlining ONE: A New Era is the world lightweight title clash between champion Eduard Folayang and challenger and former champion Shinya Aoki of Japan.
Co-headliner of the fight is the champion-versus-champion battle between women’s strawweight world champion Xiong Jing Nan of China and women’s atomweight champion Angela Lee of Singapore for the former’s belt.
Also part of the card is the middleweight world championship collision of champion Aung La N Sang of Myanmar against Ken Hasegawa of Japan as well as the world bantamweight title clash of champion Kevin Belingon of the Philippines against Brazilian Bibiano Fernandes.
Filipino flyweight Danny Kingad is also set to see action in one of the brackets in the flyweight grand prix.
The event will be available live for viewing on the ONE Championship app while in the Philippines it can be seen at ABS-CBN S+A beginning at 6 p.m. and iWant Sports.

Business Expectations Survey

INVESTOR and consumer sentiment received a huge lift as the year opened, riding expectations of more business and job opportunities, according to latest results of quarterly surveys which the Bangko Sentral ng Pilipinas (BSP) released on Thursday. Read the full story.
Business Expectations Survey

Business, consumer sentiment improves

By Melissa Luz T. Lopez
Senior Reporter
INVESTOR and consumer sentiment received a huge lift as the year opened, riding expectations of more business and job opportunities, according to latest results of quarterly surveys which the Bangko Sentral ng Pilipinas (BSP) released on Thursday.
Business confidence recovered in the first quarter to end four consecutive quarters of decline, while Filipino households grew less pessimistic towards prospects for 2019.
Business Expectations Survey
“Business confidence is supported by strong domestic demand with brisker business due to election-related spending, increase in orders and consumer purchases, and continued infrastructure and development projects,” Redentor Paolo M. Alegre, Jr., director of the BSP’s Department of Economic Statistics, said in a press briefing at the central bank headquarters yesterday.
Investor sentiment improved to 35.2% in January-March from 27.2% last quarter to mark the highest level since the second quarter of 2018, according to the Business Expectations Survey (BES) results released yesterday.
The central bank said companies were more bullish across the board, riding on expectations for more business activity ahead of the May 13 midterm polls which will trigger increased orders and consumer purchases.
“The election definitely encourages economic activity and also encourages more positive sentiment among business respondents,” BSP Deputy Governor Diwa C. Guinigundo said in the briefing.
Bigger government infrastructure spending also contributed to the rosier outlook, despite delays in enacting the P3.757-trillion national budget. Other factors were perceived enhancements in business strategies, as well as expansion plans and new product lines.
Across businesses, importers were the most upbeat during the quarter as they see more raw materials become available and increased demand for construction equipment, the BSP said. Exporters’ outlook also improved as they see increased orders from abroad, while firms serving the local market said they will likely ride the tide given robust consumer demand and better prices, as inflation sustains its descent.
From a nine-year-high 6.7% in September and October, inflation went down to 3.8% in February to return to the state’s 2-4% goal.
Across sectors, construction firms emerged as the most bullish as they expect more projects rolled out during the dry season. Most other industries reported better prospects for the quarter expect agriculture, fishery and forestry which expect lower production during the lean season.
CONSUMERS LESS PESSIMISTIC
Meanwhile, more households grew positive about their finances during the quarter, but were still outnumbered by pessimists this quarter.
This drove the consumer confidence index to -0.5%, rising from -22.5% in the fourth quarter to log the biggest quarter-on-quarter leap since the Consumer Expectations Survey (CES) started in 2007.
The better-but-still-negative outlook stemmed from anticipated additional or higher income, more jobs, a better peace-and-order situation, and “good governance,” Mr. Alegre said, citing survey responses.
Filipinos from low, middle and high-income groups all said they see improvements in the overall economy, household finances and family income. They also see better conditions for April-June, as well as the year ahead.
More respondents even said that they see the current quarter as a good time to make big-ticket purchases, particularly real property, cars and motorcycles.
The better consumer and investor sentiment is expected to lift overall economic prospects, possibly buoying gross domestic product growth this quarter.
“This suggests that if the expectations of business is rising, 67% of the time, growth may follow in the same direction,” Mr. Alegre said.
Businesses had a more favorable view on the economy, seeing credit conditions still tight but accessible, inflation slower, and the peso stronger. In contrast, consumers expect inflation to keep rising, interest rates to go up and the peso to weaken further.
The BES was conducted Jan. 22-March 19 among 1,496 firms, while the CES covered 5,396 households on Feb. 5-16.

Gov’t to borrow less next quarter

By Karl Angelo N. Vidal
Reporter
THE GOVERNMENT plans to borrow P315 billion from the domestic market next quarter through a mix of short and long-term securities, lower than the amount offered in January-March and in last year’s second quarter.
In a memorandum posted on its Web site on Thursday, the Bureau of the Treasury said it will auction off P195 billion in Treasury bills (T-bill) and P120 billion worth of Treasury bonds (T-bond) between April and June.
The planned borrowing next quarter is lower than the P360 billion the government offered in January-March as well as the P325 billion placed on the auction block in last year’s second quarter.
Broken down, the Treasury plans to raise P15 billion per offer through T-bills — P4 billion in 91-day tenor, P5 billion in 182-day debt, and P6 billion in 364-day bills — which will be sold in five auctions in April and four each in May and June.
This quarter, the Treasury offered P20 billion worth of T-bills weekly, divided into P6 billion each for the three- and six-month debt papers and P8 billion for the one-year instruments.
The government will also issue a mix of T-bonds next quarter worth P20 billion per auction. The Treasury will offer 10- and 20-year papers on April 11 and 25, followed by seven- and 10-year notes on May 16 and 30, as well as 20- and seven-year instruments on June 13 and 27.
The state plans to borrow P1.189 trillion in 2019 to help fund its P3.757-trillion budget. Of the amount, 75% will be sourced domestically while the balance will be from foreign creditors.
The national government borrows from local and foreign sources to fund increased spending — especially on infrastructure and social services — and boost economic activity.
Sought for comment, a bond trader said the preference of the Treasury to offer debt papers with longer tenors “will help the yield curve since the issuance for the second quarter is on the long term… Clients would like to lock in the rates in the long end.”
Another trader said that the demand for longer tenors reflects expectations that inflation will be contained within the central bank’s 2-4% target range.
“Given that view, people would rather lock in rates for longer tenors than have a reinvestment risk when you invest on short-term placements,” the trader explained in a mobile phone message.
The Bangko Sentral ng Pilipinas, which sees inflation continue a softening seen since November last year from a nine-year-high 6.7% clocked in September and October, last week trimmed its full-year forecast average for 2019 to three percent from 3.1% previously.
“The inversion of the yield curve is turning out to be a global scenario. Global growth slowdown is triggering demand for safe-haven assets such as bonds,” the second trader added.
The budget deficit is projected to widen to an equivalent of up to 3.2% of gross domestic product in 2019, from a programmed three percent and actual 3.2% last year, to accommodate increased government spending particularly on infrastructure.

February registrations pull down BoI approvals in first two months

THE BOARD of Investments (BoI) — the government’s lead investment promotion agency — saw total value of projects approved drop in February, which one official attributed to high base effects and one economist blamed on “spillover effects” of fast inflation, government moves to change the fiscal incentives system and a generally trying global economic environment.
Preliminary BoI data showed total project cost dropping 95.21% to P3.848 billion in February from P80.309 billion a year ago, with foreign projects nearly halved to P340.33 million from P669.2 million and local ones falling by 95.6% to P3.508 million from P79.64 million.
Total number of projects was halved to 15 from 34, with projected employment down 61.89% to 1,561 jobs from 4,096.
Projects approved last month were led by the Allied Care Experts Medical Center’s P970-million new general hospital in Tacloban City; Pueblo de Oro Development Corp.’s P835.62-million expansion of its low-housing project in San Fernando, Pampanga; Asian Alcohol Corp.’s P824.82-million bioethanol production project in Negros Occidental; Megaworld Corp.’s P338.18-million tourist accommodation, Hotel Lucky Chinatown, in Binondo, Manila; and Cebu Landmasters, Inc.’s P323.18-million low-cost housing project in Cagayan de Oro City.
BoI-approved projects dropped 22.71% to P101.718 billion in this year’s first two months from P131.611 billion a year ago, with local projects down a third to P90.791 billion from P130.909 billion but foreign projects growing more than 15-fold to P10.927 billion from just P702.28 million.
Trade and Industry Secretary Ramon M. Lopez, BoI chairman, said the decline was due to a “timing issue”, as some projects failed to make the monthly cut and were instead credited to March, and high base effects from last year.
He downplayed February’s drop saying: “Ang mahirap kapag, kunyare, four months ka na in a decline — ’yun ang may problema (What will be worrisome would be, for instance, four straight months of decline — that would be a problem).”
In a press release, Trade Undersecretary and BoI Managing Head Ceferino S. Rodolfo explained that “We have key projects in the pipeline, particularly in the area of power, that are still undergoing BoI’s rigorous evaluation process on technical and financial aspects; and equally important, on their compliance with requirements for BoI registration.”
“Given the projected investment costs, we are very optimistic of a renewed surge in total approvals in the next months,” he added.
“We remain optimistic of meeting the P1-trillion target set by our chairman… Secretary Ramon Lopez, for BoI this year. It is a timing issue as we cannot and we do not rush project approvals. The BoI makes sure that every peso of approved investments is qualified and is deserving to be registered.”
Sought for comment, Michael L. Ricafort, head of Rizal Commercial Banking Corp.’s Economics & Industry Research Division, said in an interview that the decline may have been caused by spillover effects of last year’s high inflation and interest rates “as investors may wait for borrowing/financing costs to go down further before aggressively borrowing again to finance new investments and expansion projects in able to further save on costs.” Other factors included uncertainty from government moves to change investors’ fiscal incentives and muted global economic prospects due to the Sino-US trade war, among others. — Janina C. Lim

PHL resilient to global slowdown — BSP official

THE PHILIPPINES should be able to weather a US recession and global economic slowdown, a senior central bank official told reporters on Thursday, citing scope for monetary authorities and economic planners to sustain rapid domestic-driven growth.
Bangko Sentral ng Pilipinas (BSP) Deputy Governor Diwa C. Guinigundo said robust domestic consumption should carry the economy through a potential US recession and an economic slowdown in Europe and China.
Signs of a possible US recession — as borne by inverted US Treasury yield curves as longer tenors fetched lower rates — and of a looming economic slowdown elsewhere have battered financial markets lately.
“The Philippines has sufficient space to address these important global challenges. In the broader sense, the economy continues to be resilient,” Mr. Guinigundo said in a press briefing yesterday.
“The trend of monetary policy is of course towards easing, and many countries with flexibility, I think, are more sanguine about being able to address these challenges.”
The United States Federal Reserve dialled back with dovish signals in last week’s policy meeting, saying it was no longer eyeing rate hikes for the rest of 2019 in order to support US economic activity. A low interest rate environment is expected to support economic activity by encouraging businesses to invest and households to spend.
For the Philippines, Mr. Guinigundo reinforced signals from newly seated Governor Benjamin E. Diokno that the BSP also sees ripening conditions for interest rate cuts.
“Assuming that inflation continued to come down and is firmly entrenched in the 2-4% target of both the BSP and the government, that will provide some flexibility for the monetary authorities to consider easing monetary policy. But of course, this is something that will require careful assessment of the data,” Mr. Guinigundo said.
The BSP kept interest rates wthin the 4.25-5.25% range in its March 21 policy review, saying that monetary authorities need to observe price trends even as inflation has been on a decline since November last year.
From a nine-year peak of 6.7% in September and October last year, inflation slowed in succeeding months to a one-year-low 3.8% in February, the first time in 12 months that the rate returned to the target band.
Mr. Diokno has said that he sees room to ease key rates, even as he noted that the BSP will first have to watch if the slowdown in price increases will be sustained. The BSP now expects full-year inflation to average three percent, a sharp drop from 2018’s 5.2%.
Mr. Guinigundo also said some $82.78-billion reserves and a “flexible” peso exchange rate provide buffers against external shocks, while a healthy, “sustainable” fiscal balance should help sustain overall economic expansion. — Melissa Luz T. Lopez

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