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Zamboanga-Kalimantan sea transport service being considered

DAVAO CITY — A sea transport service linking Kalimantan and Zamboanga is being eyed to boost trade and tourism between Indonesia and the Philippines, according to Indonesian Consul General Berlian Napitupulu.
The Zamboanga Peninsula Region is on the western side of Mindanao while Kamilantan comprises the Indonesian part of Borneo Island.
Mr. Napitupulu, speaking to the media on Thursday during the opening of the 2nd Indonesia Food and Beverage Expo here, said a shipping company from Zamboanga has already expressed interest to operate the ferry service, but a feasibility study (FS) will first have to be undertaken.
“We have to make a thorough FS and they asked me to initiate as I have to learn the statistics of trade. At least we found 15 Indonesian products coming through other countries but if we rely (on) this 15, I think it won’t be enough so we have to accumulate more products. That is why we really have to do a thorough study,” said the Davao City-based diplomat.
The ferry service being considered is for both passengers and cargo.
“They already established service from Zamboanga to Sandakan (in Sabah, the Malaysian part of Borneo) and they would like to extend it to Indonesia,” Mr. Napitupulu said.
Meanwhile, the Davao-Bitung roll on-roll off (RoRo) service remains on hold due to low load factor.
Mr. Napitupulu said they are not giving up on eventually reviving the route, which was launched in April 2017 and made just a couple of voyages.
The service initially covered the Davao-General Santos-Bitung route using a 500 twenty-foot equivalent unit (TEU) vessel operated by Philippine firm Asian Marine Transport Corp.
However, with minimal cargo load demand, the vessel was replaced by an Indonesian-flagged boat, the Gloria 28, with a capacity of 256 TEUs. The Gloria 28 made only one voyage last year.
“Everybody should put efforts in promoting Davao-Bitung route. Let us continue our efforts for all sectors,” he said.
The Indonesia Food and Beverage Expo this weekend includes business matching activities to explore more potential trade ties.
“I have to be honest to you, Indonesian businessmen they don’t know much about Davao and Mindanao, that is why I’m very delighted that this coming expo many Indonesian companies are participating and many Indonesian businessmen will join the meeting. Many of them are first timers,” Mr. Napitupulu said.
He also pointed out the need for the Philippine government to ease business procedures to encourage Indonesian investors.
“They (Indonesians) are willing to come. I think they are hopeful for an ease to some procedures for investment. It would be helpful if they (Indonesians) are allowed to start with smaller amount of money. They are interested to invest here. Based on the standard procedures, they have to meet certain requirement such as amount of money, I mean, it should be lower and also reduce some procedures,” he said.
Another window for Indonesian investors, he added, is to go into joint ventures with local businessmen. — Maya M. Padillo

Peso rebounds amid lingering overseas concerns

THE PESO strengthened versus the dollar on Friday to log its best showing in a week, as market players unwound their long positions and amid disappointing economic data in the United States.
The local unit closed at P53.34 against the greenback, 17.5 centavos stronger than the P53.515-per-dollar finish logged on Thursday. This is the peso’s strongest performance since June 22, when it closed at P53.28.
The peso traded generally stronger on Friday as it opened at P53.48. It touched P53.50 against the dollar as its intraday peak and hit P53.29 as its lowest point before settling at the closing rate.
Sought for comment, two traders said the peso moved in sync with other currencies in the region.
“The peso closed lower in tandem with region,” one trader said by phone, noting that players are actually unwinding long positions which they took as the peso touched a fresh 12-year low.
Another trader pointed out that easing geopolitical concerns may have allowed some recovery for Asian currencies including the peso.
“The peso finished stronger (on Friday) after trade concerns abroad started to calm down and following softer-than-expected US economic data last night,” one trader said via e-mail.
Reuters reported that US economic growth was revised downward to 2 percent in the first quarter, slower than the initial 2.2% estimate amid weaker consumer spending.
Dollars traded on Friday amounted to $855.4 million, higher than the $621.49 million that exchanged hands the previous day.
The peso is among the worst performers among Asian currencies, having depreciated by 7.42% year-to-date versus the dollar according to the Department of Finance (DoF). This is second to the Indian rupee which has slipped by 7.46%, and compares to a 2.66% average depreciation among Asian currencies.
Still, it maintained that this is not a sign of economic weakness, as the Philippines continues to be well-positioned against global financial shocks.
“In an environment of global uncertainty where domestic macroeconomic fundamentals are sound… the exchange rate should move flexibly so that economic players are able to adjust promptly to market dynamics, thus sustaining economic growth,” the DoF said in an economic bulletin.
It cited above-6% growth, hefty dollar reserves, “financeable” trade deficits and declining debt ratios as sources of fiscal strength. — Melissa Luz T. Lopez

PSEi close higher on last trading day of 1st half

By Arra B. Francia, Reporter
LOCAL shares recovered on Friday, ending the first half of the year on a positive note on the back of window dressing alongside gains in international markets.
The 30-member Philippine Stock Exchange index (PSEi) jumped 1.8% or 127.11 points to 7,193.68. The broader all-shares index likewise went up 1.61% or 69.55 points to 4,392.78.
“Philippine stocks ended the session higher to close out the semester on window dressing and some support from the region,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message.
The Dow Jones Industrial Average went up 0.41% or 98.46 points to 24,216.05. The S&P 500 index rallied 0.62% or 16.68 points to 2,716.31, while the Nasdaq Composite index jumped 0.79% or 58.60 points to 7,503.68.
Most Asian indices also ended higher following a recovery in Chinese markets.
Papa Securities Corp. Trader Gabriel Perez noted the same, saying that window dressing at the end of the first half of the year “saved” the PSEi for the day.
The PSEi had been hounded by volatility in the first six months of 2018. It reached an all-time high of 9,078 in intraday trading last January 29, and has so far dropped by more than 20% on the back of concerns over the brewing trade war between the United States and China.
The main index hit a low of 6,923.67 last June 26, its lowest record in a span of 17 months.
On Friday, all sectoral indices ended in the green, with property leading the increase by 3.05% or 105.03 points to 3,549.11. Holding firms followed with a 1.65% rise or 114.15 points to 7,051.74. Industrial gained 1.56% rise or 160.40 points to 10,414.84, while services climbed 1.52% or 20.88 points to 1,392.62.
Mining and oil increased 0.43% or 41.69 points to 9,673.22, while financials added 0.4% or 7.06 points to 1,779.30.
Some 750 million issues switched hands, valued at P7.13 billion, higher than the P5.79-billion turnover on Thursday. Advancers outpaced decliners, 120 to 82, while 43 issues were unchanged.
Foreign investors turned buyers, purchasing a net of P526 million worth of stocks on Friday, coming from a net foreign selling position of P362.06 million in the previous session.
Papa Securities’ Mr. Perez noted this is the largest net foreign buying figure since May 11.
“As a caveat, foreigners may only have been net buyers today due to window dressing. NFB (net foreign buying) days have also always been short-lived with the longest period since February only lasting for two consecutive days,” Mr. Perez said.

Jollibee ramping up global store expansion

By Arra B. Francia, Reporter
JOLLIBEE Foods Corp. (JFC) is putting up 500 stores globally this year while scouting for new acquisitions, in a bid to have an equal contribution in sales from the local and international segments by 2023.
Of the total store openings, around 250 to 300 will be located within the Philippines.
Next to the Philippines, JFC Chief Financial Officer Ysmael V. Baysa said Vietnam will have the most number of store openings, as the company is currently ramping up the expansion of its Highlands Coffee chain.
“We are very excited about Vietnam because the population is just like the Philippines and the potential for growth is even bigger. Because there’s a lot more growth to (cover). It’s a low base,” Mr. Baysa said in a briefing after the company’s annual shareholders’ meeting in Quezon City yesterday.
The target store openings will also allow the company to enter new markets such as the United Kingdom, Malaysia, and Indonesia.
JFC Founder and Chairman Tony Tan Caktiong said the first Jollibee store in Malaysia will be in the eastern city of Kota Kinabalu, noting the large population of Filipinos in the area.
Meanwhile, the Jollibee store to be opened in London in October will also be focused on the Filipino community.
By the end of 2018, Mr. Baysa said the company will have around 4,200 stores, compared to the 3,797 stores it had by 2017’s close.
The target store openings for 2018 is 7.5% higher than the 465 stores that JFC opened in 2017.
To support this store expansion, JFC has committed to spending P12 billion in capital expenditures this year, 33% higher than its spending in 2017. Of this, P7 billion will be allotted for new stores and renovations, while P5 billion will be for commissary investments.
The listed firm also remains on the lookout for potential acquisitions that will help grow its international store network.
“We always keep our eyes open… We tend to go around and keep on eating. One of our important criteria is that the food should really be good,” Mr. Tan Caktiong said.
One segment the company is looking at is Mexican food, citing the huge demand for the cuisine in the United States.
“We are still exploring. It can be acquisition of a company, can be joint venture. The Mexican market is so huge. We could start small then grow it,” JFC Chief Executive Officer Ernesto Tanmantiong said, adding there are already discussions but declined to disclose details.
JFC’s global expansion is in line with the company’s target to have a 50-50 contribution in sales from the local and overseas markets. Currently, the Philippine market accounts for 70% of the company’s total sales.
The company initially said it could reach the target by 2021 or 2022, but is now deferring the target to 2023 to 2025 since the local market is also rapidly expanding.
“We think that we need to grow the foreign businesses as well. Originally we thought we could do that at an earlier pace, except the Philippines grew so fast, so the base of the Philippines keeps growing,” Mr. Tanmantiong said.
NO MORE CONTRACTUALS
Addressing questions on JFC’s supposed engagement of contractual workers, Mr. Tan Caktiong said: “There’s no more contractual, not only in the fast food category. I think in the whole Philippines there’s no more contractualization. The issue now is about outsourcing, on what kind of work can the company outsource…the trend globally now is outsourcing.”
The company said it is making sure that all the employees hired through service providers are authorized by the labor department.
Mr. Tan Caktiong added JFC is closely working with the Department of Labor and Employment regarding the list it released last April on the contractual status of around 6,000 workers in JFC.
Shares in JFC gained 1.31% or P3.40 to close at P263 each at the stock exchange on Friday.

Oil set for weekly surge as Saudis fail to allay supply fears

Oil surged this week by the most in two months as Saudi Arabia’s assurance of increased output failed to assuage concerns that disruptions from Canada to Libya and Iran will strain global markets.
Futures advanced about 7 percent this week in New York, rising for a fourth quarter, as U.S. inventories slump. The U.S. Energy Department indicated on Thursday that buyers of Iranian crude could be allowed to reduce purchases gradually, softening an earlier target for a complete shut-off. Yet the gesture failed to curb prices, which remain near the highest in three years despite Saudi pledges to boost output.
Crude has rallied over 12 percent in the last two weeks as the U.S. signaled it will aggressively enforce sanctions on Iran, OPEC’s third-largest supplier, following President Donald Trump’s exit from a nuclear accord with the Islamic Republic. Despite Saudi pledges of extra supply, concerns are escalating that reduced Iranian output will further strain a market grappling with shrinking U.S. inventories, a Canadian oil-sands outage, as well as turmoil in Libya.
“The risks to global oil supply are piling up,” said Jens Naervig Pedersen, senior analyst at Danske Bank A/S in Copenhagen. “The potential loss of supplies from Libya and Iran has been a cause for jitters.”
West Texas Intermediate crude for August delivery traded unchanged at $73.45 a barrel on the New York Mercantile Exchange at 10:47 a.m. in London. Total volume traded was about 34 percent below the 100-day average.
Brent for August settlement, which expires Friday, gained 75 cents at $78.60 on the London-based ICE Futures Europe exchange. The contract is up 3 percent this week. The global benchmark was at a $5.13 premium to WTI for the same month.
The world’s two most important oil benchmarks are diverging as Saudi Arabia’s promise to fill any supply gaps weighed on the European marker, while shrinking inventories in the U.S. supported futures in New York. The spread between Brent and WTI settled at the narrowest since March on Thursday. The spread has collapsed since settling at $11.43 on June 7, the widest since February 2015.
A market structure known as backwardation, where near-term prices trade at a premium to later contracts, persisted this month. WTI for August settlement was about $1.60 higher than the September contract, indicating a supply shortage after Syncrude Canada Ltd. was said to cut volumes to customers after an unplanned outage in Alberta last week. Meanwhile, Brent for near-term delivery was only 26 cents higher than later cargoes, a much smaller premium than in the American market.
“The OPEC deal offers some comfort, especially if Saudi Arabia manages to deliver record-high output,” said Pedersen. “The risk is that there will not be enough oil to go round.”
In the U.S., the Energy Information Administration said nationwide stockpiles fell by 9.89 million barrels last week, more than the 3 million-barrel decline expected in a Bloomberg survey. Inventories in the storage hub at Cushing, Oklahoma, also contracted by 2.7 million barrels, while exports surged to the 3 million mark for the first time despite concerns about a pipeline bottleneck in the Permian region.
In Libya, forces loyal to Khalifa Haftar, a commander in the politically divided nation’s east, have handed over control of ports with a combined export capacity of 800,000 barrels a day to a self-declared National Oil Corp. in the eastern city of Benghazi. Recent clashes cost the country about 450,000 barrels of daily output, taking more oil off the market just days after OPEC reached a deal with allies to increase production. — Bloomberg

Emerging-market carnage sidesteps India as locals buy stocks

As emerging-market stocks reel under the pressure of a rising dollar and fiery trade rhetoric, Indian equities are charting a different course.
The nation’s benchmark S&P BSE Sensex Index has risen 7.5 percent this quarter in local-currency terms, the best performance among developing nations. That’s as the MSCI Emerging Markets Index has tumbled almost 9 percent.
The world’s fastest-growing major economy is relatively insulated from trade risks due to its massive domestic market and burgeoning middle class. And while India hasn’t been immune to outflows, buying by local funds has more than made up for this and helped the Sensex to so far shrug off headwinds such as rising oil prices and a weak rupee.
“The EM pack has suffered due to outflows and a strong dollar,” said Sunil Sharma, who oversees $1 billion of assets as chief investment officer at Sanctum Wealth Management Pvt. in Mumbai. “India has been resilient because of its strong economy and local flows, even as the trade war rhetoric rises.”
Domestic funds have bought a net $4.5 billion of Indian shares since the end of March, compared with $2.9 billion of foreign outflows, data compiled by Bloomberg show. Much of the local buying came in April and May, when a net 245 billion rupees ($3.6 billion) was pumped into equity funds amid poor returns from gold and real estate.
Data released in late May showing the economy grew 7.7 percent from a year earlier in the first quarter has also added to the allure of stocks.
“Domestic flows, while having moderated from peak levels, are still quite sizable and they are lending support to the market,” said Harsha Upadhyaya, who oversees $3.4 billion in equities as chief investment officer at Kotak Mahindra Asset Management Co. in Mumbai.
Also, year-to-date withdrawals of less than $800 million from Indian stocks are “very small as markets like Indonesia and Thailand have seen much larger outflows,” Mark Matthews, head of Asia research at Bank Julius Baer & Co., said in an interview in Mumbai. “We saw foreign investors subscribe to Indian IPOs. They wouldn’t do that unless they want to be in India.”
Resilience Tested
Still, the idea that Indian equities are less prone than others to global shocks may be tested if the price of oil — the nation’s top import — remains elevated and the trade skirmish worsens and drives a flight to haven assets.
The rupee has slid about 5 percent this quarter and hit a record low Thursday. That’s left global funds with losses in dollar terms, and has increased the risk of the stock market becoming overly reliant on domestic buying. The upshot is that equity investors must tone down their return expectations, according to Aditya Birla Sun Life AMC Ltd.
“Equity as an asset class in India will yield moderate returns this financial year — about 12 to 13 percent,” said Mahesh Patil, who manages $6.3 billion of stocks at Aditya Birla, the nation’s third-largest money manager. “It’s very difficult to expect positive foreign flows in India this year.” — Bloomberg

Bitcoin bloodbath nears dot-com levels as many tokens go to zero

Bitcoin’s meteoric rise last year had many observers calling it one of the biggest speculative manias in history. The cryptocurrency’s 2018 crash may help cement its place in the bubble record books.
Down 70 percent from its December high after sliding for a fourth straight day on Friday, Bitcoin is getting ever-closer to matching the Nasdaq Composite Index’s 78 percent peak-to-trough plunge after the U.S. dot-com bubble burst. Hundreds of other virtual coins have all but gone to zero — following the same path as Pets.com and many other red-hot initial public offerings that flamed out in the early 2000s.
While Bitcoin has bounced back from bigger losses before, it’s far from clear that it can repeat the feat now that much of the world knows about cryptocurrencies and has made up their mind on whether to invest. Bulls point to the Nasdaq’s eventual recovery and say institutional investors represent a massive pool of potential cryptocurrency buyers, but regulatory and security concerns have so far kept most big money managers on the sidelines.
“You’ll have to see the market reverse before you see” institutions pile in, Peter Smith, chief executive officer of Blockchain Ltd., which introduced a crypto trading platform for professional investors on Thursday, said in an interview on Bloomberg Television.
Bitcoin declined as much as 4.2 percent to $5,791.19 on Friday, the lowest level since November, according to Bloomberg composite prices. It traded at $5,894 as of 6:22 a.m. in New York, down 59 percent for the year and heading for a second-quarter loss of 14 percent. Other coins including Ether and Litecoin also slumped, while the combined value of tokens tracked by CoinMarketCap.com declined to $236 billion. At the peak of crypto-mania, they were worth about $830 billion.
While it was difficult to find fresh catalysts for Bitcoin’s drop on Friday, hacks at two South Korean exchanges and a regulatory clampdown in Japan have weighed on sentiment in recent weeks. Regulators around the world have stepped up scrutiny of cryptocurrencies on concern that they’re a breeding ground for illicit activity including money laundering, market manipulation and fraud.
Lesser-known tokens have been hit the hardest. Dead Coins lists around 800 that are effectively worth nothing, while Coinopsy puts the tally at more than 1,000. Fewer than 4 percent of initial coin offerings raising from $50 million to $100 million were successful or promising, according to a March analysis from ICO advisory firm Satis Group.
Bitcoin may not go to zero, but it’s “very much” a bubble, Robert Shiller, the Nobel laureate economist whose warnings about dot-com mania proved prescient, said in an interview with Bloomberg Television’s Tom Keene on Tuesday. Last year’s Bitcoin surge was “not a rational response,” he said. — Bloomberg

PHL, Japan eye ‘collaboration’ in Build Build Build program

Manila and Tokyo continued to engage in talks to deepen industrial cooperation amid the ongoing Build Build Build program of the government.
In a statement released by the Board of Investments (BOI) on Friday, June 29, BOI managing head Ceferino S. Rodolfo said that both countries continued to seek collaboration rather than negotiation in the third round of Industrial Cooperation Dialogues late last week.
“Being the country’s second largest trading partner, we value Japan as among our partners in nation-building as the Philippines continues to modernize and expand its economy anchored on the “Build, Build, Build” program of the government,” he added.
Mr. Rodolfo said he hopes the dialogue will serve as a template for future bilateral negotiations with other countries.
Japanese Ministry of Economy, Trade and Industry official Satoshi Miura said that the collaboration between the two countries will aid in positioning the Philippines as a manufacturing hub in the Southeast Asian region. — Anna Gabriela A. Mogato

LTFRB accredits new TNC E-Pick Me Up

The Land Transportation Franchising and Regulatory Board (LTFRB) confirmed it has accredited a new transport network company (TNC) on Thursday, June 28.
Inter-Agency Council for Traffic (I-ACT) Spokesperson Aileen Lourdes A. Lizada told reporters in a Viber message on Friday, June 29, that the new TNC is E-Pick Me Up, Inc.
The office of LTFRB Chairman Martin B. Delgra III verified the information to BusinessWorld.
ALSO READ: LTFRB mulling moratorium on new ride-hailing companies
LTFRB said E-Pick Me Up will initially operate in Metro Manila only. Eventually, the company hopes to expand its operations to the greater Metro Manila and the nearby provinces.
In early June, the LTFRB Pre-Accreditation Committee recommended E-Pick Me Up for accreditation by the board.
There are now a total of eight TNCs approved by the LTFRB to operate in the country. Aside from E-Pick Me Up, the others are Grab, Hype, Hirna, Owto, Go Lag, Micab and U-Hop. — Denise A. Valdez

DICT releases second draft of selection terms for third telco player

The Department of Information and Communications Technology (DICT) has issued on Friday, June 29, its draft terms of reference (TOR) for the selection of the third telco player, which seeks to put importance on financial aspects.
But DICT noted that the document is still to be revised, and the draft is only released for the purpose of a public consultation which will be held next week.
It said the document has yet include the insights of the consultants from the International Telecommunication Union (ITU).
“Please note that the minimum bid amount is pegged from the Spectrum User Fees (SUFs) being paid by existing telecommunications companies and does not yet consider the inputs/recommendations of experts from International Telecommunication Union (ITU) and best practices from other countries, and hence, is in no way final,” it said in an email. — Denise A. Valdez

Del Monte Pacific reports net loss due to closure of two US plants

Del Monte Pacific Limited (DMPL) swung to a net loss for the fiscal year ending April 2018, dragged by the closure of two plants in the United States.
The listed canned fruit manufacturer said its net loss reached $28.2 million in the 12 months ending April, against a net profit of $24.4 million the year before. The performance for the year was weighed down by one-off expenses amounting to $74 million after the company closed down two plants in the US.
The closure of the plants are part of the company’s efforts achieve operational efficiencies among its plants and reduce costs from the US subsidiary, Del Monte Foods, Inc.
Shares in DMPL dropped 38 centavos or 4.75% to close at P7.62 each at the stock exchange on Friday. — Arra B. Francia

Stocks rebound on window dressing

By Arra B. Francia, Reporter
Local shares recovered on Friday, June 29, ending the first half of the year on a positive note on the back of window dressing alongside the positive finishes of international markets.
The 30-member Philippine Stock Exchange index (PSEi) jumped 1.8% or 127.11 points to 7,193.68. The broader all shares index likewise went up 1.61% or 69.55 points to 4,392.78.
“Philippine stocks ended the session higher to close out the semester on window dressing and some support from the region,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said in a mobile message.
The Dow Jones Industrial Average went up 0.41% or 98.46 points to 24,216.05. The S&P 500 index rallied 0.62% or 16.68 points to 2,716.31, while the Nasdaq Composite index jumped 0.79% or 58.60 points to 7,503.68.
Most Asian indices also ended higher following a recovery in Chinese markets.
On Friday, all sectoral indices ended in the green, with property leading the increase by 3.05% or 105.03 points to 3,549.11. Holding firms followed with a 1.65% rise or 114.15 points to 7,051.74. Industrial gained 1.56% rise or 160.40 points to 10,414.84, while services climbed 1.52% or 20.88 points to 1,392.62.
Mining and oil increased 0.43% or 41.69 points to 9,673.22, while financials added 0.4% or 7.06 points to 1,779.30.
Some 750 million issues switched hands, valued at P7.13 billion, higher than the P5.79-billion turnover on Thursday. Advancers outpaced decliners, 120 to 82, while 43 issues were unchanged.
Foreign investors turned buyers, purchasing a net of P526 million worth of stocks on Friday, coming from a net foreign selling position of P362.06 million in the previous session. Papa Securities’ Mr. Perez noted this is the largest net foreign buying figure since May 11.

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