China central bank pledges billions worth of funding to speed along recovery in disaster-hit farm regions

August 19, 2024 | 12:02 am

BEIJING/HONG KONG — China’s central bank said it will provide an additional 100 billion yuan ($14 billion) to banks to support rebuilding areas devastated by floods, after recent extreme weather damaged around 6 million acres of crops.

The world’s largest agricultural importer has in recent weeks been plagued by Typhoon Gaemi lashing its eastern seaboard, record rains in its southern rice fields, and intense heat waves across its northern corn and wheat yielding regions.

After state media reported Vice Premier Liu Guozhong called for China’s vast agricultural sector to push for a bumper harvest this autumn, the central bank announced it will issue a further 100 billion yuan of a re-lending facility to support 12 areas with flood prevention and reconstruction initiatives.

The People’s Bank of China (PBoC) will direct the funding towards Fujian, Guangdong, Henan, Heilongjiang, Hunan, Jilin, Jiangxi, Liaoning, Shaanxi and Sichuan provinces, along with the megacity of Chongqing and the Guangxi region, and to farmers, small and micro-sized firms and households, a statement said.

The PBoC had issued a total of 2.61 trillion yuan in re-lending quotas to support agriculturalists and small firms.

“The PBoC will urge its branches in relevant provinces to make good use of the newly added re-lending quotas… ensure the funding needs of disaster-stricken enterprises and help them resume production,” it added.

China suffered 76.9 billion yuan in economic losses from natural disasters last month, with 88% of those losses caused by heavy rains and floods, according to the Ministry of Emergency Management.

It was the biggest amount of losses for the month of July since 2021, ministry data showed.

Mr. Liu, during his visit to Liaoning and Jilin provinces over the weekend and Monday, urged officials to improve the agriculture sector’s capacity for disaster prevention and mitigation, according to the official Xinhua news agency.

He also “urged measures to drain accumulated water, promote the restoration of affected crops and guide farmers in replanting areas where crops were destroyed,” the report added.

Producers from the US to Brazil and Indonesia will be watching to see whether China will increase its food imports to meet the demands of its 1.4 billion people.

A cut in domestic farm output could bolster the Asian giant’s demand for overseas supplies, which would impact global food supply and prices.

Beijing envisions 92% self-sufficiency in staple grains and beans by 2033, up from 84% during 2021-2023. But an increase in the number of extreme weather events calls that into question.

Natural disasters in July affected almost 26.4 million people across China, with 328 either dead or missing. More than one million people were relocated, 12,000 houses collapsed and 157,000 more were damaged. Some 2.42 million hectares (5.98 million acres) of crop area were also affected. — Reuters

Knight Frank: Manila third highest in first-half logistics rental growth in Asia-Pacific

August 19, 2024 | 12:02 am

Manila logged the third-highest year-on-year logistics rental growth at 9.1% in the Asia-Pacific region in the first semester, and a half-year rental growth of 1.7%, according to the latest report by real estate consultancy Knight Frank. Based on the report, strong demand for cold storage facilities in the Philippines has led major industrial developers to expand. Meanwhile, rents for logistics spaces in the region sustained an increase of 2.4% year on year.

Luxury’s China slump: belt tightening or an issue with value?

August 19, 2024 | 12:01 am

Mini-Flap-Bag-with-Top-Handle — CHANEL.COM

By Shuli Ren

MULTINATIONALS have a puzzle that they need to tease out in China, the world’s biggest market for luxury products: What’s driving a slump in sales? Is it because a slowing economy is leading people to tighten their belts, or a sign that the Chinese no longer believe many brands can hold their value?

This question matters because it affects luxury houses’ long-term prospects. If the problem is just a weak economy, they might accept recent earnings as a temporary rough patch and carry on business expansion as before. But if people start to see luxury products as mere commodities, brands have a much bigger problem and must start to cut back on supply and restore scarcity value.

In particular, executives need to worry about speculators. Just like trend-chasing quant funds and Japan’s Mrs. Watanabe, they take one-way price bets and no one in the industry really knows the scale of the gamble. The only difference, perhaps, is the lack of leverage — carry traders, for example, would typically take out cheap loans to invest in something that has higher returns.

This phenomenon is likely to be pronounced in China. After all, Chinese are a pragmatic bunch. Even when the economy was doing well, many buyers were making an investment case for their purchases. For instance, Chanel’s classic handbags have been well-loved by fashionistas, in part because of their resale value. The iconic French brand has been speeding up price hikes since 2016, doubling the cost of its medium classic flap bag from $4,900 to $10,800. As online resale platforms blossomed, many consumers have been able to ride on Chanel’s price hikes and sell their second-hand items for a profit.

Chanel typically reviews handbag prices twice a year, in March and September. It raised the flap bag prices by 6% to 8% this spring, with all its models retailing for more than $10,000. This makes Chanel as much an investment as a good, encouraging both speculators and end-consumers to purchase the newest lineups.

But the presence of speculators can also ruin iconic brands. Kweichow Moutai Co., China’s most prestigious premium liquor distiller, is a good cautionary tale. From 2016 to early 2021, the wholesale price of its iconic Feitian baijiu rose 358% to a peak of 3,850 yuan ($536) per 500-milliliter bottle, drawing in an army of hoarders.

Prices of Moutai started to drop this spring, according to Bloomberg Intelligence’s Ada Li. But it was the big midyear e-commerce shopping festival in June that broke the camel’s back. JD.com, Inc. sold Feitian at only 1,499 yuan per bottle as a way to draw shoppers to its platform.

While the wholesale price seems to have stabilized in early August, investors have lost faith in this household brand. There’s now worry of oversupply and that speculators might be keen to lock in profit before the situation worsens again. UBS Group AG estimates that hoarders have piled up about 14 months’ worth of Moutai liquor supply over the years, with an average purchase cost of 2,079 yuan a bottle.

As China suffers from an economic Long COVID, it’s clear that brands with better resale value are much more resilient. Last year, the prices of Hermes International SCA’s second-hand products continued to grow, while many other luxury brands, including LVMH Moet Hennessy Louis Vuitton SE’s Louis Vuitton, and Dior experienced a decline, according to Bernstein Research. This perhaps explains why Hermes’ earnings in the second quarter were a lot prettier than LVMH’s. Kering SA, meanwhile, is at the bottom end of the table because its flagship, Gucci, has too many discounted channels, from private sales to outlet stores, mostly in Asia. Second-hand Gucci sells at about a 40% discount.

For now, the likes of Chanel and Hermes may take comfort that they can still raise prices amid this weak macro backdrop. But they need to be careful with inventory management. Past steady annual price increases have already drawn in one-way bets, not unlike how the Bank of Japan’s yield curve control attracted macro tourists to the yen carry trade. When the game of musical chairs stops — as markets feared in a rout early last week following a hike in interest rates — the unwinding can be very ugly. — BLOOMBERG OPINION

The threat of an H5N1 avian flu pandemic

August 19, 2024 | 12:01 am

The first recent outbreak in the country of the highly pathogenic avian influenza A(H5N1) virus, commonly called bird flu, was reported in February 2022. Since then, outbreaks have been reported in several areas including Manila, Pampanga, Cagayan Valley, Sultan Kudarat, and, most recently, Leyte.

Avian influenza A(H5N1) is widespread in wild birds worldwide and is causing outbreaks in poultry across the globe. The Philippines currently has no confirmed human transmission of bird flu. However, reports of confirmed human infections with bird flu in several countries are spawning fears of a bird flu pandemic.

Bird flu viruses may be transmitted from infected birds to other animals, and potentially to humans, in two main ways, said the US Centers for Disease Control and Prevention (CDC). First, directly from infected birds or from avian influenza A virus-contaminated environments, specifically from exposure to saliva, mucous, or feces from infected birds. Second, through an intermediate host, such as another animal.

While avian influenza viruses do not currently transmit easily from person to person, the ongoing circulation of these viruses in poultry is concerning, as these viruses can result in mild upper respiratory tract infection to severe illness and death, and also have the potential to mutate to become more contagious, warned the World Health Organization (WHO).

Conjunctivitis, gastrointestinal symptoms, encephalitis (inflammation of the brain), and encephalopathy have also been reported in previous human infections with A(H5N1) viruses. Encephalopathy is a group of conditions that cause brain dysfunction that can appear as confusion, memory loss, personality changes, and/or coma in the most severe form.

There have also been a few detections of the bird flu virus in asymptomatic persons who had exposure to infected birds, the WHO said.

The best way to prevent H5N1 bird flu is to avoid sources of exposure whenever possible, stressed the CDC. As a general precaution, whenever possible people should avoid direct contact with sick or dead wild birds, poultry, and other animals and observe them only from a distance.

If one must have direct or close contact with sick or dead wild birds, poultry, or other animals, he or she must wear recommended personal protective equipment (PPE). They should make sure to wash their hands thoroughly with soap and water immediately after. Do not touch surfaces or materials (e.g., animal litter or bedding material) contaminated with saliva, mucous, or animal feces from wild or domestic birds or other animals with confirmed or suspected avian bird influenza A virus infection. It is important not to touch or consume raw milk or raw milk products, especially from animals with confirmed or suspected avian influenza A virus infection.

Travelers to countries with known outbreaks of animal influenza should avoid farms, avoid contact with animals in live animal markets, entering areas where animals may be slaughtered, or contact with any surfaces that appear to be contaminated with animal feces.

Noting that the virus has not acquired mutations that facilitate transmission among humans and based on available information, the WHO assesses the public health risk to the general population posed by this virus to be low and considers the risk of infection for occupationally exposed persons to be low-to-moderate.

Although there are no specific vaccines for preventing influenza A(H5N1) virus infection in humans, several candidate vaccines to prevent H5 infection in humans have been developed for pandemic preparedness purposes, the WHO explained.

The agency stressed that close analysis of the epidemiological situation, further characterization of the most recent viruses (from human cases and animal) and comprehensive investigations around human cases are critical to assess associated risk and to adjust risk management measures in a timely manner. If needed, the WHO committed to reviewing its risk assessment should further epidemiological or virological information become available.

The innovative pharmaceutical industry has played and will continue to play a critical role in pandemic preparedness response. We have a strong track record as a partner contributing knowhow and exploring solutions. During the COVID-19 pandemic, innovation, scaling manufacture, and a socially responsible approach to sharing technology changed the pandemic course in record time.

Drawing from lessons learned from the global response to COVID-19, the International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) launched the Berlin Declaration. This sets out an approach to more equitable pandemic preparedness and response based on collaboration, commitments, and contributions across the global health community. The industry’s goal is to address issues of equitable access to vaccines, diagnostics, and therapeutics during a global pandemic.

Hopefully, through a coordinated global response, the current avian influenza A(H5N1) outbreak will be contained. The biopharmaceutical industry, on the other hand, will continue to work with global stakeholders to contribute our knowledge and expertise in developing and deploying high-quality diagnostics, therapeutics, and vaccines as quickly as possible when a major health threat is identified.

Teodoro B. Padilla is the executive director of Pharmaceutical and Healthcare Association of the Philippines (PHAP). PHAP represents the biopharmaceutical medicines and vaccines industry in the country. Its members are in the forefront of research and development efforts for COVID-19 and other diseases that affect Filipinos.

Yields on government debt end mostly lower

August 19, 2024 | 12:01 am

YIELDS on government securities (GS) traded in the secondary market mostly went down last week after the Bangko Sentral ng Pilipinas (BSP) cut benchmark interest rates for the first time in nearly four years.

GS yields, which move opposite to prices, decreased by 3.91 basis points (bps) on average week on week, according to PHP Bloomberg Valuation Service Reference Rates data as of Aug. 16 published on the Philippine Dealing System’s website.

Rates of the 91- and 182-day Treasury bills (T-bills) rose by 10.74 bps and 0.96 bp week on week to 5.9503%, and 6.1152%, respectively. Meanwhile, the 364-day T-bill decreased by 4.88 bps to yield 6.1489%.

At the belly, yields on the two-, three-, four-, five, and seven-year Treasury bonds (T-bonds) dropped by 2.48 bps (to 6.0013%), 3.99 bps (5.9986%), 5.83 bps (6.0011%), 7.57 bps (6.0068%), and 9.57 bps (6.0206%), respectively.

At the long end, the 10-, 20, and 25-year debt papers saw their rates go down by 9.53 bps (to 6.0582%), 5.43 bps (6.2663%), and 5.48 bps (6.2646%), respectively.

GS volume traded was at P82.34 billion on Friday, higher than the P23.13 billion recorded a week earlier.

“Market players started the trading week on the sidelines ahead of key events, namely the seven-year auction, US inflation data releases, and the Bangko Sentral ng Pilipinas’ policy rate decision. Price action remained rangebound going into the Monetary Board meeting. Given mixed signals from policy makers, investors were divided whether the BSP would begin its easing cycle this month,” Lodevico M. Ulpo, Jr., vice-president and head of Fixed Income Strategies at ATRAM Trust Corp., said in an e-mail.

“However, following the BSP’s decision to cut the policy rate by 25 bps to 6.25%, significant buying interest was immediately seen across the curve. With confirmation of another rate cut by yearend, market participants scrambled for bonds until the end of the trading week, driving yields lower by 10 to 20 bps week on week,” Mr. Ulpo said.

The Philippine central bank on Thursday cut benchmark interest rates for the first time in nearly four years to mark the start of a “calibrated” easing cycle amid an improving inflation and economic outlook, with the BSP chief signaling at least one more reduction before the end of the year.

The Monetary Board reduced its target reverse repurchase rate (RRP) by 25 bps to 6.25%. Rates on the central bank’s overnight deposit and lending facilities were also lowered to 5.75% and 6.75%, respectively.

This was in line with the expectations of nine out of 16 analysts surveyed in a BusinessWorld poll.

This was the first time that the Monetary Board reduced rates since November 2020, when it delivered a 25-bp cut amid the coronavirus pandemic.

Prior to the cut, the BSP kept its policy rate at an over 17-year high of 6.5% for six straight meetings following cumulative hikes worth 450 bps between May 2022 and October 2023 to combat inflation.

“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” BSP Governor Eli M. Remolona, Jr. said at a briefing.

Mr. Remolona said they could cut rates by 25 bps again within the year. The Monetary Board’s remaining policy-setting meetings this year are scheduled for Oct. 17 and Dec. 19.

Moving forward, GS yields may move sideways with the BSP signaling gradual adjustments, a bond trader said.

“Yields were lower especially after the rate cut confirmation,” a bond trader said in a Viber message. “However, it looks like it will take more catalysts to support a further downside in yields as BSP only sees one more rate cut for the rest of the year, at least for now. GS yields are already trading close to the 6% level, which is the projected RRP rate if the BSP will cut one more time this year.”

“Looking ahead, the peso bond market rally will likely persist in the near-term as local and foreign market players catch up on duration — in preparation for further policy easing from the BSP and the US Federal Reserve. In the absence of significant market catalysts on the domestic front, we expect market participants to continue trading on momentum,” Mr. Ulpo said.

A batch of US data last week showed inflation was moderating and retail spending was robust, Reuters reported.

That has helped the market narrative move away from recession concerns, sparked by a weak US jobs report in early August, to confidence the economy can keep growing. Softer inflation data has also reinforced expectations of an interest rate cut by the US Federal Reserve in September.

On Friday, a survey showed that US consumer sentiment rose in August, driven by developments in the US presidential race, while inflation expectations remained unchanged over the next year and beyond.

With central bankers from around the globe set to gather in Jackson Hole, Wyoming this week, traders expect the Fed to lower borrowing costs from a 23-year high next month but have reduced their bets on an emergency 50-bp cut to 25%, down from 55% a week earlier, the CME FedWatch tool showed. — C.W.E. Laureta with Reuters

EVAP, Chinese officials strengthen ties for EV industry boost

August 19, 2024 | 12:01 am

VELO_Page2_State-of-Charge2_EVAP — Shaking hands are Electric Vehicle Association of the Philippines Chairman Rommel T. Juan (fourth from left) and Regional Industry Cooperation Committee (RICC) Chairman Xu Ningning. With them are (from left) RICC Liaison Officer Nicole Wang, Philippine Commercial Counsellor Emman Ang, RICC Secretary-General Jennifer Liu, EVAP Chairman Emeritus Ferdinand I. Raquelsantos, and EVAP President Edmund A. Araga. — PHOTO FROM THE ELECTRIC VEHICLE ASSOCIATION OF THE PHILIPPINES

THE ELECTRIC VEHICLE Association of the Philippines (EVAP), represented by Chairman Rommel T. Juan, Chairman Emeritus Ferdinand I. Raquelsantos, and President Edmund A. Araga, recently visited the office of the Regional Comprehensive Economic Partnership (RCEP) Regional Industry Cooperation Committee (RICC) in China. Accompanied by business officials from the Embassy of the Philippines in China, this visit, according to an EVAP release, “marks a significant milestone in fostering cooperation in the electric vehicle (EV) industry between China and ASEAN countries.”

The delegation engaged in discussions with RICC representatives, including Chairman Xu Ningning, Secretary-General Jennifer Liu, and Liaison Officer Nicole Wang. These discussions focused on enhancing collaboration and sharing best practices in EV technology, infrastructure development, and regulatory frameworks. This visit underscores the commitment of EVAP leaders to drive the growth and development of the EV industry in the ASEAN region through strategic partnerships and international cooperation.

Said Mr. Juan, “Our engagement with the RICC is a pivotal step toward strengthening our ties with China and other ASEAN countries. By working together, we can accelerate the adoption of electric vehicles and contribute to a sustainable future.” Added Mr. Raquelsantos, “The exchange of knowledge and expertise between our countries will pave the way for innovative solutions in the EV sector. We are excited about the opportunities this partnership will bring.” Mr. Araga joined, “We look forward to building on this foundation and achieving remarkable milestones in the years to come.”

Mr. Ningning, for his part, stated, “We are pleased to host the leaders of EVAP and are confident that this cooperation will lead to significant advancements in the EV industry. Together, we can achieve mutual growth and sustainability.”

The visit to the RICC office aligns with EVAP’s ongoing efforts to promote the upcoming 12^th Philippine Electric Vehicle Summit, which will be held on Oct. 24 to 26 at the SMX Convention Center in Manila. The summit aims to bring together industry leaders, policy makers, and stakeholders to discuss the latest trends, challenges, and opportunities in the EV landscape.

Earnings, revised growth targets lift Converge shares

August 19, 2024 | 12:01 am

CONVERGE ICT Solutions, Inc.’s shares rose last week as it revised growth forecasts following the release of its second-quarter earnings data.

Converge was the 11^th most actively traded stock last week, with a total of 65.21 million shares worth P854.92 million changing hands from August 12 to 16, data from the Philippine Stock Exchange showed.

Shares closed at P14.28 apiece last Friday, up by 19% from P12 apiece the previous week.

Year to date, the stock has jumped 70.4% from its P8.38 close on the last trading day of 2023.

Analysts attributed the week-on-week increase to strong earnings data released by the telecommunications company early last week.

“Solid second-quarter results reflected positively on the stock last week, driving investor sentiment upward. The earnings beat most analysts’ expectations, which likely contributed to a bullish momentum, resulting in increased trading volumes and upward price movements earlier last week,” Arielle Anne D. Santos, equity analyst at Regina Capital Development Corp., said in an e-mail.

The attributable net income of the company surged by 29.8% in the second quarter to P2.74 billion from P2.11 billion in the same period a year ago, bringing its total to P5.29 billion for the first half of the year.

Likewise, Converge’s second-quarter revenue reached P9.98 billion, climbing 14.4% from last year’s P8.72 billion.

With strong earnings for the second quarter and first half, the telecommunications company upgraded its 2024 revenue growth targets to 12-14% from 7-8%, further pushing shares upward.

“This upward revision signaled stronger-than-anticipated demand, particularly in the residential and enterprise segments. The market generally responded positively to this guidance upgrade, as it indicated management’s confidence in capturing more market share and sustaining growth. This news likely contributed to a further boost in stock price, reflecting heightened investor optimism,” Ms. Santos said.

The company’s household coverage for the second quarter reached 63.7%, higher than the 62.3% in the same period last year.

Enterprise clients likewise increased year on year to 55,906, up 30.6% from 42,797.

“The increase in enterprise clients and household coverage is a significant development for the company as it highlights the broadening market reach of Converge despite the stiff competition in the telco landscape,” Jervin De Celis, equity trader at Timson Securities, said in an e-mail.

Ms. Santos expects Converge’s full-year revenue to come at the higher end of its 12-14% forecast if recent trends continue.

Mr. De Celis sees Globe’s third-quarter revenue reaching P10.7 billion, while full-year revenue may reach P41.37 billion.

“I expect the stock to pull back early this week as investors might take this rally to take some profits. The stock may find support between P12 and P12.50, while resistance will probably range between P15 and P15.50,” he said.

Ms. Santos placed her support at P12.30 and immediate resistance at P14.70. — Karis Kasarinlan Paolo D. Mendoza

High hopes in Israel for cocoa that survived Gaza frontline conditions

August 19, 2024 | 12:01 am

ESHKOL COUNCIL, Israel — Farming can develop in mysterious ways. Israeli researchers learned about that when the war in Gaza seemed to have all but wrecked their work on a more resilient strain of the cocoa plant that could help alleviate a global shortage of the beans.

Just days after Israel’s agriculture research center, the Volcani Institute, sent 140 seedlings to a facility in southern Israel to study how this tropical plant could be grown in dry conditions, the area came under attack by the Palestinian Islamist group Hamas.

The Oct. 7 assault that sparked the war in Gaza, paralyzed southern Israel and left the facility shut down for months without electricity or irrigation.

“When we came back in January, we saw everything around us, all the experiments that died,” said Talli Ilani, a researcher at the R&D Darom site. Everything except for 18 cocoa seedlings.

While the team had not planned on testing the selected cocoa strains specifically for drought resistance, they may have found just that. “It’s a very unusual result, to find a strain that can withstand 3-1/2 months of drought as new fresh seedlings and also severe cold front,” said Ellen Graber, a senior principal scientist at the Volcani Institute.

“It means that we may be able to develop strains that can expand the growing regions for cocoa.”

Bad weather and disease have hurt cocoa production and sent global cocoa prices soaring. Ms. Graber now plans to clone the surviving plants — which she refers to as “super heroes” — and test them for other qualities such as resistance to pests, and identify the genes responsible for their resilience.

The Volcani Institute has developed resilient plant strains in the past, including drought-resistant wheat that ripens earlier and with a higher nutrient content, as well as a chill-resistant basil that yields all year round. — Reuters

Overseas Filipinos’ Cash Remittances

August 19, 2024 | 12:01 am

CASH REMITTANCES from overseas Filipino workers (OFWs) rose to a six-month high in June, the Bangko Sentral ng Pilipinas (BSP) said late on Thursday. Read the full story.

How PSEi member stocks performed — August 16, 2024

August 19, 2024 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Friday, August 16, 2024.

Shares may rally further as BSP starts easing cycle

August 18, 2024 | 9:00 pm

PHILIPPINE SHARES may continue to climb this week after the Bangko Sentral ng Pilipinas (BSP) on Thursday cut benchmark interest rates for the first time in nearly four years.

On Friday, the Philippine Stock Exchange index (PSEi) rose by 2.3% or 154.46 points to end at 6,847.37, while the broader all shares index went up by 1.74% or 63.27 points to finish at 3,691.42.

Week on week, the PSEi climbed by 3% or 199.57 points from its 6,647.80 close on Aug. 9, marking its second consecutive weekly gain.

“Local equities surged, boosted by the Bangko Sentral ng Pilipinas’ 25-basis-point (bp) rate cut, the first in almost four years,” online brokerage firm 2TradeAsia.com said in a market note.

“The local market had a good run last week, with value turnover going above the year-to-date average. In the process, the market was able to get past its 6,700-6,800 resistance range,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message.

The Monetary Board on Thursday reduced its target reverse repurchase rate by 25 bps to 6.25%.

This was the first time the BSP reduced rates since November 2020, when it delivered a 25-bp cut amid the coronavirus pandemic.

Prior to the cut, the BSP kept its policy rate at an over 17-year high of 6.5% for six straight meetings following cumulative hikes worth 450 bps between May 2022 and October 2023 to combat inflation.

“With inflation on a target-consistent path, the current macroeconomic outlook supports a calibrated shift to a less restrictive monetary policy stance,” BSP Governor Eli M. Remolona, Jr. said at a briefing.

Mr. Remolona said they could cut rates by another 25 bps this year. The Monetary Board’s remaining policy-setting meetings are scheduled for Oct. 17 and Dec. 19.

For this week, the market will continue to react to the BSP’s rate decision, Mr. Tantiangco said.

“With the BSP already going for one 25-bp rate cut, together with the prospect of more monetary policy easing moving forward, we may see the market climb further this week,” he said. “Easing recession worries in the United States are also expected to help the local bourse.”

Mr. Tantiangco said if the PSEi can remain at the 6,700-6,800 range, this would be its new support, while its next resistance is at 7,000.

“There is clear upward bias to market movements as rate cuts, locally and abroad, have turned in favor of risk assets. The dying out of the ‘higher-for-longer’ view on global interest rates may be the impetus the PSEi needs to approach 7,000 in the medium term,” 2TradeAsia.com said.

The online brokerage placed the market’s immediate support at 6,600 and resistance at 7,000.

Philippine financial markets will be closed on Friday (Aug. 23) for a special nonworking holiday in observance of Ninoy Aquino Day, which was moved from the original Aug. 21 date. — R.M.D. Ochave

Philippines accuses China of violating 2002 pact

August 18, 2024 | 8:29 pm

"BRP TERESA MAGBANUA”, the largest patrol vessel (97 meters) for the Philippine Coast Guard (PCG)

THE PHILIPPINE Coast Guard (PCG) on Sunday said China is the only country in the region that continues to violate a 2002 declaration that sought to promote peaceful coexistence in the South China Sea.

This, after China urged its neighbor to withdraw a PCG vessel from Sabina Shoal, a Philippine feature to which Beijing has deployed naval assets in recent weeks.

“China should stop citing the 2002 Declaration on the Conduct of Parties in the South China Sea, as they have not honored or followed a single provision of that declaration,” PCG spokesman Jay Tristan Tarriela said in an X post.

“As far as the region is concerned, it is only Beijing that constantly violates this declaration,” he added, citing China’s deployment of large coast guard and maritime militia vessels there.

The Chinese Embassy in Manila did not immediately reply to a Viber message seeking comment.

Mr. Tarriela said China had sent naval assets to Sabina Shoal, which is part of the Spratly Islands and falls within the Philippines’ exclusive economic zone. It is 123.6 nautical miles from Palawan Island, which is facing the South China Sea.

“These actions undermine stability in these waters and contribute to escalating tensions.”

China last week filed a diplomatic protest against the “illegal anchoring” of Philippine Coast Guard vessel BRP Teresa Magbanua at the shoal, saying it “seriously infringes on China’s sovereignty.”

“China has protested to the Philippines through diplomatic channels and asked the Philippines to stop its infringement activities and withdraw the vessel at once,” Chinese foreign ministry spokesperson Lin Jian told a news briefing in Beijing last week.

He said BRP Teresa Magbanua had entered the lagoon of Sabina “without permission and has been there for a very long time.”

It was a violation of the Declaration on the Conduct of Parties in the South China Sea, she added, noting that Beijing was “closely monitoring the developments” and would undertake “resolute measures.”

China and the Association of Southeast Asian Nations (ASEAN) have yet to finalize a code of conduct in the disputed waterway decades after signing the nonbinding 2002 declaration, which calls on parties to “exercise self-restraint in the conduct of activities that would complicate or escalate disputes and affect peace and stability” at sea.

The 2002 document urges parties to refrain “from action of inhabiting on the presently uninhabited islands, reefs, shoals, cays and other features and to handle their differences in a constructive manner.”

On Thursday, Singaporean President Tharman Shanmugaratnam said in a joint statement with his Philippine counterpart delivered at the presidential palace in Manila that his country, which is a non-claimant state, upholds “the rights of all states to freedom of navigation and overflight.”

Singapore “strongly supported the peaceful resolution of disputes in accordance with international law including the 1982 United Nations Convention of the Law of the Sea (UNCLOS),” he said.

“That’s fundamental UNCLOS has to be the legal framework within which all the activities in the oceans and seas are carried out.”

The 97-meter multi-response vessel Teresa Magbanua was sent to the shoal after reports of small-scale Chinese reclamation activities there.

Mr. Tarriela said the ship was deployed there not to provoke or escalate tensions, but to “protect and safeguard our sovereign rights over these waters.” He added that it’s also monitoring “illegal poachers” who damage the marine environment.

The 97-meter Teresa Magbanua, a multirole response vessel, has been stationed at the shoal since mid-April.

The PCG on Aug. 13 said China had deployed a 135-meter coast guard vessel with hull number 5303 to the shoal to replace its largest coast guard ship known as “The Monster,” which was first spotted by the Philippine Navy in the area on July 3.

It said the vessel, which was registered by the Chinese government under the Western and Central Pacific Fisheries Commission, did not inspect Chinese maritime militia vessels that gathered within the shoal for compliance with fishery laws.

“Instead of conducting inspections, they interacted with the crew of the Chinese maritime militia as if they were familiar acquaintances, sharing meals together,” it said.

“It is evident that no formal boarding procedures were carried out by the China Coast Guard to question the Chinese maritime militia’s intentions, despite their prolonged presence without any signs of fishing,” it added.

Mr. Tarriela said this showed that the Chinese maritime militia is recognized by the Chinese Coast Guard (CCG) as an integral part of its maritime operations, “aiding in encroaching upon the exclusive economic zones of other countries throughout the South China Sea.”

“These state-subsidized maritime militia support the CCG and the People’s Liberation Army Navy in intimidating neighboring maritime states such as Vietnam, Malaysia, Indonesia and the Philippines,” he added.

The shoal has been used by the Philippine Navy as a staging area for the resupply missions to its outpost at Second Thomas Shoal, which is also within the country’s EEZ.

The US-based Asia Maritime Transparency Initiative (AMTI) in February said about 195 Chinese militia ships were present near disputed areas of the South China Sea including Philippine features on any given day last year, a 35% increase from a year earlier.

These were composed of professional militia that operate purpose-built vessels out of Hainan province, and the “Spratly Backbone Fleet,” which consists of commercial vessels subsidized to operate in disputed waters to support Chinese sovereignty claims, AMTI said.

Earlier this month, the Philippine Navy said Chinese research vessel Ke Xue San Hao, which is equipped with advanced technology designed for marine environment observation, was still near Sabina over a week after it left a major Chinese military outpost in the South China Sea.

Its zig-zag movement “indicates something else,” which is no longer an innocent passage, it said.

The Navy said it had spotted Ke Xue San Hao, 12 Chinese maritime militia vessels and one China Coast Guard ship at the shoal from July 30 to Aug. 4. — Kyle Aristophere T. Atienza