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PHL signs social security deals with Germany, Japan

THE Philippines’ two major pension funds have signed social security arrangements (SSAs) with Germany and Japan to extend benefit coverage to Filipino residents of that country.
In a statement Friday, the Social Security System (SSS) said the Philippines now has SSAs with Germany and Japan, taking effect on June 1 and Aug. 1, respectively.
The bilateral SSAs will be implemented by SSS and the Government Service Insurance System (GSIS) for the Philippines and their counterpart agencies Deutsche Rentenversicherung and Japan Pension Service.
The SSAs will benefit an estimated 47,214 Filipinos in Germany and another 182,917 in Japan who work or are permanent residents of those countries.
“These bilateral SSAs [are] aimed at reducing or eliminating nationality- and territory-based restrictions on social security,” SSS President and Chief Executive Officer Emmanuel F. Dooc said in the statement.
Covered persons and their beneficiaries can receive their social benefits regardless of whether they decide to reside in the Philippines, Japan, Germany or even in another country.
“With the bilateral SSAs in place, Filipinos are now entitled to social security benefits under the same conditions applicable to nationals of Germany and Japan and we are looking forward to extend the same protection to more Filipinos working or residing abroad,” Mr. Dooc added.
Under the Philippine Social Security Law, a member must have at least 120 monthly contributions to qualify for a retirement pension.
Without the SSA, members who failed to meet the minimum number of monthly contributions will only get the total contributions paid as well as interest.
But with the arrangements, the “totalization of insurance period” allows the consolidation of contributions made in both countries.
Mr. Dooc also noted that SSS will continue to to pursue SSAs with other countries in collaboration with the Department of Foreign Affairs, Department of Labor and employment as well as other social security institutions to “promote the welfare of overseas FIlipinos and ensure social security protection in times of contingencies.”
Aside from Germany and Japan, the Philippines has bilateral SSAs with Austria, the United Kingdom, Spain, France, Canada, the Netherlands, Switzerland, Belgium, Denmark and Portugal, covering more than 1.34 million FIlipinos abroad. — Karl Angelo N. Vidal

Nat Re 2017 net profit down 35% at P50-M

NATIONAL Reinsurance Corp. of the Philippines (Nat Re) said net profit fell in 2017 due to reinsurance payouts for calamities and fires.
In a regulatory filing Friday, Nat Re said it booked a net profit of P50 million in 2017, down 35%.
The listed reinsurance firm attributed the lower profits to “massive global insured losses from catastrophe events and large single fires affecting the local non-life industry.”
“Although Nat Re’s results were not as good as one would hope, we were able to effectively safeguard the company from severe losses because of significant improvement in our portfolio diversification and our limited exposure to US and North Americal risks,” Nat Re President and Chief Executive Officer Augusto P. Hidalgo was quoted as saying in the disclosure.
In a Reuters report in April, Swiss Reinsurance Company, Ltd. (Swiss Re) estimated that global insured losses from catastrophes in 2017 hit a record $144 billion.
Swiss Re said North America was hard hit last year as hurricanes Harvey, Irma and Maria brought insured losses of $92 billion.
Nat Re said the P50 million profit was supported by an underwriting profit of P204 million.
Net written premiums grew 40% to P1.9 billion in 2017 with net written premiums in its life business rising 49%.
Nat Re posted P255 million in realized investment income last year on the back of the bullish equity market. Comprehensive investment income rose to P604 million in 2017 by 275% from the previous year.
In 2017, Nat Re said its life unit added three clients to reinsurance programs it leads.
Its non-life segment on the other hand closed 16 new contracts, increased shares in 29 renewal contracts and secured new lead insurer positions with two companies.
“[W]e endeavor to create meaningful and lasting relationships with our partners and find ways to share with them our industry knowledge and build their capabilities,” Mr. Hidalgo said.
Nat Re shares closed at P1.05 on Friday, down three centavos or 2.78%. — Karl Angelo N. Vidal

Peso flat vs. dollar in rangebound trading

THE peso ended flat against the dollar on Friday after the release of the minutes of the June meeting of the US Federal Reserve.
The peso ended Friday’s session at P53.42 against the dollar, unchanged from its close on Thursday.
The peso opened the session at P53.41, while its intraday high stood at P53.36. Its worst showing for the day was at P53.46.
Dollar volume was $506.5 million, slightly lower than the $520.5 million that changed hands yesterday.
A trader said that the peso traded “within a very tight range” on Friday following the minutes of the Fed’s rate-setting Federal Open Market Committee (FOMC).
“The peso ended flat as it traded within a very tight range. The release of the Fed minutes was not that significant,” the trader said in a phone interview.
US central bankers said during the June FOMC meeting expressed concerns that global trade tensions could hit the US economy that by most measures indicated strong performance, Reuters reported.
Many policymakers noted that the gradual hikes could take federal funds rate above the neutral level some time next year.
During its June 12-13 meeting, the Fed raised its benchmark rates by a quarter of a percentage point, the second adjustment for the year, on the back of strong economy. Federal rates are now in a range of 1.5-1.75%.
“The FOMC minutes didn’t move the market that much,” the trader said.
He added that the market is waiting for retaliatory action from China in its trade war with the US.
President Donald J. Trump has imposed tariffs on $34 billion worth of Chinese imports.
The trader added that the market will also await the non-farm payrolls data in the US to be released late Friday, Manila time. — Karl Angelo N. Vidal

Bourse retreats further on inflation, trade war fears

THE MAIN INDEX marked its second day of decline on Friday as investors continued to reel from a faster-than-estimated June inflation that was reported on Thursday morning, becoming the odd-man out among largely positive Asian markets.
Analysts also noted that the local market dove for cover as US tariffs on $34 billion worth of Chinese imports took effect, triggering a full-blown trade war between the world’s two biggest economies, even as this development had already been priced in by many foreign counterparts.
The Philippine Stock Exchange index (PSEi) gave up 46.86 points or 0.64% to close 7,186.71 — 0.097% down on the week from June 29’s 7,193.68 finish — while the all-shares index dropped 20.28 points or 0.46 points to end 4,387.34.
Friday marked the second straight day of net foreign selling and saw four of the six sectoral indices end lower.
FEARS BITE
RCBC Securities, Inc. noted in its Stock Market Weekend Recap on Friday that “Philippine equities remained downbeat… following the release yesterday of higher-than-expected June inflation of 5.2%” — a fresh five-year peak that sustained an ascent for six straight months and marked the fourth straight month that overall price hikes pierced the Bangko Sentral ng Pilipinas’ (BSP) 2-4% full-year 2018 target range. June inflation pierced the 4.3-5.1% range estimated by the BSP’s Department of Economic Research for that month, the 4.9% estimate of the Department of Finance and the 4.7% median of BusinessWorld’s poll of private sector economists.
June inflation took last semester’s pace to 4.3%, a bit higher than the BSP’s full-year target range though still below a downgraded 4.5% forecast average for 2018.
Luis A. Limlingan, managing director of Regina Capital Developmemt Corp., noted in a mobile phone message that “Philippine markets got off to a rocky start before a bit of a recovery softened the impact, as investors now grapple with how a possible rate hike of even 50 bps would affect inflation as well as borrowing and lending.”
The BSP’s Monetary Board raised policy interest rates by 25 basis points each on May 10 and June 20 for the first time in nearly four years, but several economists agree that June’s faster-than-expected inflation — described by BSP Governor Nestor A. Espenilla, Jr. as “a setback” and by Socioeconomic Planning Secretary Ernesto M. Pernia as “unwelcome” — left at least another rate hike on the cards this year.
Mr. Limlingan noted “[a]lso the mood was bearish with US-China trade tensions… kicking off as President Trump confirms tariffs to be implemented”, while Jervin S. De Celis, equities trader at Timson Securities, Inc., said in a separate text message that “[t]he PSEi went down… as the US Tariffs on Chinese goods take effect today”.
“However, the market’s reception of the news is a bit warmer than expected. The market may have priced in this news since the trade rift started a few weeks ago,” Mr. De Celis said.
Reuters reported that Wall Street’s key indices rose on Thursday amid reports that the United States and the European Union may agree to withdraw auto tariffs, as the US-China trade row “had already been priced into stocks”. The Dow Jones Industrial Average climbed 0.75% to 24,356.74, the Nasdaq Composite Index rose by 1.12% to 7,586.43 and the S&P 500 Index went up 0.86% to 2,736.61.
Key markets elsewhere in Asia followed suit, like Japan’s Nikkei 225 (up 1.12% to 21,788.14) and TOPIX Index (up 0.92% to 1,691.54), Hong Kong’s Hang Seng Index (up 0.47% to 28,315.62), the Shanghai SE Composite Index (up 0.46% to 2,746.482) and the blue-chip Shanghai-Shenzhen CSI 300 Index (up 0.68% to 3,365.12).
FOREIGNERS SELL
At home, four sectoral indices closed lower: property by 45.59 points or 1.26% at 3,552.52, holding firms by 79.75 points or 1.12% at 7,021.25, mining & oil by 69.68 points or 0.72% at 9,598.20 and financials by 4.24 points or 0.23% at 1,771.79.
Only two sub-indices gained: services by 5.10 points or 0.36% to 1,414.16 and industrials by 4.37 points or 0.04% to 10,332.21.
Stocks that declined were nearly double those that advanced at 127 to 65, while 45 issues were unchanged.
Friday’s list of 20 most active stocks had 14 that fell — led by the likes of Megawide Construction Corp. (down 3.71% to P1920); Metropolitan Bank & Trust Co. (down 2.79% to P69.75 apiece); Ayala Land, Inc. (down 2.39% to P36.70) and Bloomberry Resorts Corp. (down 2.39% to P9.80 each) — and five that gained, led by the likes of Now Corp. (up 6.74% to P9.66 apiece); Manila Electric Co. (2.29% to P358) and Bank of the Philippine Islands (up 1.39% at P87.50 each).
Foreigners remained predominantly sellers for the second straight day, with Friday marked by P637.981 million in net foreign selling that was 21.59% bigger than Thursday’s P524.714 million, as gross buying dropped 23.63% to P2.289 billion from P2.997 billion and total selling fell by a smaller 16.89% to P2.927 billion from P3.522 billion.
Timson Securities’ Mr. De Celis said that, for the next few days, there will be “no signs yet of a comeback for foreign investors as they assess the impact of the trade tariffs on the overall economic performance of the developed countries.” — with JCL

China’s tariff response takes effect after Trump ignites trade war

President Donald Trump threatened to impose tariffs on every single Chinese import into America as the world’s two largest economies exchanged the first blows in a trade war that isn’t set to end anytime soon.
After months of rhetoric, a 25 percent levy on $34 billion of Chinese goods entering the U.S. took effect just after midnight Washington time on Friday with farming plows and airplane parts among the products targeted. China hit back immediately via duties on U.S. shipments including soybeans and automobiles.
Neither side shows any signs of backing down. Trump is already eyeing another $16 billion of Chinese goods and suggesting the final total could top $500 billion, more than the U.S. bought in 2017. China’s Commerce Ministry accused the U.S. of “bullying” and igniting “the largest trade war in economic history.”
The first ever U.S. tariffs aimed just at China will likely rally Trump’s voters who agree with his “America First” argument that Beijing hasn’t played fair for years, stealing America’s intellectual property and undercutting its manufacturers.
But the risk is that a spiraling conflict undermines economic growth by gumming up international supply chains and inflicting higher prices on companies and consumers. The Federal Reserve has already noted some firms are slowing investment, while Harley-Davidson Inc. and General Motors Co. are warning they may cut jobs.
Given the moves were well flagged, investors took them in their stride. European stocks trimmed gains and U.S. equity-index futures fluctuated. The dollar and Treasuries edged lower as traders looked ahead to the release of U.S. jobs data.
“Clearly the first salvos have been exchanged and in that sense, the trade war has started,” said Louis Kuijs, chief Asia economist at Oxford Economics. “There is no obvious end to this.”
The extent of the economic damage will depend on how far both sides go. If the U.S. and China cool off after a first round of tariffs, the fallout will be modest, according to Bloomberg Economics.
Under a full-blown trade war in which the U.S. slaps 10 percent tariffs on all other countries and they respond, the economists reckon U.S. growth would slow by 0.8 percentage point by 2020. Trump has already imposed duties on foreign steel and aluminum imports, drawing a response from the European Union and Canada which fret he may go after automakers next.
“Our view is that trade war is never a solution,” Chinese Premier Li Keqiang told reporters during a trip to Bulgaria. “No one will emerge as a winner from trade war, it benefits no one.”
Read More on Bloomberg These are some of Trump’s weapons in China standoff: QuickTake Bloomberg Economics says a new stage has begun Read Bloomberg’s Editorial on the start of the trade war Follow all the action and reaction on the Top Live blog Track the ship steaming toward northern China
The U.S. runs a bilateral trade deficit of $336 billion with China and imports much more from it than the reverse, giving it an early advantage. Trump has declared trade wars as “easy to win” and bet the skirmish will prompt American companies to return operations to the U.S.
In the first round though, the additional Chinese duties on U.S. goods will have a significant impact on some items, risking lower sales. For instance, the tariff on pure-electric vehicles, such as Tesla, will rise to 40 percent of the value from the current 15 percent.
U.S. whiskey will be taxed 30 percent, compared with 5 percent for alcohol from other nations. U.S. soybeans, a key flash-point in the worsening trade relations, will see their tariff jumping to 28 percent of the value, while the soybean duty for some other nations has been lowered to zero recently.
China also has other ways to retaliate by going after U.S. companies such as Apple Inc. and Walmart Inc., which operate in its market and are keen to expand. It could introduce penalties such as customs delays, tax audits and increased regulatory scrutiny, while more drastic steps include devaluing the yuan or paring $1.2 trillion holdings of U.S. Treasuries.
Beijing has shown little interest in making fundamental changes to its economic model. President Xi Jinping has balked at U.S. demands to stop subsidizing Chinese firms under his plan to make the nation a leader in key technologies by 2025.
The strength and size of both economies means the fight could rage on for years.
In the past, the U.S. used its clout to win trade skirmishes with developing countries, said James Boughton, a senior fellow at the Centre for International Governance Innovation in Waterloo, Ontario.
China, whose economy has grown tenfold since it joined the World Trade Organization in 2001, poses a much more formidable adversary.
“The dynamic is different from anything we’ve seen,” said Boughton. “China has an ability to ride out this kind of pressure, to weather the storm, that a lot of countries didn’t have in the past.” — Bloomberg

There are fears about an oil spike above $150

Oil investors may regret urging companies to cough up cash now instead of investing in growth for later as the dearth of exploration is setting the stage for an unprecedented crude price spike, according to Sanford C. Bernstein & Co.
Companies have been compelled to focus on boosting returns and shareholder distributions at the expense of capital expenditures aimed at finding new supplies, analysts including Neil Beveridge wrote in a note Friday. That’s causing reserves at major producers to fall and the industry’s reinvestment ratio to plunge to the lowest in a generation, paving the way for oil prices to surpass records reached last decade, according to Bernstein.
“Investors who had egged on management teams to reign in capex and return cash will lament the underinvestment in the industry,” the analysts wrote. “Any shortfall in supply will result in a super-spike in prices, potentially much larger than the $150 a barrel spike witnessed in 2008.”
The world’s oil majors including Royal Dutch Shell Plc and BP Plc navigated the price crash of 2014 by cutting costs, selling assets and taking on debt to help satisfy investors with hefty dividends. The biggest, Exxon Mobil Corp., was punished by shareholders earlier this year after compounding disappointing results with a massive spending plan and a lack of buybacks.
The oversupply of crude globally in recent years has masked “chronic underinvestment,” Bernstein said in the report. Oil has rebounded to the highest in more than three years as the Organization of Petroleum Exporting Countries and its allies started curbing output at the beginning of last year to trim a global glut. The producers aim now to pump more to help cool the market, but disruptions from Libya to Venezuela are keeping prices elevated.
Proven reserves of the world’s top oil companies have fallen by more than 30 percent on average since 2000, with only Exxon and BP showing an improvement, helped by acquisitions, Bernstein said. Meanwhile, more than 1 billion people will urbanize in Asia over the next two decades and this will drive demand for cars, as well as air travel, road freight and plastics that also require oil, according to Bernstein.
“If oil demand continues to grow to 2030 and beyond, the strategy of returning cash to shareholders and underinvesting in reserves will only turn out to sow the seeds of the next super-cycle,” the analysts wrote. “Companies which have barrels in the ground to produce, or the services to extract them, will be the ones to own and those who do not will be left behind.”
Brent oil rallied to an all-time high above $147 a barrel in 2008 as booming demand growth and a lack of readily available resources fueled a synchronized surge across commodities that was dubbed the super-cycle. The global benchmark was at $76.78 a barrel as of 11:57 a.m. in London on Friday, up about 60 percent in the past year. — Bloomberg

Patent applications up by 14% in first quarter: IPOPHL

Local applications for intellectual property saw a 14% annual increase during the first quarter of the year amid expanding awareness over the importance of protecting trademark for business.
The Intellectual Property Office of the Philippines (IPOPHL) said applications for patents — which cover inventions, utility models, and industrial designs — and trademarks totaled 10,024 in the January to March period this year, above the 8,761 logged in the comparable period last year.
Of this, trademarks represented 84% at 8,400 applications, increasing 12.56% from last year’s 7,463.
Resident filings took up the bulk at 60% and the remaining 40% were from non-residents.
Trademarks serve as ‘source-identifiers’, meant to distinguish one business’ goods or
services from that of another, and can be a significant marketing tool for enterprises to
establish brand recognition.
Meanwhile, the application for a patent for inventions grew 38% to 986 from 717 a year ago; the patent for utility models surged 59% to 331 from 208; but the patent for industrial design decline the 18% to 3017 from 373.
A patent is a bundle of exclusive rights granted for an invention which consists of product, a process or improvement of either that meets the requirements of industrial applicability, inventiveness, and novelty.
As a bundle of exclusive rights, a patent allows the inventor to allow or prohibit others from making, using, selling, or importing the product of his invention during the life of the patent. — Janina C. Lim

Gross reserves drop to lowest level in nearly seven years

THE country’s gross international reserves (GIR) continued to decline to the lowest level in about seven years, as the central bank still intervened in the foreign exchange market amid a depreciating peso.
The Bangko Sentral ng Pilipinas (BSP) reported on Friday, July 6, that the GIR declined 1.92% to $77.675 billion in June, from the $79.202 billion recorded in May, and 4.48% lower than the $81.321 billion logged in June 2017.
This was the lowest level since the $75.302 billion GIR recorded in December 2011.
“The month-on-month decline in the GIR level was due mainly to outflows arising from the foreign exchange operations of the BSP, revaluation adjustments on the BSP’s gold holdings resulting from the decrease in the price of gold in the international market, and payments made by the National Government (NG) for its maturing foreign exchange obligations,” the BSP said in a statement.
The central bank sometimes intervenes in the foreign exchange market to temper sharp swings during the daily peso-dollar trading sessions.
“These were partially tempered by the NG’s net foreign currency deposits as well
as the BSP’s income from its investments abroad,” the BSP added.
The central bank also said reserves can cover up to six times the country’s short-term external debt and 4.1 times when computed on residual terms.
International reserves — which stands as buffers against external financial shocks — 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. — Elijah Joseph C. Tubayan

Singapore Airlines brings Boeing’s latest Dreamliner jet to Manila

Singapore Airlines (SIA) has accepted the delivery of Boeing Dreamliner 787-10, one of the 49 ordered by the airline, at the Ninoy Aquino International Airport (NAIA) Terminal 3 on Tuesday, July 3.

Sotto asks PNP to allow De Lima to fulfill Senate duties while in detention

The Senate President has requested the Philippine National Police (PNP) to allow detained Senator Leila M. De Lima to perform her senatorial duties within the premises of the PNP.
Senate President Vicente C. Sotto III wrote in a letter to PNP Director General Oscar D. Albayalde “to formally request the Philippine National Police (PNP)to allow detained Sen. Leila De Lima to exercise her functions as an elected senator of the country through the conduct of hearings on pending measures to the Senate Committee on Social Justice, Welfare, and Rural Development (Committee for brevity) — a committee which she chairs — inside the premises of the PNP Custodial Center.”
Mr. Sotto added that holding the position of Senate President, he is giving “full authority to discharge her duties as chair of the committee, particularly to conduct and personally preside over its hearings.”
This is similar, Mr. Sotto said, to what had been done on Senator Antonio F. Trillanes IV when the latter was in detention.
The reason for the Senate President’s request is so the Committee’s pending measures in the senate “will be given an opportunity to be heard and deliberated on by the Philippine Senate.”
The pending bills for consideration of the Committee are “if passed into law, will be beneficial to all the Filipinos in general and will give the marginalized sectors their needed boost,” said Mr. Sotto.
The Committee’s pending bills for consideration are the following: “1.) Public Solicitation Act; 2.) National Rotary Day, February 23 of Every Year, 3.) Magna Carta of the Poor, 4.) Magna Carta of Day Care Workers, 5.) Emergency Volunteer Protection Act, 6.) Social Welfare and Development Agencies Act, and 7.) Rural Employment Assistance Program Act.” — Gillian M. Cortez

Senator Grace Poe files bill seeking probe on PNP’s P1.89-billion purchase of Mahindra jeeps

Senator Grace S. Poe-Llamanzares has filed a bill seeking an investigation into the P1.89-billion purchase of the Philippine National Police (PNP) of Indian car maker Mahindra Vehicles’ police patrol jeeps back in 2015.
Senate Resolution No. 777, filed on July 3, directs the Senate Committees on Accountability of Public Officers and Investigations and Public Order and Dangerous Drugs to conduct the inquiry. The committees are led by Senators Richard J. Gordon and Panfilo M. Lacson, respectively.
Ms. Llamanzares cited the findings of the Commission on Audit (CoA) in its 2017 annual report, which concluded that the PNP’s patrol jeeps provided by Mahindra Vehicles were not reliable for police operations, citing the complaints raised by several regional police offices.
State auditors noted that 206 vehicles were not effectively utilized “due to frequent breakdowns, poor after sales services, and limited availability of spare parts.”
A total of P59.379 million worth of additional costs were incurred by the PNP in the form of service fees which “could have been otherwise used to acquire approximately 67 units of patrol jeeps.”
Ms. Llamanzares has said she would invite former Interior Secretary Manuel A. Roxas II and former Philippine National Police (PNP) chief Alan L. Purisima in the legislative investigation to shed light on the issue. — Camille A. Aguinaldo

Peso ends the week flat after Fed minutes released

The peso ended flat against the dollar on Friday, July 6, after the release of the minutes of the June meeting of the US Federal Reserve (Fed).
The local unit ended Friday’s session at P53.42 versus the greenback, flat from its close on Thursday.
The peso opened the session a bit stronger at P53.41, while its intraday high stood at P53.36 per dollar. Its worst showing for the day was at P53.46 against the US currency.
Dollars traded reached $506.5 million, slightly lower than the $520.5 million that switched hands on Thursday.
A trader said that the local unit traded “within a very tight range” on Friday following the minutes of the Fed’s rate-setting Federal Open Market Committee (FOMC).
“The peso ended flat as it traded within a very tight range. The release of the Fed minutes was not that significant,” the trader said in a phone interview.
American central bankers said during the June FOMC meeting expressed concerns that global trade tensions could hit the US economy that by most measures indicated strong performance, Reuters reported.
Many policymakers noted that the gradual hikes could take federal funds rate above the neutral level some time next year.
During its June 12-13 meeting, the Fed raised its benchmark rates by a quarter of a percentage points, the second adjustment for the year, on the back of strong economy. Federal rates now stand at at a 1.5-1.75% range. — Karl Angelo N. Vidal
 

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