Fed policy makers signal turning point on US rate hike path
WASHINGTON/INDIANAPOLIS — The US central bank is flagging a turning point in monetary policy, as a Federal Reserve policy maker on Friday backed interest rate hikes in the “near term” but nodded to increasingly less certainty ahead.
Speaking at an event in Washington, Federal Reserve governor Lael Brainard said the economic picture was broadly positive but that risks were growing overseas and in the corporate debt markets at home. Tailwinds, she said, are fading as global growth slows, financial conditions tighten, and the boost from fiscal stimulus moderates.
“The gradual path of increases in the federal funds rate has served us well by giving us time to assess the effects of policy as we have proceeded,” she told the audience. “That approach remains appropriate in the near term, although the policy path increasingly will depend on how the outlook evolves.”
Speaking less than an hour later, St. Louis Federal Reserve bank president James Bullard repeated his call for the Fed to pause its current cycle of interest rate increases, saying the central bank may already be restricting the economy and noting that inflation expectations are drifting downward.
“We are at a crossroads in monetary policy,” said Mr. Bullard, who next year will be a voting member on the Fed’s policy-setting committee.
With inflation contained and at no risk of breaking out, investors are nervous the Fed has gone too far, he suggested.
Recent market developments and an expected further interest-rate increase means there is a “real risk” the Treasury market yield curve could invert this month, Mr. Bullard said. The yield curve is said to invert when interest rates on shorter-term debt rise above rates on longer-term debt, and historically portends a coming recession.
Traders continue to bet on a Fed rate hike in two weeks, when policy makers will next meet and, importantly, release fresh forecasts for the rate path for next year and beyond.
As of just a few months ago, Fed policy makers had indicated they would probably increase interest rates three times in 2019.
But with recent data showing the housing market slowing, job gains cooling, and inflation giving no signs of rising above the Fed’s two-percent target, there are plenty of “reasons for hinting at a pause in March,” Cornerstone economist Roberto Perli said in a note Friday.
Since the middle of last month, Fed policy makers have pointed to the need to reconsider what have been steady quarterly rate hikes for most of the past two years. It began with Fed Chair Jerome Powell telling Dallas Fed chief Robert Kaplan in an on-stage interview that policy makers may need to “slow down” amid growing uncertainty, just as someone feeling their way through a dark room filled with furniture would need to do.
Later that month he repeated that metaphor and noted rates are only “just below” a neutral level, a remark that sent markets soaring as traders took it to mean fewer interest-rate hikes ahead.
Then last week, in minutes of the Fed’s November meeting, policy makers were clear they are preparing to ditch a longstanding promise for “further gradual increases” to the Fed’s policy rate.
Mr. Kaplan earlier this week called for “patience” on further rate increases.
It was so even with New York Fed President John Williams, who believes so deeply in the need for slow but steady rate increases he used to give away T-shirts printed with the word “gradual”. Late on Thursday he noted that tariffs have hit business confidence and could slow economic growth.
President Donald Trump has taken aim at Mr. Powell for raising rates. And on Friday, Mr. Trump’s top economic advisor said in an interview on Bloomberg television that he expects the Fed to pause for “quite some time” after December.
Ms. Brainard, in her remarks, was careful to note that rate policy could go either way, saying twice that risks are on both sides of the economy’s likely growth path.
Fed hawks have long contended that financial stability risks call for further rate hikes to tamp down dangerous risk-taking.
Stopping after just one or two more rate hikes, when rates would be at most between 2.5% and 2.75%, would make the Fed’s job harder by giving it less leeway to cut rates to offset any future downturn.
And with unemployment at 3.7%, some economists think, upward pressure on inflation is only a matter of time.
“We continue to think the Fed’s got more work to do,” JP Morgan economist Michael Feroli said in a note on Friday. — Reuters
Robinsons to open 51st mall in PHL
ROBINSONS Land Corp. (RLC) is set to open a new mall in Bukidnon this Wednesday, Dec. 12, as part of the company’s goal to establish its presence in emerging economic hubs in the country.
The Gokongwei-led property developer said in a statement that it will be opening Robinsons Place Valencia, the first full-service mall in Valencia City, Bukidnon. This is RLC’s seventh mall in Mindanao and its 51st nationwide.
Robinsons Place Valencia is located on an eight-hectare lot along Sayre Highway. Anchor tenants include Robinsons Department Store, Robinsons Supermarket, Robinsons Appliances, Handyman, Daiso Japan, Robinsons Bank, and South Start Drug.
It will also feature various fastfood and casual dining restaurants, coffee shops, a food gallery, and novelty food shops.
“With the opening of Robinsons Place Valencia, people from Bukidnon need not travel to Cagayan de Oro or Davao for a complete shopping, entertainment and dining experience,” RLC President and Chief Executive Officer Frederick D. Go said in a statement.
Mr. Go also expects the mall to attract residents from nearby towns and cities near the province.
RLC chose to expand to Valencia City on account of its rapid development and economic growth. The company described the city as Bukidnon’s center of trade and commerce given its strategic location of being at the center of Mindanao.
The opening of Robinsons Place Valencia also follows the company’s strategy of putting up malls in provincial areas, including Cagayan de Oro, Davao, General Santos, Butuan, Tagum, and Iligan.
“We will continue to open more malls in areas that have strong underserved market demand and where we can be a catalyst for economic growth,” Mr. Go said.
The company earlier said it looks to end the year with 1.508 million square meters (sq.m.) in gross leasable area (GLA) across its shopping malls, following the opening of Robinsons Place in Ormoc, Pavia, Tuguegarao, and Valencia.
In 2019, the company will be opening Robinsons Place in San Pedro and Antipolo, while also expanding Robinsons Magnolia in Quezon City. This will bring RLC’s GLA to 1.61 million sq.m by the end of next year.
RLC’s net income attributable to the parent surged 96% to P3.22 billion in the third quarter of 2018, after revenues climbed 56% to P8.75 billion.
On a nine-month basis, RLC’s attributable profit 43% to P6.55 billion. Revenues meanwhile jumped 31% increase to P21.8 billion during the period. — Arra B. Francia
Atimonan project costs rise by P15B due to PSA approval delay
By Victor V. Saulon
Sub-Editor
MERALCO Powergen Corp. (MGen) said the continuing delay in the approval of the power supply contract for its Atimonan coal-fired power plant had jacked up the project’s cost by P15 billion.
“If my numbers are correct, I think nasa mga (it’s at about) P15 billion, kasi interest rate na lang (because even only the interest) on a loan of P107 [billion],” Rogelio L. Singson, MGen president and chief executive officer, told reporters last week.
He said the reckoning of the cost is from the filing of the power supply agreement (PSA) in 2016 until September or October this year.
Mr. Singson said even a 2% per annum increase in interest rate would result in raising the borrowing cost for the project.
“Tapos meron ka pang (Then you also have) escalation on EPC (engineering, procurement and construction),” he said, referring to the contract with the builder of the facility.
The EPC contract had to be re-valued after it lapsed because of the delay. A new contract meant costs will go up under new terms.
Mr. Singson also cited foreign exchange costs, which rose with the weakening of the peso against the dollar.
Angelito U. Lantin, Manila Electric Co. (Meralco) senior vice-president, previously said all of the equipment for the project will be imported. He said when the power supply contract was submitted for approval, a dollar costs only about P47. The peso closed at P52.71 to the dollar on Dec. 7.
About a year ago, Manila Electric Co. (Meralco) said its unit MGen had agreed with lenders the terms of a P107.5-billion loan to fund about 70%-75% of its 1,200-megawatt (MW) coal-fired power plant in Atimonan.
MGen is borrowing from eight local banks in Philippine pesos. The company previously placed the project’s cost at P135 billion.
Although there was a lending agreement, MGen unit Atimonan One Energy, Inc. (A1E) could not draw down on the loan amount until the PSA has been approved. The supply contract is pending with the Energy Regulatory Commission (ERC).
Oppositors to the project questioned the timing of filing of the PSA just before rules on competitive selection process (CSP) took effect. The CSP allows challengers to the electricity price forged under the PSA. A case questioning the contract had been filed and is pending at the Supreme Court. The ERC previously said it would await the court’s decision before acting on the PSA.
“I think we will wait for the approval,” said Meralco President and Chief Executive Officer Oscar S. Reyes when asked whether the group would opt to build the plant even without an assured buyer of its power output.
“May oras pa ’yun (There is still time),” he added.
MGen is leading the development of three power plants — all coal-fired. A1E is building a two-unit ultra supercritical coal-fired power plant, each with a capacity of 600 MW in Atimonan.
Another subsidiary, San Buenaventura Power Ltd. Co. (SBPL), is constructing a 455-MW facility in Mauban, Quezon. It will be the country’s first supercritical coal-fired power plant. The plant was targeted to be completed in mid-2019.
The third project, a coal-fired power plant under Redondo Peninsula Energy, Inc., has two units, each with a capacity of 300 MW using the circulating fluidized bed technology.
Of the three, only SBPL secured project financing, through a P42.15-billion omnibus agreement for a senior-term loan with several banks.
Meralco will be the buyer of the Atimonan plant’s entire electrical output. Under a previous schedule, testing and commissioning was expected in December 2020 for unit one, and in May 2021 for unit two. Their respective commercial operation was set in the fourth quarter of 2020 and the fourth quarter of 2025.
Mr. Reyes said the plant is now targeted for completion by 2023, leaving MGen a shorter time to build the power plant that is meant to respond to the expected rise of electricity demand in the coming years.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls.
Aboitiz Equity Ventures
ABOITIZ EQUITY Ventures, Inc. (AEV) was one of the most actively traded stocks last week following its buyback program and the death of its chairman.
AEV was the seventh most traded stock in terms of value turnover last week. A total of P1.83 billion worth of 34.92 million shares exchanged hands on the trading floor from Dec.3 to Dec.7, data from the Philippine Stock Exchange showed.
Shares closed at P50.30 apiece on Friday, down P2.45 or 4.64% from the previous day. It was also lower by 3.64% than its closing price on Nov. 29. For the year, AEV shares shed 32.48%.
“I believe the main factor why it was among the actively traded stocks [last] week was due to the passing of Chairman Jon Ramon Aboitiz last Nov. 30, 2018,” said Unicapital Securities, Inc. (Unicap) certified securities representative Cristopher Adrian T. San Pedro.
“According to empirical studies, investors in recent years normally react sharply to unexpected deaths of its long-term company leaders therefore creating a volume spike,” he added.
For his part, Regina Capital Development Corp. Managing Director Luis A. Limlingan said: “Some crosses were made by brokers worth several hundred million pesos, which drove value turnover.”
“Also there was an announcement of a buy back which got funds interested,” he added.
In a disclosure to the stock exchange, AEV said that its chairman, Jon Ramon M. Aboitiz, passed away on Nov. 30 due to a “lingering illness.” Mr. Aboitiz was also the chairman of Aboitiz & Co., Inc. and chairman and chief executive officer of Ramon Aboitiz Foundation, Inc.
AEV said in a Nov. 23 disclosure that its board of directors renewed its share buyback program, which will use internally generated excess cash.
The Board also renewed the firm’s authority to purchase additional shares on Aboitiz Power Corp. (AP) and Union Bank of the Philippines (UnionBank).
AEV’s disclosure last Nov. 29 provided information on the total amount appropriated for the buy-back program.
“No specific limit has been imposed, although the amount used for any repurchase (i) must be within the delegated financial authority limits of the Chief Executive Officer and the Chief Financial Officer and (ii) has to be from the Company’s internally generated excess cash,” the disclosure read.
Also last week, Apo Agua Infrastructura, Inc., the listed company’s subsidiary, said it tapped a consortium of lender banks for a P9 billion loan to finance its bulk waterproject and 2.5-MW hydro-electric power plant.
“Expansion wise, the 2.5-MW (megawatt) [hydro-electric] plant will add to AP’s renewable energy portfolio. Financing wise, the P9 billion will be added to their almost P295.6 billion parent-level debt,” said King A. de Mesa research analyst at Unicapital Securities, Inc.
“Cash-flows wise, I think they can service their debt given their cash-generating ability (coming and will be coming from AP mostly since their major plant additions will be up and running in the next 2-3 years),” Mr. De Mesa added.
Meanwhile, the company’s consolidated net income grew 38.51% to P10.41 billion in the third quarter. Net income attributable to the equity holders of the parent company stood at P7.23 billion, up 28.36% from the P5.63 billion posted a year ago.
For the first nine months of the year, net income attributable to equity holders of the parent reached P17.318 billion, up 8.89% year on year.
For this year, Unicap’s Mr. De Mesa said AboitizPower and UnionBank would drive the company’s performance this year.
On the other hand, Mr. Limlingan said the company could take in P22.4 billion in net income.
“Since most of AEV is tied to AP, the changes in power rates or the outlook in the energy industry could affect this. The second biggest contributor, UnionBank, will also be influenced by the rate hikes, which in turn will affect the loan growth and trading,” Mr. Limlingan said.
He pegged the stock’s support and resistance at P48.50 and P53.00, respectively.
Meanwhile, Unicap’s Mr. San Pedro gave the stock support and resistance prices at P49.50 and P56.75. — Christine Joyce S. Castañeda
DA to back Fisheries Expo with P400M in loans
FISHERMEN representing 100 communities nationwide are expected to purchase machinery and equipment at the World Trade Center, supported by P400 million worth of loans from the Department of Agriculture (DA).
Agriculture Secretary Emmanuel F. Piñol said on Sunday that the loans will have a 2% interest rate, payable in eight years. The event is known as the Philippine Fisheries Expo 2018, to be held on Dec. 17-18.
“The lack of post-harvest facilities and equipment which would give them access to the market also serves as a serious limiting factor in the increase of fish catch as the fishermen would naturally limit the volume of their catch knowing they could not sell it,” Mr. Piñol said in a statement.
“The fishermen’s groups will then use the money to pay for the machinery and equipment that they have chosen during the Philippine Fisheries Expo, a system which allows them to pick the equipment brand of their choice and eliminates the long and tedious process of government procurement,” Mr. Piñol said.
The equipment includes ice-makers, refrigerated vans, filleting machinery and drying facilities, and fish cages.
According to Mr. Piñol, the loans will include working capital for the fishermen, payable in 8 years with a grace period to be determined by the DA — Agricultural Credit Policy Council (ACPC).
Last week, Mr. Piñol said that DA aims to establish ice-making facilities in 91 fishing communities to reduce spoilage losses by 40%. The ice machine purchases will be backed by P282.5 million from the Agriculture and Fisheries Machinery and Equipment (AFME) Loaning Program.
Mr. Piñol said that the following locations are expected to get P10 million loan each by the first quarter of 2019 for the ice-making facility: Sipalay City, Negros Occidental; Ubay, Bohol; Pasil, Cebu City; San Vicente, Northern Samar; Mapanas, Northern Samar; Aparri, Cagayan; Sta. Ana, Cagayan; Masinloc, Zambales; Dingalan, Aurora; Dinahican, Infanta, Quezon; Estancia, Iloilo; Sagay City, Negros Occidental; Tarangnan, Western Samar; Borongan, Eastern Samar; Limasawa, Southern Leyte; Panabo City Mariculture Park; and Kalamansig, Sultan Kudarat.
Lebak, Sultan Kudarat will meanwhile receive funding of P8 million. — Reicelene Joy N. Ignacio
Gucci owner revamps jeweler to Czars as branded rocks boom
A GLEAMING necklace in Boucheron’s shop window in Paris’s Place Vendome features dozens of lifelike hydrangea blossoms made from mother-of-pearl and diamonds, framing a 43-carat pink tourmaline.
Shoppers who enter the restored 18th-century mansion, which recently underwent a sweeping restoration by parent Kering SA, can slip out with their purchases via a secret door through the lacquered panels of a Chinese-inspired selling room. High rollers who prefer to stay might even be invited to sleep in a VIP guest suite — operated by the Paris Ritz, no less — featuring views of the Eiffel Tower from the bathtub.
“This is more than just a store opening for France,” said Boucheron Chief Executive Officer Helene Poulit-Duquesne, who joined the brand in 2015 after 17 years at Richemont’s Cartier. The Paris square is the world’s most prestigious jewelry destination — housing such names as Van Cleef & Arpels, Chaumet and Chanel — and a pilgrimage has become de rigueur for fans of top-end pieces. “This story of the Place Vendome is what we want to tell around the world.”
After a push into skateboarding wear and soccer brands like Puma fell flat, Kering is trying to diversify within luxury at a time when targets for acquisition are scarce. A rapid comeback for its flagship brand Gucci, which rebooted with a new designer’s decadent aesthetic in 2015, drove shares in the group up 85% last year alone. But the relentless pace of growth in Gucci’s two-year run has meant the company is more dependent on the brand than ever.
The group helmed by the French billionaire Francois-Henri Pinault is now ramping up investment in jewelry, adding stores for Boucheron and a new high-end jewelry collection for Gucci, as well as expanding its smaller fashion brands like Balenciaga and Alexander McQueen.
Boucheron was founded soon after Cartier and is part of the elite club of French jewelers that produce haute joaillerie, or high jewelry: one-of-a-kind pieces priced from $50,000 to several million dollars, which are handcrafted in Vendome ateliers to show off precious stones and their makers’ most advanced techniques. But while Cartier touted its meticulous craftsmanship to sell a range reaching from super-luxury products down to more modest models like $4,000 Panthere watches and “Love” bracelets in nearly 300 stores around the world, Boucheron remained a lesser-known option, under family management until a sale to Kering in 2000.
Boucheron’s accessible lines, including its best-selling $4,000 Quatre rings, entered the global spotlight more recently. Spokeswomen like the actresses Lea Seydoux of France and Zhou Dongyu of China sport the items — and Beyonce has worn them onstage.
In addition to the renovated base, Kering has opened its first two Boucheron boutiques in mainland China this year and has additional locations in Hong Kong and Macau on the way. While the group doesn’t disclose figures for its smaller brands, a company spokeswoman said Boucheron has been profitable since 2007 and sales have more than tripled since the acquisition. Reports at that time estimated its revenue was €85 million ($97 million).
Global names dominate categories like high-end watches and handbags, but consumers haven’t historically thought about the brands behind their diamond pendants and gold hoops. A study by consultancy McKinsey found that global brands made up only 20% of the jewelry market in 2014 — a figure it expects to double by 2020.
“We see great potential for houses which have an international approach and a distinctive identity,” said Albert Bensoussan, CEO of Kering’s watches and jewelry division.
Touchscreen panels let visitors to Boucheron’s Paris store swipe through stories about notable former clients including the Countess of Castiglione (who used to live upstairs), Jane Birkin, and Czar Alexander III. But even if the renovation highlights Boucheron’s history, its CEO is wary of focusing too much on the brand’s pedigree.
As one of the first women to lead a high-jewelry house (head designer Claire Choisne is a similar pioneer), Ms. Poulit-Duquesne is sensitive to the fact that marketing focused on heirloom status or sentimental gestures holds many women back from buying jewelry. “I’d rather to talk to women about style, about how they can use the piece,” she said. “The idea is to unburden the process.”
To make clients feel more at home in the brand’s renovated base, the CEO opted to remove the rectangular counters and desks where buyers worked through a jewelry purchase across from each other, opting for friendlier, round tables. Saleswomen were allowed to eschew banker-like skirt suits in favor of a softer elegance, choosing from an approved selection of silky jumpsuits and botanical-print dresses.
“It’s an experience,” Ms. Poulit-Duquesne said. “Even if you don’t go, it’s important to know that the place exists.” — Bloomberg
Rates of T-bills, bonds likely to climb further
YIELDS on government securities on offer this week are expected to move higher as market participants await for the policy meetings of the local and US central banks.
The Bureau of the Treasury (BTr) is offering P15 billion worth of T-bills today, broken down into P4 billion, P5 billion and P6 billion for three-month, six-month and one-year debt papers, respectively.
The government will also offer P15 billion in reissued seven-year bonds tomorrow with a remaining life of six years and three months. The papers carry a 5.75% coupon rate.
A bond trader said the rates of the T-bills on offer today will likely move sideways, while another said the three- and six-month papers may still move by around 5-10 basis points (bp).
Last week, the BTr made a full award of the T-bills on auction, borrowing P15 billion as planned, as market players expected inflation to decelerate.
Rates of 91- and 182-day debt moved sideways to 5.394% and 6.305%, respectively, while the 364-day notes declined to 6.507%.
“I think the one-year bills plateaued already. It will not climb anymore. It’s just the six- and three-month [papers that still have a bit of] an upside at around 5-10 bps,” the second trader said.
For the T-bonds, the first trader expects the rate of the seven-year security to go up, fetching a yield between 6.9% and 7.1%.
The BTr borrowed P15 billion as planned via seven-year bonds when it was last issued on Nov. 27, with total tenders reaching P62.227 billion.
It fetched an average yield of 6.974%, down 11.1 bps from the 7.085% tallied when the papers were last awarded in September.
“An uptick in the T-bonds is expected since this (the auction) is additional supply on top of the scheduled borrowing. Supposedly, the 10-year bonds will be the last T-bond auction for this year, but this is already an additional supply,” the first trader said.
The second trader concurred, saying that the Treasury is set to conduct another bond auction to take advantage of the market appetite at lower rates.
“So far, there’s still demand even after the BTr reopened their tap facility. What I think is more of at what rate will the market come in,” the second trader said, expecting the bonds to fetch a rate between 6.95% and 7.05%.
The first trader, on the other hand, added that market participants are closely watching the Dec. 13 policy meeting of the Bangko Sentral ng Pilipinas as well as the US Federal Open Market Committee (FOMC) meeting from Dec. 18-19.
The local monetary authority is widely expected to keep its policy rates steady during their final meeting for this year as investors see signs of decelerating inflation.
Last month, inflation decelerated to 6% driven by slower price increases in food and drinks. This came from a nine-year high of 6.7% recorded last October and September.
Meanwhile, St. Louis Fed President James Bullard called for the US central bank to take a break from its interest rates, saying the policy rate’s current level is “about right.”
The Treasury is raising P270 billion from the domestic market this quarter through auctions of securities, offering P180 billion in T-bills and another P90 billion in Treasury bonds. — Karl Angelo N. Vidal
Shareholder asks SEC to stop Tiger’s tender offer
A SHAREHOLDER of Asiabest Group International, Inc. (ABG) has asked the Securities and Exchange Commission (SEC) to stop Tiger Resorts Asia Ltd. (TRAL) from conducting a tender offer for its planned backdoor listing, citing the company’s failure to disclose a legal dispute with Japanese casino tycoon Kazuo Okada.
ABG shareholder Carnell S. Valdez through his lawyer Salvador Paolo Panelo, Jr. filed on Dec. 7 a complaint with the SEC’s Market and Securities Regulation Department (MSRD), requesting it to issue a cease and desist order against TRAL. This should stop the firm from its ongoing tender offer until Dec. 12.
Mr. Valdez, who owns 1,000 shares in ABG, accused TRAL of violating Rule 19.12 of the Securities and Regulation Code (SRC)’s Implementing Rules and Regulations (IRR) when it failed to disclose the legal issues surrounding its dispute with Mr. Okada.
Mr. Okada is currently claiming that he is the rightful owner of controlling equity in Okada, Holdings Ltd. (OHL) and Universal Entertainment Corp. (UEC) — the beneficial owners of TRAL — through civil and criminal proceedings in Hong Kong.
TRAL fully owns Tiger Resorts Leisure and Entertainment, Inc. (TRLEI), which operates under the name Okada Manila.
Contesting that he was illegally removed as the chairman, CEO, and director of TRLEI, Mr. Okada filed a complaint with the Regional Trial Court of Parañaque last Aug. 29 against TRAL and TRLEI.
Mr. Okada also said in an earlier statement that he opposes the planned backdoor listing, and plans to nullify the decision should he regain his position in the company.
“The omission of this material fact is misleading as it makes it appear to ABG shareholders and the investing public that OHL, UEC, and TRAL have full and undisputed authority to make the tender offer, and to do a backdoor listing with the Philippine Stock Exchange (PSE)” via ABG, which is TRAL’s announced objective,” Mr. Valdez said in his complaint.
“This will likely affect the ABG’s share price and the decision of ABG shareholders and prospective investors because it goes into the suitability of TRAL, UEC and OHL’s controlling persons to be in control of a publicly listed corporation such as ABG,” Mr. Valdez said in a statement.
Other respondents in the complaint were TRAL’s tender offer agent First Resources Management and Securities Corp., the PSE, and ABG
Without the cease and desist order, the shares tendered will be transferred to TRAL through a special block sale on Dec. 14.
“If the Tender Offer proceeds unrestrained, this may result in grave and irreparable damage to ABG, its shareholders and investing public as the outcome of the Hong Kong legal proceedings may result in the nullification of the Tender Offer and Backdoor Listing,” Mr. Valdez said.
Mr. Valdez also said TRAL violated Rule 19.7 of the SRC’s IRR when it failed to divulge its officers and directors at the time it made the tender offer report.
ABG in a Sept. 19 disclosure clarified that it cannot submit a proper disclosure about the ongoing case without stepping on the sub judice rule, “which restricts any person, including the PSE, to comment and disclose matters pertaining to the judicial proceedings in order to avoid prejudging the issue, influencing the court, or obstructing the administration of justice.”
BusinessWorld tried to get the SEC’s comment on the matter, but the commission has yet to reply as of press time. — Arra B. Francia
Food industry’s sugar importation plan being considered
AGRICULTURE Secretary Emmanuel F. Piñol said that he willing to allow 100,000 metric tons (MT) worth of sugar to be jointly imported by the Philippine Food Processors and Exporters Organization Inc (PhilFoodex) and the Philippine Chamber of Commerce and Industry (PCCI), for use by food processors, if domestic supply is inadequate.
Speaking to reporters, Mr. Piñol said: “We would have to check the production right now of sugar farmers.”
“It is normal that whenever there is shortage or shortfall of a commodity, there’s always the world market that you can turn to,” Mr. Piñol said.
Roberto C. Amores, president of PhilFoodex, said last week that the associations submitted the request almost two months ago but received no response from the Sugar Regulatory Authority (SRA).
Mr. Amores said that there will be a shortfall of one million MT of sugar in 2019, and if the imports are not approved, prices of all food products using sugar as ingredient will increase.
“The reason we are not making a follow up is that we’re waiting for the technical study that would justify the need to be competitive. As soon as the technical study is out, we will use it as the basis for compelling SRA and the government in particular to allow the importation of this very important commodity. If not, we cannot really be competitive,” Mr. Amores said last week.
Mr. Piñol said approval for the imports is under study.
“I still have to see the request and I have to convene the SRA Board… We would have to check the numbers,” Mr. Piñol said.
According to the Philippine Statistics Authority (PSA) data, production of sugarcane for all uses declined by 26.2% in the second quarter of 2018 to 6.44 million MT. — Reicelene Joy N. Ignacio
Uniqlo accepts all clothes for charity recycling initiative
AS PEOPLE clean out their closets before the end of the year, Uniqlo Philippines is hoping more Filipinos will consider donating their old clothes as part of its All-Product Recycling Initiative.
Camille P. Pacis, senior marketing and PR manager of Uniqlo Philippines, said one common misconception is that only old Uniqlo clothes can be donated at Uniqlo stores in the Philippines.
“We invite the customers to donate their clothes. People ask if they can donate non-Uniqlo, of course we accept non-Uniqlo clothes. They can drop off their clothes for donation at any Uniqlo store,” Ms. Pacis said in an interview at the sidelines of the company’s “Give What You Love: Celebrating the Gift of LifeWear” gift-giving event for the children of Bantay Bata and Virlanie Foundation on Dec. 5 at the Uniqlo store in Glorietta 5, Makati.
Uniqlo works with the United Nations High Commissioner for Refugees (UNHCR) and other non-government organizations to distribute the donated clothes to refugees, disaster victims, and other people in need around the world.
Clothing that is considered “unwearable” is recycled into refuse paper and plastic fuel pellets, according to the Uniqlo Japan Web site.
As part of its charitable efforts, Uniqlo Philippines gave a holiday shopping spree to 40 children from Bantay Bata and Virlanie Foundation.
“Uniqlo has always believed in the transformative power of clothing. More than just bringing comfort to our customers through our apparel, it is also our mission to share our LifeWear to members of our community who don’t often have access to our clothing and to our stores,” Geraldine Sia, Uniqlo Philippines co-chief operating officer, said during the event.
Jose Mari Chan and Oh, Flamingo! sang several songs to entertain the children, who were each given the chance to pick Uniqlo clothes worth P1,000.
This was the second year that Uniqlo Philippines worked with Bantay Bata, and the first time it invited Virlanie Foundation.
Bantay Bata is the child welfare arm of ABS-CBN Lingkod Kapamilya Foundation, Inc., while Virlanie Foundation helps abandoned, abused, exploited, and orphaned children. — Cathy Rose A. Garcia
Yields on gov’t debt dip amid lower inflation
YIELDS on government securities last week declined, amid a lower-than-expected inflation reading for November.
On a week-on-week basis, yields — which move inversely to prices — dipped on average by 1.24 basis points (bps) according to PHP Bloomberg Valuation (BVAL) Service Reference Rates posted on the website of the Philippine Dealing System on Dec. 7.
“Yields are consolidating near the recent lows after the inflation numbers,” said Deanno J. Basas, president and managing director of ATR Asset Management Trust Corp. (ATRAM Trust).
Michael L. Ricafort, economist at Rizal Commercial Banking Corp. (RCBC), noted long term yields in particular eased in response to last month’s inflation figure. In November, inflation stood at 6.0%, lower than market expectations, after the near decade-high of 6.7% in the previous month.
“Short-term PHP BVAL yields mostly higher by 0.08-0.14, while long-term PHP BVAL yields were slightly lower, down for the 7th straight week, to trade the lowest levels in about 2-2.5 months and already declined by a total of 1.10-1.30 from the near decade-highs posted on October 22, 2018,” he said.
Inflation eased for the first time this year in November but was still faster compared to the 3% recorded in the same month a year ago, data from the Philippine Statistics Authority showed.
The pace was slower than the 6.3% median figure in a BusinessWorld poll, while falling within the 5.8%-6.6% estimated range by the Bangko Sentral ng Pilipinas (BSP).
At the secondary market, gains were almost exclusive to short term debt papers.
The 91-day Treasury bills (T-bills) picked up the most by 13.9 bps to fetch 5.587%. The 182- and 364-day T-bills trailed by climbing 8.2 bps and 1.5 bps, respectively, to finish at 6.299% and 6.617%.
Meanwhile, yields at the belly of the curve dipped except that of the seven-year Treasury bond (T-bond) which added 0.9 bps to close 7.008% compared to a week ago. The rates of the two-, three-, four-, and five-year bonds fell 1.2 bps, 3 bps, 2.7 bps, and 1.3 bps, respectively, ending with 6.726%, 6.835%, 6.909%, and 6.962%.
At the long end, the 10-, 20-, and 25-year bonds decreased by 1.9 bps, 11.7 bps, and 16.3 bps respectively, to 7.010%, 7.495%, and 7.545%.
“Long-term PHP BVAL yields could still continue their easing trend, provided that global oil prices and the US dollar/peso remain relatively stable or lower to support continued easing of inflation,” RCBC’s Mr. Ricafort said.
“Global crude oil prices again declined from 1-week highs and reverted back to the lowest levels in about 13-months after OPEC members have not agreed yet on any cut on oil production output.”
He also cited the lower movement of 10-year US treasury yield stemming from uncertainties over the US-China trade war to possibly affect the yield movements at the local market in the coming weeks.
ATRAM Trust’s Mr. Basas shared the same view, saying: “[T]he move lower in US yields and the inversion of certain parts of the US Treasury curve will be considered.”
“I think we will remain around these levels for the next few weeks as the demand from investors to deploy funds is balanced by supply coming from Treasury and corporate issuances,” Mr. Basas added.
The analysts also noted how market players may be vigilant ahead of the BSP meeting on Dec. 13.
“Locally, market will be watching the BSP meeting [this] week for their forward guidance on interest rate policy,” Mr. Basas said.
For Mr. Ricafort, he does not expect the BSP to raise policy rates during this week’s meeting, after inflation eased in November. — Marissa Mae M. Ramos