Cavite-Laguna expressway fund-raising extended

July 30, 2018 | 12:02 am

THE METRO PACIFIC group is pushing back its target closing of fund-raising for the Cavite-Laguna Expressway (CALAX) to August from its original end-July target.
MPCALA Holdings, Inc. President Luigi L. Bautista said in a text message on Sunday that the change in closing date is because the “financial close is being timed with the acquisition of the balance of right of way in Laguna and Cavite.”
He told reporters on Thursday, after an awarding ceremony with the Department of Public Works and Highways (DPWH) for another project, that he was anticipating to close the P25.3-billion CALAX financing by next month.
Mr. Bautista said the budget would be used for both the Cavite and Laguna sides of the expressway, but the company was already using equity for part of the Laguna side, which has already started construction.
He added, the funding will be sourced from around six local banks. “We went to each and every one of them. But we talked to them as a group,” Mr. Bautista said.
MPCALA Holdings, a part of the Metro Pacific Tollways Corp. (MPTC), is the private concessionaire for the 45.29-kilometer CALAX project. Once finished, the toll road will connect the South Luzon Expressway (SLEx)-Mamplasan interchange to the Cavite Expressway (CAVITEx).
Mr. Bautista said earlier this month that segments 7 and 8 in the Laguna side of CALAX is 45% complete. It is targeted to be fully completed by the first quarter of 2019.
The whole Laguna segment begins at Laguna Boulevard and ends in Mamplasan, Biñan. The road is supposed to reduce travel time from the two ends by half.
For the Cavite side, the DPWH said earlier it was yet to deliver the right of way by mid-next year. But initial construction work is eyed to begin by the third quarter of this year.
The CALAX project is expected to be completed by 2020. The four-lane expressway is aimed to cut travel time from SLEx to CAVITEx by 45 minutes.
MPTC is the tollways unit of Metro Pacific Investments Corp. (MPIC). MPIC is one of three key Philippine units of Hong Kong based First Pacific Co. Ltd., the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Yields on government debt climb on bets of BSP hike

July 30, 2018 | 12:01 am

EXPECTATIONS of faster economic growth in the US pushed yields on local government securities (GS) north last week, coupled with hawkish comments by the Bangko Sentral ng Pilipinas (BSP) governor that fuelled bets of another rate hike in August.
GS yields went up 12.96 basis points (bp) on average last week, data from the Philippine Dealing & Exchange Corp. as of July 27 showed.
“The increase in GS yields [last] week can be traced to three factors: indications from the BSP of another rate hike in August, expectations of upbeat US second-quarter GDP (gross domestic product) growth, and positive developments regarding the trade talks between the US and the European Union (EU),” said Guian Angelo S. Dumalagan, market economist at Land Bank of the Philippines (LANDBANK).
Ruben Carlo O. Asuncion, chief economist at the UnionBank of the Philippines, shared the same view on expectations of another BSP rate hike next month.
“There seem to be some consistency with yields going sideways but upward bias in the short-term. Market players are waiting and anticipating the ‘strong follow-through monetary adjustment’ communicated by the BSP Governor recently,” he said.
He added that the “clarity” on the state of further cuts in the reserve requirement ratio (RRR) “may have also played a role that signals a more contractionary or hawkish stance by the BSP consistent with how inflationary pressures should be addressed.”
In a speech last July 20, BSP Governor Nestor A. Espenilla, Jr. said the Monetary Board is considering a “strong follow-through” policy action for its upcoming Aug. 9 policy rate meeting to quell inflation expectations. This will follow the back-to-back rate increases in the BSP’s May and June policy reviews that jacked up key rates by a total of 50 bps.
Inflation averaged 4.3% in the first semester and peaked at 5.2% in June, leading the country’s economic managers to adjust their inflation outlook to 4-4.5% in 2018 from 2-4%.
However, some economists have flagged confusing signals by the BSP when it lowered the RRR to 18% from 20% through two equal one-point reductions in March and June, saying that this ran counter to the back-to-back 25 bps interest rate hikes.
The BSP chief told bank economists and other market watchers last Wednesday that the two cuts in the RRR introduced earlier this year should be enough for now, adding that the goal of achieving single digit RRR could be resumed next year when inflation “returns to target” based on their forecasts.
Meanwhile, on the external front, a survey conducted by Bloomberg among economists showed an expected average of 4.2% economic growth in the US on the back of narrowing trade deficit and robust consumer spending.
Furthermore, threats of an all-out trade war between the US and the EU showed signs of cooling off after US President Donald J. Trump and European Commission chief Jean-Claude Juncker agreed “to work together toward zero tariffs, zero non-tariff barriers, and zero subsidies on non-auto industrial goods.”
To recall, retaliatory tariffs have been imposed on US goods by China, the EU, Canada, and Mexico.
In the secondary market, the short-end of the curve saw yields on the 91- and 364-day Treasury bills (T-bill) climb by 2.21 bps (3.2773%) and 12.49 bps (4.8237%), respectively. On the other hand, the 182-day T-bill dropped 10.77 bps to fetch 4.2506%.
All tenors in the belly of the curve saw their yields go up. The five-year Treasury bonds (T-bond) led the way with a 44.03 bps increase to yield 6.1339% followed by the four-year T-bonds which rose by 25.71 bps to 5.9357%. The two-, three- and seven-year debt papers likewise increased by 16.55 bps (5.0427%), 9.30 bps (5.1127%) and 0.06 bp (6.3%).
In the long-end, the 10-year paper climbed 25.50 bps to fetch 6.65%. The 20-year T-bond also rose albeit slightly by 4.47 bps to yield 7.4518%.
Looking forward, UnionBank’s Mr. Asuncion expects yield movements to be sideways “with upward bias” due to the “expected hawkish decision” of the upcoming central bank meeting.
LANDBANK’s Mr. Dumalagan likewise shared the same outlook as the US Federal Reserve may yet again drop hawkish hints during its policy meeting on Aug. 2. Other factors that may push GS yields higher, he said, include possible tweaks to the Bank of Japan’s stimulus program, expectations of faster domestic inflation in July and bets of a BSP rate hike next month. — Vann Marlo M. Villegas

Local shares seen to drop ahead of ghost month

July 30, 2018 | 12:01 am

By Arra B. Francia, Reporter
LOCAL EQUITIES may drop in the coming days following their four-day rally last week, with investors cautious on the looming Chinese ghost month.
The 30-member Philippine Stock Exchange index (PSEi) climbed 0.46% or 35.53 points to end at 7,701.38 on Friday.
On a weekly basis, the main index rose 4.08% or 301.77 points, supported by a 5.3% increase in holding firms, 3.8% in financials, and 3.6% in property.
Online brokerage 2TradeAsia.com attributed last week’s upward performance to the clarity of some issues brought by President Rodrigo R. Duterte’s state of the nation address last Monday.
“Our ‘wish list’ last week on President Duterte’s third State of the Nation address was highlighted, and the market gave fervor with the resumption of foreign buying. This covers the Duterte administration’s thrust to sequels on the tax reform plan, plus support for provincial expansion under the [infrastructure] agenda,” 2TradeAsia.com said in a weekly market note.
Eagle Equities, Inc. Research Head Christopher John Mangun said he will not be surprised to see a pullback for the last two trading sessions in July.
“This was the pullback that was delayed from last week. The index cannot continue to maintain this momentum without relieving some pressure,” Mr. Mangun said.
Analysts are also being wary of the Chinese ghost month, when the index historically goes into a slump as investors typically hold off on trading.
The Chinese ghost month this year will last from Aug. 11 to Sept. 9.
“With the approaching ghost month, some might be prompted to go neutral over the near term and reposition in a more active manner after this period,” 2TradeAsia.com said.
For Eagle Equities’ Mr. Mangun, however, the ghost month could spell a different trend this year.
“This year is a very different situation as the index has just bottomed out in July. The index has just broken above the strong resistance at 7,500 and we shall see if this will get investors back into the market regardless of the ghost month,” he explained.
Meanwhile, investors will also be looking at the release of earnings reports for the second quarter. Scheduled to release their financials this week are BDO Unibank, Inc., Manila Electric Co., D.M. Wenceslao & Associates, Inc., Aboitiz Power Corp., Aboitiz Equity Ventures, Inc., Metro Pacific Investments Corp., and Eagle Cement Corp.
“Trends that show improved outlook (especially for core recurring earnings) will be lauded, as players see these listed leaders as proxy in their category,” 2TradeAsia.com said.
The online brokerage firm sees immediate support at 7,600 this week, while resistance can play from 7,900 to 7,950.

Iowa, wary of aid, trade wars, still turns out for Trump

July 30, 2018 | 12:01 am

DUBUQUE, IOWA — Iowa farmers criticized President Donald Trump’s $12-billion farm aid package and worried about trade wars impacting their business, but many still turned out to support him on Thursday during a visit to the top corn-producing state.
Eugene Wiederholt, who rents out land used to produce soybeans in the town of Zwingle, said the farm assistance package announced Tuesday to help farmers weather lost markets and low prices from the trade disputes reminded him of welfare.
“I don’t want nothing to do with it,” he said at a public viewing area next to Dubuque’s airport, awaiting Trump. “It’s just not wholesome.”
The concern from Wiederholt, a supporter who said Trump “is one of us,” shows a dilemma facing many Republicans who have traditionally shunned aid and prefer free trade.
Many Republican lawmakers have spoken out against Trump’s trade policy and the aid.
Republican Senator Chuck Grassley of Iowa said Trump should work to resolve the trade dispute with top soybean buyer China.
“I hope President Trump’s trip to Iowa gives him a sense of urgency,” he said in a statement. “Farmers are depending on the President for a speedy resolution.”
China and other top U. trade partners zeroed in on American farmers with retaliatory tariffs after the Trump administration imposed duties on Chinese goods as well as steel and aluminum from the European Union, Canada and Mexico.
Rural and agricultural states supported Trump by wide margins in the 2016 election, and China has targeted them with tariffs on soybeans and other products. The aid package comes ahead of US mid-term elections in November.
Trump may be taking on fights with too many trading partners at once, said Bob Weber, a corn farmer in nearby Bellevue, Iowa. But Weber still turned out to watch Trump, for whom he voted, land on Air Force One.
“What he’s doing is right but he might be doing too much at the same time,” Weber said.
Trump visited a community college in Peosta, Iowa, in Dubuque County, which flipped from supporting Barack Obama in 2012 to Trump in 2016.
Eleven people interviewed by Reuters who earn incomes from farming around Dubuque said they voted for Trump and continue to back him.
Still, BJ Reeg, a farmer in nearby Bellevue, worries that trade tensions have hurt prices for the soybeans he grows and meat he produces from cattle.
“This trade war thing, it has to be done,” Reeg said as he leaned on his silver pickup truck. “In the long run, it’s gonna be good, if a guy can hang on.”
Reeg said he was glad the Trump administration offered aid to farmers but worried it would not be enough.
“The whole farm industry is really in the gutter,” he said. “You take $12 billion and divide it by all the crops out here and it does not amount to much,” he said.
The largest emergency farm assistance announcement since 1998 will offer cash payments to farmers from a depression-era program, buy foods for food banks and other programs and aim to promote trade starting in September.
Reeg has contracts to sell about 60% of the soybeans he expects to harvest this autumn to global grain merchant Archer Daniels Midland Co. and a local cooperative.
He plans to put the remainder of his harvest into storage because of low prices.
Trump spoke down the road from where Pat Merkes raises 80 dairy cows.
It is a tough time for dairy producers because milk prices have been low for more than a year, farmers said. They hope the government helps to open new markets for US products.
“He’s not afraid to stand up to anybody,” Merkes said of Trump from atop a rusted red tractor. He also voted for the Republican. — Reuters

Morocco comes to Rustan’s

July 30, 2018 | 12:01 am

THIS AUGUST, Rustan’s brings the heart of Morocco to the Philippines at the 5^th Level of Rustan’s Makati.
The month-long festival, titled “Le Coeur du Maroc”(The Heart of Morocco) — held in partnership with HSBC, Fairmont Makati, and the Moroccan National Tourism Office — features a wide range of authentic Moroccan home items, fashion pieces, and beauty products, and even Moroccan cuisine.
Available are intricately decorated tajines and ceramic plates, handmade rugs, baskets and bags, a variety of Moroccan tea glasses hand-painted by artisans from Casablanca, as well as lanterns, lamps, and silverware hand-hammered by master metalworkers.
As Morocco is the only place to get authentic argan oil — produced from the kernels of the argan tree that is endemic to Morocco, and often referred to as “liquid gold” — Rustan’s also presents a variety of serums and soaps infused with argan oil, as well as 100% pure argan oil.
There is also a selection of accessories and fashion pieces featuring intricate hand embroidery and beading. The babouche — flat, slipper-like shoes with an exaggerated point at the toes — will also be found in Rustan’s.
There will be an array of scarves, kaftans, and djellaba — both traditional and modern — and fashion jewelry accessories like tassel earrings and beaded necklaces.
For something special, Moroccan designer Fatim-Zahra Ettalbi will be visiting the country in August to showcase her collection in a by-invite only event.
To give visitors a true feel of Morocco as they shop, Moroccan musicians will be performing at the retail floor from Aug. 1 to 8, while artisans will offer henna painting from Aug. 1 to 8 (free for a minimum purchase of P3,000 of Moroccan merchandise). They can also join the Arabic calligraphy demo workshop on Aug. 1-10, for a minimum purchase of P5,000 worth of Moroccan merchandise.
For the first week of the Festival, one of Morocco’s best known chefs, Moha Fedal, will be working at Rustan’s Casablanca Café. The celebrity chef will host special cooking demos (the final schedule of activities will be announced soon).

Grab denies fake bookings, warns Micab

July 30, 2018 | 12:01 am

GRAB PHILIPPINES (MyTaxi.PH) denied the accusations of its competitor Micab Systems Corp. on allegedly sending “phantom bookings” or fake bookings, and threatened to file a libel suit if the latter continues to make such claims.
Brian P. Cu, Grab country head, addressed the allegations of Micab Chief Executive Officer Eddie F. Ybañez in a statement on Friday, saying it can confirm the company was not sending the fake bookings.
“We took the last week to investigate internally and can confirm that Eddie Ybañez’s allegations are untrue and appears to have malicious intent,” Mr. Cu said in the statement.
“Grab did the responsible thing in taking the time to investigate, and we encourage [Mr. Ybañez] to be similarly responsible in his speech and actions. If he continues to make further false allegations, we will have to consider taking libel action,” he added.
Last week, Mr. Ybañez told BusinessWorld Micab had received 29,000 phantom bookings since June, adding “over several hundred” of its drivers reported phone invitations to attend Grab driver orientations after a booking cancellation.
Grab denied making the offers to Micab’s drivers. “We did less than 15 completed bookings a day to benchmark industry allocation rates and service levels. Further to this, we categorically did not make any follow-up phone calls to the drivers,” Mr. Cu said.
The dominant transport network company has yet to release the complete results of its investigation, but it stood firm that it is not liable for Micab’s “significant allocation problems.”
On July 18, Mr. Ybañez took to online platform e27 to write about Grab’s alleged tactics to discourage Micab drivers from staying with the new ride-hailing app. He said the drivers are now “less keen” to accept rides, as phantom bookings cost them their gas, time and safety.
He also said the company is looking to file legal charges against Grab if the experience goes on. He noted the invitation to attend driver orientations from Grab is the “single most compelling piece of evidence pointing to them as the culprit of the phantom bookings.” — Denise A. Valdez

Domestic market capitalization of select stock exchanges in Asia Pacific

July 30, 2018 | 12:00 am

How PSEi member stocks performed — July 27, 2018

July 30, 2018 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Friday, July 27, 2018.

San Miguel levels series with Barangay Ginebra after Game Two win

July 29, 2018 | 9:19 pm

By Michael Angelo S. Murillo
Senior Reporter
THE best-of-seven Philippine Basketball Association Commissioner’s Cup finals series between the San Miguel Beermen and Barangay Ginebra San Miguel Kings is now levelled at a game apiece after the former pulled abreast with an impressive 134-109 victory in Game Two on Sunday night at the Smart Araneta Coliseum.
Showing the sense of urgency of a team whose back was against the wall, the defending champions Beermen went all-out right from the opening tip to take end-to-end control of the game to book the series-tying win and reduce the series to a best-of-five.
San Miguel got off to a strong start led by import Renaldo Balkman and guard Alex Cabagnot.
The Beermen opened things with a 6-0 blast in the first minute and a half before extending their lead to 21-10 by the halfway point of the opening quarter.
Barangay Ginebra tried to narrow the gap the rest of the way but found itself still down by 11 points at the end of the first 12 minutes, 34-23.
In the second period, the Beermen continued with their strong push, outscoring the Kings, 24-14, three-fourths into the quarter to take their lead to 23 points, 64-41.
Mr. Cabagnot and Christian Standhardinger then got to help their team to finish stronger and end up with an even bigger lead of 29 points, 75-46, at the half.
June Mar Fajardo started the third canto with a basket to take San Miguel’s lead briefly to 31 points, 77-46.
But Barangay Ginebra, led by import Justin Brownlee and Joe Devance, started to make their move after, outscoring San Miguel, 19-8, to narrow the distance, 85-65, with 5:30 to go in the quarter.
Messrs. Cabagnot and Standhardinger, however, would save the period once again for the Beermen as they maintained a 20-point cushion, 99-79, heading into the final frame.
The two teams went back-and-forth to begin the fourth quarter.
San Miguel held a 112-90 lead with seven minutes remaining on the clock.
The Kings attempted to charge back but just could not get the leverage they wanted even when San Miguel forward Arwind Santos and Chris Ross were ejected in succession for a Flagrant Foul 2 and two technical fouls, respectively.
Barangay Ginebra got to within 18 points, 119-101, with 4:55 remaining but could not get any closer than that as San Miguel made its way to the win.
Mr. Cabagnot paced the Berrmen with 33 points, nine assists and four steals.
Mr. Fajardo had 25 points while Messrs. Balkman and Standhardinger had 20 points apiece.
Mr. Brownlee, meanwhile, led the Kings with 29 points with Mr. Devance and Scottie Thompson adding 16 each.
“We were sad after the first game but the players knew the importance of Game Two and they came out furiously at the start,” said San Miguel coach Leo Austria after Game Two.
“Good thing we got this win. It would be hard to be down 0-2. Now we have a series,” he added.
Game Three of the PBA Commissioner’s Cup finals is on Wednesday.

PHL rice still uncompetitive at 35% tariff — Villar

July 29, 2018 | 8:59 pm

By Camille A. Aguinaldo
Reporter
THE imposition of 35% tariffs on imported rice will still leave Philippine rice uncompetitive relative to the produce of Southeast Asian neighbors, Senator Cynthia A. Villar said on Sunday.
In a radio interview, Ms. Villar, who chairs the Senate committee on agriculture and food, said the national government should provide assistance to rice farmers, particularly for mechanization and acquiring high-yielding seed.
“Even if we provide 35% rice tariffication, our rice is still not competitive. Now I’m asking an assurance from the national government that they provide funds to rice farmers to mechanize and to offer seed that can increase their production per hectare from four metric tons per hectare to six,” she said.
“Because that’s the only way we can compete with Vietnam. And to mechanize as well because the labor cost in Vietnam is cheaper. Ours is expensive because we’re not mechanized,” she added.
Ms. Villar said she plans to take up the rice tariffication bill at the Senate plenary this Congress session. She has identified the bill as among her committee’s legislative priorities.
She said the Senate’s version of the bill has the needed remedies for the sector once the tariff system is imposed, including the P10-billion rice competitive enhancement fund for farmers and the provision mandating the Bureau of Customs (BoC) to implement the national single window system to prevent rice smuggling.
“We will pass the rice tariffication (bill),” she said.
The Bangko Sentral ng Pilipinas (BSP) and the National Economic and Development Authority (NEDA) have cited the rice tariffication bill as one of the levers for easing inflation, which hit 5.2% in June. The proposed measure seeks to amend Republic Act 8178 or the Agricultural Tariffication Act of 1996 in order to lift the quantitative restrictions (QR) on rice imports and impose a 35% tariff on rice.
In his third State of the Nation Address (SONA) on July 23, President Rodrigo R. Duterte asked Congress to prioritize the measure, certifying it as urgent as well.
“We are also working on long-term solutions. On top of this agenda to lower the price of rice, we need to switch from the current quota system in importing rice to a tariff system where rice can be imported more freely. This will give us additional resources for our farmers, reduce the price of rice by up to P7 per kilo, and lower inflation significantly,” he said.
“I ask Congress to prioritize this crucial reform, which I have certified as urgent today,” he added.
The bill remains pending at committee level both in the Senate and the House of Representatives. It has been identified as among the priority bills of the Legislative-Executive Development Advisory Council (LEDAC).

DTI to add more construction materials for certification

July 29, 2018 | 8:58 pm

THE Department of Trade and Industry (DTI) said it will be adding more construction materials to the list of products subject to mandatory certification and labeling standards to support the government’s aggressive infrastructure campaign.
Trade Undersecretary for the Consumer Protection Group Ruth B. Castelo said the DTI, through its Bureau of Product Standards (BPS), is currently reviewing its current rules and the list of products to be included.
“By the end of the year we’ll have more products in the mandatory list,” Ms. Castelo told BusinessWorld in Pasay City last week, noting that the proposed materials are “mostly for construction.”
“We will increase it because of the building program,” she added.
She said pole line hardware and polyvinyl-chloride pipes are under consideration while reinstating flat glass, plywood and galvanized iron sheets — items removed from the list in 2015.
The glass industry appealed that the removal of the material from the list has encouraged the influx of cheap imports, posing safety risks.
TQMP Manufacturing Glass Corp. said it is expecting glass to be reinstated by the last quarter of the year at the latest.
“It is the consumers that will benefit the most, by ensuring the quality of flat glass that are being installed in residences and commercial buildings,” said Nonito B. Galpa, Executive Vice-President of TQMP’s subsidiary, Pioneer Float Glass Manufacturing, Inc., in a text message over the weekend.
Pioneer was formerly known as AGC Asahi Glass. TQMP bought the firm from AGC Asahi Glass Ltd., a world leader in glass, chemicals and high-tech materials.
As to the plans of constructing a new float furnace — part of its over P5-billion expansion plan to nearly triple its production capacity, Mr. Galpa said the firm first has “to make sure that the situation is favorable for us.”
“Having flat glass reverted to the mandatory standard status, other concerns like technical smuggling, must also be addressed,” he added.
The BPS is tasked to implement mandatory product certification for various building and construction, electrical and electronics, chemical and consumer products under its product certification scheme.
Such products cannot be sold or distributed in the Philippines without the necessary Philippine standard or import commodity clearance mark.
As of April 2018, there are 85 products the BPS deems critical to safety and required to undergo mandatory certification. — Janina C. Lim

House panel confirms receipt of spending plan; budget hearing starts Tuesday

July 29, 2018 | 8:58 pm

THE House Committee on Appropriations has confirmed that Speaker Gloria M. Arroyo has transmitted the National Expenditure Program (NEP) in time for the budget hearings beginning Tuesday.
“The Office of the Speaker officially transmitted (the budget) to the Committee on Appropriations, so on Tuesday we can begin our hearings,” Committee chair Karlo Alexei B. Nograles told BusinessWorld in a phone interview Saturday.
Mr. Nograles also said “social services” and “infrastructure” will be the priority of the General Appropriations Act (GAA) of 2019.
Under the NEP, the education sector will receive the highest allocation with P659.3 billion, followed by infrastructure with P555.7 billion, and interior and local government with P225.6 billion.
The first sector to be subject to review is the Development Budget Coordination Committee (DBCC) which will discuss the proposed budgets of the Department of Budget and Management, National Economic and Development Authority, Department of Finance, and Bangko Sentral ng Pilipinas, Mr. Nograles said in a statement Sunday.
Appropriations Committee Vice-Chair Jose Ma. Clemente S. Salceda said he is looking out for the DBCC’s “revenue forecast and underlying assumptions and macroeconomic framework.”
Ways and Means Committee chair Dakila Carlo E. Cua said the DBCC economic forecast is “the most critical.”
After the DBCC, the Committee on Appropriations will next review the proposed budgets of the Philippine Charity Sweepstakes Office (PCSO), Philippine Amusement and Gaming Corp. (PAGCOR), and Department of Agriculture (DA) among others. — Charmaine A. Tadalan