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Bringing the chunky sneakers back


American footwear brand, Skechers, is looking back on its legacy by releasing an updated look of its heritage sneaker, D’Lites, presenting a “modern, edgy look,” according to a company release.
“The chunky sneaker trend is getting bigger now, from the streetwear communities to runways. We’ve seen a lot of brand releasing their own version of chunky sneakers,” Seph Asong, head of communications for Skechers Philippines told BusinessWorld in an interview on April 27 in Henry Hotel in Pasay City.
Twenty years ago, Skechers D’Lites was one of the most popular kicks in the ’90s and early 2000s because it was the footwear of choice of the biggest names in the music industry at the time — namely Mickey Mouse Club alums, Britney Spears, and Christina Aguilera.
Now, the trend is back that even luxury houses including Prada, Alexander McQueen, and Balenciaga have all come out with their version of “dad sneakers,” which was a huge hit in the recently concluded Coachella Valley Music and Arts Festival in April.
“From street to luxury, all point to a new sensation — the ‘ugly,’ unconventional and unapologetic,” said the release.
And being one of the pioneers of the “dad sneaker” trend, Skechers decided to bring back the classic but with a few updates, and thus, D’Lites 2 Sweet Monster came to be.
“We wanted to be different. Everybody right now is doing the streetwear look — very gritty, very New York-vibe — so what we’re going for is something more polished looking but exuding an unpolished attitude,” Mr. Asong said.
The new silhouette focuses on minimalism: the Sweet Monster collection only features two colors, black and blush pink, and a lighter construction but with the brand’s signature memory foam technology.
This shift to a more minimalist design is something Skechers will continue doing with its successive launches for the year, said Mr. Asong.
D’Lites 2 Sweet Monster (P3,890) is only available in the Nines, a clothing retailer focused on streetwear, starting the second week of May and in the Skechers Philippines website.
The partnership with the clothing retailer includes a curated collection of looks, Skechers call “The Retro Renegade,” as it focuses on women having an “unpolished, yet polished look.”
The Nines is located on the second floor of Uptown Mall in Bonifacio Global City, Taguig.
THE SUMMER COLLECTION
April has been a pretty busy month for Skechers as the brand welcomed its summer 2018 line featuring a collaboration with Cuban-American singer, Camila Cabello called the Hi-Lites collection.
Ms. Cabello was first known as a member of American girl group, Fifth Harmony before moving onto a solo career. One of her biggest hits to date, “Havana,” released in 2018 was a homage to Cuba’s capital.
The collection described as “effortless tropical fashion,” according to the release, complements Ms. Cabello’s penchant for streetwear with a Latin flair.
The Hi-Lites collection come in either low and high-top silhouettes with plump uppers, vulcanized pinstripe outsoles, fat laces, oversized metallic eyelets and the brand’s memory foam for comfort.
The Skechers Summer 2018 collection is available in Skechers stores nationwide and online. — Zsarlene B. Chua

MiCab says it won’t impose surge pricing

By Denise A. Valdez
NEWLY-ACCREDITED transportation network company (TNC) MiCab Systems Corp. said it will not charge booking fees or implement surge pricing, unlike other taxi-hailing companies.
MiCab logo
Eddie F. Ybañez, company chief executive officer and cofounder, said the MiCab application guarantees passengers will only have to pay fares according to the taxi meter, unlike other ride-hailing services that hike fares depending on demand.
“What you see on the meter is what you pay. So you are able to travel in a clean, comfortable, modern cab at a fraction of the cost of traditional ride-hailing solutions,” he said in an e-mail interview.
MiCab is a TNC founded in Cebu by Mr. Ybañez and Kenneth Baylosis. It said it currently has 6,000 drivers servicing 4,300 cabs in Metro Manila, Baguio, Cebu, Bacolod and Iloilo. The Land Transportation Franchising and Regulatory Board (LTFRB) issued a Certificate of Accreditation to MiCab last April 30.
Similar to dominant player Grab Philippines, MiCab offers incentives to its drivers to motivate them to provide good service.
“Based on a combination of two key metrics — acceptance rating and rider rating — we award our top drivers with gift certificates. They are also recognized as one of our top drivers on our in-cab tablets,” Mr. Ybañez said.
He added said MiCab generates revenues through a business-to-business (B2B) advertising model.
“We offer advertising space on our taxi toppers as well as our in-cab tablets. Having a B2B model ensures that a clean, efficient, and comfortable ride will always be affordable for passengers,” Mr. Ybañez said.
MiCab continues to expand its driver base by partnering with top taxi companies and through word-of-mouth,” he said.
Mr. Ybañez said the company does not tolerate rude taxi drivers, and takes passenger complaints very seriously. Aside from being “hands-on” in addressing complaints, MiCab uses its data to ensure drivers are kind and polite.
“Based on our data, we have found that our rating system has produced a virtuous cycle with all our drivers: Good drivers are encouraged to maintain their positive demeanor, and drivers who need to improve find out where they need to do so until they become as highly rated as their peers,” he said.

Sizzling summer shopping in Shangri-La Plaza mall


Shangri-La Plaza Mall showed off this summer’s trends last week as stocked in their stores, as seen in brands from Calvin Klein Jeans, Folded & Hung, ForME, GAP, Gingersnaps, Great Kids, Joe Fresh, Just G, Mothercare, Onitsuka Tiger, Paul & Shark, Penshoppe, Periwinkle, Rustan’s, Sky Castle, Superdry, The Park, Oxygen, Regatta, Memo, and True Religion.
The Prospect of Prints — Yes, we know, the prospect of prints can seem daunting to you, but designs from Rustan’s, Joe Fresh, and Oxygen show that smaller prints lead to more restrained and cohesive patterns that anyone can pull off.
Blooming in Blue — Who knew? Outfits in chambray and denim by Just G and Calvin Klein Jeans seen on the runway show that blue can be exciting, when paired with texture and well, your very own panache.
White — The dressing myth goes that white clothes reflect light, so you’ll feel cooler in the summer heat. Either way, you can at least look cooler as you stroll under sunlight in white.
Lovely in Lace — Just because you’re laboring under the heat doesn’t mean you can’t look pretty. Crochet lace dresses and chambray outfits trimmed with lace make sure there’s still a touch of whimsy in your outfits, with little extra weight which won’t make you break out in a sweat. — J. L. Garcia

Megawide-GMR to bid for Clark airport’s O&M

By Krista A.M. Montealegre
National Correspondent
MACTAN, CEBU — The consortium of Megawide Construction Corp. and India’s GMR Infrastructure Ltd. is joining the bidding for the operations and maintenance (O&M) contract for the Clark International Airport in Pampanga.
Interested parties can purchase the bid documents for the project starting today.
“Megawide-GMR intends to participate in the bid for Clark O&M. We will carefully study the terms and qualifications set by the Bases Conversion and Development Authority,” the consortium said in a statement.
The government is adopting a hybrid public-private partnership (PPP) model for Clark Airport. Under this policy, the government will fund the construction of the new terminal in Clark, while the O&M contract would be auctioned off to the private sector.
Megawide-GMR earlier won the auction to build the new Clark terminal late last year.
Meanwhile, GMR Megawide Cebu Airport Corp. (GMCAC) is set to start commissioning the new passenger terminal of the Mactan-Cebu International Airport (MCIA) on June 22, with President Rodrigo R. Duterte set to grace its opening.
GMCAC President Louie B. Ferrer told Manila-based reporters flown here last week the new international terminal is on track to open ahead of the July 1 schedule, as provided in the concession agreement, despite previous delays in the turnover of the project to the consortium of Megawide and GMR.
GMCAC won the contract for the P17.52-billion Mactan-Cebu International Airport Passenger Terminal Building project under the Aquino administration’s flagship public-private partnership (PPP) program and the concession to develop MCIA for a period of 25 years.
With the opening of Terminal 2 and the launch of new flights out of Cebu, MCIA is eyeing passenger traffic to reach 11.2 million this year, up 12% from the passenger count of 10 million in 2017, said GMCAC Chief Executive Advisor Andrew Harrison.
GMCAC will immediately start work on the phased rehabilitation of Terminal 1 once the new terminal, which will cater to international flights to and from Cebu, commences operation.
MCIA serves 25 domestic destinations with seven carriers, and 22 international destinations with 17 airlines. Last year alone, it opened eight new routes to China.
In the next two years, new routes connecting Cebu to Europe, Australia and other Southeast Asian countries and expanding connections to China, Japan and South Korea will be in the works. GMCAC has been in talks with airport operators in Sweden, Australia and Japan to market Cebu as a destination and to showcase MCIA as an ideal gateway to the Philippines.
“We’ve only got the tiny tip of the iceberg when it comes to China. Our focus is on Australia and Europe,” Mr. Harrison said.
GMCAC is attributing the growth of MCIA’s passenger traffic to its destination marketing initiatives, which is anchored on strengthening Cebu’s connectivity and its positioning as a viable gateway to the rest of the Philippines as well as a major transfer hub to other countries.
The shutdown of Boracay to tourism is expected to boost passenger volumes for MCIA, said Ravishankar Saravu, GMCAC chief commercial adviser.
“We see some airlines are re-routing their flights from Boracay to Cebu. We are not seeing yet, but we should,” said Mr. Saravu.
In the event the government decides to close Cebu to tourism for rehabilitation, GMCAC expects passenger traffic to remain positive because of the strong business activity in the region, while noting that other tourism sites have initiated a cleanup in their own respective areas.
Last February, GMCAC was granted the original proponent status for its proposal to upgrade and expand the Mactan-Cebu airport at a cost of P208 billion.
The government turned over the airport’s operation and maintenance to the Megawide-GMR consortium on Nov. 1, 2014. This, however, did not include the improvement, operations, and maintenance of the runway and other related facilities, which to date remain with the Mactan-Cebu International Airport Authority.

Chinese banana trader doubles orders from Davao planters

By Carmelito Q. Francisco
Correspondent
DAVAO CITY — China’s GoodFarmer Banana Trading Corp. is increasing its banana purchases from Davao producers to 300 containers from 150 containers a week between this year and 2019, a company official said last week.
GoodFarmer Country Manager Michael Li said the company, among the biggest sellers of bananas in China, is also looking at expanding its market by exploring new areas.
“There is still a big requirement for bananas in China; we can still grow our market,” Mr. Li said during a tour of about 30 stakeholders from Guangzhou province to the banana farms of Davao del Norte.
The group said the banana industry in the region is efficient and modern, citing the packing houses of the Tagum Agricultural Development Co., Inc. (Tadeco) in Sto. Tomas, Davao del Norte.
“We never see a packing house like this in China,” Mr. Li said, noting that some of the visitors, including growers and suppliers, “want to know about the best practices of the local banana industry.”
Last year, GoodFarmer signed a marketing agreement with Tadeco subsidiary Anflo Banana Corp. for about 840,000 boxes of Class A bananas annually for two years.
The bananas will be sourced from Anflo Banana’s farms in Pantukan, Compostela Valley and Don Marcelino, Davao Occidental.
In 2015, government data show China bought about 448,000 boxes of fresh bananas from Philippine growers.
Apart from the Philippines, GoodFarmer also imports banana from Ecuador, Costa Rica, Colombia, and Vietnam.
The other agricultural commodities it buys from the Philippines are pineapples from Bukidnon and Cagayan de Oro City, and dragon fruit from Biñan, Laguna.
GoodFarmer, which started operations in Davao City in 2011, also exports to the Philippines agricultural products from China such as garlic, ginger and apple.
“We have grown very fast here,” Mr. Li said.

PSE eyes 8 initial public offerings this year

By Arra B. Francia
Reporter
THE PHILIPPINE Stock Exchange, Inc. (PSE) is aiming to double the number of initial public offerings (IPO) it had in 2017 for this year, a top official said over the weekend.
PSE President and Chief Executive Officer Ramon S. Monzon said they target to have eight IPOs, even though no company has yet taken itself public so far this year.
“We targeted eight. Unfortunately up to May, there’s still zero,” Mr. Monzon told reporters after the company’s annual shareholders’ meeting in Mandaluyong City on Saturday.
The aggressive target comes amid the lackluster performance of the Philippine Stock Exchange index since February, which has so far retreated by 20% from its high of 9,058.62 last Jan. 29 to 7,546.19 on May 4’s close.
“There will still be appetite and it just depends on the pricing as the companies that will list in the PSE have good market positions and good future prospects,” BDO Capital and Investment Corp. President Eduardo V. Francisco said via text.
The 2018 target is the double the four companies that listed their shares for the first time at the stock exchange in 2017, including Wilcon Depot, Inc. (P7-billion IPO), Eagle Cement Corp. (P8.6 billion), Cebu Landmasters, Inc. (P2.9 billion), and Chelsea Logistics Corp. (P5.8 billion).
So far, only two firms have filed their IPO plans with the Securities and Exchange Commission.
Del Monte Philippines, Inc. (DMPI), the local unit of the Del Monte Pacific Limited (DMPL), said it seeks to raise P16.7 billion from the sale of 559.464 million shares to the public, priced at P29.88 apiece. This comprises about 20% of DMPI’s outstanding shares.
Net proceeds of the offer will be used to partially prepay or repay DMPL’s existing debt, as well as for general corporate purposes.
DMPI’s proposed IPO will make it the largest since Pilipinas Shell Petroleum Corp.’s $380.79-million IPO in October 2016, and will top Felda Global Ventures Holdings Bhd’s $3.27-billion IPO in 2012, the largest in Southeast Asia.
The company targets to conduct the IPO this month, pushing back its initial April schedule to give way for other share sales in the market, such as Metropolitan Bank & Trust Co. and Bank of the Philippine Islands. DMPI has tapped BDO Capital the offer’s issue manager, sole global coordinator, and sole book runner.
Meanwhile, property developer DM Wenceslao and Associates, Inc. also applied to take a fifth of its shares public by June. The company targets to raise P15.5 billion from the sale of 679.172 million shares, with an over-allotment option of up to 101.876 million shares, at P22.90 each.
The real estate firm, known for its development of the 204-hectare Aseana City in Parañaque City, plans to use the net proceeds of the offer for the further expansion of the estate. The company has allotted P7.46 billion for land acquisitions, P5.31 billion will be for the development of nine projects, while P500 million is for infrastructure development.
BPI Capital Corp. and Maybank Kim Eng Securities, Pte. Ltd. will serve as the joint global coordinators and book runners of the offer.

Estee Lauder CEO Freda apologizes for product testing fiasco

Estee Lauder Cos. Chief Executive Officer Fabrizio Freda apologized for false ad claims on certain cosmetics and said a comprehensive review is under way.
“We recently learned that some testing related to certain products advertising claims had been intentionally altered for some time by a small group of employees,” Freda said Wednesday on a conference call with analysts. “This clearly does not meet our standards.”
Freda didn’t disclose which products were affected by the manipulated tests, saying only that there were no safety issues and that some of the companies’ advertised claims will be changed — some minor and some “more significant.” The shares fell the most in almost three years.
“We are sorry this occurred and we take full responsibility for this matter,” Freda said.
The testing disclosure put a cloud over the company’s third-quarter financial report, which showed that revenue was powered by sales in Asia, e-commerce and skincare products. Estee Lauder, which owns dozens of makeup and skincare brands including Clinique and Mac, is benefiting from its strong lineup of higher-end labels, while budget brands — the kind found at pharmacies or discount retailers — are struggling to attract shoppers.
MILLENNIAL CONNECTIONS
The 72-year-old company has been aggressive in its efforts to connect with millennial customers through opportunistic acquisitions and the willingness to try out new digital tactics in e-commerce. Since 2015, Estee Lauder has been on a buying spree, scooping up such brands as Glamglow, Becca, Kilian, and Too Faced.
Standouts included Clinique skincare, Estee Lauder brand makeup and Jo Malone London fragrances. Each posted double-digit growth in most regions.
In Asia, the company saw gains across all its brands, especially in China, Hong Kong, Taiwan and the Philippines. Consumers in the region flocked to the highest-end products, such as La Mer and Tom Ford. — Bloomberg

Agriculture cooperatives hope to help farmers rise up the value chain

EXPECTED growth in the agricultural sector has highlighted the need for cooperatives to step into the gap when the government and banks fail to supply credit.
Asian Farmers’ Association (AFA) Cooperative Development Program Director Cresente C. Paez noted that some savings and credit cooperatives are starting to expand their services to farmers.
Mr. Paez said in the Philippines savings and credit cooperatives are the “strongest,” while agricultural cooperatives continue to lag.
“What (savings and credit cooperatives) did is to shift to the agriculture sector and at the same time, put up business enterprises. They went here because most of their members are from the rural areas,” he added.
“Cooperatives can provide services, especially credit. Before, borrowers used to borrow money from usurers, but now they go to the cooperative because the interest rates are low.”
According to AFA, around $1,000 to $4,000 per hectare is needed to invest in mixed or diversified farming while an average of $500,000 is needed for working capital and processing facilities.
“The problem is that we cannot rely on the government when it comes to extension services because extension services have political strings attachment,” Mr. Paez said.
“That’s our experience and we thought that what we need [to do is] to help cooperatives build up their own extension services. Perhaps with a research or agricultural institute, maybe they could be more independent.”
AFA program manager and Oro Integrated Cooperative Chairperson Jose Romeo B. Ebron said that the organization was purely a savings and credit cooperative four years ago.
Oro has since branched out to serve the agriculture sector through its subsidiary, Golden Grains Cooperative.
Mr. Ebron added that financing farmers is “the biggest challenge we have in the whole agri-enterprise: the farmers are not in control of the whole value chain. They’re only up to the production level.”
“We have members that we finance and then we connect them to the market. We [also] provide extension services for farmers who are engaged in cacao production, covering around 100 hectares,” he added.
“We provide extension services like quality control and drying facilities, then we help connect them into the market.”
Regionally, Mr. Paez believes that cooperatives can help reduce poverty among farmers not only through credit but as well as knowledge-sharing.
Mr. Paez said AFA plans to increase its reach even further from current membership of 13 million farmers and 18,000 farmers’ organizations in Asia since 2002.
“In the Philippines, it’s really not about numbers. It’s more on how strong the cooperatives are. We are looking at 1,000 cooperatives in the Philippines out of 24,000 [in the next three to five years],” he added.
Mr. Paez said farmers need to be more involved in the value chain to improve the quality if their lives.
“The key here is the organizer. Cooperatives should engage and every cooperative should have an organizer,” he added.
“If the farmer should only be a producer of raw materials, but someone else handles the value chain, the farmer will be on the losing end.” — Anna Gabriela A. Mogato

Maynilad allots P743M for pumping stations

MAYNILAD WATER Services, Inc. has set aside P743 million in 2018 to fund the construction of new pumping stations and reservoirs that will boost water pressure for thousands of its customers while connecting a million more to the west concessionaire’s network.
“We in Maynilad have made it our mission to improve the living conditions of our customers through better water access. Hence, we keep investing in the infrastructure enhancements needed to connect new customers and boost service levels for existing ones,” said Ramoncito S. Fernandez, Maynilad president and chief executive officer, in a statement.
The new facilities will be constructed in Valenzuela and Muntinlupa, and will have a combined water storage capacity of 75 million liters. They will allow the company to store more water for better supply management in the areas to be served. About 87,000 customers are expected to benefit from the improved water pressure.
The two pumping stations and reservoirs will be equipped with high-efficiency pumps that can raise water pressure to 16 pounds per square inch (psi) from the current 7 psi in the barangays Maysan and Gen. T. de Leon in Valenzuela, and Imus in Cavite.
They will also allow Maynilad to bring surface water to residents in the covered areas who either rely on deep wells for their supply or have limited-to-no-water access, Maynilad said.
The Valenzuela and Muntinlupa facilities are expected to be completed by the fourth quarter of 2019. Ahead of these, the new facilities that will start operating this year include those in Bacoor and Imus in Cavite province.
Maynilad is an agent and contractor of Metropolitan Waterworks and Sewerage System (MWSS) for the west zone of the greater Manila area. Its coverage spans certain areas in Manila, Quezon City and Makati City. It also covers Caloocan, Parañaque, Las Piñas, Muntinlupa, Valenzuela, Navotas and Malabon.
Outside Metro Manila, the company covers the cities of Cavite, Bacoor and Imus, and the towns of Kawit, Noveleta and Rosario — all in Cavite province. — Victor V. Saulon

Kiehl’s reintroduces serum line for targeted skin concerns

Kiehl’s, the premium skincare brand known for its no-frills packaging and natural ingredients, is reintroducing its power serums line for people who may have just started creating their own, personalized skin care routines.
“In the Philippines, we built the brand around serums. Everyone knows Kiehl’s for either Midnight Recovery Concentrate or the Clearly Corrective Dark Spot Solution, these two are our best-selling serums,” Joan Hwang, Kiehl’s Philippines brand manager told the media on the sidelines of the April 25 event in Bonifacio Global City, Taguig.
She explained that while a considerable amount of the company’s sales come from its serums, many are not aware that the brand offers other serums with other benefits.
“Serums can work as targeted skincare treatments… you can use two serums at the same time,” she said.
Serums, unlike moisturizers and other face creams, are products that contain high concentrations of performance ingredients, making it an indispensable part of one’s skincare routine.
The Midnight Recovery Concentrate (P2,995 for 30 ml and P3,995 for 50ml), arguably the brand’s best-selling serum, is meant to give “heavy duty rejuvenation overnight” as it contains oils including evening primrose oil for skin repair and skin soothing and a cocktail of lavender, geranium, rosemary and rose essential oils to heal the skin.
Other serums from Kiehl’s include the Clearly Corrective Dark Spot Solution (P2,995 for 30ml and P3,995 for 50ml) focuses on diminishing dark spots and discolorations as it includes white birch and peony extracts; and the Powerful Strength Line Reducing Concentrate (P3,675 for 50ml) which contains 12.5% Vitamin C and hyaluronic acid for reducing fine lines and wrinkles while hydrating the skin.
Also included in the serums line are the Daily Reviving Concentrate (P2,895 for 30ml) which contains a blend of ginger root oil, sunflower seed oil and tamanu oil to reduce skin inflammation, reduce the appearance of redness and moisturize the skin; the Hydroplumping Re-texturizing Serum Concentrate (P2,730 for 50ml) which has plant-based glycerin and shiso leaf extract to plump the skin and smooth the appearance of fine lines and wrinkles; and finally, the Nightly Refining Micro-Peel Concentrate (P3,185 for 30ml) formulated with quinoa husks extract and phytic acid which helps exfoliate the skin overnight to accelerate skin cell turnover.
Ms. Hwang said the company is expecting 2018 to be one of its fastest growing year due to their focus on promoting skin care routines and their serums via skin consultations.
Kiehl’s serums are available in Kiehl’s boutiques nationwide. — ZBC

T-bills, T-bonds may fetch higher rates

GOVERNMENT SECURITIES on offer this week will likely fetch higher yields as investors await the monetary policy meeting of the Bangko Sentral ng Pilipinas (BSP).
The Bureau of the Treasury is offering today P15 billion worth of Treasury bills (T-bills), broken down into P5 billion and P4 billion in three- and six-month papers, respectively, and another P6 billion in one-year bills.
Tomorrow, the Treasury will also offer P10 billion worth of reissued three-year Treasury bonds (T-bonds) with a remaining life of two years and eight months.
A trader said on Friday that the T-bills auction could end mixed as yields on the shortest tenor may slip.
“For the bills, we expect yields of the 91-day papers [to move] sideways or lower by five basis points from the previous auction,” the trader said in a phone interview, adding that yields on the 182- and 364-day papers will likely move up by around five basis points.
“For the T-bonds, we’re expecting [the yield] to rise by five basis points from the previous auction,” the trader noted.
Meanwhile, another bond trader sees Tuesday’s T-bonds being awarded at a rate between 4.625% and 4.85%.
During last week’s T-bills auction, rates of the three-month papers dropped to 3.485% from 3.597% in the previous auction, while the six-month and one-year papers fetched higher yields of 4.019% and 4.263%, respectively.
Meanwhile, the government raised P10 billion from the three-year bonds auctioned on April 3 with an average rate of 4.632%, higher than the 4.25% coupon rate.
At the secondary market on Friday, the 91-day, 182-day and 364-day papers fetched yields of 3.4068%, 3.8478% and 3.9159%, respectively, while the three-year bond was quoted at 4.5804%.
Decent demand is expected at the three-year bonds auction, “reflecting investors’ preference,” ANZ Research said in a report released last week.
BSP MEETING
Sought for comment, traders said the market will await the meeting of the BSP’s Monetary Board, which is seen to tighten monetary policy settings.
“The market will wait for the Monetary Board meeting. There is a possibility of a rate hike given the higher inflation,” the first trader said.
Inflation reached a five-year high of 4.5% in April, preliminary data from the Philippine Statistics Authority showed.
This was higher than the 4.3% inflation logged the previous month while matching the median estimate in a BusinessWorld poll of 11 economists.
“We believe that this pace of inflation, coupled with strong imports and credit growth, warrants a rate hike,” ANZ Research said. “However, as the BSP did not indicate any inclination to raise rates, our base case is that the overnight reverse [repurchase] policy rate would be maintained at 3%.”
ANZ Research added that the “situation somewhat changed” when the monetary authority indicated recently that it is “ready to make measures to protect price and financial stability.”
“This view of the central bank has raised the odds for a rate hike next week,” ANZ Research noted.
Last week, BSP Governor Nestor A. Espenilla, Jr. said latest observations bared that inflation is becoming broader than initially expected.
“What we react to is whether it’s spreading and it is affecting expectations. And our reading, based on the latest data, it seems to have spread somewhat,” Mr. Espenilla said.
BSP Deputy Governor Diwa C. Guinigundo said separately that the Federal Reserve’s decision to remain on hold last week demonstrates the “gradual” pace of policy tightening in the US, which he noted will be a “very important input” to the BSP’s own policy meeting.
Domestic inflation remains a bigger concern, the central bank official added.
The Treasury is holding two auctions per week this quarter — one for T-bonds and another for T-bills — to reflect increased borrowing requirements.
The government plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

Trade tensions crimp US soybean sales to China

US SOYBEAN SALES to China ground to a halt after Beijing threatened tariffs on imports, the CEO of agricultural trader Bunge Ltd. said on Wednesday, the latest sign of mounting trade tensions upsetting the global flow of commodities.
Countries such as Brazil and Canada are increasing soybean sales to China following Beijing’s threat last month to impose a 25% tariff on imports of US soybeans, Chief Executive Soren Schroder said in an interview. US farmers rely on China as the top buyer of soybeans, but at a current price of about $420 per ton, that translates to a potential tax of more than $100 per ton on shipments.
“Nobody’s willing to take the risk of committing to US soybeans to China in the current context, knowing that there could be a $100 penalty from one day to the other, and no way of managing that risk,” Schroder said after the company reported a quarterly loss.
Soybeans were the United States’ most valuable agricultural export last year to China, which bought $12 billion of the crop.
Freshly harvested South American soybeans typically dominate the world trade in the first half of the calendar year, followed by the United States from September onwards.
But US soybean sales to China over the last four weeks are down 10% from this time a year ago, according to US trade figures — a blow to US farm country, which helped propel US President Donald Trump into office in the 2016 election.
Growing trade disputes are disrupting the agricultural supply chain worldwide and causing US farmers and manufacturers to back away from expansion plans due to steel and aluminum tariffs.
“The trade stuff has been another layer of uncertainty that nobody really knows how to price yet,” Schroder said.
Separately, Beijing slapped hefty anti-dumping deposits on US imports of a livestock feed known as sorghum.
Bunge’s rival, Archer Daniels Midland, said on Tuesday it would take a $30-million hit in the second quarter due to the sorghum dispute.
ADM is closely monitoring US trade developments regarding China and the North American Free Trade Agreement (NAFTA), CEO Juan Luciano said.
Bunge has seen trade flows shift amid NAFTA renegotiations as well. In one example, Bunge milled wheat that had been imported to Mexico from Argentina as a test, Schroder said.
Mexican buyers imported 10 times more corn from Brazil last year due to concerns that NAFTA renegotiations could disrupt their US supplies.
The shift in China’s soybean business is not a net negative for Bunge because it has operations globally, Schroder said.
“If there is a problem in one part of the world, we can solve it in another,” he said.
Bunge reported a net loss of 20 cents per share in the quarter ended March 31, down from a profit of 31 cents a share a year ago. The loss included a $120-million charge due to forward oilseeds crushing contracts, which Bunge said it would recover.
Improved margins for soybean crushing should boost earnings significantly this year, executives said, after a severe drought reduced harvests in Argentina, the world’s top exporter of soy products.
The higher margins prompted Bunge to raise its agribusiness unit’s full-year earnings outlook to a range of $800 million to $1 billion from $550 million to $700 million.
Shares gained 2.3% to $73.29.
Bunge’s projection for stronger performance was a turnaround after years of bumper harvests reduced price volatility and margins for the company and its rivals, making it tough to turn a profit on their core business: buying, processing and selling corn, soy and wheat.
A string of weak results over the past year left Bunge’s management fending off takeover approaches from traders Glencore PLC and ADM. — Reuters

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