Home Blog Page 12372

FOREX-Dollar takes breather as trade concerns linger, yuan remains in focus

  • Dollar softer amid lingering trade war fears
  • China central bank to keep yuan stable, helping cool-off market
  • Canada dollar gains on manufacturing data, higher oil prices
  • Mexico peso jumps on soothing words from president-elect
  • U.S. holiday could keep trading thinner

TOKYO, July 4 (Reuters) – Major currencies marked time on Wednesday while the Chinese yuan recovered from 11-month lows, after efforts by authorities the previous day to calm financial markets which had been rattled by worries about trade wars.
Both the yuan and Chinese equity markets have been on edge ahead of July 6, when U.S. tariffs on $34 billion worth of Chinese goods kick in. Beijing has said it would retaliate with tariffs on U.S. products.
The onshore yuan opened at 6.6365 per dollar, after hitting 11 month low of 6.7294 on Tuesday.
Ahead of the U.S. Independence Day holiday on Wednesday, the dollar was down 0.14 percent against a basket of six major currencies at 94.440, after notching up three consecutive months of gains.
China’s central bank moved to soothe markets on Tuesday after the yuan dropped through the psychologically key 6.7 to the dollar mark, hitting its lowest in 11 months as anxieties over U.S. trade frictions deepened.
In a statement posted on the website of the People’s Bank of China, Governor Yi Gang said the central bank was closely watching fluctuations in the foreign exchange market and would seek to keep the yuan at a stable and reasonable level. Cross-border capital flows were under control, Yi said.
A Chinese central bank adviser was also quoted as saying authorities did not expect significant yuan depreciation, which also helped the yuan reverse early losses to move back into positive territory.
Investors are awaiting the release of the Federal Reserve’s June meeting minutes on Thursday and Friday’s U.S. jobs data for validation of policymakers’ forecasts for two more rate hikes this year.
Valuations also remain supportive of the dollar, with its trade-weighted basket still below long-term averages.
The dollar was down 0.2 percent to the yen at 111.35 while the euro traded up 0.1 percent at $1.1665 against the euro.
The Canadian dollar strengthened against greenback on Tuesday as oil prices rose to 3-1/2-year highs and domestic manufacturing data supported the view that the Bank of Canada will hike interest rates next week.
The pair last traded at C$1.3115, its highest level in 2-1/2 weeks.
Growth in the Canadian manufacturing sector accelerated in June to its fastest pace in more than seven years, the IHS Markit Canada Manufacturing Purchasing Managers’ Index showed on Tuesday.
U.S. crude oil futures settled 0.3 percent higher at $74.14 a barrel after rising above the $75 mark for the first time in 3-1/2 years. Oil is one of Canada’s major exports.
Elsewhere, the Mexican peso firmed sharply on Tuesday after the newly elected president, Andres Manuel Lopez Obrador, sought to assuage investors, magnifying a global bounce in emerging market assets.
Obrador, who cruised to victory over the weekend as the first leftist elected president since one-party rule ended in 2000, has strived to dispel fears he might be averse to private investment when he takes office on Dec. 1.
The peso firmed 2.6 percent overnight, by far the biggest gainer among Latin American currencies, as improved sentiment over Mexico helped to magnify an emerging markets rally.
“We think the latest developments go in line with our view that Lopez Obrador will be more pragmatic than some domestic market participants expect,” said Tania Escobedo, New York-based Latam FX Strategist at RBC Capital Markets.
“We think there is space for a rally of Mexican peso in the transition period, as local retail investors that have been overweight cash and U.S. dollar should start shifting back to peso given the opportunity cost in yield.” — Tomo Uetake, Reuters

At least 6.5% growth ‘easily achievable’

The current administration expects to complete nearly half of its 75 flagship projects by 2022, when President Rodrigo R. Duterte ends his six-year term.

By Melissa Luz T. Lopez, Senior Reporter
THE PHILIPPINE ECONOMY can easily expand by at least 6.5% over the next few years on robust investments and consumer spending, analysts at S&P Global Ratings said, adding that sound policies and the infrastructure push should help lift growth prospects.
“Growth-wise in the Philippines, the past two years have actually been stellar. In terms of the outlook for the next few years, we think that 6.5% and above as a pace of growth is actually very easily achievable,” S&P economist Vincent R. Conti said in a webcast yesterday.
The credit rater forecasts another 6.7% growth for Philippine gross domestic product (GDP) this year to match its 2017 pace, but will fall short of the government’s 7-8% target.
The economy expanded by 6.8% in the first quarter, and state economic managers believe second-quarter growth — to be reported on Aug. 9 — could have clocked at least seven percent.
In April, the debt watcher revised its credit outlook for the Philippines to “positive” from “stable,” hinting at stronger chances of bagging a rating upgrade from the current “BBB” level, which is a notch above minimum investment grade.
Mr. Conti said a young and agile Filipino work force is “very favorable” for the economy, helping to buoy household spending that contributes more than 60% to GDP and attract investments.
The rosy outlook is likewise supported by “very stable” fiscal and monetary policies.
“The ramping up of the infrastructure program is one of the relatively newer additions to the policy tool kit and that’s actually a positive. It can generate even further potential growth farther into the future,” Mr. Conti added.
State infrastructure spending totaled P280.8 billion in the five months to May, up 42.4% from a year ago, the Budget department has said. The government intends to spend P1.068 trillion on infrastructure this year, forming part of an P8-9 trillion program until 2022, when President Rodrigo R. Duterte ends his six-year term.
S&P sees limited credit rating impact from the passage of the second tax reform package currently pending in Congress, but noted that additional revenues should help boost domestic economic activity.
“I think overall, the second package is not likely to make much change either to the revenue or expenditure side of things on the budget. In other words, the fiscal impact is very small and unlikely to directly affect the rating,” said Kim Eng Tan, senior director for sovereign ratings at S&P.
“The key thing we are looking at in tax reform is if the government actually has the ability to carry this out.”
A measure that seeks to gradually cut corporate income tax rates to 25% from 30% now awaits approval by the House of Representatives. Projected foregone revenues will be offset by the streamlining of tax holidays and fiscal perks granted by 14 investment promotion agencies.
This follows the implementation of Republic Act No. 10963, or the Tax Reform for Acceleration and Inclusion Act (TRAIN), since Jan. 1 that cut personal income tax rates, with revenue losses — estimated at P10 billion a month — expected to be offset by the removal of some value-added tax breaks; higher fuel, automobile, mineral and coal excise tax rates, as well as new levies on sugar-sweetened drinks and cosmetic surgery.
S&P took into consideration TRAIN and “improved” fiscal policies in lifting its outlook for the Philippines, saying these factors build the case for “more sustainable public finances and balanced growth” in the next two years. The government plans to raise P2.846 trillion in revenues this year, 15.1% more than 2017’s P2.473 trillion and accounting for 16.2% of GDP. Tax collections reached P1.186 trillion as of end-May, a fifth more than the year-ago P996.5 billion.

BSP, big banks firm up moves vs cyber threats

BIG BANKS are teaming up for an industry-wide monitoring scheme for cyber breaches just as the Bangko Sentral ng Pilipinas (BSP) is set to impose a one-day reporting period for such incidents.
BSP Deputy Governor Chuchi G. Fonacier said the central bank is linking up with the Bankers Association of the Philippines (BAP) in order to set up a reporting platform for cyber threats.
Ms. Fonacier said the BSP will soon release a new circular that will require all financial firms to report glitches, hacking and other forms of cyber security breaches to the central bank within 24 hours from detection.
The BSP is “ready” to issue the new rules, Ms. Fonacier told reporters on Tuesday, but is waiting to sync its reporting framework with the BAP’s own system.
Last year, the BSP official revealed plans for a two-day window to report cyber attacks and similar incidents amid growing cases of cybersecurity breaches.
While the BSP has been laying out an “enabling” environment for financial technology, Ms. Fonacier has said that banks should not let their guard down against digital fraud and hacking.
The industry’s own initiative will enable participating lenders to promptly alert and share notes with each other on cyber attacks.
The BSP has been encouraging increased electronic transactions by enabling interbank fund transfers via mobile and Web-based applications.
At the same time, central bank officials have labeled cyber security threats as one of the biggest hazards now faced by the banking industry.
Besides financial losses, banks face reputational risk — involving erosion of public trust — when they succumb to cyber security attacks.
In November last year, the BSP issued Circular 982 that required all financial companies to identify and prepare ways to counter digital attacks like skimming, phishing and malware.
The same circular requires financial firms with “complex” information technology systems to set up 24/7 security operation centers to monitor potential attacks, as well as an incident response plan to “minimize and contain” impact on banking services. — Melissa Luz T. Lopez

Finance dep’t estimates 4.9% June inflation

June is expected to have seen households spend on education-related items as the new school year began, while seasonal rains jacked up prices of farm products.

THE DEPARTMENT of Finance (DoF) expects that inflation in June quickened further to a fresh six-and-a-half year high as seasonal rains pushed vegetable prices higher and households spent on education-related items as the new school year began.
The DoF estimated a 4.94% rise in prices of widely used goods and services last month, from 4.6% logged in May, according to its latest economic bulletin that was e-mailed to journalists on Tuesday ahead of the Philippine Statistics Authority’s scheduled July 5 report on June inflation.
This is faster than the 4.7% median in a BusinessWorld poll of 12 economists late last week and falls past the midpoint of the BSP’s own 4.3-5.1% estimate for that month.
The economic bulletin said that this was due to “base effects” as well as the “0.35% month-on-month (MOM) increase” that compares to June 2017’s 2.5% annual inflation rate and zero month-on-month increase.
To recall, inflation slowed to its lowest level in five months in June last year — matching January’s pace — on softer food, utilities and transport price increases.
“Month-on-month inflation adjustment may be due mainly to two items — 2.43% MOM rise in education during the opening of classes and 2.27% rise in vegetable prices that usually accompanies incessant rains at the onset of the wet season,” the DoF said.
“Food prices contributed to the YOY uptick mainly due to vegetables.”
The overall increase in food and alcoholic beverage prices likely accelerated to 5.6% last month from 3.04% in June 2017, but was slightly slower than the 5.75% recorded last May.
Broken down, inflation in vegetables will likely record a 7.49% uptick from 0.55% last year and 7.03% in May; rice prices rose by 4.17% overall from 1.22% last year but slightly slower than 4.37% in May; and fish prices accelerated by 10.61% from 7.63% a year ago but slower than the 11.36% in May.
The Development Budget Coordination Committee now expects full-year inflation to clock 4-4.5% — up from a 2-4% projection before its Monday meeting — while the central bank sees it at 4.5%, still beyond its official 2-4% official target band though lower than 4.6% previously.
Moreover, the DoF also noted that prices of “sin” products — tobacco and alcohol — which contributed 0.46 percentage points to headline inflation likely continued to surge by an estimated 20.44% in June from 7.05% in the same month last year, but slower than the 20.54% recorded in May.
“Non-food price also saw 0.33% month-on-month increase, driven by education and petroleum products but tempered by the decline in electricity rates,” DoF noted, even as it clarified that “[t]he P0.90-1/liter (fuel pump) price rollback last June 25 likely came after the survey.”
Prices in the non-food subsector likely rose 3.89% in June, faster than the year-ago 2.04% and the 3.23% a month-ago.
Housing, utilities and fuel prices are expected to have increased by 4.51% in June, faster than 1.84% last year and three percent in the preceding month.
Other items that likely saw faster price increases include transportation (6.9% in June from 3.6% last year and 6.21% in May), education (2.69% in June from 2.05% last year and 1.78% in May); and restaurants and miscellaneous services (3.56% in June from 1.58% but slower than the 3.68% in May).
Prices in the health as well as the clothing and footwear sectors are expected to have slowed to 2.7% and 2.19%, respectively, from 2.84% and 2.6% in June last year. Inflation for health also slowed from 2.77% in May, while that of clothing and footwear steadied. — Elijah J. C. Tubayan

Chelsea Logistics’ Trans-Asia deal voided by PCC

THE Philippine Competition Commission (PCC) voided Chelsea Logistics Holdings Corp.’s (CLC) acquisition of Trans-Asia Shipping Lines, Inc. for its failure to notify the antitrust body of the 2016 deal.
In its June 28 decision released on Tuesday, the PCC said the company consummated the Trans-Asia deal without securing the Commission’s approval, even though the size of the transaction fell under the compulsory notification threshold of P1 billion at that time.
The PCC also imposed a P22.8- million fine on CLC and its parent Udenna Corp. led by businessman Dennis A. Uy, as well as Trans-Asia.
The nullification of the Trans-Asia deal, however, paved the way for the PCC’s conditional clearance of Chelsea’s acquisition of KGLI-NM Holdings, Inc., which in turn controls 2Go Group.
“With the Trans-Asia agreements out of the picture because of the nullification order, the overlaps with 2Go in the 6 legs of passenger shipping services and 7 areas in cargo shipping services in Visayas and Mindanao found earlier in PCC Mergers and Acquisitions Office’s Statements of Concerns have been ruled out,” the PCC said in a statement.
The consummation of the two deals, according to the PCC, would have translated to “a substantial lessening of competition” in Roll-On, Roll-Off passenger shipping services in Cebu-Cagayan De Oro; Cagayan De Oro-Cebu; Cebu-Ozamis; Ozamis-Cebu, Cebu-Iligan; and Iligan-Cebu.
In a disclosure to the stock exchange yesterday, CLC said it is currently deciding if it will file a motion for reconsideration before the PCC or elevate the case to the Court of Appeals.
“Chelsea and the sellers are convinced that the Commission should reconsider what the parties consider an unfair decision. The twin voiding of the transaction and the penalty of P22.8 million is likewise unduly harsh in light of the ambiguity in the Commission’s own rules, the listed company said.
CLC insisted they were not required to notify the PCC of the deal since Trans-Asia’s net asset value (NAV) at the time of the sale was “way below” the P1-billion threshold.
“The parties argue that the basis for the P1 billion size of transaction threshold should be computed based on ‘net assets.’ Trans-Asia had debts on its books which brought down its NAV to not even half of the Commission’s P1-billion threshold,” the company added.
CLC further noted the PCC only released the guidelines, which stated the computation of merger notification thresholds should be based on gross assets, not net assets, in December 2017 or a year after the Trans-Asia deal.
“It will be recalled that the Commission early this year raised its own Size of Transaction threshold to P2 billion citing as reason that transactions below this amount will not likely raise competition issues,” CLC said.
Meanwhile, CLC President and Chief Executive Officer Chryss Alfonsus V. Damuy refuted the PCC’s claim there will be a thinning of market competition if the company acquires both 2Go and Trans-Asia.
“It is not possible. There are so many other players around and existing players on those routes,” Mr. Damuy said in a mobile message on Tuesday, noting there are four existing players in some of the cited routes such as the Cebu to Cagayan De Oro.
Should CLC still pursue the Trans-Asia deal, the PCC said the firm can notify the antitrust commission within 30 days from the execution of the merger or acquisition agreements involving any of its shares.
The PCC said if Udenna, CLC’s parent, or any of its subsidiaries or affiliates re-execute the voided transaction, the parties should notify the PCC “regardless of whether it is notifiable under the mandatory notification regime of the Philippine Competition Act.
“Every M&A (merger and acquisition) notification subjected to PCC review is evaluated in a fair and transparent manner with the public’s welfare as foremost concern. There are sanctions for violations, there are clearances when there are no competition concerns,” PCC Chairman Arsenio M. Balisacan was quoted as saying in a statement. — Janina C. Lim

MPTC subsidiary gains control of Indonesian firm

A UNIT of Metro Pacific Tollways Corp. (MPTC) gained control of Indonesian infrastructure firm PT Nusantara Infrastructure Tbk after increasing its stake to more than 50%.
In a disclosure to the stock exchange on Tuesday, MPTC’s parent Metro Pacific Investments Corp. (MPIC) said PT Metro Pacific Tollways Indonesia (PT MPTI) acquired an additional 760 million shares in PT Nusantara, or 4.99% of the company’s total issued capital stock on a fully diluted basis.
The transaction, valued at a total of P597.33 million, or 79 centavos per share, was executed through a cross sale on the Indonesian Stock Exchange.
This brings PT MPTI’s stake in PT Nusantara to 53.26%, solidifying its control of the company that has interests in tollroads, water, energy, port operations, and telecommunications.
“The transaction is expected to enhance profitability and strengthen the balance sheet of MPTC,” the listed parent company said.
Since PT MPTI now holds a majority of PT Nusantara’s shares, the company is required to conduct a mandatory tender offer to its minority stockholders. The minority shareholders collectively own 44.21% of PT Nusantara’s outstanding capital stock, with the balance of 2.53% held as treasury shares.
The company expects the tender offer price to be at around 79 centavos per share or 211 Indonesian Rupiah (IDR). With this, the entire tender offer size could reach IDR 1,421 billion or around P5.29 billion. The final tender offer price will require approval from the Indonesian Financial Services Authority.
PT MPTI said it will secure bank loans to finance the acquisition of the additional shares as well as the tender offer.
The listed infrastructure conglomerate initially owned 42.25% of PT Nusantara through a partnership with MPT Asia Corp. and PT MPTI. It further increased its interest in PT Nusantara to about 47.08% last November.
PT Nusantara operates a total of 34.47 kilometers in toll roads in Indonesia. The investment in the firm forms part of MPIC’s plan to expand its tollway business in Southeast Asia.
MPIC currently has a presence in Thailand through a 29.45% stake in Don Muang Tollway Public Company Limited in Bangkok. In Vietnam, it also holds a 44.9% stake in CII Bridges and Roads in Ho Chi Minh City.
Locally, MPIC operates three major tollways under MPTC, namely the North Luzon Expresssway (NLEx), Subic Clark Tarlac Expressway, and Cavite Expressway. MPTC has three other toll roads under construction: Cavite-Laguna Expressway, the Cebu-Cordova Link Expressway, and the NLEx-South Luzon Expressway Connector Road.
The conglomerate booked a consolidated core net income of P3.6 billion in the first quarter of 2018, 16% higher year on year on the back of better than expected volume growth in its business units.
MPIC is one of three key Philippine units of Hong Kong-based First Pacific Co. Ltd., with the others being Philex Mining Corp. and PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.
Shares in MPIC went up five centavos or 1.08% to close at P4.67 each at the stock exchange on Tuesday. — Arra B. Francia

CNPF allots up to P1.8-billion capex

By Arra B. Francia, Reporter
CENTURY Pacific Foods, Inc. (CNPF) is spending up to P1.8 billion this year to expand its capacity, as it expects earnings to grow in single digits due to the rising costs of fuel and raw materials.
“Capital spending will be roughly around P1.5 billion to P1.8 billion this year. The vast majority of that would be for capital expenditures for capacity expansion,” CNPF Executive Chairman Christopher T. Po said in a press briefing after the company’s annual shareholders’ meeting in Ortigas Center on Tuesday.
The 2018 capex is higher than the P1.1 billion to P1.5 billion it committed to spend in 2017.
Mr. Po said the company is expanding its tuna facility as it is already operating at full capacity with 300 to 350 metric tons of tuna produced per day.
“We think the efficient scale for a new plant would be 50 to 100 metric tons of tuna produced a day. Once we finish this plant, it will satisfy our requirement for the next three to five years,” Mr. Po said.
The new tuna facility in General Santos City is expected to be completed by the third quarter of 2019.
The expansion will help support CNPF’s growth targets in the next few years, as it plans to grow the business by 10-15% in the next five to 10 years.
This year, the company expects revenue growth to be in the teens, despite the peso depreciation, rising interest rates, and commodity prices putting a drag on its bottomline figures.
CNPF’s net income this year is projected to grow in the mid-single digits. In the first quarter, the company’s attributable profit grew by 4.42% to P732 million.
“These cycles come and go every four to five years. It’s just that now, they’re all happening at the same time, the weak peso, higher interest rates, higher commodity prices, so there’s a little bit of a new challenge, but we’re managing,” Mr. Po said.
Softer prices in the tuna sector has also helped boost demand for the company, as the segment accounts for 40-50% of the business.
“Other prices are going up, but tuna prices have actually softened. So that’s been a welcome development,” Mr. Po said.
Despite the various cost pressures the food manufacturing industry is experiencing, the company is carefully timing any price increases for its products.
“For as long as we can, we look for a different way to economize by finding efficiencies, investing in machines, capex, in some ways even reformulating to bring down the price and make it more affordable… But there’s a portion there’s nothing else you can do, so you have to find opportunities to pass on (costs),” Mr. Po said.
Meanwhile, CNPF said it is currently in talks with the Department of Labor and Employment on the regularization of its employees.
The company was part of the Labor deparment’s list of firms that voluntarily submitted commitments to regularize their employees by the end of the year.
“We are in the midst of discussions as to what percent of the work force should be part of the company as opposed to outsourced… Nothing definitive at this point, but we are pretty confident that we can come up with a win-win type of arrangement,” Mr. Po said.
Shares in CNPF slipped eight centavos or 0.5% to close at P15.92 each at the stock exchange on Tuesday.

Coral World Park says it is still pursuing $250-M theme park-resort in Coron

By Janina C. Lim, Reporter
CORAL World Park (CWP) Undersea Resorts, Inc. is still pursuing its $250-million leisure and tourism project in Coron, Palawan.
“The new timeline now is 2021,” CWP Chairman and Chief Executive Officer Paul Monozca told BusinessWorld, referring to the completion of the project’s first three phases.
The 400-hectare leisure and tourism project has been delayed for at least two years now, but CWP expects at least half of the development of the land area to be completed within three years.
The first three phases involve the construction of a luxury resort, a budget resort and a 100-hectare theme park. Out of the P6-billion budget, P4 billion will be allocated for the theme park development and the rest for the two resorts.
CWP is entering into joint ventures for the development of the project. In the new few months, the company is set to announce the developers that will handle the construction of the theme park.
“I think that if we start with the one, tuloy-tuloy na. We might name one, or two or even three… If we execute the deal with the developer, they will handle everything. They’re very well connected,” Mr. Monozca said, hinting it will be “one of the leading” developers.
A privately held company with majority Filipino ownership, CWP owns two global theme park licenses which are part of the top 10 theme parks worldwide. It also owns two leading scientific hubs and a basketball theme park. The company is the official partner of Asia’s leading marina club and has relationships with six other hotel and resort brands.
For the Palawan project, CWP said eight international family entertainment and luxury-branded resorts and spas will be introduced.
“The good news is we’re joining the international league of global family entertainment brands… Coral World is the first international branded consortium coming into the country,” Mr. Monozca said.
To recall, Viacom International Media Networks discontinued its intellectual property licensing agreement for the Nickelodeon-branded attraction and resort, after the project was opposed by the local community and environmental groups.
Mr. Monozca said the company never changed its plans, noting delays were caused by infrastructure issues and securing government permits.
He clarified that the development is on land, contrary to reports that it will have an underwater theme park. Mr. Monozca said there will be a few two-storey floatation tanks that will have an underwater restaurant in a glass-enclosed space.
“We have an undersea theme to our development but our property is on land,” Mr. Monozca, said, adding the accusations that they will destroy 400 hectares of corals was “silly.”
“They were also telling us they were cutting trees. Were the trees there? It’s kalbo (bald)… It’s a former mining site, chromite. We’re rehabilitating a former mining site,” he said.
The CWP official said its plans were never withdrawn despite attacks from environmental groups such as Greenpeace, but were only hampered by infrastructure issues and delays in obtaining government permits.
Mr. Monozca also clarified the location for the theme park will be in Coron area near the mainland, not the Coron islands where the Tagbanua tribe resides. He declined to give the exact location.
He noted the company’s project has received support from government agencies and local government units.
“They want to be assured that the people of Coron will be employed. They want to be assured that the small businesses will not be removed, I said that’s silly, because we need these operators, we need bancas. Why would we go up against the people,” he added.
CWP is looking at installing “top-class” waste management solutions such as a waste-to-energy system proposed by a European company. Mr. Monozca said he wants whole theme park and resort to use renewables as its energy source.
Although the CWP board members viewed the Philippines as a “risky” investment destination due to the past failures especially on infrastructure development, Mr. Monozca said he wanted to do something in Palawan.
“Palawan has always been number one. The first time I went there, I said that was it,” he said. “This place has to be done the right way because population growth is very very high and if we don’t implement a good masterplan here, it is going to end up like Boracay.”

Locals see opportunity in $55-B Philippine stocks rout

UNFAZED by a foreign-led sell-off that wiped out about $55 billion in Philippine stocks, some local individual investors are seeing opportunities to buy.
Rommel Songco, 45, who left his senior finance role at a telecom company and is now a full-time day trader, is wading through the worst back-to-back quarterly rout in a decade and picking up stocks he thinks were unduly sold.
“I have seen this happen before,” said Mr. Songco, who first started investing in the Philippine stock market during the Asian financial crisis more than two decades ago. “There are more opportunities now than at the start of the year when prices were elevated. Risks will eventually subside and cheap stocks will go up.”
Mr. Songco has purchased shares in two of the nation’s biggest conglomerates — GT Capital Holdings, Inc. and DMCI Holdings, Inc., both of which have both plunged more than 20% this year.
The Philippine Stock Exchange index tumbled 9.9% in the second quarter, buffeted by a weakening peso, quickening inflation, and the brewing trade war between the US and China, not to mention the general sell-off in emerging markets. The benchmark stock gauge entered a bear market in June, with valuations sinking to the lowest in 29 months. It rose 0.5% to 7,267.34 at the close today in Manila, extending gains for a third day.
“When markets are down, we remind retail investors that times of weakness are an opportunity,” said Julian Tarrobago, head of equities at ATR Asset Management, Inc. “Savvy and aware retail investors come in while some people get emotional and stay out for fear of losing more money.” All seven brokerages surveyed by Bloomberg said retail investors are dipping their toes in the Philippine stock market with cautious optimism.
Overseas investors have withdrawn more than $1.22 billion so far this year, already a record amount in annual terms. The Philippine benchmark gauge has lost more than 15% in 2018, making it one of the world’s worst-performing major stock markets.
“The risk-reward proposition for Philippine stocks is probably at its strongest in the past two years,” Mr. Tarrobago said. The stock market could see a significant rebound that could push up the benchmark index to where it was at the start of the year, he said.
Mr. Tarrobago, who helps manage the best-performing stock fund in the Philippines this year, said the market is pricing in near-zero corporate earnings growth at a time when the nation’s economic growth remains among the fastest in Asia. He expects the 9.5% year-on-year growth in first-quarter core earnings to accelerate as bank profits improve with rising interest rates while strong residential and office demand sustain property earnings.
Robert Ramos, chief investment officer of East West Banking Corp., said market volatility could continue, even as inflation concerns ease, due to external headwinds ranging from accelerating global interest rates to the trade war. Global rather than local factors will determine how long Philippine equities will stay in a bear market, he said.
“These levels are attractive for long-term investors, but it wont be smooth sailing,” said Mr. Ramos, who favors banks and property stocks. “There are concerns with local inflation and earnings but the bigger concern is global. We will be dependent on what developed markets will decide on trade and monetary policy.”
But Carla Beltran, a 24-year-old marketing assistant, isn’t too concerned. She says the market plunge is the “best time” to make her first foray in equities. “It’s the best time to come in while prices are low, but I will still gather information so that I buy the right stocks,” she said. — Bloomberg

Treasury rejects all bids for 10-year bonds

By Karl Angelo N. Vidal, Reporter
THE GOVERNMENT rejected all bids for the 10-year Treasury bonds (T-bond) it offered yesterday as investors demanded higher rates ahead of the June inflation print.
The Bureau of the Treasury (BTr) opted to reject all tenders for its P15-billion offer of reissued 10-year debt on Tuesday, as tenders put forward by banks reached P14.84 billion, slightly below the amount the Treasury wanted to borrow.
Had the BTr decided to accept all bids, the papers, which have a remaining life of nine years and eight months, would have fetched an average rate of 6.842%, 49.2 basis points higher than the 6.35% tallied in the previous auction.
The 10-year papers carry a 6.25% coupon.
At the secondary market prior to the auction, the debt notes were quoted at 6.9304%.
The 10-year securities rallied in afternoon trading to close at 6.3437% as the session wrapped up.
After the auction, Deputy Treasurer Erwin D. Sta. Ana said the rates submitted by the banks were too high.
“The committee felt that the bids submitted are too high compared to where the market is in that sector of the curve,” Mr. Sta. Ana told reporters after yesterday’s auction.
“Also considering that the auction is undersubscribed, we felt that it was just better to reject all the bids.”
He added that investors are “focused on the shortest tenor.”
In the T-bills auction on Monday, the Treasury awarded P4 billion as planned in the 91-day tenor as bids for the papers surged to P14.438 billion, a huge chunk of the total P26.5 billion tendered by dealers that auction.
“It just goes to show that market appetite is on shorter-dated securities at this time.”
The Treasury also noted that market players continued to price in their inflation expectations.
“We’ve said that inflation could be a factor and all eyes are on the Thursday release of the inflation print,” Mr. Sta. Ana said.
A BusinessWorld poll among 12 analysts yielded a median inflation forecast of 4.7% for the month of June. If realized, the inflation print will accelerate from May’s 4.6% figure to a fresh five-year high.
Economists said inflation likely picked up from the previous month due to higher food and oil prices, although this was offset by easing electricity rates.
Meanwhile, a bond trader said the rejection of all bids was “a good thing” as rates would have gone up had the government accepted the tenders.
“It’s a good thing they rejected it. The rates would have risen to 6.842% if awarded,” the bond trader said in a text message. “This gives the market some relief as we wait for the [inflation print].”
The government is set to borrow P300 billion from the domestic market this quarter through auctions of securities, offering P195 billion in T-bills and another P105 billion in Treasury bonds.
Aside from this, plans for another dollar bond float as well as yen-denominated “samurai” papers are also being finalized.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit capped at 3% of the country’s gross domestic product.

New on UNESCO’s Heritage List: a national park, hunting grounds, an Arab city, Art Deco buildings


MANAMA, BAHRAIN — Colombia’s massive Chiribiquete National Park has made UNESCO’s World Heritage List, the United Nations body announced Sunday at a meeting in the Bahraini capital Manama. It is one of several new places that have made the list over the weekend. UNESCO’s World Heritage Committee has been meeting in Manama since June 24.
With an area of ​​2.7 million hectares covering five Amazonian municipalities in the southern Guaviare and Caqueta regions, Colombia’s largest natural park has rich biodiversity and is a sacred place for indigenous people.
This is the ninth world heritage listing in Colombia, the second most biodiverse country in the world after Brazil.
Colombian President Juan Manuel Santos said that his government will expand the protected territory in the area. “Tomorrow we will be in the park to further expand and protect our biodiversity #World Heritage,” he wrote on Twitter.
The territory, which is considered a protected area since 1989, will be expanded by 1.5 million hectares on Monday, according to the presidency.
The area is home to creatures such as the Chiribiquete emerald hummingbird, seen as the only endemic species in the Colombian Amazon, as well as the jaguar, the big cat only found in the Americas that is threatened by the loss of its habitat due to deforestation.
TURKEY’S ANCIENT TEMPLE SITE
A Turkish ancient temple site in southeastern Anatolia was given UNESCO World Heritage status on Sunday.
Named Gobekli Tepe (Potbelly Hill), the site is the world’s oldest known megalithic structure located in Upper Mesopotamia and is some 11,000 years old.
The site, considered to be the world’s oldest temple, is in the present-day southeastern province of Sanliurfa and reopened to tourists earlier this year after restoration work was undertaken including a protective roof for the site.
The site contains “monumental circular and rectangular megalithic structures, interpreted as enclosures, which were erected by hunter-gatherers in the Pre-Pottery Neolithic age between 9,600 and 8,200 BC,” UNESCO said in a statement.
“It is likely that these monuments were used in connection with rituals, probably of a funerary nature,” it added.
On the “distinctive” T-shaped large pillars, there are images of wild animals, which UNESCO said provided “insight into the way of life and beliefs of people living in Upper Mesopotamia about 11,500 years ago.”
The late German professor Klaus Schmidt led the excavations of Gobekli Tepe from 1995.
In March this year, his wife Cigdem Koksal-Schmidt warned of heavy machinery and concrete being used to build a path at the site with images she shared on social media.
The site had been on UNESCO’s World Heritage Tentative List of Turkey since 2011 and the restoration work was part of efforts to attain World Heritage status. It has become Turkey’s 18th entry on the UNESCO World Heritage List.
ARAB CITY IN SPAIN
The remarkably well-preserved remains of the Caliphate city of Medina Azahara, a medieval Arab Muslim town near the Spanish city of Cordoba, was added to UNESCO’s list of World Heritage sites on Sunday.
The 10th-century Moorish site provides “in-depth knowledge of the now vanished Western Islamic civilisation of Al-Andalus, at the height of its splendor,” said UNESCO’s World Heritage Committee.
After prospering for several years, the magnificent palace-city, which was the de facto capital of al-Andalus, or Muslim Spain, “was laid to waste during the civil war that put an end to the Caliphate in 1009-10,” the committee said in a statement.
The city was built as a symbol of power to rival the caliphate of Baghdad, but lasted less than a century before it was destroyed in an uprising which ended the Cordoba caliphate at the beginning of the 11th century.
The remains of the city were forgotten for almost 1,000 years until their rediscovery in the early 20th century.
The site is a treasure trove for archaeologists, presenting “a complete urban ensemble” including roads, bridges, water systems, buildings, decorative elements and everyday objects, the UN Educational, Scientific, and Cultural Organization (UNESCO) said. A far more recent historical site was also added to UNESCO’s Heritage list on Sunday.
The Italian industrial city of Ivrea, which was developed in the 20th century as a testing ground for Olivetti, manufacturer of typewriters, mechanical calculators and office computers, was also rewarded.
UNESCO described the city as “a model social project” expressing “a modern vision of the relationship between industrial production and architecture.”
INUIT HUNTING GROUNDS
Inuit hunting grounds in the Arctic circle were given UNESCO World Heritage status on Saturday.
The Aasivissuit-Nipisat area, which lies at the heart of the largest ice-free area in Greenland, “is a cultural landscape which bears witness to its creators’ hunting of land and sea animals, seasonal migrations and a rich and well-preserved tangible and intangible cultural heritage linked to climate, navigation and medicine,” UNESCO said on its website.
The area “contains the remains of 4,200 years of human history,” it added.
According to the Danish historic monuments office, the area covers more than 4,000 square kilometers of fjords, lakes, rural land and ice caps.
It becomes Greenland’s third entry on the UNESCO World Heritage List.
The UNESCO status is “a great international recognition of the natural beauty we have and the culture associated with it,” Greenland’s culture minister Vivian Motzfeldt said in a statement.
PRE-ISLAMIC IRANIAN SITES
UNESCO on Saturday added eight pre-Islamic Iranian archeological sites to the World Heritage List.
The sites collectively appear on the worldwide list as the “Sassanid Archaeological Landscape of Fars region (Islamic Republic of Iran).”
A province in modern-day Iran’s south, Fars was the cradle of the Sassanid dynasty, which appeared at the start of the 3rd century.
After the fall of the Parthian empire, the Sassanids ruled territory that, at its peak, stretched from the west of Afghanistan to Egypt, before falling to the Arab conquest under the Umayyad caliphate in the middle of the 7th century.
“These fortified structures, palaces and city plans date back to the earliest and latest times of the Sassanian Empire,” UNESCO said.
With the latest addition, Iran now has 24 sites on the heritage list of the United Nations Educational, Scientific and Cultural Organization.
MUMBAI’S ART DECO BUILDINGS
Mumbai’s Art Deco buildings — believed to be the world’s second largest collection after Miami — were added on Saturday to UNESCO’s World Heritage List alongside the city’s better-known Victorian Gothic architecture.
A not-for-profit team of enthusiasts are in the process of documenting every single one of Mumbai’s Art Deco treasures but they estimate there may be more than 200 across India’s bustling financial capital. The majority of them, built on reclaimed land between the early 1930s and early 1950s, are clustered together in the south of the coastal city where they stand in stark contrast to Victorian Gothic structures.
“The Victorian ensemble includes Indian elements suited to the climate, including balconies and verandas,” UNESCO said in a press statement announcing the decision. “The Art Deco edifices… blend Indian design with Art Deco imagery, creating a unique style that has been described as Indo-Deco,” it added.
The two vastly different architectural traditions face off against each other across the popular Oval Maidan playing field, where enthusiastic young cricketers hone their skills.
On one side lie imposing and rather austere 19th century buildings housing the Bombay High Court and Mumbai University, with their spires and lancet windows. On the other side stand sleeker buildings boasting curved corners and balconies, vertical lines and exotic motifs.
They were built by wealthy Indians who sent their architects to Europe to come up with modern designs different to those of their colonial rulers.
“Mumbai’s Art Deco buildings have always lived in the shadow of the Victorian Gothic structures built by the British but this recognition by UNESCO today helps elevate Art Deco to its rightful place,” Atul Kumar, the founder of Art Deco Mumbai, told AFP.
KOREAN MOUNTAIN TEMPLES
Seven ancient Korean mountain temples, which typify the way Buddhism in the country has merged with indigenous beliefs and styles, were listed on Saturday.
The seven mountain temples — Seonamsa, Daeheungsa, Beopjusa, Magoksa, Tongdosa, Bongjeongsa, Buseoksa — were all established during the Three Kingdoms period that lasted until the 7th century AD.
UNESCO made the announcement at a meeting in the Bahraini capital Manama.
“These mountain monasteries are sacred places, which have survived as living centers of faith and daily religious practice to the present,” UNESCO said in a press statement.
Buddhism was imported to the Korean peninsula in the 4th century and accepted by the ancient kingdoms of Goguryeo, Baekje, and Silla, establishing it as the national religion for more than 1,000 years.
During the religion’s heyday in the 5th and 6th centuries many houses of worship were built under strong state patronage, accelerating the importation of Buddhist culture, architecture and style.
Buildings were constructed in supposedly auspicious locations and many temples set up in hilly areas, in line with the traditional Korean reverence for mountains and the Zen focus on meditation in a calm environment.
Temples were built on high positions protected by hills and commanding an open view over other mountains.
But Buddhism’s influence began to wane after the Chosun dynasty, which took over in the 14th century, adopted Confucianism as its ideology and launched an extensive and enduring crackdown on the religion.
It forced many urban temples to close, leaving only those in remote hills to survive.
JAPAN CHRISTIAN SITES
A dozen Christian locations in parts of southern Japan where members of the faith were once brutally persecuted were selected for inclusion on the list on Saturday.
The 12 sites include 10 villages, Hara Castle, and Oura Cathedral, a Catholic church in Nagasaki that is dedicated to 26 Christians who were executed for their beliefs over four centuries ago.
In a press statement UNESCO said that the 12 sites “bear unique testimony to a cultural tradition nurtured by hidden Christians in the Nagasaki region who secretly transmitted their faith.”
Christianity in Japan dates back to 1549, when European Jesuit missionary Francis Xavier arrived in the country with two companions and the religion began spreading in western Japan. As more missionaries arrived and the faith spread, Japanese military leaders became increasingly suspicious of its growing influence and a crackdown against Christians began from 1589.
The Christians commemorated at Oura — 20 Japanese and six foreigners — were executed in Nagasaki in 1597 as the persecution intensified.
For Japanese converts, hiding their religion became a matter of life and death for the next 250 years, with Christianity banned and Japan closed to the outside world. As they practised their faith but tried to blend in, the Christians created a blended religion that incorporated elements of Buddhism.
It wasn’t until 1865 that these “hidden Christians” or Kakure Kirishtan became known outside of their communities.
Gothic-style Oura, which was built in 1864 by French priests and was known by locals as the “French temple,” is the oldest Christian-related building in Japan. It was designated a national treasure by the government in 1933, but was partly damaged by the atomic bomb dropped by the US on Nagasaki on Aug. 9, 1945, three days after the bombing of Hiroshima.
The other sites added to the list include Sakitsu village in Amakusa, in southwestern Kumamoto, where Christians practiced their faith in secret in the Edo period. — AFP

Meralco considers Isla Verde as site for 1st microgrid system

MANILA Electric Co. (Meralco) is looking at Isla Verde, an island in Batangas province within its franchise area, as a possible location for its first microgrid system, its president said.
“We are working with the local government to energize [the island], to meet their requirements,” Meralco President and Chief Executive Officer Oscar S. Reyes told reporters.
Should the project push through, it would be Meralco’s first venture into that system.
Apart from Isla Verde, Mr. Reyes said Meralco continues to look for possible areas to build a microgrid, a small-scale electricity grid that can be operated independently from the country’s interconnected network of power transmission facilities.
“Siguro (Maybe) that will be something that we’ll pay attention to in 2019,” Mr. Reyes said.
“They’re really more for, I think, bringing power to those who have no electricity. This is not highly commercially profitable but I think it’s part of our mandate to bring electricity to unelectrified communities. We’re doing that with schools,” he added.
Mr. Lopez declined to classify the company’s electrification of Cagbalete, an island in Quezon province within its franchise, as a microgrid.
In May, Mr. Reyes told shareholders that the company had identified microgrids as a prospective new business for Meralco, which has a 25-year franchise valid through June 28, 2028 to construct, operate and maintain an electric distribution system.
Meralco serves the cities and municipalities of Bulacan, Cavite, Metro Manila and Rizal, and certain cities, municipalities and barangays in the provinces of Batangas, Laguna, Pampanga and Quezon.
Asked where the planned microgrid would be built, Mr. Reyes said back then: “Outside the franchise area.”
The announcement had raised concern among some electric cooperatives who fear the power distribution utility’s encroachment on their respective franchise areas.
Isla Verde was in the spotlight after the Department of Energy (DoE) in April asked Meralco why the island under its franchise area remains without power to this date.
The DoE had said that it was reviewing identified areas for possible operation of third-party electricity providers and the island, located along the Isla Verde passage on the way to Mindoro island, was among them.
Under existing rules, a distribution utility has to waive its right to provide electricity in an area within its franchise before a third-party power provider can come in. The DoE said it might be forced to forego the required waiver depending on Meralco’s response.
Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has interest in BusinessWorld through the Philippine Star Group, which it controls. — Victor V. Saulon