How PSEi member stocks performed — September 18, 2024
Here’s a quick glance at how PSEi stocks fared on Wednesday, September 18, 2024.
First energy-efficiency law incentives granted by BoI
THE Board of Investments (BoI) approved the registration of a solar project undertaken by Nakashin Davao International, Inc., making it the first business to be granted incentives offered under the Energy Efficiency and Conservation (EE&C) Act.
In a statement on Wednesday, the BoI said that Nakashin’s 519.2-kilowatt-per-hour solar photovoltaic rooftop system project is eligible for an income tax holiday (ITH) equivalent to 50% of its capital investment.
Estimated to cost P26 million, the project will be installed in the company’s food manufacturing facility. Nakashin produces agricultural and aquatic products for export to Japan and the European Union.
“The Department of Energy (DoE) has certified that Nakashin’s project meets the required standards for endorsement by the BoI, further supporting its alignment with the country’s sustainability goals,” the BoI said.
Signed in 2019, the EE&C Act aims to encourage the use of energy-efficient technologies to help achieve the Philippines’ renewable energy (RE) goals.
The government has set a target for RE to account for 35% of the power generation mix by 2030, rising to 50% by 2040.
“By adopting RE technologies like solar, companies in the Philippines can significantly reduce their electricity costs and reinvest savings into business expansion, boosting overall economic growth,” the BoI said.
“Nakashin’s solar rooftop system will not only reduce its dependence on grid-supplied electricity but will also provide reliable and sustainable power for its operations,” it added.
BoI Memorandum Circular 2023-006 provides that self-financed EE&C projects are entitled to the ITH incentive and duty exemption on imports of capital equipment, raw materials, spare parts, or accessories. — Justine Irish D. Tabile
Japan firms awaiting final form of CREATE MORE bill
FIVE Japanese firms are waiting on the passage of a bill that will amend the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act before making expansion decisions, the Department of Trade and Industry (DTI) said.
Speaking via Viber, Acting Trade Secretary Cristina A. Roque said five Japanese companies she met on a business mission to Tokyo last week were eager to know the final details of the CREATE to Maximize Opportunities for Reinvigorating the Economy (CREATE MORE) bill.
“They expressed that the Philippines is very important for them now, and that their business with the Philippines is growing. They look forward to more investments in our country,” Ms. Roque said.
She identified the five companies as the Japan Institute of Design and Promotion, Itochu Corp., MinebeaMitsumi, Inc., AEON Retail Co., Ltd., and Marubeni Corp.
“The CREATE MORE bill’s passage is a significant step towards improving the ease of doing business in the Philippines. We are confident that it will boost investor confidence and attract more foreign direct investment,” Ms. Roque said.
The Senate last week adopted and ratified a bicameral conference committee report on the CREATE MORE bill, which seeks to lower taxes on domestic and foreign companies to 20% from 25%.
Apart from lowered taxes, the bill also seeks to return to investment promotion agencies the power to approve or deny tax incentives up to a certain threshold and to provide a 100% deduction on power expenses incurred in a taxable year to address high power costs.
The bill will also impose a cap of 2% on registered business enterprise (RBE) local taxes based on gross income. RBEs will also be allowed to have a work-from-home setup for up to half of their workforce without losing their incentives.
In a separate statement, the DTI said that Itochu was encouraged to explore the development of new Philippine products for export, such as processed foods, fresh fruit, and Halal-certified products.
Itochu expressed plans to increase production and procurement of Philippine food products like dried mango, banana puree, and other processed fruits. — Justine Irish D. Tabile
Port projects for landing farm goods under study
THE Department of Agriculture (DA) said it is looking to tap private-sector partners to develop port facilities specialized in handling agricultural shipments.
Agriculture Secretary Francisco P. Tiu Laurel, Jr. said the DA’s aim is to bring about the more efficient movement of farm goods, which may require such shipments to bypass the Philippines’ congested major ports.
“We will come up with a proposal… on available sites,” Mr. Laurel told reporters, adding that he hopes to attract bidders or unsolicited proposals.
He added that the DA is planning to identify 17 candidate sites, estimating the potential cost at about P40.5 billion.
He said 10 main sites are estimated to cost P3 billion each, with the remaining seven expected to cost about P1.5 billion each.
“For the areas where no one is interested, then we will need to raise funding for that,” Mr. Laurel added.
He said that if the private sectors interested in assuming the risk of building port facilities for the government, “then let’s use other people’s money.”
The candidate sites include locations in Mindoro, Negros, Iloilo, southern Albay, and Batangas, he said.
The rerouting of goods to such ports, he said, have the potential to bring down fertilizer costs by 5%, corn by 5%, and feed for hogs by 10-15%.
Mr. Laurel has said that delays at the ports could foil government plans to bring down inflation via lower rice import tariffs.
“If we have the right number of agri-ports all over the country, the cost will go down, the price of rice, fertilizer, seed will go down. We really need the ports,” he said in a briefing earlier this week. — Adrian H. Halili
Peso slips as market awaits Fed rate cut
THE PESO inched down against the dollar on Wednesday due to stronger-than-expected August US retail sales data and ahead of the US Federal Reserve’s policy announcement.
The local unit closed at P55.72 per dollar on Wednesday, weakening by 2.5 centavos from its P55.695 finish on Tuesday, Bankers Association of the Philippines data showed.
The peso opened Wednesday’s session weaker at P55.80 against the dollar. Its worst showing was at P55.865, while its intraday best was at P55.715 versus the greenback.
Dollars exchanged inched down to $1.23 billion on Wednesday from $1.26 billion on Tuesday.
The peso was dragged down by a generally stronger dollar on Wednesday following the US retail sales report, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
“The dollar-peso closed higher mainly due to higher US retail sales last night amid expectations of a 50-basis-point (bp) rate cut by the Fed, helping the dollar recover from the low yesterday,” a trader said by phone on Wednesday.
For Thursday, the peso will move depending on the Fed’s decision, the trader said.
The trader sees the peso moving between P55.50 and P56 per dollar on Thursday, while Mr. Ricafort expects it to range from P55.60 to P55.80 against the greenback.
The dollar shed some of its overnight gains against the yen on Wednesday, as investors made last-minute tweaks to positions ahead of a policy meeting expected to initiate a US easing cycle, Reuters reported.
The Federal Reserve was expected to make its first interest rate cut in more than four years at 1800 GMT, with markets pricing a 61% probability of a 50-bp cut.
The dollar has fallen along with US yields since July and at $1.1129 per euro is not far from the year’s low at $1.1201 in anticipation of US easing at a clip, with more than 100 basis points of rate cuts priced in by Christmas.
The yen, up more than 12% since July, has been surging because the Bank of Japan — which sets policy on Friday — has been hiking rates at the same time as the Fed prepares to cut.
It rose about 0.4% to 141.80 per dollar on Wednesday, recouping about a third of an overnight drop. The yen was down 0.3% to 157.84 per euro.
Traders say the Fed’s tone as well as the size of the rate cut will drive the reaction in the foreign exchange market.
US retail sales unexpectedly rose 0.1% in August, data showed overnight, against forecasts for a 0.2% contraction and the Atlanta Fed’s closely followed GDPNow estimate was raised to 3% from 2.5%, supporting perhaps a case for a smaller Fed cut. — A.M.C. Sy with Reuters
PSEi drops on profit taking as Fed rate cut looms
PHILIPPINE STOCKS closed lower Wednesday due to last-minute profit taking as the market awaited the US Federal Reserve’s policy decision.
The benchmark Philippine Stock Exchange index (PSEi) slipped by 0.27% or 19.46 points to end at 7,155.90 on Wednesday, while the broader all shares index declined by 0.05% or 2.21 points to close at 3,847.96.
The PSEi climbed to as high as 7,219.17 intraday, but investors pocketed some of their profits, causing the index to end lower compared to Tuesday’s close.
“Last-minute profit taking sent the local market lower this Wednesday. Investors booked gains following the bourse’s two-day rally,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message. “Investors also took a cautious stance while waiting for the Fed’s policy decision.”
“The PSEi snapped its two-day winning streak as traders awaited the Fed’s rate cut decision, with a 63% chance of a 50-bp cut. However, some investors are concerned that a larger-than-expected cut could indicate underlying economic weakness,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
Asian stocks struggled as traders weighed the odds of a super-sized Federal Reserve interest rate cut later in the day, Reuters reported.
The chances of the Fed kicking off its easing cycle with a supersized cut of 50 basis points (bps) oscillated in Asia, retreating to 63% early in the day from 67% around the same time on Tuesday, before stabilizing around 65%, according to LSEG data.
Japan’s Nikkei stock average climbed as much as 1.3% early on in reaction to overnight weakness in the yen, but pared those gains to just 0.23% as of 0526 GMT as the currency rebounded.
China’s blue chips slipped 0.18% after coming back online following a holiday-extended weekend, and Taiwan also returned from a day off to tumble 1%. Australia’s benchmark sagged 0.1%.
MSCI’s broadest index of Asia-Pacific shares outside Japan slid 0.27%.
Back home, sectoral indices ended mixed. Financials went down by 0.66% or 14.60 points to 2,185.31; services declined by 0.59% or 13.03 points to 2,195.47; and industrials went down by 0.12% or 11.85 points to 9,548.83.
On the other hand, mining and oil climbed by 1.82% or 148.08 points to 8,251.26; property rose by 0.88% or 25.33 points to 2,905; and holding firms inched up by 0.01% or 1.15 points to 6,134.32.
Value turnover declined to P6.14 billion on Wednesday with 879.65 million shares switching hands from the P6.69 billion with 712.81 million issues traded on Tuesday.
Advancers outnumbered decliners, 125 to 68, while 60 issues closed unchanged.
Net foreign buying declined to P773.87 million on Wednesday from P806.45 million on Tuesday. — R.M.D. Ochave with Reuters
Visitor target maintained at 7.7M after falling behind pace in year to date
THE Department of Tourism (DoT) said it is sticking to its 7.7 million visitor-arrival target for 2024, noting that it seeking to offset the still-weak China market by tapping other Asian source countries as well as Eastern Europe.
At a briefing ahead of the Travel Sale Expo 2024 on Wednesday, DoT National Capital Region Supervising Tourism Operations Officer Ivannovich Dmitri Tan Agote said that the department is working to develop alternative source markets.
“Last year, we were able to surpass our target, so we are confident that we will be able to surpass it (again this year),” Mr. Agote said.
“Although we are not seeing a good forecast for the Chinese market because of geopolitical issues, we are working on developing other source markets like Indonesia, Malaysia, Vietnam, Eastern Europe, and India,” he added.
He added that the DoT is also working on attracting visitors from Singapore and the Middle East.
As of Sept. 10, the Philippines admitted 4.15 million international visitors, equivalent to 53.8% of the DoT’s target for the year.
Travel Sale Expo 2024 Chairperson Michelle G. Taylan said she expects the trade show to do strong business based on seasonal consumption patterns.
“Most of the visitors will be looking for gifts for their loved ones. We are expecting around 40,000 to 50,000 in foot traffic,” Ms. Taylan said.
Kicking off on Sept. 27, the three-day travel expo will be attended by 180 exhibitors occupying 200 booths at SM Megamall’s Megatrade Hall.
“There is still demand, and it’s really unstoppable,” she added.
Mr. Agote said that the department views visa requirements as a possible brake on international tourist arrivals.
“The DoT is actually working hand-in-hand with the Department of Foreign Affairs (DFA) to explore visa-free offerings, taking inspiration from other countries that are relaxing their visa requirements,” he said.
With regard to route development, he said the DoT is working with the airlines to decongest the Manila gateway hub.
Separately, he said the DoT supports the proposed value-added tax refund scheme for tourists, which will put the country on par with neighbors already offering such refunds.
“For us in tourism, this is very welcome, because other countries are very successful with it, and replicating it here in the Philippines will certainly yield positive results, specifically in terms of enticing more tourists to come,” he added. — Justine Irish D. Tabile
UK meat trade seen improving after Philippines lifts poultry import ban
THE resumption of poultry imports from the UK could boost meat shipments from that country if the produce is well-priced, an importers’ group said.
“Theoretically, it will result in more purchases from the UK. But it depends how competitive they will be,” Meat Importers and Traders Association President Emeritus Jesus C. Cham told reporters late Tuesday.
Last month, the Department of Agriculture issued Memorandum Order No. 34, which lifted the temporary ban on imports of domestic and wild birds and their by-products from the UK.
“They have to find their niche, because the problem with the UK is that their main market is the European Union and (its) domestic market, which pay better prices than what we are willing to pay,” Mr. Cham added.
British Ambassador to the Philippines Laure Beaufils said that the UK and the Philippines recently signed a regionalization agreement outlining what the trading partners will do in case of animal disease outbreaks in the UK.
Under the agreement, only areas in the UK which have reported bird flu cases will be barred from exporting to the Philippines, with those outside of the active zones not affected by any bans.
“That’s the whole idea of regionalization. So even where there may be a region where there’s avian flu, that will not detract from the ability of other regions to export. So the flow can be steady again which is ultimately what importers want here as well,” Ms. Beaufils told reporters.
The agreement ensures that trade with disease-free areas of the UK remain uninterrupted.
The Philippines banned imports of UK poultry and its by-products in 2021 due to an outbreak of H5N1 highly pathogenic avian influenza (HPAI).
“We’ve lost three years sadly, so I think importers and traders have first and foremost to get reacquainted with the UK market, with UK suppliers, and recognize the opportunity that is presented to them,” Ms. Beaufils said. — Adrian H. Halili
BIR lowers floor price for cigarettes, tobacco
THE Bureau of Internal Revenue (BIR) said it has lowered the floor prices for cigarettes and tobacco products, citing lower production costs.
The updated floor prices were based on current manufacturing costs as well as taxes, BIR Assistant Commissioner Jethro M. Sabariaga said via Viber.
“So, if the floor price based on latest issuance is lower than previous, the manufacturers must have submitted lower costs to produce cigarettes as taxes are statutory, and are constant,” he said.
The floor price is the minimum price of products and is set by the BIR, based on production costs, excise tax, and value-added tax.
Under Revenue Regulations No. 016-2024, the floor price of a pack of cigarettes was lowered to P78.58 from P114.6 last year. A ream of cigarettes now costs P785.8 from P1,146 previously.
The floor price for heated tobacco products was also cut to P60.11 per pack from P120.4 previously.
A 2 milliliter (ml) pod of nicotine salt now has a floor price of 180.67, down from P200 a year earlier. The floor price of a 10 ml bottle was set at P679.12.
Finally, a 10 ml bottle of classic nicotine costs P181.72, up from the P179.2 set a year earlier, while the floor price of a 30 ml bottle was P263.73, down from P403.2 previously.
“The above floor prices shall only be used as reference for taxation purposes in the absence of other documents/proof as to the actual price of the product that is higher than the identified floor price,” according to BIR regulations.
However, those selling below floor price will be fined as much as P500,000 and subject to up to six years’ imprisonment.
“We are warning all e-marketplaces, online sellers, retail sellers, suppliers and distributors that are selling vapes, cigarettes, and heated tobacco products below the floor price… this is a criminal violation penalized by imprisonment of the seller,” BIR Commissioner Romeo D. Lumagui, Jr. said in a statement. — Beatriz Marie D. Cruz
‘Green’ startups angling for tie-ups with major companies
PHILIPPINE ENERGY and climate-mitigation startups have grown since 2020, but will need the clout of major companies working in partnership to ensure access to financing, California-based business accelerator New Energy Nexus (NEX) said.
“Local entrepreneurs are best placed to understand how to deploy solutions in their communities and transition our economy more equitably to clean energy. It really does take a village to build and deploy these solutions,” NEX Philippines Country Director Brenda Valerio said in a media roundtable on Wednesday.
In a report, NEX tallied 91 clean-energy and climate startups in 2024, up 500% since 2020. Of these, NEX supports 85.
Nearly half of these startups are in the renewable energy generation industry, while others are involved in sustainable transportation or electro mobility, energy access, and waste management.
The report noted that while 34.1% of the startups are in Metro Manila, entrepreneurs from Northern Mindanao and Calabarzon are making inroads.
“We still have many energy issues. But at the same time, we can leverage entrepreneurs and innovators to address them,” Ms. Valerio said.
The report said that 18 startup companies have raised almost $1.3 million from loans, grants, competition rewards, crowdfunding, and angel investment.
Ms. Valerio said these kinds of energy startups need backing from major corporations to ensure financing.
“The Filipino clean energy innovation ecosystem has shown huge progress and promise in the past years, but the nascent space runs the risk of stalling because of lack of access to networks, funding, testing facilities, and skills training,” Ms. Valerio said.
The report recommended experimenting with “diverse funding mechanisms and de-risking strategies to create a more investor-friendly environment for both institutions and innovators.”
“This decade is the most critical decade in our transition, not just with trying to limit our greenhouse gas emissions so we can achieve the 1.5 degree of the UNFCCC (United Nations Framework Convention on Climate Change),” Ms. Valerio said.
The government is hoping to accelerate its energy transition, with a goal of increasing the share of renewable energy in the power mix to 35% by 2030 and 50% by 2040. — Sheldeen Joy Talavera
LRA backs bill minimizing court role in updating, cancelling titles, records
THE Land Registration Authority (LRA) said on Wednesday that it asked the Senate to ensure that a bill seeking to extend the land lease limit to 99 years for foreign investors to do away with the need to go to court in updating lease records.
At a Senate Justice and Human Rights committee hearing looking into Senate Bill No. 2717, which seeks to extend the lease of private land, not including agricultural land, to 99 years from 75, LRA acting Legal Division head Salvalente Thaddeus B. Elizalde asked the panel to give the Registry of Deeds (RD) the authority to automatically cancel lease annotations after 99 years to spare heirs the need to go to court.
He also asked legislators to give the RD the power to automatically cancel lease records in the event of “default” or failure to comply with the lease terms.
The Senate bill, which cited the need for foreign investors to enjoy longer leases, is classified as a priority measure by President Ferdinand R. Marcos, Jr.
Under the measure, which Senate President Francis G. Escudero filed in July, investors may also sublease a leasehold interest on a property, subject to the provisions of the original contract.
Sublease contracts with a term of less than 25 years are exempt from mandatory registration with the RD, but may be voluntarily registered for legal protection and public notice, based on the bill.
“The efforts of the government and the private sector, however, are stymied by a number of factors — among them is the unsecured property and leasehold rights that may not legally bind third parties due to lack of registrability and indefeasibility,” Mr. Escudero said in the bill’s explanatory note.
“Attracting foreign investors has been a long-standing priority of the government, spanning several administrations.” — John Victor D. Ordoñez
Favorable policies credited with RE investment surge
THE INFLUX in renewable energy investments are the result of policies that have created “a favorable business environment,” the Department of Energy (DoE) said.
“The DoE is committed to work with the private sector and our partner agencies in the National Government and local government units to ensure that these approved investments will ripen into beneficial and tangible energy infrastructure for our people,” Energy Secretary Raphael P.M. Lotilla said in a statement on Wednesday.
On Monday, the Board of Investments (BoI) said it approved 225 investment pledges worth P1.35 trillion this year, surpassing the P1.26 trillion tallied in 2023.
The bulk of the approved investments are in the energy sector, accounting for P1.29 trillion or 95% of the total.
The DoE said the lifting of foreign ownership restrictions was the catalyst behind most new renewable energy projects, alongside steps taken to expedite their development.
The DoE also aims to promote transparent and competitive pricing for renewable energy and enhance project bankability by offering a 20-year offtake guarantee through the Green Energy Auction Program.
Investments registered with the BoI enjoy income tax holidays, a preferential tax rate on gross income, zero-rated value-added tax, as well as tax- and duty-free imports of capital equipment, raw materials and supplies.
“We are working closely with banks and financial institutions, through the Bangko Sentral ng Pilipinas (BSP), to align the needs of developers with the objectives of financial institutions to effectively support these projects,” Mr. Lotilla added. — Sheldeen Joy Talavera