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Tax reform watch weighs on investor sentiment

ANY OPTIMISM over the Philippines’ credit rating upgrade on Monday by Fitch Ratings evaporated yesterday, as investors awaiting Congress’ ratification of tax reforms made the Philippine Stock Exchange index (PSEi) end three days of gains.

PSEi dropped 24.51 points or 0.29% to close 8,334.06, while the all-shares index gave up 18.83 points or 0.39% to end 4,866.62.

“The local market traded on a softer note a day before a series of huge events in the next few days,” Regina Capital Development Corp. Managing Director Luis A. Limlingan said, citing impending ratification of the first of up to five tax reform packages designed to boost infrastructure spending till 2022, when President Rodrigo R. Duterte ends his six-year term.

The bicameral conference committee harmonizing divergent tax reform provisions of the Senate and the House of Representatives was unable to issue its report yesterday for ratification by both chambers.

Diversified Securities, Inc. equity trader Aniceto K. Pangan said “the market is still awaiting the final version of the tax reform package,” whose divergent provisions have spelled significant difference in terms of projected additional revenues.

“Investors have been discounting this news, but until this is final then it is not yet set,” Mr. Limlingan noted, while Mr. Pangan said that “[u]ntil we are certain of the final version, definitely market will continue to consolidate.”

Set to be ratified separately is the proposed P3.767-trillion national budget for 2018.

Both laws are targeted for implementation starting Jan. 1 next year.

Congress is also expected to extend for a year martial law declared over Mindanao — in the face of what Malacañang sees as persistent threat from Islamic militants and communist rebels — that is set to lift at end-2017.

Lawmakers then adjourn on Dec. 16 for a month-long break.

Four of the six sectoral indices ended with losses: mining and oil by 149.57 points or 1.28% to 11,559.25, holding firms by 87.99 points or 1.04% to 8,412.21, services by 13.60 points or 0.86% to 1,569.89 and industrial by 15.08 points or 0.14% to 11,017.

On the other hand, property gained 18.31 points or 0.47% to finish 3,915.43, while financials added nine points or 0.42% to close 2,152.90.

Negative sentiment similarly gripped many other Asian bourses, with Japan’s Nikkei 225, Hong Kong’s Hang Seng Index, China’s blue-chip CSI 300, the Shanghai Composite Index, South Korea’s KOSPI Index, Straits Times Index and the Jakarta Composite Index dropping 0.32%, 0.63%, 1.31%, 1.24%, 0.42%, 0.16% and 0.09%, respectively.

Philippine stocks that declined led those that gained 115 to 87, while 52 others were unchanged.

Tuesday’s list of the 20 most-traded stocks showed only seven gained, led by Ayala Land, Inc. that added 1.49% to end P44.15 apiece, Bank of the Philippine Islands that increased by 0.96% to P105, Security Bank Corp. that rose by 0.72% to P252 and Metropolitan Bank & Trust Co. that climbed 0.87% to P98.95 each.

Those that lost were led by Bloomberry Resorts Corp.; DMCI Holdings, Inc.; International Container Terminal Services, Inc.; and Ayala Corp. whose shares gave up 3.55% to close P10.32 apiece; 3.27% to P14.22; 2.008% to P102.50 and 1.44% to finish P1,025 each.

Tuesday saw 638.34 million stocks worth P6.61 billion change hands, compared to Monday’s 923.34 million stocks worth P5.85 billion.

Foreigners remained predominantly sellers for the eighth straight trading day, but Tuesdays’ mere P491,402.68 net sales were the smallest amount in that period. — Arra B. Francia

How PSEi member stocks performed — December 12, 2017

Here’s a quick glance at how PSEi stocks fared on Tuesday, December 12, 2017.

Insurance firms’ premium income jumps in 3rd quarter

By Karl Angelo N. Vidal

THE INSURANCE INDUSTRY booked a single-digit increase in its total premium income in the third quarter, driven by the continued growth of the life insurance sector.

Preliminary data based on unaudited reports submitted by life and non-life companies to the Insurance Commission showed the industry’s total premiums collected in the July to September period rose by 9.41% to P185.51 billion from the P169.56 billion posted during the same period last year.

Broken down, life insurers reported P144.63 billion worth of premiums at end-September, 8% higher than the P133.85 billion recorded during the same period a year ago.

“The total premiums from variable life insurance products rose by 8.74% from P96.46 billion to P104.89 billion,” Insurance Commissioner Dennis C. Funa was quoted as saying in a statement on Tuesday.

While the premium income from single premium variable life insurance product fell by 5.81%, Mr. Funa noted this was offset by the “impressive” increase in its first year and renewal premiums, which grew by 12.28% and 34.43%, respectively.

Premiums from traditional life insurance products surged by 29.01% in single premium and 23.07% in first year premium.

Meanwhile, non-life insurers saw 14% rise in total net premiums to P34.31 billion in the third quarter from P30.1 billion booked in the same period last year.

“The non-life insurance sector demonstrated continued momentum in the third quarter of this year through the sale of fire and motor insurance products,” Mr. Funa said, noting that more than half of the total net premiums written by the sector were generated from the said products.

In addition, mutual benefit associations (MBAs) recorded total contributions of P5.61 billion in the July to September period, up 16.59% from P4.27 billion quoted last year.

The insurance industry’s net income jumped 21.88% to P27.86 billion in the July-September period, versus the P22.85 billion booked in the same period last year.

Broken down, net income of life insurers climbed 31.93% to P21.96 billion, while MBAs saw its net surplus rise 15.19% to P3.13 billion.

Meanwhile, non-life insurers’ net income declined by 20.87% to P2.76 billion during the third quarter from P3.49 billion reported in a comparable year-ago period.

Nation at a Glance — (12/13/17)

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

Philippine trade year-on-year performance

FOREIGN SALES of Philippine goods grew for the 11th straight month last October, but the double-digit increase in merchandise imports drove the monthly trade gap to its biggest on record, the government reported yesterday. Read the full story.

October trade gap biggest on record as imports outpace exports in growth

Tax reform measure remains in bicam

TAX REFORM remained with the bicameral conference committee reconciling the House and Senate bills Tuesday night, senior legislators said.

“Not today. Wala pa, hindi pa namin napipirmahan (we have not signed),” House Majority Floor Leader Rodolfo C. Fariñas said of the Tax Reform for Acceleration and Inclusion (TRAIN) measure.

According to Senate Majority Floor Leader Vicente C. Sotto III, “Magulo pa. Hindi pa pipirma. Saka ‘yung mga bicam members, may mga tsine-check pa.” (It’s still not in order. We’re not yet signing. And the bicameral committee members are still checking some things.)

Mr. Sotto said it is still possible to have the measure ratified before the year ends if the bicameral committee members can “straighten out their issues.”  Minde Nyl R. dela Cruz

Fullerton Health announces Philippines market entry through the acquisition of Intellicare Group

Singapore – Fullerton Healthcare Corporation Limited (Fullerton Health) have announced that it has entered into agreements to acquire a 60% stake in the Intellicare Group, one of the leading managed care providers in the Philippines. The Philippines is an important market in Asia Pacific for Fullerton Health, underpinned by attractive underlying growth drivers. Completion of the transaction is subject to the fulfilment of certain conditions and is expected to complete in early 2018.

The Intellicare Group was founded in 1995 and is strategically aligned with Fullerton Health’s vision of being Asia Pacific’s preeminent total healthcare solution provider. The Intellicare Group comprises three companies: Asalus, a health maintenance organisation (“HMO”) engaged in the delivery of managed healthcare services via comprehensive, systematic and prevention-oriented health maintenance programmes; Avega, a provider of third party administration services to corporates as well as small and medium enterprises; and Aventus, a chain of nine outpatient multi-speciality clinics.

Dr Michael Tan, Co-Founder and Group CEO of Fullerton Health, commented: “Today is an important milestone for Fullerton Health and takes us into our eighth country in Asia Pacific. With a population of over 100 million people, the Philippines offers great growth potential for the company, and the potential synergies between our two businesses, together with our operational and technological capabilities, will allow us to deliver increased benefits and services to even more corporates and patients across the country. This acquisition reinforces our strategy of developing a strong presence in markets across the region, and I would like to take this opportunity to welcome the Intellicare Group to the Fullerton Health family.”

Mario M. Silos, Chairman and President of Intellicare Group, said: “The investment by Fullerton Health, establishing them as our majority shareholder, is an exciting development for the Intellicare Group. It will enable us to tap into their expansive network and wealth of experience across Asia Pacific to ensure that we are delivering the most sophisticated care possible to corporates and patients throughout the Philippines. As the country’s preeminent HMO, we arecommitted to leading the managed healthcare space. Fullerton Health shares our values of ensuring that healthcare is efficient, accessible, affordable and compassionate, and the synergies created through this acquisition will enable us to uphold each of these and enhance our innovative and holistic approach to managed healthcare.”

Factory output down 6.5% in October, worst since 2011

Factory output declined in October, the Philippine Statistics Authority (PSA) reported this morning.

Preliminary results of the PSA’s Monthly Integrated Survey of Selected Industries (MISSI) showed that in October, factory output – as measured by the Volume of Production Index (VoPI) – contracted by 6.5%, the worst turnout since December 2011 when factory output declined by 7.7%.

This was lower than the revised 4.1% contraction recorded in September and a reversal of the 9.9% growth posted a year ago.

Sectors that posted double-digit declines were: chemical products (-61.0%), tobacco products (-39.4%), textiles (-28.3%), footwear and wearing apparel (-27.5%) and paper and paper products (-18.9%).

Average capacity utilization, which is the extent by which industry resources are being used in the production of goods, was estimated at 83.8%. Eleven of the 20 sectors registered capacity utilization rates of 80% and above. — Christine Joyce S. Castañeda

This e‑Learning startup aims to be the Uber of edtech industry

The Generation Y, where the much debated‑about millennials belong to, is said to be the most entrepreneurial generation. A big chunk of this demographic prefers running their own businesses rather than working for an established company.

Research conducted by the team behind Bizcool, an e‑Learning platform launched just last November, led to the same conclusion.

The results of the study, which tapped 500 respondents with age ranging from 18 to 45 years old, showed that 65.2% or 326 respondents are “extremely” into running their own business.

“[A large] demographic of the millennials, they extremely value entrepreneurship, but we don’t have enough access to education. Workshops cost around ₱3,000 for a three‑hour workshop, but it’s still not that intensive,” Bizcool CEO Marvin Perol told the media in an interview.

With such premise came the idea of launching the platform, which aims to bring “affordable and accessible” education about entrepreneurship to the digital space.

Bizcool offers 11 online courses covering fundamental information on establishing and operating a business. Its courses include “My Coffee Shop,” “My Bakeshop,” “My Eatery,” and “My Online Store,” which all cover the kinds of businesses that respondents of the study think are the most ideal ventures.

Each course, which can be availed at a starting rate of ₱1,129, includes five modules, 38 tutorial videos, 41 PDF files, and three worksheets on average.

Perol, who owns a video equipment‑rental business, said the platform aims to help budding entrepreneurs address such perennial concerns as lack of capital through reading materials on how to raise funds and how to create a business plan and financial forecast.

“We’re targeting individuals who are not very particular with academic portfolio, they want to really jump into business right now, that’s their personality profile. But we are continuously studying the market,” he said.

But while many millennials are keen to build their own business, Vincent Velasquez, a college professor and co‑founder, said they dismiss the idea of learning the ropes of entrepreneurship through a conventional, classroom‑setting manner.

Art Samantha Gonzales

This is why the team assured that the contents of the modules for each course are “less academic and more practical” while retaining the theoretical lessons of entrepreneurship.

“Somehow, along the way, in doing our research we had an insight that millennials are not necessarily into studying, they just want to put up their own business, so we wanted to include less academic, more practical tools and concepts that they can really apply,” Velasquez said.

“For the most part we consulted entrepreneurs and business consultants, so for every product we conducted research for the content,” he added.

JJ Ingco, co‑founder who also teaches in a university, said the workshops will also be their marketing tools to attract more people to enrol in the digital courses.

“We’re in the business of creating e‑Learning products. However, when it (Bizcool) was made, we found out that social aspect was something important as well to people, because for the longest time, we learned through schools and that transition from personal or social aspects to digital is quite drastic at this point in time,” Ingco said.

The team currently focuses on gaining traction in Metro Manila to expand the business to the whole Southeast Asia and eventually become the edtech industry’s Uber or Alibaba.

“We want to build a community of startups. Eventually we want to be an ecosystem builder, we want to get these educators, investors to come in to the platform and increase our value over time. We have two types of users—the students and contributors and educators,” Perol said.

How big data can benefit retailers according to Adobomall and Kris Aquino

Adobomall is the newest contender in the Philippine online shopping market, challenging e‑commerce giants Lazada and Zalora with brandname stores that can make it seem close as possible to shopping in a real‑life mall — and with none other than media giant Kris Aquino as brand ambassador.

The goal of Adobomall is to bring the feeling of visiting an actual brick and mortar mall — something that Innerworks CEO and Adobomall founder Walt Steven Young believes has become very much a part of modern Filipino culture. That’s why every visit to every online shopfront in Adobomall is different: Audiophile’s storefront will look different from Kipling’s from Chris Sports’, just like how they would look different in an actual mall.

But making a new e‑commerce platform isn’t as easy as “if you build it, they will come.” There has to be a reason for these merchants to want to sell on your online mall. So what Adobomall did to set itself apart from the e‑commerce platform is deliver real‑time customer insight and information— big data— to their merchants.

That could be the key ticket to attracting that sector. With real‑time information on the number of clicks or visitors their store gets, how long people linger on certain displays and which products are popular, merchants can be able to make key decisions that could net them more profit.

“The numbers will be integrated every time they look at [their store],” Young told SparkUp. “When they know their numbers, they can easily adjust. They don’t need to wait for month or a week or for someone to count for them. It’s in their hands.”

The practical application to big data came from Aquino herself, as she cited how knowing consumer trends is beneficial to two of her business ventures: cinema food staples Potato Corner and Nacho Bimby. “Something like this where you would know what’s moving would make it easier for you to calibrate what you have to order,” she told SparkUp. “Kasi sa amin, we have to place those orders on a weekly basis. So with [Adobomall’s] set‑up it would make it so much faster as a retailer because then you would know what’s moving faster, and you don’t want to get stuck with inventory that’s not moving.”

“You really need to know what your consumer habits are,” Aquino said, adding that consumer trends would also make it easier for retailers to combine operations and services that would not only make inventory move faster but also give customers more value for their money. “So if you put your store inside Adobomall, what’s going to happen is that your data will be given to you. And then you’ll know that wow eto yung gumalaw. This is what people are buying. So this I know is what I should order, especially because some orders take time.”

Why is it important to keep your products moving? “Inventory takes cash, and I don’t want my cash to sleep,” the celebrity explained. “Everyone wants to make money, and what Walt is going to do is he’ll assist those who are selling to know what to stock.”

That’s not all the data Adobomall will provide its merchants. They will also provide data on which products people are looking at but not buying. “You know that they want it,” Young explained. “Now you can decide if it’s because of a price issue or another issue, and you can fix it to see what works.” Lingering, or how long a customer stayed to look at a particular item, is also another number that big data can provide that can be beneficial to a brick and mortar retailer, to show whether or not the product is something that people buy not on impulse but after careful planning and consideration.

Currently Adobomall has three “floors” dedicated to brand‑centered stores (ex. Barbie, Apple, Samsung), authentic retailers (ex. Audiophile, Chris Sports, Kipling) and restaurants (ex. Coffee ean and Tea Leaf, Sangkap, Sobremesa). With several promotions this Christmas season, the e‑commerce platform promises to provide real great finds coupled with as close an experience to brick and mortar mall shopping you could have on an online platform.


For #realgreatfinds, visit www.adobomall.com or download their app on Android or iPhone.

Exports up 6.6% in October, top target

Merchandise exports grew by 6.6% to $5.366 billion in October, bringing total exports on track to beat the official target, data from Philippine Statistics Authority showed this morning.

Growth in exports receipts in October accelerated from the 4.9% growth recorded in the previous month, but was slower from 9.7% growth during the same month last year. The October print was also way above the official five percent growth target for this year.

Electronic products, which account for more than half of the total outbound shipments, expanded by 13.8% to $2.857 billion in October alone.

Trade was recorded with a $2.845 billion deficit in October as import payments  beat exports receipts, which grew 13.1% from the same month a year ago to $8.211 billion.

Imports of capital and consumer goods grew by 2.6% and 14.8% in October, respectively, to $2.667 billion and $1.478 billion.

Raw materials and intermediate goods — which accounts 39.1% of the total imports — increased by 22.2% to $3.213 billion.

China was the Philippines’ biggest source of goods in October which valued at $1.572 billion. Japan, on the other hand, is the country’s largest market for exports at $871.36 million. — Ranier Olson R. Reusora

Unemployment rate rises to 5% in October

Preliminary results of the latest Labor Force Survey (LFS) conducted by the Philippine Statistics Authority (PSA) showed the unemployment rate at 5% in October, a rise from 4.7% recorded in the same month last year. This was equivalent to 2.19 million Filipinos, up from 2.04 million a year earlier. 

Meanwhile, the underemployment rate – proportion of those who are looking for additional jobs or more hours of work – fell to 15.9% from 18.0%.

The size of the labor force, which is the population Filipinos 15 years and older, was estimated at 70.4 million. Labor force participation rate eased at 62.1% from 63.6%.

The country’s employment rate – proportion of the employed to the total labor force – slightly dropped to 95% from 95.3% recorded in the same month last year.

By industry, employment rate in the service sector, which has the largest share in the employed population, expanded to 57% from 54.6%. However, the agriculture sector which is the second largest, saw reduction in the number of workers to 25.0% from 28.3%. The portion of the industry sector went up to 18.1% from 17.1%. — Arianne Kristel R. Pelagio