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How PSEi member stocks performed — January 9, 2018

Here’s a quick glance at how PSEi stocks fared on Tuesday, January 9, 2018.

Bank of Japan trims bond purchases, prompting stimulus withdrawal talks

HONG KONG — Speculation the Bank of Japan (BoJ) may slow its monetary stimulus this year gripped the currency market on Tuesday after the central bank trimmed the amount of its purchases of Japanese government bonds (JGB).

While the bond-buying operations are usually seen as a routine affair, traders appeared to latch on to the BoJ announcement that it will buy less of the long-dated bonds, sending the dollar down about 0.5% against the yen.

“This (announcement) adds to speculation that BoJ may remove monetary stimulus,” Maybank analysts said in a note after the announcement.

BoJ Governor Haruhiko Kuroda has repeatedly dismissed the chance of withdrawing stimulus any time soon, even as some policy makers have recently expressed concerns over the perceived demerits of monetary easing, especially the hit on financial institutions’ profit margins.

That has led to speculation that the central bank may have to consider raising its yield targets or slow purchases of risky assets later in 2018. A host of developed nations have started to tighten policy, partly thanks to a synchronized uptick in global growth.

The BoJ pledged in 2016 to guide short-term interest rates at minus 0.1 percent and 10-year bond yields at around zero percent. It also keeps a loose pledge to increase its bond holdings at 80 trillion yen ($710.29 billion) per year, although its buying has recently slowed.

On Tuesday, the central bank reduced its purchases of JGBs with 10 to 25 years left to maturity and those with 25 to 40 years to maturity by 10 billion yen ($88.39 million) each, from its previous operations.

It also offered to buy 190 billion yen of 10-25 year JGBs and 80 billion yen of 25-40 year JGBs.

The announcement pushed the dollar to a session low of 112.50 yen, down around 0.5% on the day.

Japanese bond prices dipped, lifting 20- to 40-year yields to one-month highs. The benchmark 10-year JGB yield ticked up 1 basis point to 0.065%.

POLICY INCONSISTENCY?
Since it adopted the yield curve control policy in 2016, the BoJ has occasionally tweaked its bond operations, with officials saying any changes are meant to keep bond yields in line with its policy goal and not to telegraph hints on its future policy.

But some analysts say the inconsistency of the two policy targets requires a change of tack from the BoJ.

“It’s better to use the upcoming Jan. 23 meeting to tweak the policy — with a fresh balance sheet target at 40 trillion yen,” Westpac analysts said in a note.

The difficulty is that inflation remains far off the BOJ’s 2 percent target. Slow wage growth is one of the challenges.

Data on Tuesday showed Japan’s real wages, which are adjusted for inflation, posted their first gain in 11 months in November, helped by a rise in year-end bonuses. But the increase was just 0.1% and economists warn that wages are unlikely to keep up with general price increases, which could hurt consumption.

“Regular pay is set to strengthen only slowly … the Bank of Japan’s 2 percent inflation target won’t be reached anytime soon,” said Marcel Thieliant, senior Japan economist at Capital Economics. — Reuters

Nation at a glance — (01/10/18)

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

Where Top 1000 corporations come from

BusinessWorld‘s Top 1000 Corporations in the Philippines can be purchased at Fully Booked and National Bookstore outlets. You may also purchase it by calling BusinessWorld at Tel. (632) 535-902 extension 102.

Composing fates

On a bus ride through the Arizona desert, Merlinda Bobis sees a black bird flying across the grey sky, close to an eerie white sun—a sun unlike the yellow orb often depicted in artworks and children’s drawings, unlike the smiling (or screaming) icon in cartoons. The scene, which could have belonged to any time, ordinary but also bordering on the divine, revealed itself as a poem. “I began seeing images as if for the first time… Seeing was a beautiful accident,” Bobis writes in her afterword. It was the scene or the image’s becoming—bird, sun, sky—that prompts meditation on the progression and arrangement of life. How every decision, or deferral, composes our fates.

but which composes which

and which is accidental?

(“After the Grand Canyon”)

Apart from poetry in English, Bobis has also written works in Filipino and her native Bikol. In Accidents of Composition, Bobis explores often visceral experiences in her poetry; how global events and natural calamities have changed the course of human lives to the seemingly invisible events in a kitchen foretelling a historical event. Among the poems, knowing and knowledge are presented as afterthoughts, only coming to light after an event is finished or a deed done. Memory teaches us to anticipate and prepare, because remembering is only the first step to a journey.

An incantation

found in the hole

that used to be a house.

…

to the howl

of rain and wind

as he listened to

his daughter say, Ay, Papa—

before the line was cut.

(“The Lost Notebook”)

 

On the other side of the world,

Ferñao, you too will be gutted

by the namesake of a fish.

(“Auguries of a Fish”)

Traveling allows for a person to expand their horizons and, for some, a way to learn about oneself. Journeying, both in the physical and spiritual sense, are replete in Bobis’ verses, as reflected by her life. From the lush jungles at the foot of Mount Mayon to a placid river in China, life unfolds and, through recollection and documentation, reveal themselves as poems. It can be considered that Accidents of Composition, Bobis’ return to the poetry book after four novels, as a statement about her creative process or poetics.

Within the lyric lines and vivid imagery, Bobis takes the reader into an experience otherwise unfamiliar or alien. Drawing connections between images and texts, events across time and space, Bobis also expands the meaning of ecology from its physical definition. Every thing and image is an index or reference of another, image and texts are combinations of the known and unknown, our relations are mediated and determined by reasoning with elements beyond our control. One can navigate their fate through a ripple caused by the smallest fish; one can find their love in a different time or in virtual space.

So sweetheart

from the other side…

faceless yet to each other

there is hope for us.

(“Love is Planetary”)

There is a balance of cold and warmth, toughness and affection in Bobis’ language. In “After Reming”, for instance, she takes the color purple to mean a bruise, but also a flower, that from the void of loss is the possbility (or inevitability) of return and growth. Even when concrete replaces the earth and technology serves as surrogates of our affection, life will take its natural course.

In Accidents of Composition, travel moves from the mundane to the meaningful, through a tour bus across the desert in 2014 to a galleon crossing the Pacific Ocean in the 18th century, Bobis drew arcs of light—the very poems every reader and seer holds, or will hold, in their hands.

DoF lines up remaining tax reforms

By Elijah Joseph C. Tubayan
Reporter

THE EXECUTIVE BRANCH is readying the remaining three packages of its tax reform program for submission to Congress within the year, the head of the Department of Finance (DoF) said yesterday.

“We will pass the second package some time this month. Package two that will lower corporate income taxes and modernize fiscal incentives. We will also pass package four on passive income and financial taxes by the second half of 2018,” Finance Secretary Carlos G. Dominguez III told reporters in a briefing in Malacañan Palace.

“Package three will be also submitted within the year.”

In its original planned configuration, the third package will rationalize the capital gains tax on real estate as well as other property-related taxes and fees by simplifying them and increasing valuation. This tranche was initially meant to yield P43.5 billion more and will be designed to enable the national government to devolve more functions.

Mr. Dominguez said the department “will still see” if a fifth package — consisting of increased tax rates on luxury items like jewelry and yachts, as well as on lottery and gambling, among others — will be needed as some of this tranche’s original features, such as higher tobacco, coal, and mineral taxes, had been included by Congress in the first package that was enacted on Dec. 19 as Republic Act 10963.

“The other tax packages are not so much about increasing taxes — it is just making it fair,” he explained.

The entire four- to five-part tax reform program is supposed to yield about P2 trillion in additional revenues that will help finance the government’s planned P8.44-trillion infrastructure development campaign until the current administration ends its six-year term in 2022.

The Finance chief said that the second package would cut corporate income tax rates to 25% from 30% currently. It will be “revenue-neutral,” with initial DoF estimates showing some P34 billion estimated to be foregone as a result of lower corporate income tax rates to be covered by a matching amount from the withdrawal of some incentives granted by investment promotion agencies.

“We are the only country in ASEAN that has 14 agencies that give tax incentives,” Mr. Dominguez said of the Association of Southeast Asian Nations, adding that the country foregoes at least P301 billion annually from fiscal incentives given to companies that would have come in just the same without such help.

“In other countries, there is only one or two. So, we have whole menu of tax incentives and they are not coordinated… so, we’d like to simplify it.”

The fourth package, Mr. Dominguez said, will among others seek to make the tax on passive income from investment instruments more inclusive. “The government takes 20% of the interest… if it is in pesos less than five years. But in pesos more than five years, no tax,” Mr. Dominguez noted. “We think that’s anti-poor. Who can afford to put money more than five years? Right now the current tax system favors the wealthy.”

2019 ELECTIONS A FACTOR?
Asked if he sees the administration rushing the rest of the packages with an eye on next year’s mid-term legislative elections, political analyst Ramon C. Casiple said much will depend on President Rodrigo R. Duterte’s political will to push the measures, in the same way that he intervened when he was told that the first tax reform tranche had faced rough sailing in the House of Representatives in the middle of last year.

“The key question is not elections by itself. The election will become a factor if his popular support lessens,” Mr. Casiple, executive director of the Institute for Political and Electoral Reform, said in a telephone interview.

Mr. Duterte has been acing public opinion surveys, with the latest by Pulse Asia — conducted on Dec. 10-15 — showing him outdoing the four other top national officials in the line of succession with an 80% approval rating, steady from September, and an 82% trust score from 80% previously.

“…[H]e’s still highly popular, I don’t think it will be the factor. I think legislators are all over in approving the next packages of TRAIN,” Mr. Casiple said of the Tax Reform for Acceleration and Inclusion Act, as RA 10963 is better known.

“That’s why political will is very important. I think the President will stand by TRAIN. I think the whole package has been approved by the president.”

Emmanuel J. Lopez, associate professor and chairman of the University of Santo Tomas Department of Economics, shared this view, saying via e-mail that “it is not exactly a factor for the mid-year election in 2019 because it is part of the campaign promise of Duterte.”

Sought for comment, Senator Juan Edgardo “Sonny” M. Angara, chairman of the Senate Ways and Means committee, said in a mobile phone message: “The Committee on Ways and Means can tackle these new packages after completing work on the proposed comprehensive tax amnesty bill.”

“Simultaneous hearings with the [H]ouse can be done,” Mr. Angara said, even as he cautioned that “[a] factor which may affect timetables is any impeachment trial which might ensue given that there are some impeachment complaints being heard in the House of Representatives.”

RA 10963 cut personal income tax rates and makes up for the foregone revenues by removing some value-added tax breaks; raising fuel, automobile, mineral and coal excise tax rates, as well as adding levies on sugar-sweetened drinks and cosmetic surgery.

Government readies dollar, ‘panda,’ ‘samurai’ bond offers for this year

THE GOVERNMENT is lining up three offshore bond offers this year, the Finance chief said yesterday.

First up will be a sale of dollar-denominated “global bonds” which Finance Secretary Carlos G. Dominguez III said in a press briefing in Malacañang “will happen between now and February.” The Finance chief said it would be worth “more or less the same amount as last year.” In January 2017, the government auctioned off $2 billion worth of 25-year bonds, raising $500 million in new money and swapping some $1.5 billion. Mr. Dominguez had said last December that the government may issue $1 billion this year in a combination of both new money and swap agreements.

He said that the government is also preparing a yuan-denominated debt sale. “Panda bonds — pending approval by the monetary authority in China — the panda bonds we are studying the issuance sometime this year,” said Mr. Dominguez, adding that the offer would involve “roughly $215 million equivalent in renminbi.” Initially scheduled for around October or November last year, the Finance chief had said in November that the government was looking at an offer in 2018’s first quarter.

Mr. Dominguez also said that the sale of “samurai bonds” or yen-denominated debt papers is “being considered sometime towards the end of this year.” However, he said the government was “not sure yet” of the amount to be sold. — Elijah J. C. Tubayan

One bond trader said the offshore bonds should see strong demand, after Fitch Ratings, for the first time since 2013, last month upgraded the Philippines’ credit rating from “BBB-” to “BBB” — a notch above minimum investment grade matching ratings earlier given by Moody’s Investors Service and S&P Global Ratings — with a stable outlook, citing favorable macroeconomic conditions and the enactment of a major tax overhaul.

“I think the demand will be robust… global markets will look for investment grade that at the same time gives a yield higher than the Treasury,” the trader said over the phone.

“No problem with China bonds because the issue will just be a small amount. The market will also be abroad rather than here. So prospects will be good on the yuan,” the trader added.

“It’s more like the yuan will go ahead of the yen(-denominated debt sale). But Philippines is investment grade and the yield will be better… no problem with the demand for the yuan and the samurai (bond sale) as well.” — Elijah Joseph C. Tubayan

Grant Thornton survey finds Philippine business leaders among world’s most bullish

BUSINESS LEADERS in the Philippines remain among the world’s most optimistic about the economy’s overall outlook, according to a quarterly survey which advisory service provider Grant Thornton conducted among 2,500 respondents across 36 economies in May-June last year.

Grant Thornton survey finds Philippine business leaders among world’s most bullish

A summary of findings of Grant Thornton’s International Business Report (IBR) that was e-mailed to journalists showed Philippine business leaders overall optimism (total optimistic less total pessimistic) level at 86% in 2017’s fourth quarter — a slight improvement over the preceding three months’ 84%, the highest reading in three quarters and six points more than the 80% in 2016’s final quarter. The country’s best reading on record, so far, was logged at 98% in the first three months of 2017.

Grant Thornton described respondents worldwide as chief executive officers, managing directors, chairmen or other senior executives from across industries.

The entire 2017 saw an 88% overall optimism in the Philippines that was the best reading since 2014’s 90%.

The latest quarterly reading placed the Philippines fourth behind Indonesia (100%), Finland (96%) and the Netherlands (92%), and was better than the 58% for Asia Pacific — itself the region’s “historic high” according to Grant Thornton — the Association of Southeast Asian Nations (ASEAN) and worldwide.

“In the Philippines, overall optimism among business leaders remains high,” P&A Grant Thornton said in a statement accompanying the summary of survey findings.

“Results of the survey show that businesses are very confident about the economy,” Ma. Victoria C. Españo, chairperson and chief executive of P&A Grant Thornton, said in the statement.

“For one, the recent passage of the first tranche of tax reforms is expected to support public spending and investments in infrastructure and social services which, in turn, will create more opportunities for businesses.”

BEST IN…
By issue, the Philippines topped the rest in terms of expectations of revenue increase in the next 12 months (88%, matching readings of the preceding three months and of the third quarter of 2011 and the highest since the first quarter 2011’s 94%), of an increase in hiring (66%, compared to the third quarter’s 70% and fourth quarter 2016’s 54%) as well as profitability in the next 12 months (86%, the highest since the first quarter 2011’s 88%).

The country placed second in terms of planned increase in investment in plants and machinery (54%, in a tie with Malaysia and behind Nigeria’s 80%).

The Philippines placed third in terms of expectations of an increase in the next 12 months in:

• investment in new buildings (36%, behind Nigeria’s 68% and Turkey’s 38%);

• research and development (44%, behind Nigeria’s 84% and China’s 58%);

• investment in technology (62%, in a tie with Argentina and behind Nigeria’s 92% and Australia’s 68%).

Finally, while the Philippines was eighth — together with Finland and New Zealand — with 80% in terms of expecting to offer employees a pay hike in the next 12 months, it was ninth with 22% of Philippine respondents saying they would offer above-inflation raise in the same period.

GROWTH INITIATIVES
In terms of growth measures planned for the next 12 months (percentage of respondents giving up to three options):

• 50% said they will improve sales force effectiveness;

• 48% said they will develop and/or launch a new product or service;

• 40% will invest more in marketing;

• 40% will expand business in the Philippines;

• 34% will give incentives for productivity improvement;

• 24% will tap new funding sources;

• 14% will recruit specialist talent;

• eight percent will expand business overseas;

• and eight percent will merge with or acquire another business.

“Local businesses are seeing an increase in employment and plan to improve sales force effectiveness, as well as develop and launch new products or services,” Ms. Españo said.

In Asia and the Pacific, optimism among businessmen reached 58%, an increase of 17 percentage points over the third quarter. The global figure at 58% is higher than the preceding three months’ 49%.

“Confidence has boomed in Asia Pacific, reaching its highest peak in the history of the IBR,” Ms. Españo noted.

“While China has experienced growing levels of optimism over the past year or so, Japan’s break into positive territory is a real sign of change in the region. As global trade improves, firms in Japan and China are also thinking about the future and investing in long-term growth,” she added.

“This positive business sentiment in the region is an opportunity that Philippines businesses must consider as they plan for their long-term expansion and growth plans outside the Philippines.” — VVS

Ayala, Yuchengco groups in talks to merge education units

By Krista A. M. Montealegre,
National Correspondent

THE AYALA and Yuchengco groups have initiated talks to merge their education businesses, allowing the unified entity to expand its reach and offer a complete education cycle.

In a joint statement, Ayala Corp. (AC) and House of Investments, Inc. (HI) announced they have executed a non-binding term sheet for the potential merger of AC Education, Inc. (AEI) and iPeople, Inc., which have a combined population of over 40,000 students.

AC and HI agreed to an exclusivity period to complete due diligence. The terms and conditions of the merger are expected to completed within the first quarter of 2018, with iPeople as the surviving entity.

Yuchengco-led iPeople controls Malayan Education System, Inc., which is operating under Mapua University, a leading private engineering and technical university in the country. Mapua has two subsidiaries, Malayan Colleges Laguna and Malayan Colleges Mindanao.

iPeople’s other unit is Pan Pacific Computer Center, Inc., which services the information technology-related requirements of the Yuchengco group and selected clients, according to a regulatory filing.

AEI, on the other hand, owns University of Nueva Caceres, one of the oldest and largest universities in Bicol, and APEC Schools, the largest stand-alone chain of private high schools in the country.

“The Yuchengcos going with the Ayalas is a big news regardless of what they are coming together for,” Rens V. Cruz II, analyst at Regina Capital Development Corp., said in an interview.

Mr. Cruz said the deal is complementary since AC is into basic education through APEC Schools, and iPeople is engaged in higher education through Mapua University.

“The potential merger completes an education cycle for both parties so it is a perfect synergy. We have yet to see if it translates to a substantial impact on bottom line or if it creates clamor for further retail investments in education stocks,” he said.

iPeople surged 8.61% to end at P14.88 per share, a new 52-week high. HI shed 0.13% to P7.69 apiece, while AC lost 0.75% to P1,057 each.

“A merger will provide the proponents a larger scale and reach, and will raise standards (of education),” PNB Securities President Manuel Antonio G. Lisbona said in a mobile phone message.

Mapua is a world-ranked Quacquarelli Symonds (QS) three-star university, which is defined as nationally popular, and may have also begun to attract international recognition. Three-star institutions also maintain “a reputable level of research and its graduates are attractive to employers.”

The school has the most Commission on Higher Education Centers of Excellence in Engineering.

A new player in the education sector, the Ayala group is taking advantage of the window of opportunity presented by the shift to the Kinder to Grade 12 program with APEC Schools, which has established 23 branches in less than three years of operation.

“Mapua’s reputation as a leading private engineering and technical university in the country, together with AEI’s ability to provide quality education leading to enhanced employability, at an affordable price, would enable the Yuchengco Group of Companies and Ayala Corporation to jointly contribute to the improvement of the quality of education in the Philippines, for the benefit of all sectors of society,” HI Chairperson Helen Y. Dee was quoted in the statement as saying.

“We are very pleased about this opportunity to partner with the Yuchengco Group of Companies to help build our nation through education. Our belief is that the potential combination of iPeople and AEI would create significant synergies that would enable us to better equip students for compelling futures,” AC Chairman Jaime Augusto Zobel de Ayala said.

The terms and conditions of the proposed merger will be presented for approval by the parties’ respective boards of directors and stockholders. The deal is subject to the requisite regulatory approvals as well.

More towns get access to financial services

By Melissa Luz T. Lopez,
Senior Reporter

OVER A THIRD of towns in the Philippines remained unbanked as of June 2017, although more areas gained access to formal financial channels compared to a year ago, results of a recent central bank survey showed.

Some 571 local government units (LGUs) remained without banks as of the first semester, or 34.9% of 1,634 cities and municipalities. This improved from 589 unbanked areas in June 2016, the Bangko Sentral ng Pilipinas (BSP) said in a statement.

Progress has been slow, with the decline in unbanked LGUs averaging at 0.9% annually from 2011 to 2016.

A total of 11,343 bank offices and 19,500 automated teller machines (ATMs) are operating nationwide as of end-June, with branches growing by an annual average of 4% over the last six years.

These platforms are “concentrated” in Metro Manila, Calabarzon, and Central Luzon, while the Cordillera Administrative Region and the Autonomous Region in Muslim Mindanao remained lagging, the BSP said in its latest Financial Inclusion report.

Access to banking offices remained limited in some areas, with 89 towns being served by micro-banking offices alone. These small bank outlets offer a limited array of services such as releasing small-scale loans, serving as bills payment centers and selling microinsurance products.

There are 44.4 million depositors holding 55.3 million bank accounts worth P10.998 trillion as of June 2017, against an estimated 101 million Filipinos. Of the number, 40% of the accounts are located in Metro Manila, accounting for two-thirds of total deposits.

Over 60% of bank accounts are considered low-value, with deposits at P5,000 or lower.

On the other hand, loans granted by banks reached P7.3 trillion as of end-June, with average annual growth at 17% over the past six years, the BSP said. Metro Manila borrowers took 85% of the outstanding credit.

Compared to regional peers, the Philippines stood in the middle of the pack in terms of access to banking, but is on the low end in terms of the number of accounts.

“In terms of usage, the number of deposit accounts per 10,000 adults in the Philippines was lower than most of our peers except Cambodia, Lao PDR, and Myanmar,” the central bank said.

NON-BANK OUTLETS
Meanwhile, non-banks stood as alternatives for areas in need of financial services with over 61,000 outlets, the BSP said, with the fastest expansion seen among electronic money agents.

“Pawnshops, cooperatives, and microfinance NGOs (non-government organizations) had wider presence than banks and were the most common financial service providers in unbanked areas,” the central bank said, noting that only a tenth of LGUs remain unserved if non-banks are taken into account.

Pawnshops have a wider presence compared to banks, as these outlets are available in 73% of the country’s towns and cities.

REFORMS
The BSP is counting on its recently approved guidelines for “branch-lite” units to broaden financial inclusion in the Philippines.

The rules approved in December essentially allow banks to set up dressed-down branches in provinces and non-business districts, which is expected to remove the intimidating vibe of the usual brick-and-mortar bank offices.

A measure that will allow banks to offer basic deposit accounts is likewise being prepared by the regulator, which will relax maintaining balances, dormancy charges, and identity documents. This is seen to serve as the entry point for unbanked Filipinos to finally get aboard the formal financial system.

The National Baseline Survey on Financial Inclusion released by the central bank in 2015 showed that only 43% of Filipino adults had savings, with 68% of them opting to keep their money at home rather than placing them as bank deposits.

The BSP will release the results of its second baseline survey within this quarter.

UBS looks to buy stake in China securities JV

UBS GROUP AG is in discussions to acquire a majority stake in its Chinese securities joint venture, Chief Executive Officer  Sergio Ermotti said, as global banks rush to take advantage of Beijing’s pledge to further open its financial markets.

UBS has started talks with its local partners on taking a 51% stake in the venture, Ermotti said in an interview in Shanghai on Monday with Bloomberg Television’s Tom Mackenzie. He also said UBS is ahead of its plan to double headcount in China over a five year period, saying the Zurich-based bank may have 1,200 staff in the country by the end of this year.

“So we are in line with our plans to grow our business, regardless of the stake,” Ermotti said. “But of course if we can have a more rounded financial participation in our business here, we do welcome that,” he added. He said the discussions on a 51% stake could be concluded in “a matter of months.”

Other global securities giants such as Morgan Stanley and Goldman Sachs Group Inc. have already signaled a desire to take majority stakes in their Chinese ventures, following the government’s announcement in November it would relax foreign ownership restrictions. China said it plans initially to allow 51% stakes before abolishing the cap completely after another three years.

The Swiss bank announced in early 2016 it planed to add about 600 people in China across wealth management, investment banking, equities, fixed income and asset management businesses over a five-year period.

It’s the first time UBS has confirmed talks on taking a majority stake in its China venture, over which it already has management control.

Before the government announcement, UBS had been working on a plan to boost its stake in its local venture to 49%, up from 25% at present. The four Chinese companies in the venture are Beijing Guoxiang Asset Management Co., China Guodian Capital, COFCO Group and a Guangdong transport company.

Goldman Sachs has quietly been laying the groundwork for taking control of its onshore securities business in China, holding discussions with its local partner Fang Fenglei, people familiar with the matter said in November. Morgan Stanley has already raised its stake in its local securities joint venture to 49% from one third, and aims to hold a majority once China gives details on how the rule change will be implemented.

However, Ermotti noted that a majority stake for UBS would be less significant because of its management control. “Honestly, strategically speaking it doesn’t really change at lot because we have been in full control from the managerial standpoint” in China, he said.

Recent hires in China were across the board, and included new staff for the bank’s risk management and technology functions. “So we are also developing knowledge and know-how that we export for the rest of the group from China,” he added. He welcomed extra clarity on Basel capital requirements but said it’s “premature” to make any announcement on share buybacks by UBS. He expects financial market volatility to increase.

“If I look into 2018, I do expect probably a more normalizing environment for volatility than the ones we saw in the last few quarters,” he said. He declined to comment on UBS’s relationship with HNA Group Co. — Bloomberg

Maynilad tapping Megawide, Toshiba’s UEM for P2-B project

ENGINEERING conglomerate Megawide Construction Corp. has secured a contract worth over P2 billion to design and build Maynilad Water Services, Inc.’s water treatment facility, allowing the company to diversify its portfolio.

In a disclosure to the stock exchange on Monday, Megawide said the Las Piñas Water Reclamation Facility is set to deliver 88 million liters per day (MLD) of potable water. Maynilad said its first water reclamation engineering project could support the requirements of 88,000 households.

“The Megawide construction business will continue its expansion this year, starting with Maynilad’s 88 MLD Las Piñas facility. We are actively seeking more projects outside the residential and commercial types to expand our portfolio,” Megawide Chairman Edgar B. Saavedra said in a statement.

The listed firm has partnered with Toshiba Group’s UEM India Pvt. Ltd. and LinkENERGIE Industries Co., Inc. for the project. 

The UEM group is an international firm based in India that provides services ranging from engineering and design to construction and installation of water, wastewater, and domestic waste treatment facilities, according to its Web site. The company was consolidated into the Toshiba group last 2015.

Meanwhile, LinkENERGIE is a local company that offers products and services primarily for the water sector.

“We partnered with UEM and LinkENERGIE to ensure delivery of the highest quality standards. UEM brings solid international experience in creating water treatment facilities and we are looking forward applying their world-class standards to this project,” Mr. Saavedra said.

The design and pre-construction work for the Las Piñas facility will start this month.

Megawide noted the Maynilad water facility is the first of many projects it has yet to unveil for the first quarter of 2018.

“Our construction business is off to a great start this year. We have a number of exciting new projects that we will announce very soon,” Mr. Saavedra said.

The Megawide executive further said they are looking at more projects similar to that of Maynilad’s, as part of a five-year diversification plan to accelerate its growth.

Unveiled in 2016, Megawide announced its strategy to enter four core businesses, namely construction, airport operation, transport, and power generation focused on renewable energy sources within the next five years.

For power, Megawide has acquired Citicore Power, a renewable energy firm committed to produce 1,000 megawatts of clean energy through solar, biomass, wind, and hydropower sources.

In airport operation, Megawide’s consortium with India’s GMR Infrastructure was recently awarded the contract to build a new passenger terminal for Clark International Airport in Pampanga. Megawide had the lowest bid for the project at P9.36 billion, around 25% lower than the ceiling price of P12.55 billion.

For transport, Megawide has a 35-year build-transfer-and operate contract for the Integrated Transport System-Southwest Project signed in 2015.

The listed company recorded a 5.7% growth in attributable profit for the first nine months of 2017 to P1.38 billion, against the P1.31 billion recorded in the same period a year ago. Revenues, meanwhile, climbed 4% to P14.5 billion during the period.

Shares in Megawide dropped eight centavos or 0.45% to close at P17.70 apiece at the Philippine Stock Exchange on Monday. — Arra B. Francia

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