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Asian markets slip ahead of US-China tariff deadline

Hong Kong — Asian stocks edged down Thursday as investors fretted over US-China tariffs which are due to kick in within hours and threaten to trigger a trade war between the world’s top two economies.
A public holiday in the US meant no lead from Wall Street for anxious traders to follow.
But with the US due to begin enforcing tariffs on more than $34 billion in Chinese imports from Friday, and Beijing vowing to respond with its own tariffs immediately, fears are growing over the consequences for global trade.
Greg McKenna, chief market strategist at AxiTrader, said as the tariff deadline looms, “there has been a subtle but distinct shift in the number of voices who are now saying this could all end up in a big global mess with a huge hit to global growth”.
Traders may have underestimated the resolve of the US administration to pursue President Donald Trump’s protectionist agenda, he said.
Hong Kong shares were down 0.2 percent, while Shanghai lost 0.1 percent.
Tokyo slipped 0.2 per cent in morning trade, while Seoul and Taipei also posted losses.
Washington describes the tariffs as retribution for Beijing’s theft of American technology and other unfair trade practices.
It has vowed to introduce even steeper US counter-measures, potentially covering another $400 billion in Chinese goods, if Beijing retaliates.
China’s finance ministry vowed this week that it “absolutely will not” fire the first shot, but had made preparations to take “necessary measures” against any US tariffs.
Meanwhile, oil prices eased off recent highs after Trump fired a warning shot at OPEC.
“The OPEC Monopoly must remember that gas prices are up & they are doing little to help,” Trump tweeted, adding: “REDUCE PRICING NOW!”
Shares in HKICIM, the Hong Kong-listed subsidiary of HNA Group whose co-founder died after falling off a wall in France Tuesday, lost 2.1 percent.
The sprawling Chinese conglomerate had been selling assets including its shares in the Hilton hotel empire to pay down its loans, amid a Beijing crackdown on debt-fuelled financing.
Traders are also watching for key data from the US including payroll figures and Federal Reserve meeting minutes later this week. — AFP

Goldman says buy commodities as trade war concerns overblown

Commodity bull Goldman Sachs Group Inc. has poured cold water on the notion that a trade war between the U.S. and China represents a serious threat to raw materials, saying most of them aren’t likely to be significantly impacted, and after recent declines now’s the time to buy.
The Wall Street lender said the economic impact from sanctions between the U.S. and China, including measures set to come into effect on Friday, is small, according to a report. It forecast a 10 percent return on commodities over 12 months as the dollar drops, and reiterated a bullish call on crude oil.
“The trade war impact on commodity markets will be very small, with exception of soybeans where complete rerouting of supplies is not possible,” analysts including Jeffrey Currie said in the July 4 note. “This is consistent with our economists’ view that the macroeconomic impact of the trade war is likely to be very small,” it said, with added emphasis on the final two words.
Raw materials have been hurt by growing concern among global investors about the potential impact of the trade tariffs planned by Washington, and the threatened Chinese response. In June, the Bloomberg Commodity Index suffered its biggest monthly slump since mid-2016, with losses seen in copper and soybeans. Energy markets were also in focus that month as OPEC producers and Russia agreed to add more supply after crude prices jumped.
“Although commodities maintain their status as the best performing asset class in 2018, the month of June was a substantial setback driven by emerging-market demand weakness, trade war concerns and the exit of OPEC+ from supply cuts,” the bank said. “All of these concerns have been oversold. Even soybeans, the most exposed of all assets to trade wars, is now a buy.”
Goldman has been consistently upbeat on the outlook for raw materials in recent months, saying they stand to benefit in the late stage of the economic cycle. Among its outlooks, the bank said in February it was more bullish on commodities than at any time since the end of the supercycle in 2008.
“In metals, we believe Chinese domestic concern over credit availability has been the primary driver of recent weakness, fueled by trade wars, and is set to reverse given recent policy shifts in China,” it said in the latest report, citing moves including the recent reduction in some banks’ reserve requirements.
“China will want to negotiate the trade wars from the position of a strong economy, which reinforces fading the trade war rhetoric but buying the trade war reality (which will likely be small),” Goldman said.
Other banks are more cautious. Among them, Morgan Stanley has flagged risks for consumption from a potential deepening of the global trade squabble, as well as from any slowdown in China. “Escalating global trade tensions bring a risk of demand destruction across commodity markets,” it said last week. — Bloomberg

DoTr suspends three officials over corruption allegations

The Department of Transportation (DoTr) has suspended three officials among its ranks on corruption charges.
The agency said in a statement Transportation Secretary Arthur P. Tugade ordered the 90-day suspension on June 29 to Office of Transportation Cooperatives (OTC) Chairman Emmanuel C. Virtucio, OTC Executive Director Eugene M. Pabualan, and Finance and Administrative Division Chief/Special Disbursing Officer Wilfredo M. Clave Jr.
It said an investigation is still ongoing on the accusations of grave misconduct of the officials, who were given 72 hours to respond.
“On December 15, 2017, the DOTr downloaded PhP3.3 million to the OTC for the implementation of the PUV Modernization Program. But, based on the Commission on Audit’s (CoA) Report for 2017, upon downloading of the funds, the OTC immediately released the total amount as cash advances — PhP2 million to Pabualan and PhP1.3 million to Clave, which they deposited to their respective personal accounts,” it said.
It added that CoA found an unliquidated balance of almost P3 million.
The statement said the findings prompted Mr. Tugade to hold the downloading of funds to the OTC until the P3.3 million is fully liquidated.
“Secretary Tugade said the officials will be given a fair investigation, but he warned heads will roll if they were proven guilty,” the statement said. — Denise A. Valdez

LTFRB says it approved ₱1-jeepney fare hike, order yet to be issued

The Land Transportation Franchising and Regulatory Board (LTFRB) has approved a P1 fare hike on public utility jeepneys (PUJ) in its board meeting Wednesday evening, July 4.
The LTFRB noted, however, the increase would not be implemented until it issues a written order.
“The Board has approved tonight a provisional fare increase of PhP1 peso for the first 4 Kilometers of PUJ plying NCR, Region 3, and Region 4 routes,” the LRFRB said in a statement on Wednesday.
Jeepney groups have filed a petition for a P2 fare hike to the LTFRB due to the rising price of fuel.
In May, Mr. Roberto “Ka Obet” Martin of Pangkalahatang Sanggunian Manila & Suburb Drivers Association Nationwide, Inc. (PASANG-MASDA) said during an LTFRB hearing the price of diesel has gone up almost P10 since January after the passage of the Tax Reform for Acceleration and Inclusion (TRAIN) law. — Denise A. Valdez

China says US tariffs to backfire, damaging the whole world

The US imposition of tariffs on $34 billion of China’s exports will not only hurt China, but the US itself and the rest of the world, a government official said.
That’s because $20 billion of those goods are produced by foreign companies, including American companies, Gao Feng, China’s Commerce Ministry spokesman, said at a regular press conference in Beijing Thursday.
China won’t bow to threats or blackmail and will have to fight back if the US goes ahead and imposes the tariffs, Gao said. Other nations understand China’s situation, he said, adding that China will protect the legitimate rights of foreign companies doing business here.
Gao spoke a day before both the US and China are scheduled to start levying additional tariffs on targeted Chinese imports. In response to a question about whether China would actually start levying tariffs first due to the time difference, Gao reiterated that “China won’t fire the first shot”. It is the US who has “provoked” this trade war, and China is forced to retaliate, he said.
After earlier indicating that it would start imposing the duties a few hours ahead of the U.S., the Ministry of Finance backtracked on Wednesday and said it would actually wait until after the U.S. acted.
China’s proposed additional tariffs on US goods will become effective “immediately” after the US imposes its levies, according to a statement on General Administration of Customs Thursday.
China’s exports to the US expanded 5.4 percent in the first half, 13.9 percentage points lower than the same period last year, according to the General Administration of Customs. — Bloomberg

Asian dollar bond buyers brace for grim year as losses mount

Investors in Asian dollar bonds, who just suffered the biggest first-half loss in five years, see little chance of a recovery any time soon.
Cash-starved Chinese issuers are flooding the market with supply and default risks are rising, just as the Federal Reserve’s tightening cycle pressures credit markets globally. For Pictet Asset Management and HSBC Global Asset Management, those are reasons to be wary that the losses through June — 2.7%, according to a Bloomberg Barclays Index – may have further to run.
It’s a far cry from 2017, when Chinese demand for Asian dollar bonds underpinned record issuance and the best returns in three years. These days, buyer appetite is on the wane as China heads toward a record year of corporate defaults amid a weaker yuan, and a looming trade war with the U.S. that threatens the world’s second-largest economy.
“Offshore corporate bonds will remain volatile in the second half because of the imbalance of demand and supply,” said Cary Yeung, Hong Kong-based head of greater China debt at Pictet Asset Management.
Chinese borrowers, which make up about 60% of the Asian dollar bond universe, are rushing to sell notes as a government deleveraging drive curtails onshore funding. Their willingness to pay up for the cash has led to a “repricing of the credit curve,” said Yeung.
Those issuers have sold about $90 billion of dollar bonds so far this year, close to 90 percent of the record issuance in the same period in 2017, Bloomberg-compiled data show. That’s even as average junk bond yields for Chinese firms are about 280 basis points higher since July 2017, according to ICE Bank of America Merrill Lynch Indexes.
Exacerbating the steady stream of bond supply is a shrinking investor base. Chinese banks, the dominant buyers of the country’s offshore dollar bonds, have already turned cautious. And losses incurred so far this year will further deter them from making investments, said Yeung.
Dollar bonds from China led declines for the region’s junk bonds in the last quarter at 3.4 percent, faring worse than investment grade peers. That’s in contrast with the U.S., where blue-chip company debt has been the worst-performing part of the credit market.
No Respite
For Anitza Nip, Hong Kong-based head of fixed income research Asia at Swiss private bank Union Bancaire Privee, the highest Asian dollar junk bond yields in two and a half years are no reason to buy.
“That may not be a sign that the market will stop widening,” Nip said. Moves are expected to be exaggerated in the coming summer months when primary issuance is quieter and trading is thin, she said.
HSBC Global Asset Management sees some chance that higher yields will start scaring issuers away, helping improve the supply-demand imbalance.
“More selloff could be expected if default cases pick up in the second half of the year,” said Alfred Mui, head of Asian credit at HSBC Global Asset Management. “There is a level even issuers won’t get into the market, and we are currently pretty much getting to this level. For some solid ‘bb’ names, I think 8 percent is the clearing level.”
And Goldman Sachs Group Inc. says that while there’s value in BB-rated bonds, the second half is not the right time to buy the lowest-rated credits.
“Worries about a credit crunch in China, the sizeable sell-off in Asian equities and the weakening of the yuan had a negative impact on investor sentiment,” Goldman said in a recent note. “Unless such concerns subside, market sentiment is likely to stay cautious.”
UBP and HSBC AM both reckon credit differentiation will continue to be the key and advise clients to stay on short duration, especially for their high yield investment. — Bloomberg

Same-Sex visa win in Hong Kong pressures other Asia finance hubs

A landmark Hong Kong court ruling granting visas to spouses of gay expatriate workers will help fuel LGBT groups pressuring Singapore and Japan to change their policies as the global financial hubs vie for business and talent.
The top court’s decision puts Asia’s premier financial hub at the forefront of the nascent movement for gay rights in Asia, where only Taiwan is in the process of recognizing same-sex marriage. Law firms and banks — including Goldman Sachs Group Inc., Credit Suisse Group AG and Nomura Holdings Inc. — cheered the ruling after long arguing that discrimination against gay and lesbian workers hindered their recruiting.
“Hong Kong now has a clear edge over our competitors,” said Raymond Chan, the city’s only openly gay lawmaker, who plans to formally call for a same-sex marriage debate in the legislature next week. “The business community recognizes the importance of attracting and retaining talent in the competitive global market.”
The decision has no bearing on the status of local same-sex couples in the city, where the government last month removed children’s books that dealt with LGBT themes from libraries after complaints by anti-gay rights groups, according to The Standard newspaper.
“There are quite a number of conservatives in the higher echelons of Hong Kong’s government who are opposed to gay rights for religious reasons,” said Regina Ip, a legislator and member of Chief Executive Carrie Lam’s top advisory body. “Like the court, younger and better-educated people are more liberal.”
Hiring Expats
Ip, 67, said she’d support Chan’s call for a debate.
Japan and Singapore don’t grant same-sex spousal visas. For financial firms in Japan, the Hong Kong decision could make it tougher to hire expatriates, especially with little likelihood that Japan’s courts or lawmakers will move on the issue soon.
Prime Minister Shinzo Abe’s party issued a policy document in 2016 emphasizing that embracing diversity didn’t mean denying the difference between genders, and it wasn’t necessarily in favor of allowing people of the same gender to wed.
“If other cities don’t allow same-sex spouse visas, they risk losing out on the relative dimension of being liberal and open,” said Nobuko Kobayashi, a partner in Tokyo for A.T. Kearney, a management consulting firm. “Everything else being hypothetically equal, a liberal-minded expat would choose Hong Kong even if he or she, themselves, may not be LGBT.”
There are some moves afoot in parts of Japan to recognize same-sex unions. In 2018, Fukuoka started issuing partnership certificates to same-sex couples and Osaka followed suit. Measures to allow same-sex partnership certificates are now under consideration in Chiba and Yokohama. Yet the certificates have no legal status.
Singapore Ban
In Singapore, the government still has a colonial-era sodomy law and last year banned foreigners from attending the nation’s annual Pink Dot Rally in support of gay rights.
“Singapore is still way behind Hong Kong,” said Leow Yangfa, executive director of Oogachaga, a nonprofit organization working with LGBT people. “The fact will certainly not be lost on our government that this means Hong Kong will now have an even bigger competitive edge.”
The Hong Kong court argued that the Immigration Department’s policy of encouraging workers to come to the city ran counter to its refusal to grant dependent visas for employees with same-sex spouses.
The saga of plaintiff QT began when her partner was offered a job in Hong Kong, a special administrative region of China. That prompted the lesbian couple to move to the city in late 2011, court documents showed.
The women entered into a civil partnership in the U.K. in May 2011, which gave them the same rights and responsibilities as a married couple under British law. QT unsuccessfully applied for her own dependent and employment visas in Hong Kong at least three times.
Hong Kong’s administration will study the judgment, according to Secretary for Security John Lee. “We will follow up the issues involved,” he said Wednesday.
Michael Vidler, the lawyer who acted for QT, told RTHK that the case should prompt the government to bring its policies on same-sex unions into line with the court’s findings.
“I fear, however, that we are not going to see that,” he said. “Therefore, we are now going to have a series of cases litigating this very same issue but in relation to policies concerning housing or adoption or succession.”
Financial Push
Financial institutions and foreign chambers of commerce have lobbied Hong Kong’s government to grant visas for spouses of expatriate gay employees. Hong Kong in 2016 began allowing same-sex spouses or civil partners of consular officials to stay in the city.
“This ruling strengthens Hong Kong’s ability to attract global talent and its competitiveness as Asia’s preeminent global center for commerce,” according to a joint statement issued by 32 financial institutions and law firms supported the plaintiff. “The ruling paves the way for greater LGBT equality in Hong Kong.”
Hong Kong ranks as the world’s No. 3 financial center, followed by Singapore and then Tokyo, according to the Global Financial Centres Index published in March. London and New York ranked Nos. 1 and 2, respectively. The U.K. and the U.S. grant same-sex visa rights.
Support for gay marriage is increasing in Hong Kong, according to a survey released Wednesday by Hong Kong University’s Centre for Comparative and Public Law. It found that 50.4 percent of respondents agreed with same-sex marriage in 2017, compared with 38 percent in 2013, when the last survey was conducted.
“It’s not just about expats’ rights, this has implications for the local community as well,” said Fern Ngai, chief executive officer of Community Business, a nonprofit organization that works with companies to advance inclusive business practices. “It’s another step to advance LGBT rights in Hong Kong.” — Bloomberg

Factory output growth slows in May

Factory production expanded in May, the Philippine Statistics Authority (PSA) reported this morning.
Preliminary results of the PSA’s Monthly Integrated Survey of Selected Industries (MISSI) showed that factory output, as measured by the volume of production index, went up annually in May by 19.8%.
This was a reversal from the revised 0.6% decline in the same month last year but slower than the 29% uptick logged in April.
The May figure marked the fifth straight month that manufacturing stayed in the double-digit positive territory.
Growth in manufacturing was driven by increases in production of printing (117.8%), petroleum products (33.3%), food manufacturing (32.5%), miscellaneous manufactures (19.2%), textiles (18.8%), electrical machinery (17.4%), and rubber and plastic products (12.6%).
Average capacity utilization, which is the extent by which industry resources are being used in the production of goods, was pegged at 84.2% with 12 of the 20 sectors registering capacity utilization rates of 80% and above. — Mark T. Amoguis

June inflation highest in five years

Philippine inflation reached a fresh high in at least five years last month, the government reported this morning.
Preliminary results from the Philippine Statistics Authority showed the prices of widely used goods increasing 5.2% in June, faster than 4.6% recorded in May and 2.5% in June 2017.
The latest print exceeded the 4.3-5.1% estimate range by the Bangko Sentral ng Pilipinas Department of Economic Research as well as the 4.7% median inflation yielded in a BusinessWorld poll of economists last week.
Year-to-date, headline inflation averaged 4.3%, exceeding the central bank’s 2-4% target for the year.
Core inflation, which excludes the volatile food and energy items, was recorded at 4.3% in June. For the first semester, it averaged 3.4%. — Jochebed B. Gonzales

Subic airport adds to infrastructure push

THE GOVERNMENT is pursuing plans to revive the Subic Bay International Airport before the second quarter of next year, the state Transport chief said in a press briefing on Wednesday where other economic managers reiterated the commitment to push major infrastructure projects despite current delays.
Transportation Secretary Arthur P. Tugade said that his department has been in “serious talks with the Subic Bay Metropolitan Authority (SBMA)… already to buhayin ‘yung airport (revive the airport).”
“The way I see it, I think sa tamang panahon magiging operational… siguro hindi aabutin ng first or second quarter next year (it is time to make the airport operational… maybe before the first or second quarter),” Mr. Tugade said in a media briefing in New Clark City in Tarlac.
He cited the need to upgrade the airport’s safety equipment as a primary task.
“If you give life to the airport, which has been inoperable for a number of years, you have to look at the structure. The problem is the aviation instrument component… (so) that the airplane will land in a safe basis,” said Mr. Tugade, who first bared the intention to revive the airport in late 2016 after President Rodrigo R. Duterte assumed office.
The Subic Bay International Airport was FedEx’s Asia delivery hub before that facility closed down in 2009.
SBMA in April announced that it had signed a memorandum of understanding (MoU) with the Asian Business Aviation Association (AsBAA) during the Asian Business Aviation Conference & Exhibition 2018 on April 17 in Shanghai, China to develop the airport “for business aviation.” Under that MoU, AsBAA will help develop the airport’s infrastructure “as well as assist in operations at the airport, while offering business aviation services in the Philippines through Subic.”
SBMA had quoted its chairman and administrator, Wilma T. Eisma, as saying she wanted Subic’s airport — which has been one of the facilities considered to help decongest Ninoy Aquino International Airport in Metro Manila — to focus on business and general aviation; maintenance, repair and overhaul services; and charter flights, leaving passenger aviation to Clark International Airport.
The national government has been moving to decongest Metro Manila by developing Clark and Subic freeport areas and improving links between these sites. In April, the National Economic and Development Authority approved the P50-billion 71.13-kilometer railway project that will connect Subic Bay Freeport Zone to Clark Freeport Zone.
In the same briefing yesterday, economic managers assured that the government has been pulling all stops to speed up infrastructure development now that the administration is approaching its halfway point.
Addressing the observation that official development assistance (ODA) financing has not been as prompt as initially hoped, Finance Secretary Carlos G. Dominguez III acknowledged that foreign governments’ “procedures can be tedious and long, but it is required by the citizens of that country because it is their money.”
“So we just have to live with that. That is a requirement all over the world… That it is the requirement of the people themselves through their legislators that makes the projects take a long time,” he added.
“I’m not making any excuses. We’re going as fast as we can.”
Socioeconomic Planning Secretary Ernesto M. Pernia earlier said that China-funded projects have not been moving as fast as those bankrolled by Japan. “Japan just made their project processing fast and sure…” Mr. Pernia said.
Mr. Dominguez said that the government has been meeting with its Japanese and Chinese counterparts once every four months to address implementation backlogs.
Public Works and Highways Secretary Mark A. Villar said that civil works for the China-funded Estrella-Pantaleon and Binondo-Intramuros bridges will be “starting in July,” while the Chico River Pump Irrigation project will start later this year.
STILL FASTER
Asked whether the government will shift to private sector funding if ODA-funded projects will continue to be delayed, Mr. Dominguez replied: “You know the PPP (public-private partnership) is also very long.”
“We’ve done a study on how long PPP is: from project submission to start of the project is 30 months.”
He even noted that one private sector-funded project was delayed for 60 months after proponents filed lawsuits against each other.
Mr. Dominguez said the government will still proceed with the hybrid-PPP procurement model where government or ODA funding will kick-start the project while the private sector will be tapped for operation and maintenance.
“Our method of using our financing is working, is faster,” he insisted.
“So again, you know, it’s not as fast as many would wish, but we are pushing ahead. It’s moving forward quickly.”
Mr. Dominguez also took note of certain proponents seeking revenue guarantees from the government in some PPP contracts in the past.
“The banks like that because they take no risk. I think if you’re the private sector, you should take a risk to make your profit,” he said.
“Don’t ask the government to take away the risk component… why charge a higher rate to users if the financing cost is higher than ours. There’s a hidden guarantee all the time… why should there be a profit if there’s no risk?”

BUILDING THE STATE’S ASSET BASE
Moreover, the Finance chief said that government-led projects could be privatized in the future to raise revenues.
“While we are doing all these projects ourselves, the government is building up asset base that is going to be very large,” the Finance chief said.
“Future governments that may need money can privatize them. We can afford to do it now.”
ODA-financed projects aren’t only the ones facing backlogs, with Mr. Tugade saying that Surigao airport’s rehabilitation and the Light Rail Transit (LRT)-1 extension project have been slightly delayed.
“We’re trying to do a catch-up plan so that the improvement and the renovation in Surigao will come in a reasonable time… It’s a little bit delayed because the fund was supposed to come from another agency so we had to wait,” Mr. Tugade said.
“The LRT-1 Baclaran-Bacoor plan, we have targeted it to be completed and operational by 2021,” the Transport chief added.
“Starting actual construction is a bit delayed now, but we’re doing a catch-up with the local government units involved and hopefully we can still meet 2021.”
‘ALL OF US ARE IMPATIENT’
Bases Conversion and Development Authority President Vivencio B. Dizon, for his part, said: “All of us are impatient.”
“But I can tell you the most impatient person who really wants to get things done as fast as possible for everybody is the President of the Philippines. So we understand the impatience and this is because of neglect of past governments,” Mr. Dizon claimed.
“You’re going to see things progress even faster as we go through the next months.”
The Cabinet officials presented to journalists yesterday the site of the 40-hectare New Clark City Government Administrative Center Phase 1 that will house satellite offices of all the branches of the government.
The center will have a one-stop-shop “Business Continuity Center,” a disaster risk and recovery center and a sports complex that will be the venue for the 2019 South East Asian games which are all expected to become operational before 2020. — E. J. C. Tubayan

PHL, ADB ink MoU for 2019-2021 lending

THE GOVERNMENT and the Asian Development Bank (ADB) signed a memorandum of understanding (MoU) on June 29 for the regional lender’s $7.1-billion sovereign lending program to the Philippines for 2019–2021.
In a statement yesterday, ADB said the lending program will particularly support the current administration’s infrastructure program, with two-thirds of the financing pipeline — about $4.5 billion — going to projects that “connect regions and communities and manage urbanization, such as railways, bridges, roads and flood management.”
“ADB is committed to working closely and collaboratively with the government of the Philippines to ensure that we deliver on our pipeline of projects,” Kelly Bird, ADB’s country director for the Philippines, said after the signing ceremony.
This follows the meeting among the National Economic and Development Authority, Department of Finance and the ADB last month where the latter presented the borrowing program.
About $945 million is allocated this year, consisting of two policy-based loans worth $600 million, a $300 million results-based loan and $45 million in project loans.
“I am very happy about this program,” ADB’s statement quoted Socioeconomic Planning Secretary Ernesto M. Pernia said in his remarks during the ceremony.
“ADB has been very cooperative and helpful in our objectives to sustain our economic growth and achieve inclusive development. This will help bring us closer to our longer-term vision of a prosperous, middle-income country where no one is poor by 2040.”
It also quoted Finance Assistant Secretary Maria Edita Z. Tan as saying in the same event that “ADB has been a very responsive partner.”
“When we asked them to consider co-financing some of the large infrastructure projects under the BBB (Build, Build, Build) program,” she recalled. “ADB immediately stepped up to the challenge.”
The government plans to spend over P8 trillion on infrastructure until 2022, when President Rodrigo R. Duterte ends his six-year term, in a bid to speed up economic growth to 7-8% annually until 2022 from 6.3% in 2010-2016 as well as slash unemployment rate to 3-5% in the last year of this government from 5.5% in 2016 and poverty incidence to 14% from 21.6% in 2016.— EJCT

Emerging market portfolio outflows pick up in June

LONDON — Outflows of foreign investor money from emerging economies accelerated in June as markets were buffeted by trade tensions, higher borrowing costs and other headwinds, according to data from Institute of International Finance (IIF).
Non-resident portfolio outflows from emerging markets rose to $8 billion following an exodus of $6.3 billion in May, the IIF said in its monthly capital flows tracker.
Outflows were split about evenly between debt markets, which recorded a net loss of $4.2 billion, and equity markets at $3.8 billion.
“Unlike other recent bouts of EM outflows, this recent downturn has featured outflows from China, likely prompted by escalating US-China trade disputes and the sharp renminbi depreciation,” IIF analysts wrote in their report, adding the June data had capped off the weakest quarter for emerging market flows since the end of 2016.
“Trade tensions, coupled with diverging economic outlooks, have also prompted a marked upturn in portfolio allocations to US assets — at the expense of other developed markets as well as EMs.”
Emerging markets had a torrid June, suffering a broad selloff after the US Federal Reserve hiked rates and gave a more hawkish outlook than expected in June, as the dollar continued a relentless ascent and trade tensions between Washington and Beijing escalated.
Most major emerging market regions were suffering outflows, the IIF found, with $4 billion leaving Africa and the Middle East, $2.7 billion from emerging Asian economies, while $2.5 billion left Latin America.
“That said, given the prolonged weakness in EM flows, it would not be surprising to see a relief rally and some tactical rebalancing if the trade narrative improves and/or the US dollar heads lower,” the IIF report said. — Reuters

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