Nation at a Glance — (12/11/17)
News stories from across the nation. Visit www.bworldonline.com (section: The Nation) to read more national and regional news from the Philippines.
How PSEi member stocks performed — December 8, 2017
Here’s a quick glance at how PSEi stocks fared on Friday, December 8, 2017.
Yields on government securities steady ahead of Fed
By Christine J.S. Castañeda,
Researcher
YIELDS on government securities (GS) traded in the secondary market were flat last week amid anticipation of a Federal Reserve rate hike, US tax reform developments and the government’s retail Treasury bond offer results.
GS yields — which move opposite to prices — were down by 6.63 basis points (bps) on average week on week, data from the Philippine Dealing & Exchange Corp. as of Dec. 8 showed.
Guian Angelo S. Dumalagan, market economist at the Land Bank of the Philippines (Landbank) said: “Yields fell [last] week following a correction in the market after last week’s rise. The drop occurred even as investors continue to anticipate another US rate hike next week and despite positive developments on the US tax reform.”
Carlyn Therese X. Dulay, vice-president and head of institutional sales at Security Bank Corp., said the Dec. 4 settlement of the retail Treasury bonds (RTB) affected GS yields last week.
“The large float temporarily caused some upward pressure on tight liquidity post settlement, along with mixed US data and optimism on the US tax legislation which was also reflected in the recent TDF (term deposit facility) auction, which had marginally lower tenders,” she said.
A bond trader also attributed last week’s yield movement to “liquidity tightening because of the settlement of the new RTBs.”
The bond trader also noted the undersubscribed offerings for the Treasury and the term deposit facility by the Bangko Sentral ng Pilipinas because “most of the money — the excess liquidity — were settled in the RTBs.”
With a 51-49 result, Senate Republicans approved the bill which would slash corporate taxes to 20% from the current 35%. This would be the largest change to US taxation since the 1980s.
Meanwhile, the government raised P255.4 billion from its offer of RTBs. The Treasury said “strong public demand led the RTBs to be oversubscribed multiple times.”
The government set the initial offer at P30 billion. The Treasury issued P130 billion in RTBs during the auction, while P125.4-billion worth was issued during the Nov. 20-27 offer period.
At the secondary market on Friday, in the short end of the curve, yields on the 91-, and 182-day Treasury bills (T-bills) went up by 11.86 bps and 10.71 bps to 3.1554% and 3.2839%. Meanwhile, the rate of the 364-day paper lost 30.22 bps to 3.1285%.
In the belly, yields on the two-, three-, and four-year Treasury bonds (T-bonds) increased by 10.55 bps (4.0745%), 8.96 bps (4.35%) and 9.25 bps (4.9371%), respectively. Meanwhile, yields on the five-, and seven-year T-bonds were down by 41.05 bps and 9.15 bps to 4.732% and 5.3464%.
In the long end, the 10-, and 20-year T-bonds saw their bonds decrease by 12.39 bps and 24.80 bps to 5.58% and 5.6074%.
For this week, Landbank’s Mr. Dumalagan said: “[Y]ields might recover amid likely hawkish moves or guidance from the US [Federal Reserve] and the ECB (European Central Bank) as well as possibly stronger US data on inflation and retail sales.”
For her part, Security Bank’s Ms. Dulay said on Friday: “Expect market to trade within range in the coming week ahead of the [non-farm payrolls] figure due out Dec. 8 with expectations at 195,000, as well as ahead of next week’s [Federal Reserve] decision.”
Non-farm payrolls rose by 228,000 jobs in November while unemployment rate was unchanged at 4.1%, the US Bureau of Labor Statistics reported last Friday.
The bond trader said: “Probably we see yields move sideways with an upward bias probably due to less liquidity in the market, when the year is about to end, banks tend to hold on to their liquidity so we’ll see probably another cautious week ahead of the FOMC (Federal Open Market Committee) meeting.”
Fourth quarter finds Filipinos less bullish
FILIPINOS remained optimistic this quarter, although confidence slid for the second time this year as concerns about higher prices and expenses as well as peace and order ate into bullishness on expected additional family income, higher salary and availability of more jobs, the central bank said in its latest survey.
The Fourth-Quarter 2017 Consumer Expectations Survey, conducted among 5,410 households last Oct. 2-14, yielded a 9.5% current-quarter reading that was the lowest in three quarters though it was better than the year-ago 9.2%.
“This means that the optimists continued to outnumber the pessimists but the margin for the current quarter was slightly lower relative to (10.2%) a quarter ago,” according to a summary of survey findings uploaded on the Web site of the Bangko Sentral ng Pilipinas (BSP).
The readings were similar for the “next three months” — which was hardly changed at 17.5% from the third quarter’s 17.8% and down from the year-ago 18.8% — and for the “next 12 months” — which went down to 32.0% from the third quarter’s 33.7% and the year-ago 33.4%.
The overall consumer confidence index is computed as the average of the three indices, namely:
• economic condition, which refers to the perception of respondents regarding the general economic condition of the country;
• family financial situation that refers to the level of household income in cash as well as in kind, savings, outstanding debts, investments and assets;
• and family income, consisting of primary income and receipts from other sources received by all family members like transfers, pensions and grants.
In a press conference at the central bank head office in Manila on Friday, BSP Deputy Governor Diwa C. Guinigundo said the fourth-quarter survey results were not unexpected. “The fourth quarter continued the less optimistic trend that was noted in the third quarter relative to the second quarter of the year. That is something that is not unique for 2017. It happened before, and it can happen in the future,” Mr. Guinigundo said.
“For Q4 2017, consumer sentiment on the three indicators was mixed, as optimism was lower on the country’s economic condition, steady on the family’s financial situation and higher on family income,” the summary read.
“For the next quarter (Q1 2018), consumers’ views on family finances and income turned more buoyant but that on the country’s economic condition weakened. The same broad trends were observed for the year ahead.”
HOUSEHOLD SPENDING TO REMAIN STRONG
In a sign that overall economic growth will continue to be supported by strong household consumption, which contributes more than three-fifths to gross domestic product, spending on basic goods and services is expected to rise next quarter — 34.9% from the third quarter’s 28.1% reading — with the more upbeat outlook “observed across all commodity groups and geographical areas…”
The percentage of households that considered the current quarter as a good time to buy big-ticket items like houses and cars increased to 31.9% from 30.2% the preceding quarter.
For the year ahead, buying intentions of respondents across all big-ticket items similarly improved to 12.7% from 11.2%.
This, even as the same survey showed respondents expecting inflation, interest and unemployment rates to rise and the exchange rate to deteriorate for the year ahead. — Karl Angelo N. Vidal
Macau’s Galaxy Entertainment plans up to $500-M casino resort in Boracay
Macau casino operator Galaxy Entertainment Group Ltd 0027.HK plans to invest as much as $500 million to build an integrated casino-resort in the Philippines, the company and Manila’s gaming regulator said on Friday.
Galaxy and local partner Leisure and Resorts World Corp LR.PS are seeking regulatory approval for the $300-$500 million casino project in the central Philippine island of Boracay, Philippine Amusement and Gaming Corp (Pagcor) President Alfredo Lim told Reuters.
Boracay Island is the Philippines’ top tourist draw, famous for its powdery white sand beach and vibrant nightlife.
“It will further improve our tourism sector. The project is intended for foreigners, junket operators and high-rollers,” Lim said. The integrated casino could start operating three years after the plan’s approval, he said.
Officials of Galaxy and Leisure and Resorts World paid Philippine President Rodrigo Duterte a courtesy call on Wednesday to discuss the plan.
“As you know, China’s relationship with the Philippines has been improving. K Wah Group and Galaxy would like to play a role in the One Belt One Road initiative and we strongly believe the Philippines has great potential and offers attractive opportunities,” Francis Lui, deputy chairman of Galaxy, said in an e-mail.
Galaxy previously said it was exploring opportunities outside of Macau.
The Philippines’ gross gaming revenue from casinos and electronic gaming sites rose 12 percent to 88 billion pesos ($1.7 billion) in the first half versus a year ago, Pagcor data showed, driven by high-rollers from China and South Korea.
The Philippines, which has one of Asia’s most freewheeling gaming industries, targets gross gaming revenue of 155 billion pesos to 160 billion pesos this year.
The growth relies on warmer ties with China. Duterte last year set aside territorial hostility with China, pivoting away from traditional ally the United States. — Reuters
Bicam reduces Senate-proposed excise on thermal coal by half
THE bicameral conference committee reconciling Senate and House versions of the tax reform package has agreed to reduce the proposed excise tax on thermal coal by half, approving a P50 per metric ton ton tax rate for the first year of implementation, P100 for the second and P150 for the third, the office of Sen. Juan Edgardo M. Angara said.
The approved measure compares with the Senate proposal of P100 for the first year, which is 2018; P200 for 2019; and P300 for 2020, originally put forward by Sen. Loren B. Legarda.
Sen. Angara’s staff clarified as well that these rates are “not yet adopted,” and these are compromise rates before the suspension of bicam yesterday, Dec.8.
Thermal coal is used as fuel by the power industry. Environmental advocates have said that an excise tax will reflect the true environmental costs of using coal, while industry has warned the tax will raise power prices, deterring investment while raising power bills for consumers.
Senator Angara’s office also said the bicameral committee failed to wrap up discussions on Friday, and will reconvene on Monday. — Arjay L. Balinbin
Cirtek successfully shores up capital
CIRTEK Holdings Philippines Corp. (CHPC) has raised US$67 million (P3.4 billion) from the issuance of dollar-denominated preferred shares, it told the stock exchange on Friday.
The electronics manufacturer said that the demand for its dollar-denominated preferred shares was “significant”, particularly from retail investors. The offering was conducted from November 16 to 29.
“At the higher end of the pricing range of 6.25-6.75% p.a., indicative demand was US$110 [million]. We eventually settled for a dividend rate of 6.125% p.a. which was still within Cirtek’s blended cost of debt, and at the same time gives a very decent return to investors,” Cirtek Chief Finance Officer Anthony Albert S. Buyawe said in a statement.
“The strong reception from retail investors reflect the growing acceptance and demand for dollar denominated products in the Philippine capital market,” the same statement quoted Roberto Juanchito T. Dispo, Vice Chairman and CEO of Cirtek as saying.
Proceeds from the preferred shares offering will be used to partly fund strategic acquisitions, as well as for debt retirement, capacity expansion, and research and development.
The Philippine Stock Exchange (PSE) last month approved CHPC’s bid to launch its offering of up to $200 million, according to a Nov. 13 disclosure.
CHPC announced in October that it planned to issue $200 million worth of preferred shares by November or December, mainly to pay debts incurred after acquiring United States-based antenna firm Quintel in July for $77 million.
The company had said in October that it is looking to grow revenues of Quintel to $500 million in the next three to five years.
Mr. Dispo at that time said that once Quintel reaches its revenue target of $500 million, CHPC will probably list the company on the Nasdaq Stock Market. — PPCM
Tax bicam sets 5% excise for cosmetic procedures — Drilon
THE bicameral conference committee reconciling the tax reform legislation has agreed to impose a 5% excise tax on cosmetic surgery procedures, Senate Minority Leader Franklin M. Drilon said.
“Cosmetic tax at 5% approved by bicam,” Mr. Drilon, a member of the bicameral committee, said in a text message.
The Senate version of the bill calls for a 10% excise tax on cosmetic procedures and body enhancements undertaken for aesthetic reasons, but met with strong resistance from the House.
Reconstruction of facial and body defects due to birth disorders, trauma, burns, disease, and those intended to correct dysfunctional areas of the body are exempt from the tax.
Mr. Drilon has said that he backs the excise tax on luxuries like cosmetic surgery “as a matter of principle” and as a gesture to the majority of people broadly affected by higher taxes on commodities like fuel.
“The House has taken the position that a cosmetic tax should not be imposed,” adding, “Certainly, there’s a very strong lobby.” — Arjay L. Balinbin
PSE to take over DW Capital brokerage
THE Philippine Stock Exchange, Inc. (PSE) said it had been mandated to take over the operations of stock brokerage firm DW Capital, Inc. as stated in a resolution issued by the Securities and Exchange Commission (SEC).
It said the SEC resolution dated Dec. 5, 2017 called for the takeover of DW Capital “effective immediately” pursuant to Rule 33.1(d) of the 2015 Securities Regulation Code. The rules state in detail the protection of customer accounts in case of business failure of an exchange trading participant.
The PSE has also been told to take necessary actions to protect customer accounts including, but not limited to the preservation of the assets and books and records of DW Capital.
It is also to execute “such acts or documents necessary or appropriate in carrying out the foregoing power.”
“To enable PSE to validate customer accounts and settle DW Capital’s liabilities to customers, all customers of DW Capital are requested to file with PSE, within thirty (30) days from the date of this notice, a notarized affidavit of claim with attached certified photocopies of: (a) two valid identification cards of the claimant; and (b) documents supporting the claim,” said the PSE’s Dec. 7 notice, which was signed by Ramon S. Monzon, president and chief executive officer.
The PSE move against the stock broker came after a series of unauthorized deals worth P2.6 billion earlier this year.
DW Capital has been accused of engaging in the unauthorized trading of securities for five accounts totaling P2,599,324,718 as of July 28, 2017. The accounts are owned by the Gaisano family, a member of whom is married to former DWCI Capital President Derwin Ngo Wong. — Victor V. Saulon
Resettlement deal signed for North-South rail
THE Department of Transportation (DoTr) said it signed an agreement with housing agencies to resettle 100,000 families who will be affected by the North-South Railway Project.
Secretary Arthur P. Tugade yesterday signed the memorandum of agreement (MOA) with officials of the Philippine National Railways (PNR), with Presidential Commission on Urban Poor (PCUP) Chairperson James Mark Terry L. Ridon, National Housing Authority (NHA) General Manager Marcelino P. Escalada Jr., Social Housing Finance Corp. (SHFC) President Arnolfo Ricardo B. Cabling, and Housing and Urban Development Coordinating Council (HUDCC) Chairman Eduardo D. del Rosario.
The government has set aside P54 billion to provide affordable housing to informal settlers affected by the railway project.
The main southern component of the rail line, known as the PNR South Long Haul, will run to Sorsogon.
“This is probably one of the most critical aspects of project implementation because we cannot start construction of the rails without the resettlement of the informal settler families,” DoTr Assistant Secretary for Railways Timothy John R. Batan told reporters.
Mr. Batan said that the government will draft a resettlement action plan and will start the relocation within the first six months of 2018. Housing will be provided by the NHA and the SHFC.
“As soon as right-of-way is substantially achieved, we can start construction,” he told reporters. He added that the project adheres to the “no demolition” policy of President Rodrigo R. Duterte without inclusive relocation to a well-planned community.
The 600-kilometer Long Haul segment will start in Los Baños and will run through Batangas, Quezon, Camarines Sur, Albay and Sorsogon. It is expected to cost P175 billion.
“The plan is to open segments which can be opened before 2022. We can operate first, for example, Naga-Legazpi, then Los Baños-Ragay,” Mr. Batan told reporters on the sidelines of the MoA signing.
The P124-billion Commuter Line segment has 23 stations and will now start from Solis-Hermosa in Tondo, Manila to Los Baños. It is expected to be completed in 2022.
The South Long Haul segment will be financed by a loan from the Chinese government, while the Commuter Line segment will be financed by a loan from the Japanese government. — Patrizia Paola C. Marcelo
Ford sales pick up 13% in November
SALES of vehicles of Ford Motor Company Philippines, Inc. in November rose 13% from a year ago, an increase the carmaker attributed to “strong demand” for its EcoSport, Everest and Ranger models.
The local subsidiary of the American automaker sold 3,408 vehicles last month, which compares to November last year’s 3,027.
The latest result brought the year-to-date sales volume to 31,994 vehicles.
“We are confident to close out the year on a high note as our showrooms across the country are remaining busy,” Bertrand Lessard, managing director of Ford Philippines, said in a statement issued on Friday.
November sales for the Ranger climbed 28% to 1,003 units from 786 a year ago.
Year-to-date sales for the Ranger, which Ford says is “the country’s second best-selling pick-up truck”, reached 9,225 units, up 25% year on year.
Ford sold 1,100 Everest sports utility vehicles in November, a gain of 15% to bring the 11-month tally to 10,873 units.
It posted a modest “just over one percent” increase in sales of the EcoSport at 1,110 units for a year-to-date volume of 9,849 units.
Gov’t to ‘demand’ refund from Sanofi: Duque
HEALTH Secretary Francisco T. Duque III said on Friday, Dec. 8, will seek indemnification from French pharmaceutical company Sanofi in the wake of its controversial disclosure on a dengue vaccine not recommended for those inoculated who had no prior infection.
The vaccine, Dengvaxia, had already been administered on 830,000 youths, the Department of Health (DoH) noted in its statement on Friday which also quoted Mr. Duque.
“We will demand the refund of the PhP 3.5 billion paid for the Dengvaxia, and that Sanofi set up an indemnification fund to cover the hospitalization and medical treatment for all children who might have severe dengue,” Mr. Duque said.
The health chief had earlier said the government plans to sue Sanofi following the suspension of its vaccine program.
On Friday, he also confirmed that a 12-year-old student in Tarlac province had suffered from severe dengue after she was injected with Dengvaxia. “(L)uckily, after some time, the child has recovered and thank God she has recovered after having been managed quite effectively,” Mr. Duque said.
He also said the department has established a task force that “will conduct a thorough review of the dengue vaccination initiative which started in March 2016 and the new evidence on safety provided by Sanofi.” Legal action on the French company is among the tasks assigned to that group, Mr. Duque said.
For her part, former health secretary Janette L. Garin clarified on Friday that the government had been in search for solutions to tackle the dengue problem since 2010.
The health secretary at the time was her predecessor, Enrique T. Ona.
“(By) 2014, I think June or July, Secretary Ona already announced na magkakaroon ng bakuna ng dengue sa 2015,” Ms. Garin told the ABS-CBN News Channel in an exclusive interview.
She also said she had many questions herself about the controversy, in spite of which Brazil, she noted, is continuing its dengue program with Sanofi.
SENATE HEARING
On Monday, the Senate blue-ribbon committee will hold a joint public hearing with the committee on health and demography, according to Senator Joseph Victor G. Ejercito.
“Nagpatawag si Senator (Richard J.) Gordon (Senate blue ribbon committee chairman) na i-resume ang hearing on Monday, this time joint with health (and demography committee),” Mr. Ejercito, chair of the Senate committee on health and demography, said in an interview with DWIZ on Friday.
Mr. Gordon first initiated the Senate probe on the vaccine program last year. “Walang report ang blue ribbon noon (The blue ribbon committee did not have a report on the investigation. Wala pa, di pa tapos yun (None, it’s not over yet),” Mr. Ejercito said.
Mr. Ejercito said the “most crucial part of the hearing on Monday will be the timeline of events.”
“Titingnan natin yung FDA (Food and Drug Authority) kung kalian na-aprub, kung kailan yung procurement (We will check when the FDA approved the vaccine and when the supplies were procured),” Mr. Ejercito said.
The Senator also said that some medical experts, past and present DoH officials Ms. Garin, and Sanofi officials are among those invited to the hearing. — Arjay L. Balinbin, Minde Nyl R. Dela Cruz, and interaksyon.com