The Philippines dropped two places to 44th out of 150 countries in 2023, based on the latest edition of the Elcano Global Presence Index by Madrid-based think tank Elcano Royal Institute. The index assesses and ranks a country’s international relations, foreign policy, and global affairs under three dimensions: economy, defense, and soft presence. With an index value of 55.15, the country is the sixth-lowest among its peers in the region.
ETHER might be coming close to its moment in the sun.
The world’s No. 2 cryptocurrency has remained in the wings this year as big brother bitcoin soared to all-time highs on the back of new US exchange-traded funds (ETF) meant to track its price.
But as companion ETFs for ether are set to hit the market soon, some market players predict a price rally beyond its Nov. 2021 all-time high of $4,867.60 could be on the cards.
“Consider the fact that ethereum has roughly half the level of spot liquidity,” said Thomas Perfumo, head of strategy at crypto exchange Kraken, referring to ether trading on exchanges versus bitcoin. “Half the amount of liquidity means that you need less amount of absolute dollars coming into the market to make the same price impact on ethereum.”
Crypto graveyards are full of investors who thought they could reliably forecast these risky, choppy markets.
The likely dumping of tokens from defunct Japanese exchange Mt. Gox has thrown a curve ball in the market in recent days, hitting bitcoin and ether. Other factors, like the timing of US Federal Reserve interest rate cuts and the upcoming presidential election could also thump crypto.
“Market participants should watch for a comeback in volatility in traditional markets and crypto alike,” Jag Kooner, head of derivatives at crypto exchange Bitfinex, said in a research note. “Regulatory developments and macroeconomic policies will play a crucial role in shaping market dynamics.”
STAKED AND LOCKED UP
Bitcoin soared to new peaks in March to as high as $73,803.25, two months after the first spot bitcoin ETFs started trading, from $45,947 before the launch. By contrast, ether has remained well off of its all-time high, trading only as high as $4,093.7 in March.
That could be set to change when the ether ETFs hit the market as in the coming weeks, experts say, noting that the supply of ether is tight and that inflows into the ETFs could have a magnified effect on token price compared with bitcoin.
The new ether ETFs are not expected to attract the same amount of investor enthusiasm as the spot bitcoin ETFs, which have drawn nearly $38 billion in assets as of late June, according to Morningstar Direct.
Research from crypto asset manager Grayscale Investments, which is set to convert its existing ether trust into an ETF, estimated that the spot ether ETFs could see 25%-30% of the demand of the bitcoin funds.
But scaling down to market capitalization — given that ether’s market cap is about one-third of bitcoin’s — there could be a comparable price impact per dollar of inflows into the ether ETFs, said Zach Pandl, managing director of research at crypto asset manager Grayscale Investments.
“I do think it’s similar to what we were looking at for bitcoin earlier this year where we think there’ll be a substantial amount of new demand for the product and it will be interacting with a supply picture that is more constrained than I think is commonly understood,” he said.
Unlike bitcoin, ether can be staked, or locked up for a certain amount of time, in exchange for yield. Just under 30% of the ether supply is staked, Mr. Pandl estimated, while another roughly 10% is locked in smart contracts. That reduces the supply of ether available for purchase for the new ETFs, which could drive up the price, he said.
“The reason bitcoin ETFs impacted price is because there was more demand for these ETFs than there was new supply of bitcoin,” said Matt Hougan, chief investment officer at Bitwise. “In [ether], the supply situation is even worse.”
Predictions for the impact the ether ETF might have on the token’s price vary widely, with global bank Standard Chartered estimating that ether could hit $8,000 by the end of the year. VanEck, which is set to launch a spot ether ETF, in May raised its price target for ether to $22,000 by 2030.
Yet the impact of the new ETFs could already be priced into ether, some market watchers warn. While it has remained off its all-time high, ether is still up more than 29% so far this year.
“For bitcoin and ethereum, they’re more richly valued than they were at the launch of the bitcoin products earlier this year. That could argue for a slightly smaller effect,” said Grayscale’s Mr. Pandl. — Reuters
PEOPLE still spend money on small indulgences during economic downturns. If Chanel lipstick is the go-to item for women, milk tea drinks are soothing China’s urban youth, who are dealing with stubbornly high unemployment.
Freshly made milk tea shops are just about on every street corner across the country. Some concoctions are essentially milk shakes with chewy tapioca pearls, or bubbles. Others may have fresh fruit added to the brew. Customers can choose green, black, or herbal tea, and the topping — whipped cream or cheese — among others. Last year, there were about 420,000 stores nationwide, generating 247 billion yuan ($31.4 billion) in sales.
Equally impressive is the flood of venture capital that has gone into the brands, making their founders, who often started out as humble street vendors, paper billionaires, or at least millionaires many times over. Shen-zhen-based Heytea, favored by the likes of IDG Capital and Hillhouse Investment, was valued at more than 60 billion yuan in 2021. Last year, Sichuan Baicha Baidao Industrial Co., owner of the third-largest chain Chabaidao, raised 970 million yuan. It went public in Hong Kong in April, pulling in more than $300 million.
For young people, these modern teahouses have become synonymous with leisure and relaxation. They like to sip while shopping and hanging out with friends, or during work breaks. Even waiting in line can be therapeutic, imposing a timeout to catch one’s breath.
But this milk tea culture also tells the tale of an economy defined and scarred by hyper competition.
With venture capital showing interest, brands see franchising, as opposed to managing stores themselves, as the only way to expand quickly and go public. Sometimes, they do so at the expense of their image and profitability.
There are about 50 such stores within less than a mile distance of major shopping centers, crowding each other out across China. At Chabaidao, for instance, an average shop generated 2.4 million yuan in sales last year, down 12% from 2021.
What’s so special about these tea drinks? To keep young people interested and coming, brands are searching for exotic fruits, and rolling out new concoctions weekly. Last year, Chabaidao introduced 48 new products, but that paled next to Auntea Jenny, which has filed a prospectus to list in Hong Kong. The Shanghai-based firm pushed out about 100 new flavors.
Some are encroaching into neighbors’ yards, too. Consider Changsha-based China Modern Tea Shop. The brand has blossomed in large part because young people who want to party have been visiting the city known for its vibrant night life and spicy cuisine.
After 4:30 p.m., customers can buy tea-fused cocktails (imagine the taste of Baileys in black tea, with whipped cream on top). But this also means that the company is competing with formidable operators such as Kweichow Moutai Co., now marketing its own baijiu-infused ice cream.
All this involution, a phrase that refers to entities copying and undercutting each other, brings little benefit to any, but raises the cost for all and necessarily leads to burnout. Share prices of Nayuki Holdings Ltd. and Sichuan Baicha, the two publicly listed names, have collapsed since their IPOs.
As a result, brands are looking overseas. Mixue, the country’s largest chain, has more than 3,000 stores outside of China. Heytea made a splashy New York debut late last year.
While some may be pleased that China is exporting its soft power, something is also very wrong with this picture. Heytea and Mixue operate in opposite segments — the former sells premium drinks and the latter dominates on the low-end. Apparently, neither feels secure in their home market.
In recent months, the US and European Union have been worrying that China is exporting its industrial overcapacity. In the case of electric vehicles, state subsidies were blamed. But that’s not the whole story. Even without government involvement, industries with rosy outlooks quickly become crowded.
Scale it till you make it — it’s the motto for succeeding in China. This milk tea craze is a good example.
Alas, for businesses, what started out as a nice way to capture young people’s desire to unwind and relax, has quickly become an intense workout and subsequent burnout. Chinese businesspeople are fleeing not necessarily from President Xi Jinping’s economic policies, but from each other.
BLOOMBERG OPINION
HEBBIA, a startup using artificial intelligence (AI) to help businesses sift through all kinds of documents to answer complex questions, has raised $130 million in a funding round — the latest sign of investor enthusiasm for deploying AI in the workplace.
The financing, set to be announced on Monday, was led by Andreessen Horowitz, with participation from Index Ventures, Google Ventures and billionaire tech investor Peter Thiel. The New York-based company is now valued at roughly $700 million, according to a person familiar with the matter, who spoke on condition of anonymity to discuss private information. Some details of the funding round were previously reported by TechCrunch.
Founded in 2020, Hebbia’s software analyzes digitized documents and data sources, including regulatory filings, PDFs and audio and video clips, to help customers field more complicated queries than might be possible with consumer-facing chatbots. The company also displays results in a more granular way intended to make it easier for users to verify responses — and perhaps alleviate corporate concerns about AI’s potential to hallucinate inaccurate information.
For example, rather than simply summarize a single document, Hebbia’s customers can ask what airlines are saying about Boeing Co. in the wake of safety lapses. Hebbia’s system will then build out a step-by-step process to answer that question, summarizing and citing the data it pulls from earnings calls and other sources in a large grid.
“It can execute complex workflows, not just chat back and forth,” George Sivulka, Hebbia’s founder and chief executive officer, said in an interview.
Hebbia’s approach has won it some notable customers. The company’s clients include the US Air Force as well as asset managers and legal services companies.
The company plans to use the new funding to conduct research and hire more software engineers, Mr. Sivulka said.
“Being able to just keep up with the velocity that this technology is evolving at is super important,” said Index Ventures partner Mike Volpi, who sits on Hebbia’s board. — Bloomberg News
LIMA — A team of archeologists have discovered the ruins of what appears to be a 4,000-year-old ceremonial temple buried in a sand dune of northern Peru, alongside skeletal human remains which may have been offerings for religious rituals.
The ruins were discovered in the sandy desert district of Zana, in the South American country’s Lambayeque region, a short stretch from the Pacific Ocean and some 780 km north of the capital Lima.
“We are still waiting for radio-carbon dating to confirm the date, but the evidence suggests this religious construction could be part of a religious tradition of temples built on Peru’s northern coast during that period,” said Luis Muro, an archeologist from Peru’s Pontifical Catholic University who led the research.
Mr. Muro’s team found the skeletal remains of three adults between the walls and bases of what was once a multi-story structure, one of which was accompanied by offerings and possibly wrapped in a kind of linen or clothing, he said.
One of the temple walls sports a high-relief drawing of a mythological figure with a human body and a bird’s head, a design which Mr. Muro said predates the pre-Hispanic Chavin culture which populated the central Peruvian coast for over half a millennia from around 900 BC.
Mr. Muro said remains of what might have been another temple were found in another excavation nearby, this one belonging to the late Moche culture, which arose about 1,400 years ago across the country’s northern coast.
Northern Peru is home to the ruins of ceremonial complexes such as the Sacred City of Caral, about 5,000 years old, while southern Peru’s Ica region hosts the Nazca lines, mysterious geoglyphs carved into the desert more than 1,500 years ago.
Peru’s most prominent archaeological site is the Incan citadel Machu Picchu, nestled in the mountainous Cusco province, a World Heritage site which was built in the mid-15th century. — Reuters
FIRST GEN Corp. said it is eyeing to participate in a bidding process for the 796.64-megawatt (MW) Caliraya-Botocan-Kalayaan (CBK) hydroelectric power plant (HEPP) complex in Laguna.
“We’re interested in that, kasi, of course, katatapos lang namin ng Casecnan, ’di ba? (because, of course, we just bagged Casecnan, right?) So, to the extent, we can increase our hydro facilities,” First Gen President and Chief Operating Officer Francis Giles B. Puno told reporters last week.
“CBK, obviously, is a pump storage. It will enable more renewable energy to come online,” he added.
The CBK hydro facilities are currently under a 25-year build-rehabilitate-operate-transfer and power purchase agreement between independent power producer CBK Power Co. Ltd. and National Power Corp., which will expire in 2026.
These facilities are composed of the 39.37-MW Caliraya HEPP in Lumban, 22.91-MW Botocan HEPP in Majayjay, and 366-MW Kalayaan I and 368.36-MW Kalayaan II pump storage power plants in Laguna.
In February, the Power Sector Assets and Liabilities Management Corp. (PSALM) and the National Irrigation Administration turned over the ownership and operations of the 165-MW Casecnan hydroelectric power plant to First Gen’s subsidiary Fresh River Lakes Corp. (FRLC).
PSALM secured the highest bid from FRLC with a price of $526 million, higher than the minimum bid price of $227.27 million.
The Casecnan hydro is a run-of-river type of power facility that generates energy by diverting water from the Casecnan and Taan rivers through a 26-kilometer-long tunnel.
Finance Secretary Ralph G. Recto anticipates the CBK privatization to generate up to P100 billion.
Mr. Puno underscored the need for increased investment in clean and renewable energy in the Philippines, aligning with government targets of 35% renewable energy by 2030 and 50% by 2040.
At the local bourse on Tuesday, shares in the company rose by 1.02% to close at P17.80 apiece. — Sheldeen Joy Talavera
Here’s a quick glance at how PSEi stocks fared on Tuesday, July 9, 2024.
To catch the interest of younger customers, companies have leaned towards experimenting with new technologies according to Larry Secreto, Country Manager of Harman Philippines.
“A lot of young people are not really brand loyal, but they are very keen in adapting to new products, new technology, new innovations,” he told BusinessWorld in an interview during the launch of one of their newest product: Soundgear Frames.
In a research published in the International Journal of Scientific Engineering and Sciences (IJSES) in 2020, Gen Z’s were highly adept at technology due to being “raised on the internet and social media.”
It added that Filipino Gen Z’s exposure to the online world created higher familiarity with emerging technologies.
“Many of our products are attracting younger, more Gen Z customers,” Mr. Secreto said.
A study by the IBM Institute for Business Value revealed that only 36 percent of Generation Z (Gen Z) felt a strong connection or loyalty to any brand.
In line with the study, Mr. Secreto shared that older generations adapt slower to new technologies because of the absence of knowledge and information.
“There’s a lot of hesitations because they don’t understand the full usage of the technology,” he said.
Lifestyle change powered by technology
Mr. Secreto believes technology can improve the lives of Filipinos in a variety of ways, and not just cater to the needs of “tech-savvy” Gen Z.
“Some people love to have their lifestyle change or adapt to the new lifestyle,” he said about their latest innovation that combined lifestyle and technology.
“Whether it’s your daily grind, weekly hangouts, or occasional road trips, hikes, and seascapes,” technology is incorporated into daily tasks, JBL said in a press release.
Mr. Secreto further added that using technology helped people enhance their lifestyles.
“I tried using this…so I can use my shades and listen to music while playing golf,” he said.
The ever-growing innovations are not limited to the youth, he said, even though younger generations are more accepting of new technologies.
“Young people like this but it’s also applicable to older people like me. So basically for everybody,” he said. – Almira Louise S. Martinez
THE PESO logged a fresh over one-month high against the dollar on Tuesday amid growing hopes for a US Federal Reserve rate cut by September.
The local unit closed at P58.44 per dollar on Tuesday, strengthening by 6.2 centavos from its P58.502 finish on Monday, Bankers Association of the Philippines data showed. This was the peso’s best finish since its P58.42-a-dollar close on May 29.
The peso opened Tuesday’s session slightly weaker at P58.54 against the greenback. Its weakest showing was at P58.56, while its intraday best was at P58.43 versus the dollar.
Dollars traded rose to $1.18 billion on Tuesday from $1.07 billion on Monday.
The peso strengthened as the market expects the US central bank to cut interest rates by September, the first trader said by phone.
The local unit rose against a generally weaker dollar due to Fed easing bets, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort likewise said in a Viber message.
Some players also sold dollars ahead of Fed Chair Jerome H. Powell’s two-day testimony before the US Congress scheduled to begin overnight, the second trader added.
The US dollar index was last up 0.1% at 105.06, rising from an overnight low of 104.80, a 3-1/2-week trough, Reuters reported. The index slumped nearly 1% last week, exacerbated by Friday’s payrolls report, which boosted bets for the Fed to soon start cutting rates.
For Wednesday, the second trader said the peso may continue to strengthen on expectations of dovish signals from Mr. Powell. The trader sees the peso moving between P58.30 and P58.55 per dollar on Wednesday, while the first trader expects it to range from P58.30 to P58.70. Mr. Ricafort gave a forecast range of P58.35 to P58.55. — AMCS with Reuters
PHILIPPINE SHARES extended their rally on Tuesday on positive market sentiment as the Bangko Sentral ng Pilipinas (BSP) chief reiterated that they could begin their easing cycle as early as next month.
The bellwether Philippine Stock Exchange index (PSEi) went up by 0.41% or 27.23 points to end at 6,556.66 on Tuesday, while the broader all shares index increased by 0.39% or 13.82 points to close at 3,538.24.
“The local market rose… as rate cut hopes were strengthened due to the dovish comments from Bangko Sentral ng Pilipinas Governor Eli M. Remolona, Jr.… The rate cut narrative seems to boost investors’ confidence as many have been anticipating it since the start of the year,” Philstocks Financial, Inc. Research and Engagement Officer Mikhail Philippe Q. Plopenio said in a Viber message.
“This performance indicates that investors are optimistic about the BSP potentially implementing a rate cut this quarter, especially with inflation remaining within target. This price action reflects strong investor confidence in favorable upcoming monetary policy adjustments,” Seedbox Securities, Inc. Equity Sales Trader Moses Frando likewise said in a social media message.
On Monday, Mr. Remolona said the BSP should not “wait too long” to begin policy easing as this would dampen economic growth.
The BSP has kept its policy rate at a 17-year high of 6.5% for six straight meetings after it raised borrowing costs by a cumulative 450 basis points (bps) from May 2022 to October 2023 to help tame red-hot inflation.
The BSP chief said they are still “on track towards reducing rates” despite lingering risks to the inflation outlook. He earlier said that the central bank can cut by 25 bps in the third quarter, and by another 25 bps in the fourth quarter.
“Philippine shares resumed their climb as the market inched closer to the 6,600 level, getting a boost from the overnight performance of US markets. Stocks across the region have been bought up under the assumption that the US Federal Reserve could start cutting its benchmark interest rates soon,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan added in a Viber message.
Most sectoral indices rose on Tuesday. Holding firms climbed by 0.9% or 50.02 points to 5,579.54; property went up by 0.71% or 18.19 points to 2,567.95; services rose by 0.56% or 11.45 points to 2,029.61; and industrials increased by 0.53% or 49.04 points to 9,172.52.
Meanwhile, financials fell by 0.77% or 15.58 points to 2,003.30, and mining and oil dropped by 0.14% or 12.23 points to 8,595.76.
Value turnover climbed to P6.74 billion on Tuesday with 767.99 million shares changing hands from the P5.63 billion with 447.35 million issues traded on Monday.
Advancers outnumbered decliners, 97 to 90, while 56 names closed unchanged.
Net foreign selling stood at P16.77 million on Tuesday versus the P143.69 million in net buying recorded on Monday. — Sheldeen Joy Talavera
THE Philippine Ports Authority (PPA) is setting aside about P16 billion for its infrastructure projects until 2028, including its 14 big-ticket projects scheduled to be completed during the period.
“We implement around 30 to 40 projects a year. Our infrastructure projects are worth around P3.5 billion to P4 billion a year. So for the next four years until 2028, we are earmarking around P16 billion,” PPA General Manager Jay Daniel R. Santiago told reporters on the sidelines of a briefing on Tuesday.
The PPA said that it plans to enhance and develop ports to improve efficiency and capacity, while also preparing some of them to receive cruise ships.
Luzon has a total of five flagship projects: the Port of Capinpin expansion in Orion, Bataan; the Currimao Port expansion and restoration in Ilocos Norte; the Jose Panganiban Port upgrade in Camarines Norte; the development of Balogo Port in Camarines Sur; and a Wharf in Claveria Port in Cagayan province.
The six projects for the Visayas are the construction of a wharf and operational area in Catacbacan Port, Loon, Bohol; Tapal Port Expansion in Ubay, Bohol; the development of a new port in Lavezares, Samar; upgrades to Babatngon Port; Leyte; the improvement of Banago Port, Negros Occidental and the expansion of Ormoc Port.
The Mindanao big-ticket projects such as the construction of a cargo ship port in Dapa, Surigao del Norte; the upgrading of the general cargo berth in Davao City’s Sasa Port; and the expansion of Plaridel Port in Misamis Occidental.
Mr. Santiago said these flagship projects will be subject to feasibility studies, with consultants being sought to conduct the studies.
“We’re engaging consultancy services for the feasibility studies. We are doing it on a cluster basis,” he said, referring to the Luzon-Visayas-Mindanao port groupings.
For now, the PPA said it will not go the public-private partnership (PPP) route for its flagship projects and will implement the projects on its own.
“I am not discounting PPP. In the immediate term, our focus is to implement the projects on our own. The project size and cost (do not require) outside funding,” he said. — Ashley Erika O. Jose
LA NIÑA is expected to lead to improved agricultural production, thereby bringing down food prices and strengthening the hand of central bankers seeking “aggressive” rate cuts, Capital Economics said.
“A La Niña could bring with it favorable growing conditions for crops in Southeast Asia, and help to put downward pressure on food prices across the region,” Capital Economics Assistant Economist Ankita Amajuri said in a report.
“It adds to the reasons to think the upcoming rate-cutting cycle in the region will be more aggressive than what is currently priced in by financial markets.”
The government weather service estimates a 55% probability of La Niña emerging in the Philippines in the October to December period, lingering until the first quarter of next year.
“Our view is that central banks in the region will begin cutting interest rates later this year. La Niña increases the odds that easing cycles will be even more aggressive than our forecasts, which are already more dovish than the consensus,” Capital Economics said.
Bangko Sentral ng Pilipinas (BSP) Governor Eli M. Remolona, Jr. has signaled potential rate cuts by August.
He said the central bank can cut by up to 50 basis points (bps) for the full year, with a 25-bps cut each in the third and fourth quarters.
“The latest inflation data from across the region paint an encouraging picture, with the headline rate falling back in almost every country that has so far published figures for June,” Ms. Amajuri said.
Philippine inflation eased to 3.7% in June from 3.9% in May, the seventh straight month that inflation has kept within the BSP’s 2-4% target range.
“We expect inflation to fall a little further in most places. Our forecast is that global oil prices will fall back again over the coming months, which should result in a decline in fuel price inflation,” Ms. Amajuri said.
“Meanwhile, subdued economic growth will help to keep a lid on underlying price pressures. We also expect food price inflation to drop back further, helped by better growing conditions now that the recent El Niño has come to an end.”
The report cited the World Meteorological Organization, which forecasts a 70% chance of La Niña emerging between August and November.
“La Niña typically brings wetter weather to Southeast Asia and is likely to provide a boost to producers of rice, coffee and sugar, who have been adversely affected by dry conditions over the past year. An increase in production would help bring down agricultural prices, which remain elevated,” it said.
Capital Economics said moderate-to-severe La Niña events in the past have been tied to falling rice prices.
“Rice is a staple food across much of the region, accounting for around 5-10% of the CPI basket in many countries.”
In June, Philippine rice inflation eased to 22.5% from 23% a month earlier. Rice accounted for 45.2% of overall inflation, equivalent to 1.7 percentage points of the headline rate.
“It is possible that the positive impact of La Niña will be less pronounced than the negative effects of the preceding El Niño because of climate change. While global warming amplified the heat and droughts caused by El Niño, it is likely to counter the cool weather brought by La Niña,” it said.
“However, it won’t be until the final quarter of the year that we will know for sure how severe this La Niña will be, and our commodities team are not making any changes to their agricultural price forecasts at this stage.” — Luisa Maria Jacinta C. Jocson
