Active fund-raising initiatives taken by Philippine banks should help sustain robust lending in the country, a global credit rater said, at a time of strong demand for infrastructure financing.
“What we are seeing over the last 12 months… I think all these initiatives are to prepare for future growth,” Moody’s senior analyst Simon Chen said in a recent interview. “I think the good thing is banks are actively thinking about what they need to prepare themselves.”
“Capital is something that is perhaps an area that banks need to work on every couple of years,” he added. “So it really will sustain the kind of growth banks need to replenish the capital every three to four years. I think the reason they need to do it is because the profitability isn’t strong enough to sustain strong growth.”
Universal and commercial banks in the country have floated bonds and shares in order to beef up their capital bases over the past several months. — Melissa Luz T. Lopez

Exports likely recovered in May, but are unlikely to plug the Philippines’ widening trade gap, analysts at ANZ Research said.
Operating under the Australia and New Zealand Banking Group, ANZ Research provides economic insights on the Australia, New Zealand, Emerging Asia, Greater China, and G3 economies.
In its weekly report, the research group said merchandise exports may have posted a 0.4% growth for the month, which, if realized, would end a four-month contraction.
“Export growth could have turned marginally positive in May after falling for four straight months in April,” ANZ said. “Imports on the other hand are expected to have been solid, driven by higher oil prices and the government’s infrastructure programme that is boosting capital goods imports.” — Melissa Luz T. Lopez

It’s been six months since Iceland made it impossible for businesses to keep paying women less than men for the same job, and Gudridur Gudmundsdottir is already a little richer for it.
A part-time chef at Iceland’s National Land Survey, the 58-year-old grandmother got a 4.5 percent wage increase, equal to $80 a month, after her bosses found she was underpaid relative to a group of colleagues.
“They moved me up two wage brackets,” Gudmundsdottir said after serving lunch at the agency’s offices in Akranes, about an hour’s drive north of the capital Reykjavik. “Women need to work up the courage to ask for something, so it’s good to have legislation backing us up.”
Iceland has long blazed the trail in gender equality, bringing the world its first democratically elected female president and first openly lesbian prime minister. Now the island in the north Atlantic is taking on the pay gap like no where else on Earth, requiring companies with 25 employees or more to prove they don’t discriminate on gender, sexuality or ethnicity lines—or face fines of 50,000 kronur ($470) a day.
Iceland’s previous cabinet of seven men and four women passed the bill last year just as workplace sexism was thrust into the global spotlight by the #MeToo movement. Worldwide, at least 417 high-profile men have been outed for sexually harassing female colleagues, according to one study.
Other countries are already studying Iceland’s new pay-parity rules to see if they can replicate them, including Nordic nations, Germany, Switzerland and governments as far away as South Korea and Panama, according to the International Labour Organization.
Man’s world
Yet even in Iceland, ranked first on the World Economic Forum’s Gender Gap Index for nine years, it’s largely a man’s world.
It’s been illegal to pay women less than men for decades, but Icelandic men still earn 10-12 percent more than women for similar work, according to findings of BSI Iceland, the main consultancy policing the equal pay law. BSI performed audits on 100 companies that voluntarily tackled their pay gaps in the past six years.
Closing the gap
“In most cases the discrimination is unconscious,” said BSI general manager, Arni Kristinsson, who explained part of the issue is men tend to oversell their skills in interviews while women are more modest. The new law puts the onus on employers to ensure this doesn’t happen.
After taking office in 2017, Prime Minister Katrin Jakobsdottir, a 42-year-old mother of three young boys, vowed to eradicate the gap by 2022. Iceland’s largest businesses with 250+ employees need to comply by year-end. Others have until 2020.
It will cost companies about $20,000 for the certification and thousands more in consultancy fees. Companies must prove to an external auditor any wage difference between roles of equal value is justified, otherwise discrimination is assumed. Employees are measured against colleagues on the skills and knowledge needed for the job, the working conditions, the responsibilities and physical and mental effort required.
Several businesses interviewed by Bloomberg were rushing to tweak job descriptions to explain discrepancies. But some excuses—like paying someone more for speaking multiple languages when they don’t use the skill at work—won’t cut it.
While other European nations are taking steps to boost transparency too (in Sweden anyone can call up the tax authority to find out how much their colleague or neighbor earns), the difference in Iceland’s case is enforcement. Its law is also bound to benefit foreigners and men on the shyer side who’ve been undercut on pay.
Paid less
“Very often you have beautiful laws, but then problems arise because the implementation mechanism is left open,” said Manuela Tomei, the head of ILO’s Department on Conditions of Work and Equality.
Calling the process “complicated” and “expensive,” VSV, one of Iceland’s biggest Atlantic fisheries, has hired Deloitte LLP to help with compliance, according to head of human resources Lilja Bjorg Arngrimsdottir. A majority of its 350 employees are male. The local branch of Ikea, which almost eliminated its pay gap a few years ago, said gender-parity policies give it a leg up in recruiting staff.
Best place for women
Iceland’s push for gender equality took off after 1975, when women went on strike, including from all housework and childcare, on Oct. 24, paralyzing the country. On the same day in 2016, thousands of women walked out of their offices at precisely 2:38 p.m., the cutoff time when women stop getting paid relative to men.
It’s still better to be a woman in the nation of 350,000 than most places. Women must occupy 40 percent of company board seats by law, new dads get three months of leave and, at 89 percent, it has one of the highest ratios of females to males in the workforce.
“The gender gap won’t close by itself,” said Rosa Gudrun Erlingsdottir, the civil servant tasked with the equal-pay legislation.
Hiring troubles
Given its small size, Iceland is a great place to see how the tougher legislation will play out, and what the unintended consequences might be.
Centerhotels ehf, which runs three- and four-star hotels, pointed out at least one: it’s getting harder to recruit chefs during a tourism boom because it can’t pay more without adjusting everyone’s wage. More than two million tourists visited Iceland last year, many attracted by the frozen landscapes and volcanoes featured in Game of Thrones.
“This law gives you less leeway to react to market circumstances,” said Centerhotel’s human resources manager, Eir Arnbjarnardottir.
While enjoying the extra cash, Gudmundsdottir, the Land Survey cook whose pay was raised after it was compared with receptionists, is still more skeptical than most about the fate of the gender pay gap.
“We have been trying this so long, for the last century or even longer,” she said. “The gender wage gap will always exist.” — Nick Rigillo and Ragnhildur Sigurdardottir, Bloomberg

The first shot of the U.S.-China trade war went off without much of a reaction from investors. The calm may be short lived.
For months, financial markets have been bracing for President Donald Trump to follow through with threats of tariffs against China. So it came as little surprise when the U.S. implemented duties on $34 billion in Chinese imports on Friday, as planned, and Beijing retaliated proportionately.
Now comes the hard part for forecasters.
No Spillovers
Economists feel they have a good handle on the direct impact of higher duties. Tariffs raise the price of imported goods, in turn inflating costs for businesses. Those companies can fully absorb the increased cost, or pass some or all of it onto consumers. The bottom line: someone pays, prices rise, demand is hurt.
The Trump administration is currently reviewing another round of tariffs on $16 billion in Chinese goods. If the U.S. stops at duties on $50 billion in imports, and China does likewise, the hit to both countries’ economies will be modest, Bloomberg Economics projects.
Call that the neat-and-tidy trade war: both countries come to their senses, and financial markets bend but don’t break.
Spillovers Galore
However, Trump said last week that he may expand tariffs to more than $500 billion in Chinese goods, to basically cover all imports from the Asian nation into the U.S.
Economists say they can’t fully measure the indirect impact that could occur as the trade war escalates. A decline in U.S. financial markets could be one such element. Factor in a significant slump in equities prices, with the knock-on effect of falling wealth, and the likely hit to U.S. growth widens to 0.4 percentage point, according to Bloomberg Economics.
Chinese stocks and the currency have already taken a beating as concerns about the onset of the trade war gathered. The Shanghai Composite Index is in its longest losing streak in six years, and the yuan posted its worst quarter since 1994 last month. Policy makers have been out in force trying to shore up sentiment.
Diverging Picture
Business and consumer confidence is another “X factor.” Business contacts in some U.S. districts monitored by the Federal Reserve indicated they’d scaled back or postponed capital spending because of uncertainty over trade, according to minutes of the June meeting of the Fed’s rate-setting committee.
“The risk is you start to see more businesses reacting negatively by constraining their investment,” said Gregory Daco, chief U.S. economist at Oxford Economics. “You’re starting to see some anecdotal evidence of businesses putting their capital expenditure plans on hold.”
In a severe scenario, declining business investment and lower consumer spending would decrease demand, which might prompt other countries to lash out with more trade barriers, creating a vicious cycle of mounting protectionism and slowing growth.
It’s difficult to measure how the “second-order” effects of a trade war would hurt the global economy, said Atsi Sheth, a managing director at Moody’s Investors Service.
“We haven’t had a real trade war at this scale in a long time,” Sheth said. “The last 50 years have been about more integration. So we don’t have very good episodes to choose from in the past that would inform us.”
Breakdown of Relations
Then there’s the unpredictability of the politics.
For now, China has avoided upping the ante. “Our view is that trade war is never a solution,” Premier Li Keqiang told reporters during a visit to Bulgaria on Friday, after the first round of tit-for-tat duties. “It benefits no one.”
“The reaction from Beijing has been restrained,” said Gene Ma, chief China economist at the Institute of International Finance. “Internally, they have a policy to contain this issue. They’ve decided this should be dealt with as a trade issue, not a geopolitical issue.”
That could change, especially if Trump continues to accuse China of trading unfairly and stealing American intellectual property. U.S.-China relations have arguably slumped to their lowest point in years, despite praise by Trump for President Xi Jinping and a prediction that the pair would “make great progress together!”
If Trump doesn’t relent, Beijing may lash out with other measures, such as swamping U.S. firms operating there with red tape, or using a weaker yuan as a weapon.
The longer the spat drags on, the harder it will be to unwind, said Bill Reinsch, senior adviser at the Center for Strategic and International Studies. While the short-term damage of the tariff back-and-forth isn’t too painful, the cumulative impact is significant, he said, adding that he foresees a long-term dispute, not a quick resolution.
Trump “only has one strategy, which is to hit harder,” Reinsch said. “It’s like two 8-year-olds having a staring contest. He’s betting that the Chinese will blink.” — Andrew Mayeda and Jenny Leonard, Bloomberg

Asian markets rallied on Monday, extending their gains at the end of last week, following another strong US jobs report that reinforced confidence in the US economy and helped settle trade war nerves.
While Friday’s tit-for-tat tariffs on billions of dollars of goods by the world’s top two economies were seen as damaging, analysts said the the impact would be limited.
Global markets had been tumbling ahead of the imposition of the tariffs but bounced on Friday.
The upbeat sentiment carried over into the new week after data showed the US economy created more than 200,000 jobs in June, beating expectations.
That was compounded by the fact that average hourly earnings growth remained sluggish, while the unemployment rate edged up, easing pressure on the Federal Reserve to lift interest rates.
The result helped all three main indexes on Wall Street to end on a high.
And in Asia on Monday Tokyo went into the break 1.3 percent higher, while Hong Kong and Shanghai were each 1.4 percent up in the morning.
Sydney rose 0.2 percent, Singapore climbed 0.9 percent, Seoul added 0.5 percent and Taipei was more than one percent higher.
However, concerns remain that the trade row between China and the US could intensify, with Donald Trump threatening hundreds of billions of dollars more in Chinese goods.
Stephen Innes, head of Asia-Pacific trading at OANDA, said that “should the (Trump) administration follow through with the threat of a $200 billion-plus duties on Chinese goods, this would have some negative implication for both the US and global growth prospects.”
Sterling rises
Eyes are now on the release of Chinese trade data later this week.
On currency markets the Chinese yuan edged up against the dollar, having tumbled in recent weeks on the trade spat.
While there had been speculation among some observers that Beijing would allow the unit to weaken in order to offset the impact of a trade war, authorities stressed they would not weaponise it.
The pound managed to eke out some gains despite Westminster upheaval after Prime Minister Theresa May’s point man on Brexit negotiations resigned over the government’s plan to retain strong economic ties with the EU even after leaving.
“The general direction of policy will leave us in at best a weak negotiating position, and possibly an inescapable one,” David Davis said in a letter to May.
His resignation — along with one of his deputies — comes two days after the cabinet approved the plan in a bid to unblock negotiations with Brussels.
Investors are now preparing for the start of the corporate earnings season, which analysts said should provide some distraction from the trade row.
Key figures around 0300 GMT
Tokyo – Nikkei 225: UP 1.3 percent at 22,063.74 (break)
Hong Kong – Hang Seng: UP 1.4 percent at 28,720.17
Shanghai – Composite: UP 1.4 percent at 2786.14
Euro/dollar: UP at $1.1752 from $1.1744 at 2030 GMT Friday
Pound/dollar: UP at $1.3300 from $1.3281
Dollar/yen: UP at 110.46 yen from 110.43 yen
Oil – West Texas Intermediate: UP eight cents at $73.88 per barrel
Oil – Brent Crude: UP 14 cents at $77.25 per barrel
New York – Dow: UP 0.4 percent at 24,456.48 (close)
London – FTSE 100: UP 0.2 percent at 7,617.70 (close)
— AFP

Shares of Chinese smartphone giant Xiaomi fell almost 6 percent in its trading debut in Hong Kong Monday, a long-awaited IPO overshadowed by the start of a US-China trade war and bearish investor sentiment.
Shares opened at HK$16.60 ($2.12) in Hong Kong — down from their IPO price of HK$17.00 — and dived 3.8 percent in morning trading, falling as much as 5.9 percent to HK$16 at one point.
Investors felt a lack of confidence even before public trading started, selling their shares at a discount on the unofficial “grey market” last week, Bloomberg News reported.
Despite being one of the most anticipated Chinese technology IPOs this year, Xiaomi saw a disappointing valuation of US$54 billion, well below its ambitious US$100 billion target.
Founded in 2010 by entrepreneur Lei Jun, Xiaomi has grown from a start-up in Zhongguancun — China’s “Silicon Valley” — to become the world’s fourth-biggest smartphone vendor at the end of last year, according to International Data Corp.
Lei has described Xiaomi as a “new species” of company with what he describes as a “triathlon” business model combining hardware, internet and e-commerce services. Its products range from smart home gadgets like air purifiers to non-tech items such as pillows and ballpoint pens.
A delay in Xiaomi’s plan to launch new so-called Chinese Depository Receipts (CDRs) in Shanghai as well as doubts about the sustainability of its business model were also among reasons for the lower valuation, analysts said.
Chinese authorities devised the CDR programme, under which homegrown companies listed abroad can simultaneously list at home, after watching technology heavyweights Alibaba and Baidu launch on Wall Street.
The plan aims to help development of China’s still relatively immature and volatile share markets and allow domestic investors to invest in the country’s big tech champions.
Beijing-based Xiaomi is the first firm in Hong Kong to trade with a controversial dual-class structure since listing rules were overhauled to allow weighted voting rights for different sets of shareholders.
Analysts say Hong Kong’s technology listings have struggled in recent months, deflating investor interest.
“Nothing can help because the sentiment is no good at the moment… Most of the IPOs listed this year were not that profitable,” said Dickie Wong of Kingston Securities, adding he does not see any “upsides” until the CDR listing which would boost interest. — AFP

The Brexit compromise deal thrashed out by Theresa May’s cabinet over Britain’s contentious exit from the EU has been dealt a blow by the resignation of David Davis, the minister in charge of the process.
Here are the key points of the plan agreed Friday between warring factions within the cabinet, long divided between those seeking a clean break with the EU and others wanting to maintain a closer relationship with the bloc.
The proposal says it would avoid checks on the border between Northern Ireland and Ireland and protect manufacturing supply lines, while fulfilling domestic promises to end the jurisdiction of the European Court of Justice (ECJ), control migration and allow Britain to establish its own trade policy.
Common rulebook for goods
Britain and the EU would maintain a “common rulebook for goods including agri-food”, with London agreeing in a treaty to “ongoing harmonisation” only with those EU rules necessary to reduce friction at the border.
It says the plan would smooth trade in agricultural, food and fisheries products, and protect integrated supply chains and just-in-time processes that are vital to, for example, the automotive industry.
Britain would expect to play a “strong role” in shaping the international standards which underpin these rules.
The British parliament would also reserve the right to reject any new rules, while recognising the “consequences for market access, security cooperation or the frictionless border”.
Britain would leave the EU’s Common Agricultural Policy and Common Fisheries Policy.
Flexibility for services
Britain would retain regulatory flexibility for its dominant services sector, “where the potential trading opportunities outside the EU are the largest”, in return for restricted access to EU markets.
It accepts the end to current “passporting” rights allowing British financial firms to operate freely in the EU, but suggests arrangements “that preserve the mutual benefits of integrated markets and protect financial stability”.
Standards and competition
Britain would legally commit to a common rulebook on state aid rules, and establish “cooperative arrangements between regulators” on competition.
Both sides would agree to maintain high regulatory standards for the environment, climate change, social and employment and consumer protection.
European Court
The EU and Britain would establish a “joint institutional framework” to ensure the consistent interpretation of legal agreements between them.
In Britain this could be done by British courts, “with due regard to EU case law” in the relevant areas, but the ECJ would no longer have jurisdiction.
Both sides would need to agree a means of resolving disputes, including through binding independent arbitration.
Customs arrangements and free trade
Britain proposes that it would “apply the UK’s tariffs and trade policy for goods intended for the UK, and the EU’s tariffs and trade policy for goods intended for the EU”.
This arrangement, which would have to be phased in, would eliminate the need for customs checks and controls between Britain and the EU, “as if a combined customs territory”.
This would give Britain the right to control its own tariffs and strike trade deals with non-EU nations — including “potentially” joining the 11-nation Trans-Pacific Partnership, the document said.
Free movement of people
Britain would end free movement of people from the EU, but proposes British and EU citizens continue to travel and apply for study and work in each other’s territories.
No deal option
The government restated that it is in interests of both sides to reach an agreement.
But “given the short period remaining before the necessary conclusion of negotiations this autumn, we agreed preparations should be stepped up” for a range of potential outcomes, including that no deal is reached. — AFP

Tokyo stocks opened higher on Monday, extending rallies in New York with the cheaper yen also supporting the market.
The benchmark Nikkei 225 index edged up 0.23 percent, or 51.08 points, to 21,839.22 in early trade while the broader Topix was up 0.34 percent, or 5.75 points, at 1,697.29.
“After gaining in early trade, the Tokyo market today could lose a sense of direction” as positivity generated by rallies last week in New York was likely to be offset by lingering worries over US-China trade frictions, SBI Securities said in a commentary.”
The dollar was changing hands at 110.51 yen in early trade, slightly higher than 110.46 yen in New York late Friday.
In Tokyo, telecom giant SoftBank was 1.44 percent higher at 8,412 yen, Nintendo was up 2.16 percent at 35,470 and electronics parts maker Murata Manufacturing was 3.60 percent higher at 19,665 yen.
Wall Street stocks notched strong gains Friday on solid US employment data, with the Dow finishing up 0.4 percent at 24,456.48. — AFP