Cryptocurrencies dropped sharply for the second time in less than 24 hours, sinking toward a nine-month low amid concern that broader adoption of digital assets will take longer than some anticipated.
Bitcoin, the largest cryptocurrency, tumbled as much as 9.8% and was trading at $6,422 as of 1:25 p.m. in Hong Kong, according to Bloomberg composite pricing. The Bloomberg Galaxy Crypto Index, a gauge of the largest digital assets, traded near its lowest level since November 2017 as rival coins Ripple, Ether and Litecoin also fell.
Cryptocurrency bulls who counted on an expanding user base to drive up prices have been dealt a string of recent disappointments. Business Insider reported on Wednesday that Goldman Sachs Group Inc. was pulling back on near-term plans to set up a crypto trading desk, while trading platform ShapeShift AG said on Tuesday that it will begin asking users for personal information — a policy that may drive away customers who value anonymity. The moves follow last month’s decision by U.S. regulators to reject another round of Bitcoin exchange-traded fund proposals.
“A lot of retail investors’ hopes for a bigger institutional presence were really being driven by Goldman Sachs,” Stephen Innes, head of trading for Asia Pacific at Oanda Corp., said by phone from Singapore. “This is just a negative, negative sign as far as liquidity goes.”
While many banks and institutional investors are dipping their toes into the world of cryptocurrencies, concerns about everything from money-laundering to market manipulation and unclear regulations have prevented widespread adoption. The market value of virtual currencies tracked by CoinMarketCap.com has slumped about 75 percent from its January peak to $204 billion.
The next key level to watch for Bitcoin is $5,000, according to Innes, who said a drop below that threshold may cause losses to accelerate. — Bloomberg
Approved foreign investment pledges rose by 70.4% in the second quarter, its highest in almost three years, the Philippine Statistics Authority said.
Preliminary PSA data showed approved foreign commitments by the country’s seven investment promotion agencies (IPAs) growing to P30.9 billion from P18.2 billion recorded in the same period last year.
The second-quarter result brought foreign commitments in the first half to P45.2 billion, 10% more than the P41 billion a year ago. — Vincent Mariel P. Galang
UnionBank of the Philippines is set to raise P20 billion through issuance of debt instruments to raise fresh funds.
In a regulatory filing on Thursday, Sept. 6, the Aboitiz-led UnionBank said its board of directors approved during its regular meeting the issuance of a bond or commercial paper amounting to P20 billion.
The fundraising activity can be done in multiple tranches.
Banks can now raise fresh funds through corporate bonds with greater ease starting this month, as new rules do away with having to secure approval from the Bangko Sentral ng Pilipinas to deepen domestic capital markets. — Karl Angelo N. Vidal
Financial services firm Credit Suisse said the local central bank needs to hike its interest rates by 50 basis points (bp) to dampen inflation expectation as the robust economic growth “comes at a cost.”
In a media briefing on Thursday, Sept. 6, Credit Suisse Managing Director and Chief Economist for Asia Pacific Ray Farris said that the Bangko Sentral ng Pilipinas (BSP) will likely raise its benchmark rates by 50 bp to temper inflation.
“We see a reasonable chance the BSP will want to send a signal to the markets that they recognize that the inflation is too high and it wants to ensure that it will come back under control by raising rates faster,” Mr. Farris told reporters. “We see a good chance for a 50 bp rate hike.”
Mr. Farris added that the central bank needs “re-establish a degree of balance in the system” to maximize economic growth in a longer period.
“You’re not really sacrificing growth because if you want to maximize growth over long periods of time, you need to keep inflation stable and low. So if the BSP doesn’t act and inflation continues to rise, it’s going to get worse.” — Karl Angelo N. Vidal
Manila Electric Co. (Meralco) announced on Thursday, Sept. 6, a decrease in electricity rates for September by P0.1458 per kilowatt-hour (kWh) to P10.0732 per kWh from P10.2190 per kWh.
The decrease translates in a reduction of around P29 in the monthly bill of a typical household consuming 200 kWh.
“We are pleased to announce that despite the recent figures released on inflation and a slight depreciation of the Peso, Meralco customers can find some relief in the decrease of power rates this month, as this goes against the current trend that we see with other basic goods and commodities,” said Meralco Spokesperson and Head of Public Information Office Joe Zaldarriaga. — Victor V. Saulon
Solar Philippines President Leandro L. Leviste has accepted the challenge of electric cooperatives to prioritize “unserved and underserved” areas in the Philippines in his drive to energize rural households, a move that was welcomed by the National Electrification Administration (NEA).
“We accept [National Association of General Managers of Electric Cooperatives’] challenge, so hope they stop opposing attempts by the private sector to enter these poorly served areas — as we’ve already done in 12 towns,” he said in a statement on Thursday, Sept. 6.
“The towns’ requests for better electric service have been ignored for years. Yet now they’re being served by an alternative provider, certain coops would prefer these towns have no power at all,” he added.
Sought for comment, NEA Administrator Edgardo R. Masonsong said he welcomes Mr. Leviste’s offer.
“Thank you for accepting the challenge. That is good for the country,” he told reporters on Thursday. “Everybody can help.” — Victor V. Saulon
Overseas Filipino Workers (OFWs) won’t need to avail an exit permit to leave Qatar after a new provision was enacted in the Arab state’s labor code.
The International Labor Organization (ILO) reported on Tuesday, Sept. 4, that Law No. 13 of 2018 will assure migrant workers’ fundamental rights to temporarily leave or exit the Arab state for good.
The new legislation, which amends provisions of Law No. 21 of 2015 and Law No. 1 of 2017 of Qatar’s labor code, will ensure migrant workers “will be able to leave Qatar without having to obtain such a permit.”
ILO reported that the new law may allow employers to “submit for approval to the Ministry of Administrative Development, Labour and Social Affairs the names of workers for whom a ‘no objection certificate’ would still be required, with a justification based on the nature of their work.” — Gillian M. Cortez
The Department of Public Works and Highways (DPWH) opened on Thursday, Sept. 6, three new bridges in Pampanga and Bataan to replace the existing infrastructure in the region that have weakened over time.
In a statement, the DPWH said the Pasac-Culcul Bridge 1 and 2 connecting Sto. Tomas to Minalin Road in Pampanga and the Samal Bridge linking Jct Layac, Balanga and Mariveles Port Road in Bataan are now passable to vehicles.
“These new 2-lane bridges were constructed under the DPWH Bridge Construction Replacement Program (BCRP) I Contract Package 2 implemented by DPWH UPMO-Bridge Management Cluster to provide safer, sturdier linkage along national roads that also serve as diversion roads and help decongest traffic along major thoroughfares,” DPWH Secretary Mark A. Villar was quoted as saying. — Denise A. Valdez
International Container Terminal Services, Inc. (ICTSI) will be increasing its stake to 50% in Habor Centre Port Terminal, Inc.’s Manila North Harbor Philippines, Inc. (MNHPI) after both parties agreed to the transaction last Wednesday, Sept. 5.
In a disclosure to the bourse on Thursday, Sept. 6, the ICTSI said it signed a share purchase agreement to acquire 4.55 million shares in MNHPI, or another 15.17% of total stocks for P910 million. This would increase ICTSI’s shareholdings in MNHPI from 34.83% to 50%.
However, “the completion of the Share Purchase Agreement remains subject to a number of conditions precedent,” the company said.
The Razon-led business said that it will be able to “contribute its experience, expertise and state-of the-art technology and infrastructure to enhance the operational efficiency of the domestic terminal in the Port of Manila and improve the traffic condition in Metro Manila.”
Likewise, the “transaction will further improve the returns of ICTSI’s shareholders through this value-accretive acquisition,” the company added.
Prior to this recent acquisition, ICTSI has acquired 34.8% of the shares from Petron Corp. late last year as the latter moves to focus on its core business. — Anna Gabriela A. Mogato
SM Group of Companies founder Henry T. Sy, Sr. is still the country’s richest tycoon for 11 consecutive years, according to this year’s Forbes Philippines Rich List.
Mr. Sy managed to stay on top of the country’s ranking of wealthiest individuals after his net worth climbed from $18 billion to $18.3 billion.
However, former senator and businessman Manuel B. Villar Jr., who came in second place, posted the most gains as his net worth jumped from $1.65 billion to $5 billion. Forbes noted that his Golden Bria Holdings Inc. shares grew 1,300% in the first quarter. Golden Bria’s businesses include death care, through Golden Haven, Inc. and mass housing through Bria Homes, Inc.
JG Summit Holdings founder John L. Gokongwei Jr. and Ayala patriarch Jaime Zobel de Ayala took third and fourth place, respectively.
The nonagenarian Mr. Gokongwei’s net worth was estimated at $4.4 billion. Mr. Zobel, on the other hand, clinched the fourth spot after his wealth grew to $4 billion, $300 million higher from a year ago.
Port management magnate Enrique Anselmo K. Razon, Jr., who posted a net worth of $3.9 billion, finished fifth place.
To come up with the list, Forbes Asia compiled information based from the businessmen, analysts, the Stock Market, private databases and government agencies.
“Net worths were based on stock prices and exchange rates as of the close of markets on August 24, 2018,” Forbes Asia in a statement said. To make it to the list, a businessman has to have at least a $125 million net worth, $5 million higher from last year’s requirement.
“Private companies were valued by using financial ratios and other comparisons with similar publicly traded companies.” — Anna Gabriela A. Mogato
A WORKER repacks rice grains imported from Vietnam at a National Food Authority warehouse in Quezon City in this Sept. 5, 2008 photo. — AFP
HEADLINE INFLATION in August caught state economic managers and financial markets by surprise, shooting up to its fastest clip in almost a decade, according to official data the Philippine Statistics Authority (PSA) released on Wednesday.
PSA data showed that the prices of widely used goods increased by 6.4%, higher than July’s 5.7% and August 2017’s 2.6%. The latest figure was the fastest since March 2009 when it registered 6.6%.
August’s pace also pierced the 5.5%-6.2% range estimated by the Bangko Sentral ng Pilipinas’ (BSP) Department of Economic Research as well as the 5.9% estimate of the Department of Finance and the median in BusinessWorld’s poll of economists.
Year-to-date, headline inflation averaged 4.8%, higher than the BSP’s target range of 2-4% for the year and right below its upward-revised 4.9% forecast for 2018.
Core inflation, which excludes food and energy items, clocked in at 4.8%, higher than last month’s 4.5% and August 2017’s 2.2%.
Financial markets reeled from the data, with the Philippine Stock Exchange index dropping 1.64% to 7,752.27 and the peso weakening to a fresh 12-year-low P53.55 to the greenback. NEED FOR ACTION
“An unfortunate confluence of cost-push factors continues to drive consumer price inflation in August beyond the acceptable target range. Much of it has to do with food supply shocks, [r]ice in particular,” BSP Governor Nestor A. Espenilla, Jr. told reporters via Viber yesterday, adding that these factors “warrant more decisive non-monetary measures.”
“Elevated oil prices also continue to impact transport and power prices. At the same time, the peso (along with other currencies) is being adversely affected by emerging market uncertainties and a strong US dollar. These are adding to the cost-push pressures.”
The central bank governor further cautioned that the strong domestic demand is “making it too convenient” for producers and traders to pass on higher costs to consumers.
The food-alone index for August was 8.2%, higher than last month’s 6.8% and last year’s 3.1%. The PSA noted that, except for corn, most food subindices posted higher annual mark-ups in August.
“The government, particularly the Department of Agriculture, must act quickly and fervently with a sound judgment to ease the increasing prices of agricultural commodities which are the main drivers of inflation,” Socioeconomic Planning Secretary Ernesto M. Pernia was quoted in the statement of the National Economic and Development Authority (NEDA) as saying.
“While the government’s economic team expected inflation to peak in the third quarter before tapering off towards the latter part of the year, inflation in August is largely beyond the median market forecast. That is why we remain steadfast in putting forward measures that will address prices, especially for food.”
NEDA issued a separate joint statement of the Cabinet’s economic development cluster which met Wednesday “to address food inflation.” The meeting — among representatives of BSP, NEDA, the Department of Finance, the Department of Budget and Management, the Department of Trade and Industry (DTI), the Department of Agriculture (DA), the Department of Justice, the Bureau of the Treasury and the National Food Authority (NFA) Council — drew up a list of “immediate reforms for reducing food prices”, including “immediately” releasing 4.6 million sacks of rice from NFA warehouses “to the market across the country”; authorization by the NFA Council for importation of 5 million sacks of rice that will arrive in the next one-and-a-half months and another 5 million sacks to arrive “early next year”; facilitating the distribution of imported fish to wet markets; formation of teams consisting of law enforcers and farmers groups to monitor transport of rice from ports to NFA warehouses to retail outlets; DA to provide cold storage for chicken and, with DTI, to put up outlets where producers can sell directly to the public; while the Bureau of Customs “will prioritize the release of essential food items in the ports”.
In a separate statement, Albay Rep. Clemente “Joey” S. Salceda, senior vice-chairman of the House of Representatives committee on ways and means, said that the August inflation was “self-inflicted.”
“Ultimately, the 6.4% [August inflation figure] was really due to the fact that we did little or nothing. We can no longer blame [market profiteers] and rice hoarders. The only notable measure we implemented in response was the 50 basis point (bp) increase in policy rates of the BSP, but it would take a lag of 6-18 months for monetary action to gain traction in containing aggregate demand,” Mr. Salceda said.
“[W]hat is more worrisome is that it would reverse gains in poverty reduction and hunger mitigation since the main culprit is food inflation… Thus, the inflation of the poor (lowest 30%) is estimated at 7.4%.”
The Development Budget Coordination Committee (DBCC) — which is composed of the Department of Budget and Management, Department of Finance, and NEDA — will convene later this year to adjust upward its inflation assumption for the year, even as it will keep the estimate for 2019, and possibly review the economic growth target as well.
“The DBCC meets quarterly; so in the light of this we will call for a meeting,” Budget Secretary Benjamin E. Diokno said in a media briefing yesterday when asked whether the government will review its economic assumptions.
Asked whether the DBCC’s new inflation forecast could reach 5%, Mr. Diokno said: “There’s always a possibility.”
The body currently forecasts a 4-4.5% inflation rate for 2018 and 2-4% in 2019.
He said the body will also consider adjusting the gross domestic product growth for this year, following the slower-than-expected six percent economic growth figure in the second quarter that fueled a 6.3% expansion last semester against the year-ago 6.6%. OUTLOOK
“The BSP will be looking more closely at the latest data to reassess the medium-term inflation path. We also need to consider external developments and US [Federal Reserve] actions to the extent these exert undue pressure on the peso,” BSP’s Mr. Espenilla said.
“Under the circumstances, we will weigh the need for further monetary policy action. Appropriate recommendations will be presented to the MB (Monetary Board) on Sept. 27 at its next policy meeting. It is most critical at this point to restore inflation back to the target range soonest and securely anchor inflationary expectations.”
Economists interviewed were largely in agreement that the latest inflation data made the case for another rate hike.
“The chances of another aggressive monetary policy action has zoomed as inflation surged. Another 50bp policy rate hike at the Sept. 27 meeting is a real possibility,” said ING Bank N.V. Manila senior economist Jose Mario I. Cuyegkeng.
ANZ Research likewise expects a stronger policy response, saying in a research note: “With inflation surpassing six percent for the first time since March 2009… bringing it back below target will require more policy response given cost-push pressures in the economy.”
“We now expect BSP to increase its overnight reverse repurchase rate by 50 bp at the upcoming Sept. 27 meeting to 4.50%, compared to our earlier expectation for a 25 bp hike.”
For Nomura economist Euben Paracuelles: “[T]his higher-than-expected pick-up in headline inflation could further stoke inflation expectations, raising the risk of BSP hiking again by a relatively aggressive 50bp this month, with possibly more to come.” — VMPGandElijah Joseph C. TubayanwithC. A. Tadalan
HEADLINE INFLATION in August caught state economic managers and financial markets by surprise, shooting up to its fastest clip in almost a decade, according to official data the Philippine Statistics Authority (PSA) released on Wednesday. Read the full story.
