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Manila Water expands footprint in Indonesia

MANILA WATER Co., Inc. is expanding its footprint in Indonesia, as a subsidiary acquires a 20% stake in a bulk water company that serves part of Central Java province.

In a disclosure to the stock exchange, the Ayala-led company said its subsidiary PT Manila Water Indonesia (PT MWI) signed the share purchase agreement with PT. Triguna Rapindo Mandiri to acquire 4,478 shares of PT. Sarana Tirta Ungaran (STU).

The move will allow PT MWI to own 20% of the outstanding capital stock of STU, it said.

Metro Manila’s east zone water concessionaire described STU as a bulk water supply company serving PDAM Kabupaten Semarang and industrial customers in Bawen, located in Ungaran area of Semarang Regency, Central Java Province, with a capacity of 21.5 million liters per day.

“[T]his acquisition expands our footprint in Indonesia, after the successful completion of our showcase leakage reduction project in Bandung in 2017. This clearly demonstrates our continued interest in the Indonesian market and provides an opportunity to further strengthen our growth platform and harness the vast potential for synergies within the ASEAN region,” said Virgilio C. Rivera, president of   Manila Water Asia Pacific Pte. Ltd., in a statement.

The unit holds Manila Water’s investments in various project companies in the region.

Manila Water will use internally generated funds to finance the transaction.

The deal comes less than a month after Manila Water signed a share purchase agreement to acquire an 18.72% stake in a publicly listed water supply and distribution company in Thailand.

The company said the stake in Eastern Water Resources Development and Management Public Co. Ltd. is its first point of entry in Thailand as part of the its expansion in Southeast Asia.

Manila Water’s entry in Thailand and Indonesia comes after its foray into bulk water and concession projects in Vietnam, where it has become largest direct foreign investor in that country’s water sector supplying half of the bulk water requirements of Ho Chi Minh City.

Shares in Manila Water rose 55 centavos or 2.12% to P26.55 each. — Victor V. Saulon

Yields on BSP’s term deposits increase

By Melissa Luz T. Lopez
Senior Reporter

BANKS SCRAMBLED to place more funds under the central bank’s term deposit facility (TDF) following lower reserves which took effect on Friday, even as yields climbed from the previous week.

Demand for term deposits surged to P146.856 billion yesterday, jumping from the P117.127- billion tenders received the previous week and well above the P110 billion offered by the Bangko Sentral ng Pilipinas (BSP), with over half of the bids swarming the seven-day tenor.

The week-long instruments received P80.026 billion in total bids, nearly double the P43.751 billion in offers a week ago and settling beyond the P50 billion dangled by the central bank.

Despite the oversubscription, the average yield picked up to 3.1767% from 3.0685%.

On the other hand, bids for the 14-day term deposits slipped to P43.31 billion from P44.497 billion previously, although still higher than the P40 billion dangled by the BSP.

Players sought for returns ranging from 3-3.3% to average 3.1674%, up from 3.0984% the previous week.

Demand for the 28-day tenor also declined to P23.52 billion from P28.879 billion a week ago, although still settling above the BSP’s P20-billion offering. Lenders asked for yields averaging 3.2627%, higher than the 3.1665% they sought a week prior.

The TDF stands as the central bank’s main tool in mopping up excess funds in the financial system. The facility allows banks to park idle cash under the BSP in exchange for a small return.

The BSP expects to use auction-based monetary operations to have a better handle on market loan rates, after it introduced a one percentage point cut in the reserve requirement ratio (RRR) imposed on universal and commercial banks.

The adjustment, which took effect March 2, is said to be operational as it seeks to reduce market distortions created by the “ultra-high” RRR.

“TDF auction results confirm success and effectiveness of our operational adjustment,” BSP Governor Nestor A. Espenilla, Jr. said in a text message to reporters, pointing out “strong participation” among market players.

“Resulting yields trace a pattern consistent with healthy price discovery in line with macroeconomic fundamentals,” the central bank chief added.

The reserve cut will unlock around P90 billion into the financial system, which the BSP expects to capture through the TDF and other policy tools.

Any excess cash which have not been deployed for loans, foreign exchange and debt payments can be parked under the central bank window in order to make small gains, which in turn is expected to bring market rates closer to the 3% benchmark set by the BSP.

For next week, Mr. Espenilla said latest liquidity forecasts “suggest no change in offer volumes.”

This means that the BSP will likely keep the total auction amount at P110 billion, split into P50 billion under the seven-day term, P40 billion for the two-week tenor, and P20 billion for month-long maturities.

UK video game sector, home of Lara Croft, fights gender imbalance

LONDON — Giving life to a black elf in a fantasy video game, softly spoken schoolgirl Hannah leans into the microphone to deliver an ominous warning: “This world, and everything in it, will burn!”

With seven other schoolgirls, the 13-year-old is learning the tricks of the gamer trade as part of an initiative to encourage more girls to enter the industry.

For the past three years Creative Assembly, one of Britain’s largest video game developers, has hosted girl-only workshops at its offices in Horsham, South London.

“We encounter a lot of feedback from school students and parents,” said Jodie Azhar, lead technical artist on Total War: Warhammer, the studio’s flagship series.

“We want to address these misconceptions such as ‘it’s easier for men to find jobs than it is for women in this industry’ and ‘my mom tells me to get a real job.’”

With her rectangular glasses and red highlights, Azhar knows as a young female that she is an exception in Britain’s video game industry.

According to a 2016 study, women fill only 19%of jobs, despite the fact that women make up half of British gamers.

“In that 19%, how many of those women are actually making games?” asked Marie Claire Isaaman, president of the Women in Games group, which seeks to increase female representation.

“If I look to a range of other data, most women aren’t making games,” she added. “So you have all male team(s) developing female characters. That can be a big problem.”

GAMERGATE AND LARA CROFT
For Azhar, this shortage is primarily linked to education.

“I think the biggest issue with women getting in the industry comes from a school age,” she told AFP.

“Although I loved playing video games, I didn’t realize that making them could be a professional career. At school, I never got told about theses jobs.”

Much of the disparity can be traced back to a supply shortage, with fewer girls choosing to study STEM (Science, Technology, Engineering and Mathematics) subjects, according to Richard Wilson, head of the Independent Video Game Developers’ Association in the UK.

Studios “can actively go out and try to encourage more women to get a career in the video games industry,” he suggested.

Part of the imbalance has also been ascribed to negative attitudes within the video game world, claims that boiled over in 2014 with the so-called “Gamergate” incident.

The row centred on accusations that journalists were artificially boosting games created by female developers, but soon took a dark turn with death and rape threats leveled against independent developer Zoe Quinn.

On the flip side, studios now appear less hesitant to cast women as main characters, such as in recent releases Horizon: Zero Dawn and Uncharted: The Lost Legacy.

In recent years, more and more women have also joined development teams.

And the sector is booming: the UK has more than 2,000 studios, employing around 13,000 people, and the industry grew by 7%in 2017.

The country boasts some of the industry’s most prestigious names, such as the Rockstar North studio in Scotland, creator of the Grand Theft Auto series, and London’s Rocksteady.

“Things are going in the right direction,” said Isaaman, who hopes that 40%of the industry will be female by 2025.

Not surprisingly, Britain is seeking to be at the forefront of the global debate.

After all, it was near Derby in central England in 1996 that now-defunct studio Core Design gave birth to Lara Croft, one of the most iconic gamer characters of all time. — AFP

Cebu Air forms ground-handling services company

CEBU AIR, Inc., listed operator of budget carrier Cebu Pacific, is venturing into ground-handling services at the airport.

In a disclosure to the stock exchange on Wednesday, Cebu Air said the Securities and Exchange Commission (SEC) approved the incorporation of its subsidiary 1Aviation Groundhandling Services Corporation.

Cebu Pacific had previously tapped MIASCOR Ground Handling Corp. for services at the Ninoy Aquino International Airport (NAIA).

However, the Manila International Airport Authority (MIAA) in January said it will not renew the contract of MIASCOR after several reports of luggage theft involving the latter’s employees.

MIASCOR entered into a lease and concession agreement with MIAA in July 2014. The deal expired in March 2017, but has been renewed monthly.

MIAA had previously said its contract with MIASCOR will be finally terminated on April 21.

Aside from Cebu Pacific, MIASCOR provides services to several carriers such as Malaysia Airlines, Asiana Airlines, United Airlines, Turkish Airlines and Qantas at NAIA.

Cebu Air reported a net income of P4.376 billion during the first nine months of 2017, 38% lower than the P7.098 billion earned in the same period last year. Nine-month revenues were up 8% to P50.33 billion, but expenses likewise jumped 16% to P43.08 billion due to the hike in fuel prices and weakening of the Philippine peso against the US dollar.

Zagat on the menu for restaurant review site Infatuation

SAN FRANCISCO — Restaurant review new-comer The Infatuation announced Monday a deal to buy veteran Zagat from Google for an undisclosed amount.

Since Google bought Zagat a little more than six years ago for a reported $151 million, the long-established service for evaluating dining experiences has seen appetites turn to Internet age services such as Yelp.

“Zagat has helped us provide useful and relevant dining results for users across our various products,” Google vice-president of product Jen Fitzpatrick said in a joint statement.

“The Infatuation is an innovative company that will be a terrific home for the Zagat brand.”

The Infatuation planned to cook the Zagat brand into its Web site and mobile application as part of a stated mission to become an influential global restaurant discovery platform.

“Iconic brands don’t become available very often, and Zagat is about as iconic as it gets,” Infatuation cofounder and chief executive Chris Stang said.

Zagat will remain a separate platform, working in tandem with The Information, according to the company.

Zagat was founded in 1979 by Tim and Nina Zagat, serving restaurant ratings in printing guides and online. The team of reviewers grew, as did the types of industries covered in guides.

The Infatuation launched in 2009, particularly targeting smartphone-generation restaurant seekers, and boasts reaching more than three million people monthly in an array of cities around world.

“Tim and I are very excited for Zagat’s next chapter with The Infatuation,” Nina Zagat said. — AFP

Gross international reserves slip in Feb.

DOLLAR RESERVES slipped anew in February due to lower gold valuations, and as the central bank used the funds to intervene during the daily foreign exchange trading.

Gross international reserves (GIR) totalled $80.618 billion last month, down for the second straight month coming from $81.224 billion in January, the Bangko Sentral ng Pilipinas (BSP) reported yesterday.

The figure also declined from $81.436 billion worth of reserves in February 2017, and is the lowest since November’s $80.31 billion level.

In a statement, the central bank said the decline in reserves came were mainly due to their foreign exchange operations, as well as payments made by the national government for its foreign debts.

The central bank sometimes uses the reserve fund to influence daily peso-dollar trading by buying or selling more units in line with the BSP’s “tactical intervention,” in order to temper sharp swings in the exchange rate.

The BSP’s foreign exchange holdings jumped to $6.203 billion from $5.752 billion a month prior. Central bank officials previously said that a weaker peso actually meant trading gains for the central bank, as the regulator remains long on dollars.

The peso averaged P51.7856 versus the greenback in February as it touched 12-year-lows, coming from a P50.5087 average in January.

Lower gold valuations in the international market also led to the GIR decline, with the value of the BSP’s gold holdings down to $8.308 billion from $8.501 billion in January.

Income from the central bank’s foreign investments likewise dropped to $64.442 billion, coming from $65.304 billion in January and the $68.203 billion a year ago, data showed.

The BSP said higher foreign currency deposits helped offset declines in several reserve components. In particular, $1 billion new money raised from the Philippines’ global bond offer in January boosted net funding.

Reserves kept with the International Monetary Fund (IMF) inched lower to $428.6 million from $431.5 million. On the other hand, special drawing rights — or the amount which the Philippines can tap under the IMF’s reserve currency basket — steadied at $1.236 billion.

February’s GIR stash compares to the $80-billion level expected by the BSP by end-2018, which would be lower than the $81.57 billion posted in December 2017.

Despite the decline, the GIR can still cover up to 8.2 months’ worth of import payments, well above the three-month global standard. It can also pay up to 5.9 times the country’s short-term external debt on original terms, and up to 4.2 times when computed on residual maturity.

International reserves are composed of gold, the BSP’s assets expressed in foreign currencies, country quotas with the IMF, and foreign currency deposits held by government and state-run firms. — Melissa Luz T. Lopez

BSP unlikely to hike rates despite pickup in inflation

ING BANK N.V. and Capital Economics said the Bangko Sentral ng Pilipinas (BSP) is unlikely to hike interest rates even as inflation continued to pick up in February.

In a report posted on Wednesday, ING Bank Manila branch senior economist Jose Mario I. Cuyegkeng said they are expecting the BSP to keep policy settings unchanged at this month’s review.

“With BSP’s conviction and reiteration, we now expect a steady monetary policy decision at the March 22 policy rate meeting,” Mr. Cuyegkeng said.

This comes despite the upward trend in inflation. On Tuesday, the Philippine Statistics Authority reported that prices of widely used goods rose 4.5% in February, calculated using the older model based on 2006 prices. This picked up from 4% in January as well as 4.2% consensus among economists in a BusinessWorld poll.

Inflation also rose to 3.9% in February when calculated using 2012 as the new base year, faster than 3.4% booked the previous month and 3.1% in February last year.

WATCH: HOW LONG CAN THE BSP PUT OFF A RATE HIKE?

Mr. Cuyegkeng attributed the quicker inflation print last month to the “[t]ax reform related impact together with higher oil prices, power rates and food prices,” adding that the price pressure will keep inflation elevated in the next six months.

But despite the recent trend of rising prices of goods and services, global economic research firm Capital Economics shared the sentiment of the BSP that higher inflation is only transitory.

“[T]he jump in inflation since the start of the year has been mainly down to temporary factors, most notably an increase in indirect taxes on high-sugar drinks, tobacco and alcohol,” Capital Economics said. “Although the year-on-year rate of inflation will remain elevated throughout 2018, it should drop back at the start of next year.”

“We continue to believe that interest rates in the Philippines will remain on hold at least until the end of the year,” Capital Economics said in a report.

BSP Governor Nestor A. Espenilla, Jr. said this week that the continued pickup of inflation will not necessarily prompt the central bank to tighten its monetary policy setting in their next meeting.

“The elevated February inflation figure is in line with our updates forecast for a temporarily higher inflation than target range in 2018 due to transitory factors,” Mr. Espenilla said in a text message to reporters on Tuesday.

“That’s why we don’t necessary react to February 2018, but must look much further ahead and rely on forecasts.” — K.A.N. Vidal

Lego CEO wants to combine apps with blocks

THE MAN running Lego A/S wants to merge the toy maker’s iconic building blocks with digital gadgets to help revive a slump in sales.

“We see this as a way of keeping children interested for a longer time, also for later age groups,” Chief Executive Officer Niels B. Christiansen said in an interview. “We are doing a lot in this area and we want to do more.”

Christiansen, who became CEO in October, is trying to keep Lego relevant to a generation of children whose obsession with screens has left physical toys less popular. Lego has so far had mixed results with its digital forays. While the 2014 The Lego Movie and some of the company’s video games were successful, its big 2010 bet on an online multiplayer computer game, Lego Universe, was a flop.

Christiansen says the basic building block will still be the focus as Lego designs new products. He pointed to “Lego Boost” (allows children to build their own toys and then program them to move using a smartphone app) as an example of what he wants to see more of.

“We need to get Lego focused on the right things,” he said. “We must have strong and innovative products.”

Christiansen took over just as Europe’s biggest toy maker hit a wall, ending a decade-long streak of surging revenue and profits. From 2010 to 2015 alone, sales more than doubled as then-CEO Jorgen Vig Knudstorp returned record profits to the owners, the billionaire Kirk Kristiansen family.

But growth took place at what the Danish company has called a “supernatural” pace and the organization simply got too big. In 2017, sales and profit slumped as Lego had to reduce inventories that were based on excessively optimistic forecasts. It cut 1,400 jobs, about 8% of its work force.

Christiansen says the cleanup is now over, with sales expected to start growing again next year.

“Right now we’re focusing on a few priorities and using our new organizational structure to move more decisions out closer to consumers and to the market,” the CEO said. “It’s obvious that we win in the long run by being the most creative.” — Bloomberg

PAL adds more flights to Australia

PHILIPPINE AIRLINES (PAL) is adding more flights between Manila and Melbourne in June, after seeing strong passenger traffic on the route.

In a statement, the flag carrier said it will operate five weekly Manila-Melbourne frequencies beginning June 1, from the current thrice weekly service.

“Passenger loads between Melbourne and Manila have been consistently in the high 80s, while Sydney-Manila has been in the high 80s to 90s since we utilized the A330 tri-class for the equally popular route,” PAL Vice-President for Sales Ryan T. Uy was quoted as saying in a statement.

PR207 leaves Manila every Wednesday and Friday at 4:45 p.m. and arrives in Melbourne at 3 a.m. local time the following day. The return flight PR208 departs Melbourne every Thursday and Saturday at 5:40 a.m. local time and arrives in Manila at 10:55 a.m. on the same day.

PR209 departs Manila at 9:10 p.m. on Tuesdays, Thursdays and Saturdays, and lands in Melbourne at 8:30 a.m. local time the following day. On Wednesdays, Fridays and Sundays, PR210 leaves Melbourne at 10:15 a.m. local time and touches down in Manila at 3:30 p.m. on the same day.

PAL, which recently received a four-star certification from air transport rating organization Skytrax, is also shifting to a thrice weekly non-stop service between Manila and Brisbane starting March 28.

PR221 will leave Manila at 11:30 p.m. every Wednesday, Friday and Saturday, and will land in Brisbane at 9:20 a.m. local time the following day. PR222 will depart Brisbane every Thursdays, Saturdays and Sundays at 11 a.m. local time and arrive in Manila at 5 p.m. on the same day.

Sweet-toothed fashionistas delight in chocolate clothes

BRUSSELS — In a dream mix for sweet-toothed fashionistas, models strutted the catwalk in Brussels draped in fanciful clothes made with chocolate.

The fashion show, which teams designers with chocolatiers and pastry chefs from more than 15 countries, kicked off the annual three-day Salon du Chocolat chocolate fair in Belgium’s capital on Thursday evening.

Chocolate was moulded into whimsical designs from evening gowns to cocktail dresses to hats.

The international fair, where visitors can sample sweets from more than 130 participants, plays to Belgium’s reputation as a leading chocolate maker.

“Once again, it’s a dream that becomes reality and we are salivating already,” Brussels City Mayor Philippe Close said in a statement. — Reuters

Pilipinas Shell gets P9-B loan

PILIPINAS SHELL Petroleum Corp. has entered into a P9-billion medium-term loan agreement with Bank of the Philippine Islands, the company told the stock exchange on Wednesday.

Pilipinas Shell said it obtained the loan “to avail of lower interest rates and refinance existing loans.” The company noted its gearing ratio will remain the same.

Based on the company’s financial report as of the third quarter of 2017, its gearing ratio was at 22%, down from 27% as of December 2016.

Gearing ratio is a measure of the company’s financial leverage reflecting the degree to which its operations are financed by debt. It said the amount of debt that the company will commit depends on cash inflow from operations, divestment proceeds and cash outflow in the form of capital investment, dividend payments and share repurchases.

Pilipinas Shell said it aims to maintain an efficient statement of financial position to be able to finance investment and growth, after the funding of dividends.

The gearing ratio is calculated as net debt divided by total capital. Net debt is derived from total loans and borrowings less cash and cash equivalents. — Victor V. Saulon

ECB cautious as bonds show end of decoupling

EUROPEAN Central Bank (ECB) officials considering when to end their bond-buying program have a new reason to move carefully: US inflationary pressures are helping to push up euro-zone borrowing costs.

President Mario Draghi and his colleagues spent years insulating the single-currency area from global financial markets as it recuperated from a double-dip recession, debt crisis and brush with deflation. Now yields on German bonds — the closest thing to a regional benchmark — are rising largely in tandem with US Treasuries as the world undergoes a synchronized expansion, suggesting that decoupling is coming to an end.

Higher US yields spilling over to Europe could force the ECB to prolong asset purchases even further after the current phase ends in September. Unlike the Federal Reserve, which is predicted to raise interest rates at least three times this year to keep consumer prices under control, the Frankfurt-based institution is still well short of its inflation goal.

Draghi has repeatedly urged persistence in providing stimulus, and has an opportunity to renew his call on Thursday, when the Governing Council meets to set policy.

Borrowing costs in the euro area’s financial sector, according to calculations by Bloomberg Economics, have already risen and are set for more increases.

“The shadow policy rate, which distills borrowing costs at important maturities across the whole yield curve into a single figure, has jumped of late,” said Bloomberg economist Jamie Murray. “In time, that can be expected to feed through to the actual rates paid by borrowers.”

Martin van Vliet, a senior interest-rate strategist at ING Bank NV, sees a “high degree of curve movement” between the US and German bond markets, and says that while rates are bearable for now, they could become a worry for the ECB.

“Obviously if Treasury yields would quickly move to say 3.3% and bund yields at 1%, then we’re getting into an area where the ECB would get a bit concerned,” he said.

Any push to extend the bond-buying program could spark dissent within the decision-making Governing Council, where some members argue that rising yields are simply a consequence of the euro area’s own economic growth, the most broad-based in its near two-decade history.

Just two days after quantitative easing started in March 2015, Governing Council member Ewald Nowotny said yields would eventually rise and that would be a sign of the program’s success. Asset purchases are set to total at least €2.55 trillion ($3.2 trillion).

CONSCIOUS UNCOUPLING
“Decoupling was desirable for the ECB while the recovery in Europe was still in its earliest stages while the Federal Reserve was already starting normalization,” said Marco Valli, an economist at UniCredit in Milan. “Today things are different: the increase in yields is partly a consequence of Europe’s robust expansion and it shouldn’t be an issue as long as it is contained.”

Yet the central bank has frequently warned that it’ll guard against any “unwarranted” tightening that may scupper what progress has been achieved.

That was precisely the concern in 2013, after the Fed sparked a global spike in bond yields by announcing it would consider reducing its debt-buying program. In the two years following that “taper tantrum,” ECB policy makers added forward guidance, negative interest rates, long-term loans and asset purchases to their arsenal of monetary weaponry.

Euro-zone yields have been edging higher since mid-2016 but generally shrugged off political shocks such as the UK’s Brexit vote. They remained low even as US yields jumped following Donald Trump’s election as president, when investors bet that the new administration would step up spending.

But with rates still well below pre-crisis levels, the upward trend has room to continue. That could require an ECB response, though one that Richard Barwell, an economist at BNP Paribas Asset Management, says it’s fully capable of delivering.

“Putting the spotlight on decoupling in policy rates was a neat rhetorical device,” he said. “But in the end it’s financial conditions that matter. The ECB is still the master of its own destiny in the euro area and, if necessary, could act fast to set markets straight.” — Bloomberg

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