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Mining firm to file charges vs Brooke’s Point mayor

GLOBAL FERRONICKEL, Inc. subsidiary Ipilan Nickel Corp. (INC) will be filing criminal, civil and administrative charges against Brooke’s Point Mayor Mary Jean D. Feliciano for allegedly conducting an illegal demolition activity on its mining site. In a statement released Thursday, INC claimed that Ms. Feliciano, whom the company claims to be a “known anti-mining advocate,” had “forcibly destroyed guard houses, gate posts and fences, among others, to gain access to the mine site premises then completely demolished the campsite office building.” “The mayor, with utter disregard of the rule of law and of the Mineral Production Sharing Agreement (MPSA) between INC and the Philippine Government, has not shown any demolition order from the court nor the Department of Environment and Natural Resources,” resident Mine Manager Ferdinand Libatique said. Under the MPSA, INC is allowed to operate within the prescribed Contract Area and make use of a government-owned building in exchange for looking after the host community. — Anna Gabriela A. Mogato

DENR forms team to check on Panglao waste management

THE DEPARTMENT of Environment and Natural Resources (DENR) has formed a regional investigating team in Panglao, Bohol to monitor waste management, especially along the island’s shorelines amid the government’s crackdown on environmental law violations. This comes after President Rodrigo R. Duterte threatened to shut down establishments in Boracay that have been illegally dumping their untreated waste water into the sea. DENR Secretary Roy A. Cimatu, in a statement, said that “[w]hat happened to Boracay is a wake-up call.” DENR Region 7 Director Gilbert C. Gonzales said the investigation team will check on the garbage disposal systems, and sewage and waste water facilities of each establishment along the coastal areas. We [also] have to look into the land classification of these areas to make sure that public owned or forestlands are not occupied by illegal settlers or illegal structures built and operated by local or foreign business owners,” he added. — Anna Gabriela A. Mogato

Loose firearms from Zamboanga City barangays turned over to military

THE ZAMBOANGA City government turned over on Wednesday to the military’s Western Mindanao Command (WesMinCom) more than 150 unregistered and loose firearms collected from the different barangays and neighboring areas. The surrendered firearms were presented by Zamboanga Mayor Ma. Isabelle Climaco-Salazar to Lt. Gen. Carlito G. Galvez, Jr., WesMinCom commander, at the Camp General Basilio Navarro in the city. “We are just here to show our commitment and support to the Armed Forces of the Philippines. This turnover only showcase the success of the cooperation between the military and police,” Ms. Climaco-Salazar said. Col. Leonel Nicolas, commander of the combined police and military Task Force Zamboanga, said the recovery of the loose firearms is an offshoot of the “sustained campaign against the proliferation of the unregistered and loose firearms.” The military and police have also recently intensified their campaign on loose firearms as part of the preparations for the May Barangay and Sangguniang Kabataan elections. — Albert F. Arcilla

Nation at a Glance — (02/23/18)

News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.

Subway expected to reduce economic cost of traffic — JICA

By Melissa Luz T. Lopez, Senior Reporter

CONSTRUCTION of the Philippines’ first subway line is expected to start later this year, with authorities hoping to alleviate Manila’s road congestion, which is estimated by Japan’s aid agency to cost the economy P3.5 billion daily.

Susumu Ito, chief representative of the Japan International Cooperation Agency (JICA) in the Philippines, made the estimate, which is substantially higher than the P2.4 billion daily given by a 2014 study. Metro Manila’s population is about 13 million.

“As you can see, the traffic cost is P3.5 billion a day in Metro Manila. If we do nothing, it will become P5.4 billion a day in 2035, but with Build, Build, Build, it can be reduced to P3 billion a day,” Mr. Ito said during the 36th Annual Joint Meeting of the Philippines-Japan Economic Coordinating Committee held yesterday at the New World Hotel in Makati City.

“JICA is supporting the Build, Build, Build program fully. It is a must.”

Economic cost of traffic in Metro Manila by BusinessWorld

Based on JICA estimates, road usage in Metro Manila was 13.4 million trips per day in 2017. Without any infrastructure interventions, this will rise to 16.1 million daily trips by 2035, which will come with a cost to the economy of P5.4 billion.

Mr. Ito also pointed out road congestion issues in the nearby provinces of Bulacan, Rizal, Laguna and Cavite, and a Mega Manila population estimate of which over 38 million people by 2035.

Socioeconomic Planning Secretary Ernesto M. Pernia said the government wants to fast-track the rollout of the Metro Manila Subway Project, which will be funded through official development assistance from Japan.

Mr. Pernia said the government wants to break ground for the 25-kilometer railway by the third quarter with partial operations up by late 2021 or 2022, following the Japan-Philippines meeting held Feb. 12 in Cebu.

However, JICA’s Mr. Ito said authorities are “still discussing” project timelines, with the two nations hoping to sign the first tranche of the loan deal next month.

The subway line runs from Mindanao Avenue in Quezon City to the site of the former Food Terminal, Inc. in Taguig City. Mr. Ito said completion is targeted by 2025.

Mr. Pernia said the government will be staging a job fair in the Middle East within the quarter to attract Filipino technical workers home to boost the labor pool for infrastructure projects.

“What we’re planning — in fact it is already scheduled — is we will hold a job fair in the Middle East so that we can attract back our skilled technical workers to come back and work here,” Mr. Pernia said during his keynote speech.

“We’ll make sure that the salary differential between what they are getting in overseas workplaces and here is minimal or maybe even much (more than) whatever they’re getting.”

Pressed further, Mr. Pernia said the job fair will likely be held by “late March.”

Mr. Pernia said the government will be spending P8.13 trillion for 75 big-ticket infrastructure projects until 2022, which are expected to improve mass transport and inter-island connectivity.

Separately, President Rodrigo R. Duterte promised that Japan’s projects in the Philippines will be free from red tape, Presidential Spokesperson Herminio L. Roque, Jr. said.

“[The President] pledged his commitment to ensure that Japan projects will receive attention and will be free from bureaucratic delays whether the projects are government-to-government or business-to-business,” Mr. Roque said in a televised press briefing at Sara Municipal Hall in Iloilo on Thursday, Feb. 22.

Mr. Duterte met with Philippine and Japanese conglomerates at Malacañan Palace on Wednesday.

At the meeting, according to Mr. Roque, “the President thanked Japan for its wholehearted support for his government programs, and for the humanitarian assistance it has extended to the Filipino people.”

In a statement from the Presidential Communications Office sent late Wednesday, the Palace said Mr. Duterte likewise met with the “representatives of the Philippine-Japan Economic Cooperation (PHILJEC) to tackle infrastructure programs.”

According to the Palace, “PHILJEC aims to promote, strengthen and expand trade, economic, scientific technological advancements, exchange assistance to business endeavors in both the Philippines and Japan.”

“It was designed to be a forum for private sector dialogue and the exchange of ideas geared towards the enhancement of Philippines-Japan relations.”

Moreover, in their meeting with the President, the Philippine conglomerates “discussed competitiveness and macroeconomic fundamentals, infrastructure and innovation matters,” the Palace said.

Present during the meeting were Japanese Ambassador to the Philippines Koji Haneda, Marubeni Corp. Chairman Teruo Asada, Mitsubishi Corp. Chairman Ken Kobayashi, Japan Chamber of Commerce and Industry (JCCI) International Division Manager Masazumi Nishizawa, and Japan Airlines Chairman Masaru Onishi.

Also present were JCCI Secretary General Hidekazu Oshita, PHILJEC outgoing Chairman Aniceto Saludo, PHILJEC incoming Chairman Gerard Sanvictores, ANA Holdings Senior Vice-President Koji Shibata, and Japanese Chamber of Commerce and Industry of the Philippines (JCCIPI) President Hiroshi Shiraishi.

Executive Secretary Salvador C. Medialdea joined Mr. Duterte during the meeting. — with Arjay L. Balinbin

Consumer price index base year changing to 2012 in March

THE Philippine Statistics Authority (PSA) said the base year for the consumer price index (CPI) will change to 2012 beginning in March.

The PSA said the change will take place in the next release of CPI for All Income Households on March 6.

“[T]his will include monthly CPI from January 2012 to February 2018. Data users will expect two sets of the CPI as the new series shall be issued simultaneous with the 2006-based series until June 2018. CPI series for July 2018 onwards shall be 2012-based,” the PSA said.

The PSA said that rebasing is “necessary,” as the current reference “no longer represents” household behavior and “would tend to give wrong market signals.”

“Economic, social and technological changes may have influenced Filipinos’ tastes and preferences and these, in effect may have resulted in changes in the consumption patterns,” it said.

Ruben Carlo O. Asuncion, chief economist at the Union Bank of the Philippines said that the rebasing would “naturally make a difference, but not big.”

“Nominal prices usually do not capture the real information about the level of prices. A base year is needed to compare ‘apples to apples,’” he said.

However, he added that CPI must also reflect the times. “There should be an alternative to PSA’s measure of inflation. There are a lot of commodities bought outside the supermarket, such as online. How do we measure that?”

He cited Japanese publication Nikkei’s CPINow as an example of a “detailed” measurement. The Nikkei CPINow index is a daily price gauge based on point-of-sale data in supermarkets nationwide.

For the 2012-based CPI, the PSA will adopt the chain method for the first time. “This activity involves assigning weights to the commodity groups/sub-groups. This reflects the consumption priorities of households and the way they allocate resources to meet their needs,” it said.

The weights will be derived from expenditure data of the 2012 Family Income and Expenditure Survey (FIES) — which monitors the expenditure of around 50,000 sample households nationwide.

“This is a good move. The FIES is a disaggregated data of household consumption. It is very accurate in terms of buying behavior,” Mr. Asuncion commented.

Nomura, a Japanese financial services group, said inflation is “tricky to calculate” in its report “First Insights — Philippines: CPI rebasing from 2006 to 2012 finally announced” released yesterday.

“[W]hether this rebasing will bias the inflation readings up or down… we do not know the exact weighting changes of all the items in the basket. However, we believe it is likely to introduce a small upside bias, largely because of the impact of recent tax reforms. We believe the more discretionary, big-ticket items tend to have their weightings increased in these exercises. These are the same items (e.g., utilities, beverages and tobacco, transport and telecommunication services) that have arguably experienced significant price rises due to the tax reforms at the beginning of the year, in addition to higher oil prices,” it said.

“In our view, BSP will unlikely judge a shift in its inflation outlook in either direction just because of the rebasing,” Nomura said.

“We reiterate our forecast for BSP to hike its policy rate by 25 basis points at its 22 March meeting, driven by rising inflation expectations and risks of its 2-4% inflation target being breached,” it added. — Carmina Angelica V. Olano

BIR says drafting guidelines for tax reform ‘challenging’

THE Bureau of Internal Revenue (BIR) expects to finish issuing guidelines for the tax reform law by March, although the new rate structure should have been implemented by companies and retailers at the start of the year.

BIR Deputy Commissioner Marissa O. Cabreros told reporters that the agency has yet to release implementing rules and regulations for several provisions of the Tax Reform for Acceleration and Inclusion (TRAIN) Act, saying that implementing the new taxes provided under the law has proven to be complex.

In particular, Ms. Cabreros said guidelines for taxing cosmetic procedures are taking a longer time to draft: “It’s challenging in the sense that it’s the first time for excise tax to include services.”

“The challenge to us is how to properly monitor and for them (cosmetic clinics) to properly comply easily,” Ms. Cabreros told reporters on the sidelines of a workshop organized by the Tax Management Association of the Philippines.

On the other hand, revenue regulations (RR) covering the simplified rules on estate and donor taxes will be out soon, with the draft submitted for the signature of Finance Secretary Carlos G. Dominguez III.

The TRAIN reduced income tax rates for those earning below P2 million yearly, while millionaires get slapped by as much as 35% in taxes.

Separate RRs for tax collection and reporting for sugar-sweetened drinks, as well as the removal of exemptions to the 12% value-added tax, are also being prepared by the agency.

However, Ms. Cabreros clarified that the signing of the TRAIN law specifically provides that the new taxation scheme took effect Jan. 1, 2018.

“[T]here are already initial advisories. Even without the RR, it’s not a deterrent for the appropriate taxes to be collected or that the reduction in taxes won’t be properly reflected,” the BIR official added.

The BIR yesterday issued Revenue Regulation 8-2018, which sets the guidelines for the adjustments in personal income taxes.

Ms. Cabreros said the 27-page issuance is more “explanatory” in nature, as it outlines “scenario-based” examples which are expected to make it easier for taxpayers to understand the new scheme.

Mr. Dominguez signed the RR adjusting personal tax rates on Feb. 15, although the rules state that the regulations are effective Jan. 1.

The BIR previously released updated regulations covering revised tax adjustments on mineral products, fuel, cigarettes, documentary stamp taxes, and cars. — Melissa Luz T. Lopez

DoE monitoring power deal renewals to ensure CSP rules are met

THE Department of Energy (DoE) said it will intervene and review existing power supply contracts with an automatic renewal clause to block any move to circumvent the rules on competitive selection process (CSP).

“The rate would still be negotiated. We will look at the rate. They can have an automatic renewal but DoE will still look at what they are automatically renewing,” Energy Secretary Alfonso G. Cusi told reporters in view of the recent issuance of the department’s CSP circular.

“They might be renewing at P5 per kilowatt-hour when the ongoing rate is already P3,” he said.

Mr. Cusi said the renewed power supply contract will also need clearance from the Energy Regulatory Commission (ERC), thus the rates would not be automatically carried over to the new agreement.

“That would also go through the ERC. For us, if there is an automatic renewal, we have an intervention for that,” he said.

Redentor E. Delola, DoE assistant secretary, said the department also monitors existing and expiring power supply agreements (PSAs), thus none can be renewed automatically.

Mr. Delola said that a year before a PSA expires, the DoE knows which ones are going to be renewed or extended.

“We can ask the ERC to review these contracts,” he said.

In a circular issued earlier this month, the DoE required power generation companies as well as new power providers to secure supply of electricity through a competitive bidding or CSP. The process is open to participation by any interested party and requires three process: advertisement or publication; pre-bid conference; pre-qualification; bid evaluation; post-qualification; and the award of the power supply contract.

Department Circular No. DC2018-02-0003 also calls for the distribution utilities, through their boards , to establish an independent third-party bids and awards committee to spearhead and manage the CSP.

The circular also set down the rules covering the membership of the five-member committee, two of whom are to come from the captive customers that are not directly or indirectly related or affiliated to the distribution utility.

Previously, the DoE and the Energy Regulatory Commission required the conduct of a CSP but did not give out a detailed guideline of what the process should entail. — Victor V. Saulon

Infrastructure investment in the Philippines set to drive growth

THE PHILIPPINES has kicked off its 2018 infrastructure program with the launch of a headline transport project, with additional investments set to support GDP growth moving forward.

In early January ground broke on the P31.3-billion ($616.5 million) Southeast Metro Manila Expressway project, also known as the C6 Expressway, which will run along the outskirts of the capital, linking Taguig City with Quezon City.

Targeted for completion in 2020, the 34-km, six-lane toll road is expected to cut travel time along the route to around 30 minutes. The project should also help improve logistics efficiency and ease congestion on nearby arteries.

The C6 project forms part of a broader P8.4-trillion investment program that aims to lift infrastructure development spending from 5.4% of GDP in 2017 to 7.4% in 2022, according to Benjamin M. Diokno, the Budget secretary. Analysis by investment banking services firm First Metro Investment expects outlays to reach 6.1% of GDP this year.

BUILD, BUILD, BUILD PROGRAM FOCUSES ON TRANSPORT
A major project to be launched this year as part of the Build, Build, Build program is the Metro Manila Subway, the country’s first underground mass-transport system.

The 13-station development, which has an estimated price tag of P355.6 billion, aims to significantly cut travel time around the city, and is expected to carry some 370,000 passengers annually upon its partial opening in 2025. Construction is being part financed by the Japan International Cooperation Agency (JICA), the Philippines’ main international aid agency partner, which is set to provide ¥1 trillion ($9.2 billion) for development over the next five years.

In addition to the metro, other key projects in the pipeline include: the Luzon Spine Expressway Network, a series of new roads stretching 1,000 km. from north to south Luzon; the Metro Manila Logistics Network, a set of new bridges and roads designed to alleviate congestion in the capital; and the 74-km Metro Cebu Expressway, which is expected to halve the travel time between Naga City and Danao City.

Infrastructure gaps have long been identified as a barrier to growth. Although the Philippines ranked 56th out of 137 economies on the World Economic Forum’s Global Competitiveness Index 2017-2018, it ranked 97th for infrastructure, with shortfalls identified as the second-most problematic factor for doing business, behind inefficient government bureaucracy.

The accelerated infrastructure investment program will be one of the key forces driving GDP growth in 2018, according to Gil S. Beltran, undersecretary and chief economist at the Department of Finance (DoF). Together with tax changes and rice sector reform, the Build, Build, Build policy “will push the country’s growth to 7-8% this year and sustain manageable inflation,” he said.

TAX REFORMS TO HELP FUND DEVELOPMENT
The increase in infrastructure investment will be supported, in part, by new tax reforms, which the DoF has forecast will generate P786.4 billion over the next five years.

The first of these, the initial stage of the Tax Reform for Acceleration and Inclusion (TRAIN) program, introduced in early January, increased excises on fuel, vehicles, tobacco and sugared drinks, while at the same time reducing personal income taxes. In total, TRAIN is expected to fund around 25% of Build, Build, Build.

The government has also proposed tapping the international bond market, particularly in Japan, China and South Korea, for financing. In early January, Carlos G. Dominguez III, the secretary of Finance, told reporters the government planned to launch a bond offering in the first quarter of the year. He added that a samurai bond issue was being considered for later in 2018.

MANUFACTURING TIPPED FOR REBOUND
Aside from providing an overall economic boost, the infrastructure rollout is expected to benefit key sectors that have fallen behind the general trend of strong expansion.

Manufacturing, which has felt the weight of higher electricity prices and a lack of supply chain development, is one such example. The Volume of Production Index contracted by 8.1% year on year in November, the third successive month of negative growth, according to data from the Philippines Statistics Authority.

However, this decline could be reversed if infrastructure works stimulate domestic growth.

“Infrastructure development is likely to ramp up thanks to President Rodrigo R. Duterte’s infrastructure development programme, and that should help the production of key inputs such as cement,” a January report from financial services firm Moody’s Analytics said.

PROGRAM COULD ALTER BALANCE OF PAYMENTS
While the fast-tracked infrastructure programme is expected to support growth in many parts of the economy, one short-term downside could be the potential impact on the balance of trade.

The accelerated rollout of infrastructure projects has seen related spending rise significantly in recent years, which has led to contractors increasing imports of construction products and associated equipment.

The balance-of-payments deficit reached $1.8 billion in the year to November, according to the Bangko Sentral ng Pilipinas (BSP), more than eight times the $206-million deficit recorded for the same period in 2016, with infrastructure-related imports seen as one of the major contributors.

Although the balance of payments has moved into the red and there are concerns inflation could rise on the back of shortages in key materials or skilled labor, officials remain confident that this will be offset when capital-goods imports begin to make a positive impact on the economy through increased GDP, investment and employment.

This Philippine economic update was produced by Oxford Business Group.

Peso ends flat on FOMC meeting minutes

THE PESO closed flat against the dollar on Thursday following the release of hawkish minutes of the January meeting of the US Federal Reserve.

The local currency ended today’s  session (Feb. 22) at P52.10 against the greenback, trading flat from its finish on Wednesday.

The peso opened the session at P52.13 versus the dollar, while its best showing stood at P52.03. Yesterday’s intraday low, on the other hand, was at P52.17 against the greenback.

Dollars traded dropped to $668.4 million today from the $965.95 million that changed hands in the previous session.

“The peso closed sideways [yesterday], though intraday rates were generally weaker following hawkish cues due to strong US economic growth outlook from the recently-released Fed policy meeting minutes,” a trader said in an e-mail.

During the Fed’s Jan. 30-31 monetary policy meeting, a number of officials indicated that “they had marked up their forecasts for economic growth in the near term” as the “labor market continued to strengthen and that economic activity expanded at a solid rate.”

Earlier this month, the Bureau of Labor Statistics reported that the US economy created 200,000 new jobs in January, higher than the 180,000 market consensus.

The “substantial underlying economic momentum” supported the market sentiments for the Fed to hike its interest rates this year.

“Participants expected that with further gradual adjustments in the stance of monetary policy, economic activity would expand at a moderate pace and labor market conditions would remain strong,” minutes of the Federal Open Market Committee (FOMC) meeting read.

Meanwhile, another trader said the local currency “only traded within the range.” suspecting that the Bangko Sentral ng Pilipinas continued to intervened on the top side.

The local central bank sometimes intervenes in the foreign currency exchange to temper sharp swings.

The trader added that there was some “heavy selling” around the intraday low, giving the peso some lift to close sideways.

For Friday, Feb. 23, the trader said the peso will likely move between P52 and P52.20 against the dollar, while the first trader gave a wider forecast range of P51.90 to P52.30.

“The peso is expected to move sideways due to lack of fresh leads from the US and upward pressures to the dollar for the week had already subsided,” the first trader noted.

Asian currencies languished against the dollar on Thursday after minutes of the Federal Reserve’s January meeting showed policy makers were more confident of the need to keep raising interest rates.

The dollar, which was hit recently by a barrage of bearish factors such as worries about US budget deficit and pursuance of a weaker dollar policy, rebounded this week thanks to rising US Treasury yields.

The 10-year US Treasury yield hit more than four-year highs on Thursday and was creeping towards the psychological level of 3 percent — which analysts say would drive investors away from risky assets such as emerging Asian currencies.

“We do not rule out the possibility that Fed could revise its dots projection slightly upwards for 2019 and for its terminal rate,” said Saktiandi Supaat, head of foreign exchange research at Maybank in Singapore, in a report, referring to the Fed’s expectations for its rate path.

The South Korean won, Thai baht , Indonesian rupiah and the Malaysian ringgit all shed about half a percent or more on the day, hurt by narrowing gap between the local bond yields and US Treasury yields. — Karl Angelo N. Vidal with Reuters

Shares decline on hawkish Fed meeting minutes

SHARES sank back to negative territory on Thursday, as hawkish tones from the United States Federal Open Market Committee (FOMC) prompted caution across global markets.


The main index shed 1.13% or 98.08 points to 8,515.57 Thursday, Feb. 22, quickly reverting its stance after managing to post gains in the previous session.

The broader all-shares index likewise dropped 0.68% or 34.98 points to 5,087.19.

“Rising bond yields continued to assert pressure on stocks in Wall Street, and the last FOMC minutes from then Chairman Janet Yellen giving strong sell signals to the Philippine market today. With the FOMC minutes indicating a slightly hawkish tone to inflation and growth in the US, markets globally took a precautionary stance,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.

Minutes of the FOMC’s meeting last Jan. 30-31 stated that rate hikes will be implemented, alongside the US’ increased economic growth that is also triggering faster inflation.

US markets took this news negatively, with the Dow Jones Industrial Average losing 0.67% or 166.97 points to 24,797.78. The S&P 500 index gave up 0.55% or 14.93 points to 2,701.33, while the Nasdaq Composite index was down 0.22% or 16.08 points to 7,218.23.

Most Asian indices likewise followed suit, trekking lower today as investors turned cautious against the impending rate hikes.

Papa Securities Corp. noted that index heavyweight SM Investments Corp. (SMIC) also pulled down the market after falling 5% intraday and closing 3.55% lower to P950 apiece. Villar-led firms Golden Haven, Inc., which has posted a dizzying ascent in previous days, finally snapped its rally, losing 11.11% to P290 each.

“Looking forward, it might be best to remain cautious given the current volatility. The possibility of sudden downturns in the US market is also still ever-present, more so that US treasury yields are on the rise,” Papa Securities trader Gabriel Perez said in an e-mail on Thursday.

Most sectoral indices also posted a negative turn, with the mining and oil sector posting the largest loss at 1.87% or 231.52 points to 12,098.54. Holding firms followed with a decrease of 1.63% or 143.63 points to 8,623.05. Property moved 1.05% or 41.30 points lower to 3,862.19; financials dipped 0.78% or 17.51 points to 2,201.45; while industrials slipped 0.67% or 76.93 points to 11,245.09.

The services counter was the lone advancer, albeit gaining just 0.16 point to 1,745.60.

A total of 2.96 billion issues switched hands for a total value turnover of P10.46 billion, higher than Wednesday’s P9.53 billion.

Decliners outpaced advancers, 136 to 77, as 49 names closed flat.

Foreign investors were sellers for the third straight day, disposing a net P389.87 million from their portfolios. This is lower than Wednesday’s net sales of P516.38 million. — Arra B. Francia

Stocks decline further after hawkish Fed minutes

Shares sunk back to negative territory on Thursday, as hawkish tones from the United States Federal Open Market Committee (FOMC) prompted caution across global markets.

The main index shed 1.14% or 98.08 points to 8,515.57 yesterday, quickly reverting its stance after managing to post gains in the previous session. The broader all-shares index likewise dropped 0.68% or 34.98 points to 5,087.19.

“Rising bond yields continued to assert pressure on stocks in Wall Street, and the last FOMC minutes from then Chairman Janet Yellen giving strong sell signals to the Philippine market today. With the FOMC minutes indicating a slightly hawkish tone to inflation and growth in the US, markets globally took a precautionary stance,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said.

Minutes of the FOMC’s meeting last Jan. 30-31 stated that rate hikes will be implemented, alongside the US’ increased economic growth that is also triggering faster inflation.

US markets met this news on a negative note, with the Dow Jones Industrial Average losing 0.67% or 166.97 points to 24,797.78. The S&P 500 index gave up 0.55% or 14.93 points to 2,701.33, while the Nasdaq Composite index was down 0.22% or 16.08 points to 7,218.23.

Most Asian indices followed suit, trekking lower as investors turned cautious against the impending rate hikes.

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