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Monark Equipment expects sales boost from gov’t infrastructure push

By Janina C. Lim, Reporter
MONARK EQUIPMENT, Inc. is targeting to increase this year’s sales by nearly a tenth from 2017 as projects under the Duterte administration’s “Build, Build Build” program are rolled out.
Monark Equipment Vice-President for Core Industries Manuel M. Martin said the group is targeting to hit P12 billion in sales by yearend, a 9% gain from 2017 sales.
The company’s portfolio consists of four segments namely, product support, rental sales, retail sales and mining business. Of these, the retail segment, bolstered by sales of construction equipment, made up a third of Monark Equipment’s portfolio last year.
Monark Equipment hoping to ride on the growth of the government’s massive infrastructure projects which are still in the early phase of construction.
“Ang mga projects nila is just starting to roll out so ngayon na nagpre-prepare yung mga contractors, namimili na sila ng mga gamit (The government’s projects are starting to be rolled out, so the contractors are preparing and buying equipment),” Mr. Martin told BusinessWorld on the sidelines of a recent company event.
Citing the firm’s market research information, Mr. Martin said imports of construction equipment during the first quarter grew 30% from a year ago. For Monark Equipment alone, construction machine sales during the January to March period “almost” saw a double-digit growth.
The company has been seeing a 20% annual growth in the sale of construction equipment for the past three years, according to Mr. Martin.
“Hopefully, tumaas pa siya pag nag-full blast na lahat ng project ng government (Hopefully, this will increase once the government projects are fully implemented),” he added.
Responding to this development, Monark Equipment launched the so-called Next Generation 320 and 320 GC excavators which boosts efficiency with an integrated system of fleet, while reducing fuel consumption and maintenance cost.
Because of their versatility, excavators made up about 70% of Monark Equipment’s construction machinery sales, while loaders and graders accounted for the remaining 30%.
The growth logged in construction last year offset the lackluster performance in some industries, Mr. Martin said, noting that Monark Equipment is merely sustaining client-operators in their metal mining segment.
Asked if the clampdown on mining operations was to blame, Mr. Martin said the problems facing the sector are deeper than the regulatory headwinds.
“It’s just not the crackdown, locally. But if you’re going to look at it its more of global… ang production, di masyado malaki (the production is not very big),” Mr. Martin said.
“It never really grew. But the potential is really big,” he noted about the local mining sector.
But while that potential remains untapped, Monark Equipment is banking on the construction boom expected under the “Build, Build, Build” program.
Monark Equipment is the official dealer and importer of equipment manufactured by US-based Caterpillar, Inc. The firm also carries other major brands such as Tadano, Putzmeister, Terex, Genie, Gomaco and Powerscreen.

SE Asian agriculture museum to rise in UPLB

By Carmencita A. Carillo
Correspondent
LOS BAÑOS, LAGUNA — The Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA) is preparing to build the Southeast Asian AgriMuseum and Learning Center on Agricultural and Rural Development, to be located at the University of the Philippines Los Baños (UPLB).
“It’s going to be a landmark facility located in the Philippines. It is a Southeast Asian facility, a learning facility that will give us a push for agriculture development,” SEARCA Director Gil C. Saguiguit, Jr. said during the Training-Writeshop on Communicating Trends and Innovations in ASEAN Agriculture for regional media held at the SEARCA in UPLB from April 18-20.
Mr. Saguiguit said while SEARCA traditionally publishes information on the latest research and news on agriculture, this mainly caters to professionals from the industry.
“But it should be everybody’s concern to focus on agriculture as a very important sector, primarily because it is the sector that produces our food. So we thought out of the box, how to bring in non-agriculturists to appreciate these agriculture-related problems,” he said.
Mr. Saguiguit said the challenge is how to make agriculture more exciting, especially as a field of study, to attract more students who could later become knowledgeable farmers.
“If nobody studies agriculture or go into this as a career or livelihood, the inevitable question is, who will replace the next generation of farmers?” he said.
The AgriMuseum, which will cost up to $8 million, is still soliciting funds.
Mr. Saguiguit said half of the total will be raised from donations, including P5 million committed by the Department of Agriculture-Bureau of Agricultural Research.
Other countries, he said, have initially promised to contribute exhibits for the museum’s collection.
SEARCA said it has the resources to build the AgriMuseum on its own, but would like other countries in the region to participate.
“If it’s just us (SEARCA) putting it up, then there will be no sense of ownership,” he said.
“We presented the idea to the 11 member countries and the partners are convinced that it is a good idea,” he added.
The International Service for the Acquisition of Agri-biotech Applications (ISAAA) has also pledged to help fund the project.
Mr. Saguiguit said the museum will emphasize agriculture’s importance to the region’s food security and overall development as well as promote rural growth.
“The AgriMuseum is seen as an alternative education facility for getting across the message of the urgency of agricultural and rural development to concerned stakeholders and to enjoin them to rally behind the cause,” he said.
The 1,000-square meter AgriMuseum, targeted for completion by end-2019, will be handled by the same group behind the MIND Museum at the Bonifacio Global City in Metro Manila.
Mr. Saguiguit said: “We have a small space but the goal is when you go out from the museum, you will understand how important agriculture is.”

Rates of T-bills, T-bonds to climb

THE BUREAU of the Treasury will auction off T-bills and T-bonds this week. — BW FILE PHOTO

By Elijah Joseph C. Tubayan, Reporter
YIELDS on longer-dated government securities will likely increase to track their US counterparts and bets of policy tightening both from the US and local central banks.
The Bureau of the Treasury (BTr) is offering P15 billion worth of Treasury bills (T-bills) today, broken down into P5 billion and P4 billion in three- and six-month papers, respectively, and P6 billion in one-year debt notes.
On Tuesday, it will also offer P20 billion worth of reissued 20-year Treasury bonds (T-bonds) with a remaining life of 19 years and 10 months.
Traders interviewed on Friday said yields on the 91-day T-bills will likely move sideways or decline by less than five basis points (bps).
“For the T-bills of course there would be excess demand for the three-month. But I guess it should be lower by five bps,” a trader said in a phone interview.
Another trader, however, said rates may “move sideways given that the previous auctions were already a bit high.”
Meanwhile, rates for the longer-dated 182- and 364-day papers as well as the 20-year bonds are expected to climb by at least 10 bps and demand may taper off as investors will likely continue to swarm the three-month debt notes.
“For the one-year, the yields would be at least 10 bps higher, and the 182-day also 10 bps higher. There’s not so much demand, even if you notice the past auctions. It’s really more focused on the three months,” the first trader said.
The second trader likewise forecasted the same increase for the six-month and one-year papers, noting the “possible rate hikes in the future both here and the US Fed,” while also citing “high inflationary expectations” in the Philippine economy mainly due to the tax increases introduced this year.
“So the market appetite is weak on the long-tenored notes,” the trader said.
A third trader, meanwhile, said the T-bonds on offer on Tuesday may fetch a 7-7.1% rate.
At the close of the secondary market on Friday, the 91-and 182- day T-bills fetched a 3.4761% and 3.6111% yield, respectively, while the rate of one-year papers stood at 4.2625%. The 20-year bonds, meanwhile, were quoted at 7.0929%.
The trader said the longer-dated tenors would follow the rise of US yields after the rate of the 10-year US Treasuries hit its highest level in four years.
“With this upside risk of the yields, all the more you wouldn’t want to lock in your funds in the long end,” the trader said.
The trader added that the “bid cover ratio would be lower.”
The government seeks to raise P325 billion this quarter from local creditors this quarter through weekly auctions of securities.
It is holding two auctions per week, one for T-bills and another for T-bonds, than the previous one auction per week as it increased its borrowing requirements for the period.

Revisiting 1999: Bulgari reshapes the B.Zero1 line with the help of Zaha Hadid

1999 was an extraordinary year in fashion. As the world braced itself for the new millennium, the pendulum swung from the world of excess portrayed in the 1980s to its antithesis, grunge. Perhaps a synthesis of both made way for an antiseptic minimalism that extolled the virtues of clean shapes. In the last quarter of that extraordinary year, the luxury jewelry brand Bulgari gave birth to B.Zero1, characterized by stacked circles that serve either as pendants or rings.
Late last year, the collection was revived again with the help of architect Zaha Hadid, who used the Colosseum of Rome as an inspiration to reshape the collection. This isn’t the first time that the collection was revisited: sculptor Anish Kapoor also retouched the collection in 2010.
As a collective, the collection has been done in a variety of materials, from yellow, rose, and white gold, and during a party on April 20 at the Makati Shangri-La hotel, guests saw variations, including watches and bracelets, executed in materials such as ceramic and marble.
Mario Katigbak, general manager of Bulgari in the Philippines, said: “You have to understand that the strength of Bulgari is in construction and craftsmanship.” This probably explains why for this collection, Bulgari tapped the talents of an architect and a sculptor, instead of a designer.
The stackable rings, of different sizes, also have the capability to move when worn properly. Actually, Mr. Katigbak tells clients that when taking the stacked ring off, one must start at the bottom so as not to make the rings collapse or come apart.
The series also differs from other Bulgari collections, such as the Serpenti collection, which are designed to make one pause. “This is practical. It’s something that you can wear all the time,” said Mr. Katigbak, instead of say, wearing a snake-shaped bracelet that almost seems to seek to intimidate.
As in most things, however, what seems to be the most simple holds the most complexity: “It’s not just a ring: it’s craftsmanship,” he said. — J.L. Garcia

Alterpower in talks with electric cooperatives for PSA

By Victor V. Saulon, Sub-Editor
ALTERPOWER SPECIALIST, Inc., a new player in the renewable energy sector, is planning to contract up to 80% of the capacity of a Davao del Sur solar farm it recently bought, as it hold talks with electric cooperatives in the area for a power supply agreement (PSA).
Jose Silvestre M. Natividad, who heads Alterpower, said he targets “at least 70% or 80%” of the solar farm’s 28.6 megawatt (MW) to be under a PSA, with the rest of the capacity to be traded at the wholesale electricity spot market (WESM).
“In six months’ time, 50%,” he told reporters when asked about the timeline in closing a supply contract with electric cooperatives.
“In stages of 5, 10 [MW],” he said about the phase of contracting, adding that closing a PSA takes time because of regulatory requirements, including a competitive selection process that subjects the contract to price challengers.
Alterpower is one of the special purpose vehicles under Clean Renewable Energy Solutions Philippines, Inc. (Cresphil), which Mr. Natividad runs as president and chief executive officer.
The unit secured on April 12 the approval of the Philippine Competition Commission for its acquisition of the shares of Enfinity Philippines Renewable Resources Fourth, Inc., one of the solar energy companies that aimed to qualify for the government’s guaranteed 25-year feed-in-tariff (FiT) but failed to meet the March 2016 deadline.
Enfinity is the latest among the “stranded” solar farms that are struggling after building a project at an investment cost that is way above the projected revenue streams from trading its capacity at the electricity spot market.
Its solar power project in a 34-hectare land farm in Brgy. San Roque, Digos City, Davao del Sur was acquired by Alterpower, a company established to construct and maintain solar electric facilities. Cresphil is the company’s majority shareholder.
In its approval of the deal, the PCC said it “does not result in substantial lessening of competition in the relevant market, considering that post transaction, sufficient constraints remain from other market participants and does not result in increased likelihood of anti-competitive coordinated behavior.”
The solar project was completed in 2016 with Sterling and Wilson of India as its international engineering, procurement and construction contractor. Meralco Industrial Engineering Services Corp. is its local contractor.
After the transaction, Alterpower will own 65% of Enfinity’s outstanding capital stock. The solar project is directly connected to the Mindanao grid.
Mr. Natividad said Cresphil’s aspiration is to reach an installed capacity of 100 MW in five years. These projects will be under Cresphil and various companies focused on hydroelectric power and a hybrid of hydro and solar.
The target capacity will be achieved through acquisitions and new projects, he said. Cresphil and its units have under construction a 1.8-MW mini hydro facility in Mindanao that might qualify under the FiT scheme, which was extended for two years until 2019. Another ongoing project is an 8.5-MW hydro plant in the north.
Another 1.5-MW hydro is being eyed for acquisition in the north. Other projects being considered in various parts of the country are 12-MW and 2-MW hydro facilities in Mindanao.

Filinvest Land keeps capex steady in 2018

FILINVEST LAND, Inc. (FLI) is keeping its capital spending steady in 2018, as the Gotianun-led developer aims for at least high single-digit growth boosted by its office segment.
FLI President and Chief Executive Officer Lourdes Josephine Gotianun-Yap said the company has set aside P23.5 billion for capital expenditures this year, slightly higher than the P22 billion it spent in 2017.
Of the 2018 capex, P10 billion will go to FLI’s office segment. The residential business will corner P8 billion, while the retail component will have P2.5 billion. The remaining amount has been allotted for land acquisitions.
“The indicative is high single-digits and low double-digits. (This will be driven) mainly by the rental income,” Ms. Gotianun-Yap told reporters after FLI’s annual shareholders’ meeting at Crimson Hotel in Alabang last Friday.
The property company looks to end the year with a gross leasable area of around 800,000 square meters (sq.m.) from office and retail spaces, or an additional 140,000 sq.m. for 2018. This includes the completion of Filinvest Activa in Cubao, One Filinvest in Ortigas, and two more office buildings in Pasay City.
In addition, FLI will be unveiling two buildings in Alabang, one in Cebu, and another one in Clark, Pampanga this year.
The launch of more office and retail spaces is in line with FLI’s goal to bring rental income’s share to profit to 50% by 2022. Rental income accounted for 41% of the company’s bottom line at the end of 2017.
For the residential segment, FLI is set to launch 15 projects this year, consisting of a mix of horizontal, mid-rise, and high-rise buildings.
Ms. Gotianun-Yap said the firm will be using mostly internally generated income to fund the 2018 capex, and may opt to take out loans to fund its mall and office developments.
Meanwhile, the Filinvest group will be spending some P6-8 billion in the next two years for the development of Clark Mimosa, a mixed-use estate located beside the group’s $200-million casino project.
FLI will be developing six office buildings, a mall, a retail strip, as well as some residential units for the first phase of Clark Mimosa.
Ms. Gotianun-Yap said two of the office buildings are almost finished, while construction on the mall, residential projects, and retail strip will start within the year.
“If the office component comes in very strong, then the residential portion will be strong also. Then the airport will also come in, that will also bring in more employment and the integrated resorts,” Ms. Gotianun-Yap said when asked how many residential projects FLI is eyeing.
FLI’s parent Filinvest Development Corp. (FDC) will also be spending P3-4 billion during the same period for the hospitality component.
“We’ll do expansion of the hotel, the casino, then we’ll probably plan a second hotel,” Ms. Gotianun-Yap said, who also sits as FDC’s president and chief executive officer.
The Filinvest group secured the provisional license from state-run Philippine Amusement and Gaming Corp. to build the Clark casino earlier this month. Ms. Gotianun-Yap said the group is currently negotiating to get a foreign partner for the project. — Arra B. Francia

UCPB net earnings go up in Q1 on growth in core businesses

By Melissa Luz T. Lopez, Senior Reporter
THE UNITED Coconut Planters Bank (UCPB) saw its net income surge by a fifth during the first quarter, supported by strong growth in its core businesses.
The state-run lender said it booked P1.14 billion in profits from January-March, 19% higher than the P958 million earned during the same period last year.
“The double-digit earnings growth reflects the strong performance of the Bank’s lending, deposit-taking, bancassurance and fee-based operations in the first three months of the year,” UCPB President and Chief Executive Officer Higinio O. Macadaeg, Jr. said in a statement sent over the weekend.
The bank saw a 12% expansion in its loan portfolio, with outstanding credits higher at P173.35 billion from P155.02 billion the previous year on the back of robust growth in consumer lending. In particular, stronger demand for housing, auto and personal loans brought in P6.5 billion worth of new credit lines, UCPB said.
As a result, net interest income improved by four percent to hit P2.84 billion year-on-year.
The pickup in lending came alongside a nine percent increase in deposits, which reached P278.04 billion as of end-March largely driven by new low-cost current and savings accounts.
Non-interest income also jumped by a fifth to P743 million, with UCPB drawing bigger gains from higher service charges, fees and commissions, foreign exchange trading and bancassurance revenues.The bank signed a 10-year exclusive partnership to cross-sell United Coconut Planters Life Assurance Corp. (COCOLIFE) and UCPB General Insurance Co., Inc. in February.
Mr. Macadaeg said the bank is “ahead” of their quarterly target and stands on track to surpass 2017 earnings, which totalled P4.08 billion.
UCPB — the 11th biggest bank in asset terms — currently runs 188 branches nationwide, with no plans to open new outlets as officials await plans for the bank’s privatization.
The government is free to proceed with selling its majority stake in UCPB after the Supreme Court lifted a halt order on the disposition of coco levy assets. This involves the government’s 73.9% stake in the bank worth at least P1.1 billion.
Finance Secretary Carlos G. Dominguez III said they are sorting out legal issues before proceeding with the auction, but noted that the state is not keen on extending the financial support provided to the bank for its rehabilitation, which started in 2008 and expires this year.

Commercial production of Bt eggplant seen by 2019

LOS BAÑOS, LAGUNA — The Supreme Court may have reversed its 2015 decision stopping field testing of genetically modified (GM) crops, but the commercial propagation of Bt eggplant remains stalled at the regulatory level.
A Joint Department Circular (JDC) has put in place new requirements for GM organisms (GMOs), including unanimous approval from five departments: Agriculture (DA), Science and Technology, Health, Environment and Natural Resources, and Interior and Local Government.
The nine motions for reconsideration granted by the court were by filed by International Service for the Acquisition of Agri-Biotech Applications, Inc.; Environmental Management Bureau; Crop Life Philippines; the University of the Philippines (UP); and the UP Los Baños (UPLB) Foundation.
“We will try to get regulatory approval this year and (final) approval next year,” said Dr. Desiree M. Hautea, project leader of Bt Eggplant program, in an interview at the Institute of Plant Breeding-UPLB Friday.
In a previous interview with BusinessWorld, Dr. Lourdes D. Taylo, the study leader for Bt eggplant, said the team has to submit the regulatory dossier to the five departments for a permit for food, feed and processing before sourcing seed from Bangladesh, where the Bt brinjal variety is approved.
India, Bangladesh and the Philippines have engaged in Bt eggplant research, but only Bangladesh has so far approved, planted and brought the crop to the commercial production stage.
The Philippines has completed multi-location field trials conducted in Pangasinan, UPLB, Camarines Sur, and Kabacan, North Cotabato.
Ms. Hautea said Bt eggplant proponents in the Philippines have fully satisfied three of the four stages and requirements for biosafety of GM crops, which are: contained trials in a research laboratory in 2005-2007; single-location, limited confined field trial from 2008-2009; and multi-location trials in four locations from 2010-2012. The next step is commercial cultivation.
Ms. Hautea said there are more than 21,000 hectares planted to eggplant. Based on Philippine Statistics Authority 2016 data, eggplant farmers annually produce about 215,278 metric tons of eggplant.
The Top five eggplant producing provinces are Pangasinan, Nueva Ecija, Isabela, Iloilo, and Quezon.
Studies show that the current practice of eggplant farmers involve the use of chemical pest control against the fruit and shoot borer.
“Pesticide use in eggplant production has health and environmental effects,” said Ms. Hautea.
“Majority of farmers are willing to pay for Bt eggplant seed at a price higher than the price of regular seed in the market mainly because of the large savings on the use of chemical pesticides.” — Carmencita A. Carillo

Rebellious fashion: Saudi Arabian women embrace sports abayas

ALIBABA.COM

JEDDAH, Saudi Arabia — Colorful and oozing defiance, a sports-friendly version of the abaya gown was once considered a symbol of cultural rebellion in conservative Saudi Arabia, but it is fast becoming the new normal.
Pictures of female athletes running in the garb in the Red Sea city of Jeddah went viral last month, setting off a new debate on sartorial freedoms for women in a country where the typically all-black, body-shrouding garment is obligatory in public.
Some cultural purists vented fury online, calling it a breach of tradition, but opposition has been largely muted following recent comments from powerful Crown Prince Mohammed bin Salman that the abaya — any abaya — is not mandatory in Islam.
Until a formal edict comes however, designers such as Eman Joharjy are cashing in on the growing popularity of the so-called sports abayas, as many women push back against traditional attitudes of equating chastity with dress code.
“There is a big demand,” Joharjy told AFP at her fashion studio in Jeddah.
“Having them in different colors is empowering.”
Akin to a zippered jumpsuit, sports abayas envelop a woman’s body but offer greater mobility for sporting activities, in contrast to the classic baggy version where tripping on the hem of the flowing garment is a common risk.
The 43-year-old’s designs come in colors like pistachio green, beige, and white — more tolerable in the kingdom’s scorching heat — and she uses natural fabrics, including French poplin, that do not cling to a sweating body.
One of the early pioneers of the trend, Joharjy said she was branded a social outlier and jeered by some as “batman” when she began designing — and donning — sports abayas publicly in 2007.
“There was a little bit of rebellion but I designed it for myself, because it’s practical,” she said.
“You zip up and are ready to go.”
‘SOCCER-THEMED ABAYAS’
Joharjy has defied a popular maxim in Saudi Arabia: “If it’s not black, it’s not an abaya.”
Abayas have evolved over the years, with new patterns, fabrics and embellishments, and they are sometimes worn in the kingdom with baseball-style caps over headscarves.
The latest fad is an eye-catching ensemble of “soccer-themed abayas” — in the colors of the local teams, a new way for female sporting fans to cheer for their favorite players.
Such fashion trends are gaining momentum amid the kingdom’s liberalization drive, including a historic royal decree allowing women to drive from June and enter sports stadiums for the first time.
The government is also seeking to jump-start women’s sports and is moving toward compulsory physical education classes for girls, after a ban was lifted in 2014.
Saudi officials recently announced that women would be able to participate next year in the Riyadh international marathon, previously a male-only event.
Women exercising in public were long a target for the kingdom’s austere religious police, which has largely been neutered in recent years.
And the once-unthinkable idea of doing away with the abaya appears to now be gaining traction.
“The laws are very clear and stipulated in the laws of Sharia: that women wear decent, respectful clothing, like men,” Prince Mohammed told CBS Television last month.
“This, however, does not particularly specify a black abaya. (It) is entirely left for women to decide what type of decent and respectful attire to wear.”
‘MODEST LOOK’
Muslim cleric Sheikh Ahmed bin Qassim al-Ghamdi added a new wrinkle to the debate when he dismissed the long-held view that black was the only color for abayas permissible in Islam.
“The cloak is meant for maintaining a modest look and it does not have to be black,” the former chief of the religious police in the holy city of Mecca, told Saudi-owned Al-Arabiya television last month.
But the risk of a social backlash is real in a society steeped in conservatism.
“They look like cleaners!” a tweet said, in response to viral images of athletes dressed in sports abayas.
“Their purpose is not sports. We have all been running in full body veil,” tweeted another.
Back at Joharjy’s studio, a longtime client Marwa al-Hadi walked in wearing one of her designs with magenta sneakers.
“Abaya is like the Indian saree, it is part of our identity,” Joharjy told her, as they weighed in on the future evolution of the garment.
“But at the same time, if God did not want women to do sports, we would not have muscles or a body.”
Hadi nodded.
“It is no one’s business to stop and question what I’m wearing,” she said. — AFP

Stylishly covered up

INDONESIAN DESIGNERS went all out in coming up with variations on the traditional hijab during the Muslim Fashion Festival in Jakarta. The Muslim Fashion Festival was held from April 19 to 22.

Globe plans to make GCash available in China

GLOBE TELECOM, Inc. eyes to make its cashless payment system available in countries where Chinese mobile payment platform Alipay (Ant Financial Services Group) is used.
Globe President and CEO Ernest L. Cu said they plan to make the GCash QR code system available in China this year, and other countries where Alipay is used.
“That’s on the road map. We’re still figuring out how long it’s going to take. Hopefully my goal is before end of year,” Mr. Cu told reporters on the sidelines of a Globe event on April 19.
“Not only China, the objective is to have it used in all Alipay-affiliated countries, that includes India, Malaysia, Thailand, Indonesia, maybe even Singapore with SingTel,” he added.
Globe last week announced that its financial technology arm, Globe Fintech Innovations, Inc, (Mynt) and Ant Financial Services Group have partnered for a QR code solution, which will enable merchants in the Philippines to accept payment from both local users (using GCash) and Chinese visitors (using Alipay) via a connection to GCash QR Code solution.
The service will be rolled out over the coming weeks across GCash’s merchant network.
Ant Financial earlier entered into a joint venture with Globe Telecom and Ayala Corp. to boost Mynt’s operations for merchant acquiring activities for Alipay in the Philippines.
Ant Financial was established by Alibaba Group Holding Ltd. founder Jack Ma but is being operated independently. — Patrizia Paola C. Marcelo

Government debt yields end flat as market searches for new leads

YIELDS ON government securities (GS) moved sideways last week as investors remain on the lookout for fresh leads amid lack of clear direction for a rate hike next month.
GS yields rose by an average of 1.67 basis points (bps) week on week, data from the Philippine Dealing and Exchange Corp. as of April 20 showed.
“Yields were still moving within range while investors continue to wait for more solid leads,” said Ruben Carlo O. Asuncion, chief economist at UnionBank of the Philippines (UnionBank).
“Expectations are mixed about a possible rate hike from the BSP (Bangko Sentral ng Pilipinas). On one side, the economy is overheating, thus, a case for tightening soon. The other side see the inflation upward pressure merely transitory, therefore a hike may be coming later rather than sooner,” Mr. Asuncion said alluding to the upcoming Monetary Board meeting on May 10.
For Land Bank of the Philippines (LANDBANK) market economist Guian Angelo S. Dumalagan: “GS yields moved sideways this week, with a slight upward bias, as upbeat assessments from the BSP and some US Federal Reserve officials pushed yields higher, despite safe-haven buying amid the decline in equities and lingering geopolitical concerns abroad.”
In its first quarter inflation report released last week, the BSP said the current monetary policy settings “are seen to be appropriate given the prevailing outlook for inflation and economic activity” but also noted that “economic growth remains solid enough to absorb some policy tightening if warranted.”
Market players also took their cue last week from statements made by Boston Federal Reserve President Eric S. Rosengren who expressed optimism for the US economy. The alternate member of the Federal Open Market Committee (FOMC) said he expects a tighter labor market coupled with faster inflation, and that “tightening may end up being needed than is currently reflected in the projected median for the federal funds rate.”
Meanwhile, other investors focused on domestic auctions by the national government as well as movements of Treasuries abroad. Last Monday, the Bureau of the Treasury (BTr) fully awarded P5-billion worth of 91-day Treasury bills (T-bills) that fetched an average yield of 3.493%, up from the 3.346% quoted at the auction a week prior.
On the other hand, demand for the 182- and 364-day papers were P3.33 billion and P3.3435 billion, below the offers of P4 billion and P6 billion, respectively. However, the Treasury only awarded P2.080 billion and P1.735 billion worth of the said tenors which were respectively quoted with an average yield of 3.684% and 3.83%
The following day, the BTr raised P10 billion from reissued 10-year bonds after they were fully awarded with an average yield of 6.213%.
“Government bond yields ended higher by 3 to 5 bps across the board on higher and partial auction awards,” said Carlyn Therese X. Dulay, Head of Institutional Flows Desk at Security Bank Corp.
Meanwhile, a bond trader said GS yields continued to track US Treasuries, rising on expectations of faster inflation, adding that US President Donald J. Trump’s “risk on, risk off tweets” also contributed to last week’s yield movement.
At the secondary market last Friday, the yield of the 91- and 364-day T-bills respectively rose 10.45 bps and 7.32 bps to close at 3.4761% and 4.2625%. On the other hand, the 182-day paper ended lower by 30.85 bps week on week, yielding 3.6111%.
Yields at the belly of the curve that moved up were of the three-, four-, five- and seven-year T-bonds, which increased by 1.31 bps (4.5998%), 4.44 bps (5%), 8 bps (5.3098%) and 0.69 basis point (5.7512%), respectively. The yield of the two-year paper went down by 3.38 bps to 4.2073%.
At the long end, the yield on the 10-year T-bonds climbed 19.04 bps to 6.2404% while that of the 20-year bond inched down by 0.35 basis point to 7.0929%.
“I see more of the same [yield movements this] week as the market is seemingly waiting for the first week of May when decision time for the BSP happens,” UnionBank’s Mr. Asuncion said when asked for his outlook.
For Security Bank’s Ms. Dulay: “With more auctions scheduled this week, expect yields to [move] range-bound to slightly higher depending on the outcome of the 20-year reissue scheduled Tuesday.”
LANDBANK’s Mr. Dumalagan, for his part, said: “[Y]ields are expected to move sideways with an upward bias, tracking the increase in US Treasury yields last Friday evening amid easing concerns over the flattening of the US yield curve.”
“The upward bias in yields, however, might be capped by lingering geopolitical concerns abroad and views that the European Central Bank and Bank of Japan policy meetings might be less hawkish than previously expected.”
The economist likewise noted uncertainties in the geopolitical front such as the lingering US-China trade war and the question of how Russia will respond to US-led missile attacks in Syria and recent sanctions imposed by the US on Russian companies.
“Caution ahead of Friday’s first-quarter US GDP growth report may also limit the rise in yields,” he said. The US economy is expected to grow 2% in the first quarter, lower than the previous quarter’s expansion of 2.9%, but higher than the 1.2% gain in the first quarter of 2017. — Gillian M. Cortez

Fashion and environment: an uncomfortable fit for designer Stella McCartney


LONDON — The booming fashion industry is medieval in its approach to manufacturing and needs to modernize in order to radically cut the damage it is doing to the environment, British designer Stella McCartney has said.
McCartney, known for her understated designs and refusal to use fur or leather in her work, said that while demand for garments and shows had soared thanks to growing middle classes around the world, methods had stagnated.
“If you think about how much fashion there is, whether it be luxury or fast, it is sort of swamping the planet,” she told the BBC on Friday.
“We have been relying on an industry that is essentially medieval. It really is an amazing moment we are living in… (with) change on everything, on energy, on architecture, this is the moment to look to the future for our children.”
McCartney, daughter of the Beatles’ Paul McCartney, was speaking ahead of the launch of an exhibition at London’s Victoria and Albert Museum on Saturday called Fashioned from Nature.
The exhibit demonstrates fashion’s history of plundering the environment for product and the attempts by designers to try and modernize, recycle and use different methods to ease the burden.
Pheasant feather hats from the 1940s sit alongside loud, multicolored trousers made from surplus yarn and a leather jacket produced with off cuts off material.
McCartney said designers needed to adopt cleaner methods.
“In fashion we only use about 10 materials, I’m trying to challenge that,” the London-born designer said.
“I’m trying to look at technology, I’m trying to grow silk in a lab, I’m trying to use dying in a whole new way and I don’t think you can tell the difference. It is science, but it is sexy science.”
Textile production was responsible for 1.2 billion tons of greenhouse gas emissions annually, according to a 2017 report by the Ellen MacArthur Foundation, more than the combined total of all international flights and maritime shipping.
The MacArthur report, which McCartney co-launched last year, said a lack of recycling meant around $500 billion was lost every year, while clothes released 500,000 tons of microfibers into the world’s oceans, equivalent to 50 billion plastic bottles. — Reuters

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