Rustan’s: Thanking women

March 11, 2024 | 12:02 am

“IF IT wasn’t for women, we wouldn’t even be here,” said Michael Tantoco Huang, Rustan Commercial Corp. VP for Store Development and Expansions in an interview with BusinessWorld.

Mr. Huang is the younger son of the late Rustan Commercial Corp., SSI Group, Inc., and Rustan Marketing Corp. Chair Zenaida “Nedy” Tantoco. She had passed away on Feb. 8 (story here: https://www.bworldonline.com/arts-and-leisure/2024/02/12/574791/rustans-zenaida-nedy-tantoco-77/), just about a month before the “Rustan’s Beauty GRLPWR 2024: Resort To Beauty” event launch at Rustan’s Shangri-la on March 7, a day before International Women’s Day (March 8).

“Not just my mother — she took after my grandmother (Gliceria Rustia Tantoco, who died in 1994), who had the vision for Rustan’s. It was my grandmother together with my grandfather (who died aged 100 in 2021). You see, my grandfather was always the one supporting my grandmother, and (she) had that vision from the very start, what she saw for Rustan’s. And I think that was pushed over to my mom, where she had the vision of what Rustan’s should be, and continued on through the years.”

Since his mother’s demise earlier this year, his brother Anton Huang has been named CEO, and his cousin Donnie Tantoco was named Chair. “As part of the third generation, we’ve always seen ourselves as stewards to keep the family business going. We’re just acting as stewards for the next generation,” said Mr. Huang.

RENOVATIONS AND PROMOS
Jackie Avecilla, Marketing and Communications Head for Rustan’s Beauty, said that following the renovation of their flagship in Rustan’s Makati, they’re planning renovations for their branches in Shangri-la, Alabang, and Cebu. “We’re expanding certain areas there, and also renovating. That’s long overdue,” she said. While she can’t disclose their names, she said there are new brands entering their beauty roster this year.

The “Rustan’s Beauty GRLPWR 2024: Resort To Beauty” event and seasonal campaign will highlight three female artists: singer Clara Benin, who performed at the event; illustrator Elle Battung, who did a mural for Rustan’s Shangri-la, and designer Zarah Juan, whose new bag, the Mobula, will be available for Rustan’s Beauty Addict members with a minimum purchase of P30,000 (available in white, black, and tan) from March 1 until April 30.

Other promos are lined up, but more importantly, “Because a lot of our shoppers are mostly women, especially for beauty, it’s also thanking them, and making them feel like this is a place where they can freely be themselves… and just really a safe place for them,” said Ms. Avecilla.

For every purchase of P5,000 at Rustan’s The Beauty Source from March 1 until May 31, Rustan’s Beauty Addict members are entitled to one e-raffle entry for a chance to win an all-inclusive four days and three nights-stay for two in the Garden View Villa of Nay Palad Hideaway in Siargao, inclusive of round-trip flights. From March 8 to 31, Rustan’s Beauty Addict members can enjoy times-five Beauty Addict points for any purchase at Rustan’s The Beauty Source. — JL Garcia

Ayala Land breaks ground for Evo City South District and Technohub

March 11, 2024 | 12:02 am

Ayala Land recently broke ground for Evo City’s second commercial lot and first office building developments, Evo City South District and Evo City Technohub.

Evo City is a highly connected Estate connecting Cavite, Laguna, and Metro Manila through major thoroughfares such as Cavitex, CALAX and future infrastructures such as the LRT-1 Cavite Extension Project. Spanning 207 hectares, the estate integrates commercial, residential, retail, and institutional spaces, offering a complete mix of urban amenities.

Following the success of Evo City’s commercial and residential projects — Evo City West District and The Residences at Evo City — the estate is breaking ground on a 25-hectare commercial district in Evo City South District and a two-tower office complex in Technohub Evo City, reinforcing its status as a leading hub for business and modern living.

At the heart of Evo City is its Active Park, 2.5 hectares of green space that will connect the church to the mall and the office blocks. The first phase of Ayala Malls will open by end-2024 and its second phase by 2026, bringing more than 50,000 sq.m. of retail space. The soul of Evo City is a 1,000-seater church designed by Dominic Galicia Architects, set to be completed by the second quarter of 2025.

Held onsite last March 7, 2024, this groundbreaking milestone was graced by Councilor Armie Aguinaldo and Municipal Administrator Engr. Rey Santos of Kawit, Cavite; Chairman and President development-partner, Plaridel Abaya of Kawit Prime Holdings Inc; and Meean Dy, President and CEO of Ayala Land, underscoring the collaborative effort towards shaping Evo City’s vibrant future.

Spotlight is BusinessWorld’s sponsored section that allows advertisers to amplify their brand and connect with BusinessWorld’s audience by enabling them to publish their stories directly on the BusinessWorld Web site. For more information, send an email to online@bworldonline.com.

Join us on Viber at https://bit.ly/3hv6bLA to get more updates and subscribe to BusinessWorld’s titles and get exclusive content through www.bworld-x.com.

High rates, geopolitical tensions dragged markets in Q4

March 11, 2024 | 12:02 am

1 of 4

THE COUNTRY’S financial markets swayed in the final quarter of 2023 as geopolitical tensions and interest rates pushed the market and policy makers to a waiting game in search of better economic conditions.

The Philippine Stock Exchange index (PSEi) closed the fourth quarter at 6,450.04, down 1.8% year on year from the 6,566.39 in the same period in 2022. On the other hand, the index was up by 2% from 6,321.24 in the July-to-September 2023 period.

In a Viber message, Ruben Carlo O. Asuncion, chief economist at Union Bank of the Philippines (UnionBank), said that despite the “challenging environment,” PSEi rebounded from its lowest close last year at 5,961.99 last Oct. 27 as inflation eased further and the US Federal Reserve (US Fed) hinted at policy rate cuts this year.

However, other analysts said headwinds such as the breakout of the Israel–Hamas war in October last year contributed to the slower year-on-year growth.

“At a local level, investors continued to monitor and sat on the side watching over the rates for better investment opportunities given interest rate fluctuations, indicating risk for investors,” Mr. Asuncion added.

“Prospects for lower inflation rates and interest rates in many countries around the world made investors cautious to enter the market for fixed-income securities and more eager to explore the equities market,” Cid L. Terosa, senior economist at University of Asia and the Pacific (UA&P), said in an e-mail.

“The higher-than-average interest and inflation rates, however, continue to make the fixed-income securities market more attractive than the equities market,” he added.

Demand for Treasury bills reached P300.51 billion with only P112.30 billion total offered amount in the fourth quarter. This was lower than the P220.6 billion seen in the same quarter in 2022, and the P654.9 billion in the third quarter.

The oversubscription amount of P188.22 billion was lower than P384.8 billion in the third quarter.

Similarly, Treasury bonds eased to P461.69 billion from P642.2 billion in the previous quarter. This was higher than the aggregate offered amount of P210 billion in the last three months of last year.

At the secondary bond market, domestic yield went up by 97.5 basis points (bps) on average year on year, according to data from the PHP Bloomberg Valuation Service Reference Rates published on the Philippine Dealing System’s website.

On a quarterly basis, yields grew by 93.5 bps.

“There was growing expectation that the Fed could be winding down its tightening stance and eventually shifting to potential easing by [first half of] 2024. This helped drive a bit of a rally for bonds with US treasuries trading below 4% at one point in December. Local bond yields for [10-year papers] similarly also fell below 6%,” Nicholas Antonio T. Mapa, senior economist at ING Bank N.V. Manila, said in an e-mail.

Makoto Tsuchiya, an economist at Oxford Economics, attributed the rise in long term yields from the Bangko Sentral ng Pilipinas’ (BSP) move to hike rates by 25 bps as a preemptive move to control inflation in effect of the Israel–Hamas war.

“Following the start of the war, the rise in risk premium led long term yields to rise in the Philippines. In addition, flight to safe assets led to a broad-based appreciation of the US dollar, which exerted downward pressures on the peso,” Mr. Tsuchiya said in an e-mail.

The peso kept at the P55 range as it closed at P55.370 against the dollar on the last trading day of December, according to the Bankers’ Association of the Philippines. This was stronger than the P55.755 finish on Dec. 29, 2022.

The BSP said in an e-mail that in the last quarter of 2023, the exchange rate was broadly manipulated by the uncertain monetary policy direction of the US Fed amid easing inflation rates.

“Despite the volatility in the peso-dollar rate, the peso closed the year stronger than the US [dollar] and became one of the better performing currencies in Asia and the ASEAN region,” Mr. Terosa said.

While the geopolitical tensions did not have a direct effect on the country’s financial market, analysts said that the market remained uneasy and cautious amid supply disruptions and price concerns arising from the Israel–Hamas war.

The central bank said that the heightened conflict in the Middle East moved the financial markets as outlook on international oil prices remain uncertain.

“With the volatility of the oil market, as a third world country who heavily relies on international market movements, spillovers are guaranteed to be felt. As a result, investor confidence was subdued toward the end of 2023,” Mr. Asuncion said.

The US Federal Open Market Committee (FOMC) retained their interest rates at the 5.25% to 5.5% range for the fourth straight meeting last January on a wait-and-see stance tracking inflation movements before cutting rates.

Similarly, the BSP kept its benchmark interest rate steady at 6.5% for the fourth consecutive meeting last Feb. 15 to keep watch on the US Fed’s move despite easing inflation.

Since May 2022, the BSP raised a total of 450 bps.

On the other hand, inflation eased further to 2.8% as of January this year, lowest in three years or since the 2.3% print in October 2020 during the height of the pandemic.

This was also an improvement from the 8.7%-high inflation recorded in January last year.

While analysts think the BSP’s move last year to hike interest rates by another 25 bps was “overstated” with inflation slowing, they said that they expect local interest rates to remain high until the US Fed makes a move to cut their policy rates.

INDICATORS TO WATCH OUT FOR
Analysts are pegging the central bank to continue to rein in policy rate cuts as long as the US Fed remains cautious. However, they are expecting policy rate cuts as early as mid-2024 should the US Fed strike a move to also cut rates.

UnionBank’s Mr. Asuncion said that any move by the BSP before the US Fed could add pressure to the peso-dollar rally.

“With a March cut out of the question for the US Fed, we may see a sliver of likelihood in June. Thus, a cut by the BSP may come in August, the only meeting of the Monetary Board in the [third quarter of 2024]. Inflation will continue to be front and center and how it is trending,” he added.

“We believe that the target RRP (reverse repurchase) rate of 6.5% is likely the peak and our baseline view for now is still 50 bps cut in 2024. We believe that inflation will re-accelerate anew before sustainably settling within the BSP’s 2-4% target in [fourth quarter 2024],” Alvin Joseph A. Arogo, economist at Philippine National Bank (PNB), said in an e-mail.

The central bank assured that they remain “forward-looking” when it comes to its monetary policy, keeping track of recent inflation data, their forecasts, and noting risks that could arise surrounding their forecasts.

“While our latest inflation forecasts are lower as risks to inflation have receded amid improved conditions, the BSP considers it appropriate to keep the BSP’s monetary policy settings unchanged in the near term as risks are still mostly skewed to the upside,” the central bank said.

“In view of lingering risks, the Monetary Board deems it necessary to keep monetary policy settings unchanged in the near term. Along with a sustained decline in headline and underlying/core inflation, we also want to see inflation expectations settling well within our inflation target range,” the central bank added.

Analysts are tracking several headwinds that could push the central bank to delay rate cuts until the last quarter of this year.

“We think the major risk remains in inflation, where risks are tilted to the upside. Continued weather-related disturbances, geopolitical tensions and possible related rise in commodity price and shipping rates, and possible minimum wage hikes could all lead to a reacceleration in inflation,” Mr. Tsuchiya said.

In addition to inflation, UA&P’s Mr. Terosa said to look out for the same external pressures felt back in 2022 with the Russia–Ukraine war to the breakout of the Israel–Hamas war last year.

“The possibility of tremendous wage increases this year as recommended by legislators can help pull up inflation beyond the range set by the BSP,” he added.

PNB’s Mr. Arogo said that should conditions improve in the coming months, rate cuts may happen earlier, and a reduction in the RRP rate and above 50-bps cut is possible.

“The Fed also has opened the door for a total 75 bps cut this year and investors believe that it should be more,” he added.

“The BSP has maintained a 100-bps interest rate differential from the Fed rates, and we think this will continue,” Mr. Asuncion said.

“The pursuit of price stability remains the BSP’s primary objective, and we remain committed to keeping inflation within the government’s target range while also ensuring inflation expectations remain anchored. That being said, the BSP continues to monitor current developments and the risks to inflation and remains ready to adjust monetary settings as necessary,” the BSP said.

FOREIGN EXCHANGE (FX) MARKET
BSP: Uncertainty over the path of US monetary policy amid potential upside risks to inflation as well as lingering geopolitical concerns are likely to remain key factors in regional currency movements in the near term. Nevertheless, the country’s improving current account outlook amid the expected increased growth in services exports and the business process outsourcing sector will provide support to the peso. Structural FX flows from overseas Filipino remittances, foreign direct investment inflows as well as recent recovery in travel receipts will likewise influence the domestic currency. The substantial gross international reserves also provide a level of comfort in the peso amid the current challenging global environment.

Mr. Arogo: We believe financial markets will remain volatile due to the possibility of inflation re-acceleration in [second quarter 2024] to [third quarter 2024]. Nevertheless, average inflation in 2024 and 2025 should generally be better. This is because we assume that supply shocks will not be as severe compared to 2022 (Russia-Ukraine war) and 2023 (State of Calamity from November 2022 to April 2023 due to Typhoon Paeng). As such, the USD/PHP trade at a range of P54.5-P57.5.

Mr. Asuncion: We expect the USD/PHP to rewind back to the P53-P54 trading range by year-end 2024. We trace this bullish year-end PHP outlook to the fundamental arguments of: 1) waning USD due to Fed rate cuts; 2) lower net external outflows—a reflection of a 2024 GDP (gross domestic product) growth below 6% that supports a gradual GIR (gross international reserves) buildup; and 3) a rate differential that would buck pressures to compress amid central bank rate cuts with the BSP on course to cut its policy rate in [fourth quarter 2024] and thus, trail the Fed’s rate easing schedule.

Escalating geopolitical risks that can spawn supply chain bottlenecks and higher logistical costs can throw a monkey wrench at this too-good-to-be-true year-end trajectory of a weaker USD/PHP. But as geopolitical risks and drought conditions dissipate at some point (including safe-haven demand), the fundamental backdrop depicted by a weaker USD and Fed easing rates would re-surface and conclude the unfinished business of a weaker USD/PHP.

Mr. Mapa: Local financial markets will once again take their cue from global developments with the Fed rate cut cycle (once called the pivot) still in question.

Mr. Terosa: The peso can become strong this year if the Fed cuts policy rates and inflation will continue to be tame. In the first quarter, the peso will continue to trade sideways as interest rates in the USA remain elevated and inflation remains within the BSP range.

Mr. Tsuchiya: We expect the peso to depreciate a bit in [the first half of] 2024, before strengthening later in the year. Relatively high prices, particularly given assumed reacceleration in prices in [second quarter] due to base effects, would likely keep investors cautious. But once the Fed and the BSP starts cutting rates and inflation rate declines, it should provide support to the peso.

EQUITIES MARKET
BSP: The robust economic growth outturn for 2023, easing inflation, and the positive growth outlook for 2024 are expected to support investor confidence.

Domestic economic activity is seen to remain intact over the medium term. The projected GDP growth path is supported by improved global GDP growth outlook and a projected decline in global crude oil prices, tempered in part by the lagged impact of the policy interest rate adjustments.

Inflation also eased further to 2.8% in January 2024 from 3.9% in December 2023, and the lowest since October 2020 when inflation was at 2.3 percent.

Various multilateral organizations expect the Philippines to be one of the fastest-growing economies in Asia in 2023 and 2024.

Risks to the macroeconomic outlook include a temporary rise in inflation in April to July 2024 due to possible price pressures from lower domestic supply of rice and corn as well as positive base effects. Downside risks to global economic growth include new commodity price spikes from geopolitical shocks — including continued attacks in the Middle East — and supply disruptions and concerns over the property sector in China.

Mr. Arogo: We believe financial markets will remain volatile due to the possibility of inflation reacceleration in [second quarter 2024] to [third quarter 2024]. Nevertheless, average inflation in 2024 and 2025 should generally be better. This is because we assume that supply shocks will not be as severe compared to 2022 (Russia-Ukraine war) and 2023 (State of Calamity from November 2022 to April 2023 due to Typhoon Paeng). As such, PSEi may reach 7,250 as a baseline (8,150 as bull case).

Mr. Asuncion: Our updated PSEi year-end 2024 forecasts using autoregressive distributed lag models (commonly known as ARDL models) yielded a range of 6,900 to 7,100. ARDL models are often used to analyze dynamic relationships with time series data in a single-equation framework. Using the same set of economic variables used previously (PISM, Inflation, RRP, USD/PHP, and Dow), we updated our PSEi using this top-down forecasting method.

Initially using the assumptions from our latest PSEi ARDL forecasting exercise, we update the assumptions looking at the following: 1) PISM or the local version of the S&P Global Philippines Manufacturing PMI (or simply the PMI) monitored by the BSP was assumed to gradually slowdown (as the PMI noted a December 2023 manufacturing growth slowdown, albeit still above the 50-level that indicates an expansionary environment within the manufacturing sector) that will eventually recover as the US Fed eventually embraces monetary policy rate cuts starting third quarter 2024 with an upside of earlier-than-expected cuts; 2) For the inflation trajectory, we assumed our current view seeing El Niño impacts as upside to CPI food especially in the summer months; 3) Consequently, we adopted our BSP monetary policy rate stance that sees the BSP tracking its US counterpart’s monetary policy movements throughout 2024 with a potential 100 bps cut that starts around November 2024; 4) For USD/PHP, we assumed steady currency movements between P55-P56 and an end-2024 a little over P56 to the USD; and 5) Finally, US Dow Jones is expected with a steady rise in [first half of 2024] until rate cuts in June that may propel the said stock market index between [44,000-45,000].

Mr. Mapa: Local financial markets will once again take their cue from global developments with the Fed rate cut cycle (once called the pivot) remains in question.

Mr. Terosa: Possible policy rate cuts in the second half of the year and lower inflation rates will shift greater activity to the equities market. Global and domestic optimism [regarding] economic growth and the slowing down of inflation this year bode well for investors in the equities market.

Mr. Tsuchiya: We think normalizing economic conditions and policy setting should help equity prices, after four consecutive years of poor performance. But with slower economic growth, the recovery will be very gradual, falling short of the pre-pandemic level even by the end of the year.

FIXED-INCOME MARKET
BSP: Bond yields particularly in the short-term are expected to be influenced by the BSP’s monetary policy signals on the back of easing domestic inflation and continued demand expansion. Risks to the outlook include possible spillovers from international bond markets, particularly from the US’ signal of maintaining higher for longer policy rate than what market expects and, as a consequence, a potential fall in asset prices. Continued conflict in Gaza and Israel, compounded by attacks in the Red Sea, ongoing war in Ukraine, and extreme weather shocks, could also result in another episode of supply shocks that could impact global recovery and hence influence trends in global financial markets.

Mr. Arogo: We believe financial markets will remain volatile due to the possibility of inflation re-acceleration in [second quarter 2024] to [third quarter 2024]. Nevertheless, average inflation in 2024 and 2025 should generally be better. This is because we assume that supply shocks will not be as severe compared to 2022 (Russia-Ukraine war) and 2023 (State of Calamity from November 2022 to April 2023 due to Typhoon Paeng). As such, we believe that benchmark BVAL rates by end-2024 will be lower compared to end-2023 levels.

Mr. Asuncion: Even with BSP’s average inflation for 2023 way off with its target range of 2%-4%, the December inflation went down to 3.9% which marked the lowest point for the whole year in 2023. With disinflation continuing and central banks likely to follow Fed’s preference of not rushing into a premature rate cut, the market play would be caution on long-term duration bonds.

Mr. Mapa: Local financial markets will once again take their cue from global developments with the Fed rate cut cycle (once called the pivot) remains in question.

Mr. Terosa: Fixed-income securities will continue to have a positive outlook as long as interest rates remain elevated in the first quarter.

Mr. Tsuchiya: We expect long term rates to rise over the course of the year, despite subsiding inflation and easing monetary policy. This is due to the widening term spread, which is now at a historic low. As monetary policy and economic conditions normalize, the spread should start to recover, exerting a small upward pressure on the long-term rates. — Bernadette Therese M. Gadon

PHL broiler chicken output may rise 2%

March 11, 2024 | 12:02 am

PHILIPPINE broiler chicken production is expected to increase by 2% to 1.85 million metric tons this year amid higher demand, according to the United Broiler Raisers Association.

“That is an increase of 2% already, which is conservative,” group Chairman Elias Jose M. Inciong told reporters last week.

The Philippines is expected to increase its postbroiler chicken output by 3.4% to 1.53 million this year, according to estimates from the US Department of Agriculture.

“In a normal year, the industry can grow from 4% to 7%,” Mr. Inciong said. “But for the purposes of projections, we have placed it at 2% growth.”

He noted that consumers have chosen alternatives such as chicken and egg due to higher pork prices. “Right now, you can see that demand has increased due to the substitution of pork for chicken.”

Prices for pork belly ranged from P340 to P420 per kilo, while pork shoulder is priced at P290 to 270 per kilo as of March 7, according to the Department of Agriculture.

Mr. Inciong said the government should fast-track the approval of vaccines for type H5N1 highly pathogenic avian influenza (HPAI) or bird flu, which continues to threaten the industry.

“They should really work double time on the approval so that all vaccines being used are legal,” he added.

Nine provinces still have active bird flu cases as of Feb. 29, according to the Bureau of Animal Industry.

“The incidence of bird flu right now is low because of massive vaccination,” Mr. Inciong said.

The Department of Agriculture allows vector vaccines, killed/inactivated vaccines and recombinant vaccines.

Priority was given to commercial farms for layer chicken, layer chicken breeders, broiler chicken breeders, free-range breeders, grandparent broiler breeders, and small-hold layer/native chicken, duck, game fowl, turkey and goose farms.

On the other hand, commercial broiler chicken, small-hold broiler, quail, pigeon and exotic bird farms are ineligible. — Adrian H. Halili

Honda Cars Marcos Highway is Dealer of the Year

March 11, 2024 | 12:01 am

VELO_DASH_image15 — PHOTO FROM HONDA CARS PHILIPPINES

HONDA CARS PHILIPPINES, INC. (HCPI) recently held its 2024 Dealer Conference, where Honda Cars Marcos Highway emerged as the Dealer of the Year.

“Through the annual conference, HCPI gives the rightful recognition to its dealers who excel in sales and after-sales operations each year. HCPI awards top-performing individual Honda personnel as well. With this, HCPI hopes the ceremony can motivate and inspire all Honda employees to maintain their hard work and continuously improve to serve customers in the best way they can,” said the company in a release.

Honda Cars Marcos Highway’s victory came after placing third in 2021 and second in 2022. In second and third places this year were Honda Cars Fairview and Honda Cars Alabang, respectively. HCPI also gave out the following awards:

SALES ACHIEVERS
Honda Cars Marcos Highway (Metro Manila)

Honda Cars Baliuag (Provincial)

BEST IN SALES SATISFACTION PERFORMANCE
Honda Cars Manila (Metro Manila)

Honda Cars Angeles-Clark (First, Provincial)

Honda Cars Cebu (Second, Provincial)

Honda Cars Mandaue (Third, Provincial)

SERVICE INTAKE ACHIEVERS
Honda Cars Marcos Highway (First, Metro Manila)

Honda Cars Alabang (Second, Metro Manila)

Honda Cars Makati (Third, Metro Manila)

Honda Cars Pangasinan (First, Provincial)

Honda Cars Cauayan (Second, Provincial)

Honda Cars Batangas (Third, Provincial)

BEST IN SERVICE SATISFACTION PERFORMANCE
Honda Cars Alabang (First)

Honda Cars Shaw (Second)

Honda Cars Cagayan (Third)

TOP SAFETY ADVOCATES
Honda Cars Pangasinan (First)

Honda Cars Bulacan (Second)

Honda Cars Nueva Ecija (Third)

BEST IN AFTER-SALES OPERATIONS
Honda Cars Marcos Highway and Honda Cars Batangas (First)

Honda Cars Fairview (Second)

Honda Cars Alabang (Third)

SPECIAL RECOGNITION
Elijah Dave Villan of Honda Cars Makati

2023 Honda World Skills Contest Representative

Service Advisor Category Champion (Honda Asia and Oceania Skills Contest) and Philippines and Asia and Oceania Representative

Said HCPI President Rie Miyake, “The future mobility Honda dreams of will create a joy and freedom of mobility that enables people to transcend the constraints of time and place, and augment their every possibility. Such mobility will become the power for people who are trying to advance toward their own dreams. Dreams that will move even more people, until there is an endless expanse of new dreams. Through the creation of (the) mobility we dream of, Honda will become ‘The Power of Dreams’ of more and more people. That is how we will move people and society forward.”

For more information, visit https://hondaphil.com.

Big banks’ asset growth eases, loan growth rises in Q4

March 11, 2024 | 12:01 am

THE PHILIPPINES’ big banks saw slower growth in total assets in the fourth quarter of 2023, while loans grew the fastest in three quarters despite high interest rates. Read the full story.

Innovating to cure multiple sclerosis

March 11, 2024 | 12:01 am

Multiple sclerosis (MS) is a condition that occurs when the immune system attacks the brain and spinal cord. Over 1.8 million people worldwide have MS, according to the World Health Organization (WHO). The Philippines is among the countries with a reported 27.8% change in age-standardized rates of MS between 1990 and 2016, which is higher than the global prevalence change of 10.4%.

In MS, the body’s immune system attacks myelin, the fatty insulation that surrounds the nerves in the brain and spinal cord. This disrupts the electrical impulses that are sent through the nerves to the rest of the body and results in scars (plaques or sclerosis).

Symptoms of MS vary from person to person and depend on the location and severity of nerve fiber damage. These include vision problems, difficulty walking or keeping one’s balance, difficulty thinking clearly, numbness or weakness especially in the arms and legs, muscle stiffness, depression, problems with sexual function or urination, and feeling very tired. MS symptoms can come and go or get worse over time, especially with heat or during other infections such as urinary tract or respiratory infections.

There is currently no cure for MS. Specific MS disease-modifying therapies (DMTs) are started as early as possible to reduce the frequency and severity of relapses, slow the disease progression, manage symptoms, and improve quality of life.

For a very long time, it was not known what triggered the immune system to attack myelin, but experts suspected that genetic and environmental factors played a role. MS happens most commonly in young to middle-aged adults, more in females than males, and is more common in higher latitudes, possibly due to sun exposure and vitamin D, the WHO said.

In 2022, scientists identified the Epstein-Barr virus (EBV) as the reason why the immune system attacked myelin in people with MS. EBV is the cause of mononucleosis or glandular fever (also known as the “kissing disease”). This important discovery opened up new treatment options for MS, with clinical trials of antivirals and vaccines against EBV now under way.

Antiviral therapies could reduce EBV levels circulating in patients’ immune systems. A large international study published in the Annals of Neurology in December 2023 found that people living with HIV who were on antiviral drugs were less likely to be diagnosed with MS than the general population. However, full-scale clinical trials are needed to confirm this finding.

Two Phase I clinical trials are currently being conducted to assess the safety and the immune response induced by two EBV vaccines. The American biopharmaceutical company Moderna is conducting a clinical trial on an mRNA vaccine against EBV involving 422 healthy adults aged 18 to 30. On the other hand, the US National Institute of Allergy and Infectious Diseases (NIAID) is trialing a nanoparticle vaccine against EBV involving 82 healthy adults aged 18 to 30.

Both clinical trials are designed to train the body’s immune system to attack an EBV protein known as gp350, which enables the virus to invade immune cells. Strong B-cell antibody responses are an important first-line defense against acute EBV infection. A previous EBV vaccine based on gp350 successfully prevented the development of glandular fever in Phase 2 clinical trials, although it was not able to prevent infection. Ongoing research has highlighted the importance of T-cell-mediated immune responses in long-term effective EBV control. B-cells and T-cells are lymphocytes, a type of white blood cell, that are key disease-fighting components of the immune system.

A study by Australian researchers published last year in Nature Communications describes a new EBV vaccine that is highly effective in laboratory models. The researchers used several strategic design elements to create a more effective EBV vaccine, according to Multiple Sclerosis Australia.

First, they used components from several EBV viral proteins to achieve wide immune coverage across various stages of EBV infection, as well as to stimulate both B- and T-cell arms of the immune system. Aside from utilizing gp350 to stimulate a strong antibody response, the team genetically engineered a protein called “EBVpoly” to activate T-cells thereby enhancing the vaccine’s global potential. They also incorporated an adjuvant, a vaccine ingredient that helps boost immune responses, with a specific focus on directing the vaccine to the lymph nodes, a critical site for immune response activation.

The EBV vaccine induced strong responses against EBV in both arms of the immune system. It was effectively targeted to the lymph nodes by the adjuvant, and immune responses in the lymph nodes were enhanced. Both arms of the immune response to the vaccine were long-lasting and detected beyond six months. Furthermore, the vaccine effectively prevented the spread of an EBV-related cancer in a laboratory model. The study represents a major advance towards an effective EBV vaccine for human use.

Continued investment and re-investment in biopharmaceutical research and development will be crucial in finding medicine and vaccine innovations that will help improve the lives of patients with MS and their families.

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.

PLDT shares up on earnings data, developments

March 11, 2024 | 12:01 am

SHARES in PLDT Inc. increased last week due to strong earnings, with a jump in net income and revenue prospects following significant developments.

Data from the Philippine Stock Exchange (PSE) showed the Pangilinan-led company ranking 11^th in value turnover with P230.65-million worth of 179,345 shares exchanging hands from March 4 to 8.

The telco giant’s shares closed at P1,300.00 apiece on Friday, inching up by 1.1% from its P1,286.00 close on March 1. Year to date, the stock grew by 1.6%.

Manuel Antonio M. Castro, equity analyst at Regina Capital Development Corp. said that PLDT’s earnings would be the highlight for the week.

Earnings were in line with their estimates, which caused PLDT to trade sideways, Mr. Castro said in a Viber message.

“We think the recovery in prices on Friday can be traced to better earnings prospects for [PLDT] this year alongside the broad market rally,” Rastine Mackie D. Mercado, research director at China Bank Securities Corp., said in an e-mail.

He added that PLDT managed to increase on a weekly basis due to upbeat price action on Friday despite the trading in the red due to net foreign selling.

Mr. Mercado noted that the listed telco expects service revenues to grow by mid-single digit this year, faster than 2023’s low-single digit growth.

In 2023, PLDT’s attributable net income jumped to P26.61 billion from P10.49 billion in the prior year while its revenues also grew by P210.95 billion from P204.36 billion previously.

For Mr. Castro, he said that PLDT’s net income rose mostly as it came from a low-base which included one-off expenses.

“For this figure, we’re expecting PLDT to continue to register almost the same year on year growth rate it has been recording in the previous quarters, recording growth mostly from its fiber-based revenues,” Mr. Castro said.

He added that telco business right now has been rather stagnant as there are no major catalysts on the horizon.

Last week, reports showed that PLDT as obtained its first green loan at P1 billion from HSBC Philippines to fund the expansion and upgrade of its fiber network.

This said project will provide support to the company’s internet delivery platforms such as fiber fixed broadband, mobile data services, and carrier-grade Wi-Fi.

These green loans are a form of financing that allows borrowers to use the proceeds specifically for environmentally friendly initiatives.

Other reports also showed that PLDT Enterprise, the business arm of PLDT Inc. will be providing connectivity solutions to Charoen Pokphand Foods Philippines Corp. (CPF Philippines), which is a subsidiary of the Thailand-based conglomerate, Charoen Pokphand Group Company, Ltd.

The said partnership is aimed at improving CPF Philippines’ operations in delivering and distributing their aquatic and agricultural products with PLDT’s advanced technologies.

Another development for the Pangilinan-led telco is that it has established Digico, a digital entity that will leverage data assets from Manuel V. Pangilinan Companies and provide a platform for a serious digitalization effort.

The technology platform can help expand and seamlessly integrate services and capabilities. Additionally, payment and reward systems are expected to enhance the overall user experience.

The payments platform will provide an all-encompassing solution by consolidating the MVP Group’s various payment channels, resulting in a seamless, secure, and flexible experience for both customers and businesses.

These initiatives, said Mr. Mercado, is part of PLDT’s strategy of strengthening its position in the home broadband and enterprise markets given intensifying competition.

“Specifically for the green loan, this would allow PLDT to reaccelerate their fiber network rollout given nascent demand opportunities from unserved and underserved markets in the country,” he said.

Additionally, he said that Maya could benefit from the creation of Digico for this could enhance and expand its revenue base, use cases, and subscriber count given the expansive customer base of the wider MVP Group.

For Mr. Castro, the introduction of Digico is a highlight for the company as the service would add additional source of income for the group, which is welcoming news for investors.

“PLDT has, and will continue to invest heavily in their infrastructure, making their fiber services available to more areas,” he said.

Analysts said dividends may compel market players to consider PLDT.

“Dividends makes for an interesting play for investors as PLDT continues to payout 60% of its core net income to shareholders [and they] have been relatively stable and yields are in the high single digits,” Mr. Castro said.

He placed support levels at P1,275 and resistance levels at P1,315.

For Mr. Mercado, near-term price action could be bullish as investors price in the recently declared dividends.

“We think investor interest for telcos will remain lukewarm in the medium term given the lack of catalysts,” he said.

Additionally, he said that they are optimistic about PLDT’s prospects considering its legacy mobile business is expected to continue its recovery given its market-leading position in mobile subscribers.

Another consideration is the boost of revenues as its data center business is continuously growing, and lastly, PLDT’s efforts to improve free cash flow generation will have a positive impact on dividends.

“Immediate support and resistance for [PLDT] is at P1,273 and P1,315, respectively,” Mr. Mercado said.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Abigail Marie P. Yraola

Philippine banks’ January bad loan ratio climbs

March 11, 2024 | 12:01 am

PHILIPPINE banks’ bad loan ratio worsened in January amid elevated interest rates, according to the central bank.

The industry’s bad loan ratio quickened to 3.44% from 3.23% in December, according to data posted on the Bangko Sentral ng Pilipinas (BSP) website.

Bad loans rose by 2.61% to P460.76 billion from a month earlier and by 13.73% a year ago.

The loan portfolio of Philippine banks fell by 3.46% to P13.38 trillion at the end of January from a month earlier and rose by 8.36% from a year ago. — BMDC

Style (03/11/24)

March 11, 2024 | 12:01 am

1 of 3

L’Oréal brings serum duo to PHL

L’ORÉAL is introducing its Glycolic Bright Serum duo in the Philippines. The duo consists of the Glycolic Bright Face and Eye Serums, which, according to the company, can visibly reduce dark spots by 57%. The Glycolic Bright Face Serum draws inspiration from dermatological peel procedures and is designed for daily use and is suitable for all skin tones and age groups. Infused with niacinamide, it targets dullness, roughness, dark spots, and uneven skin texture and tone. For optimal results, the use of sunscreen is recommended after application of the serum. Meanwhile, the Glycolic Bright Eye Serum, with its ratio of 3% glycolic acid, Vitamin C, and niacinamide, effectively tackles melanin build up around the eyes. The serum, featuring a patented Triple Bead Applicator, is said to reduce under-eye puffiness and boosts microcirculation for visible dark circle reduction day by day. When used together, these serums penetrate the deeper skin layers, accelerating the skin renewal process to eliminate melanin build-up cell-by-cell, resulting in a radiant and brighter complexion, according to the company. The Glycolic Bright Face and Eye Serums are available in Watsons stores nationwide and e-commerce platforms such as Shopee and Lazada.

Uniqlo collaborates with Princess tam-tam

UNIQLO has announced a collaboration with French lingerie brand Princess tam-tam for their 2024 Spring/Summer Collection. The 2024 Spring/Summer collection of loungewear includes colorful floral prints with a tropical mood and gingham patterns. Along with set-up coordinates, wearers can combine their favorite items. Released to coincide with International Women’s Day on March 8, this collection combines comfort and beautiful design. Items include pajamas (P1,490), a wireless bra (P1,499), easy pants (P990), tops (P790), and shorts (P790). The full collection will be available in select Uniqlo stores, and the uniqlo.com online store.

Treats at Robinsons Department Store for Women’s Month

ROBINSONS Department Store is joining the celebration of International Women’s Month with its “We Are Women” campaign. From March 1 to April 15, brands like Lee and JAG; beauty and skincare from Maybelline, L’Oreal, Y.O.U Cosmetics, Bobbie Cosmetics, CosRX, and more are on sale with discounts of up to 60% across all Robinsons Department Store branches nationwide. This is also available via its e-commerce channels on LazMall and Shopee Mall. Customers can also get a free Jelly Pouch (available in three colors) for a minimum purchase of P2,500 on ladies’ items. Snag deals at the one-week We Are Women Fair from March 9 to 15 at Robinsons Place Manila Midtown Atrium Activity Center. Get a chance to participate in fun activities, get freebies, and win prizes while shopping. Robinsons Department Store is also offering flexible payment options with its “Shop Now, Pay Later” plan. Enjoy 0% interest when shopping using any major credit cards, with three-month installment for P3,000 single-receipt purchases and six-month installment for P5,000 single-receipt purchases.

Ever Bilena launches EB Easy line

EVER BILENA has launched the EB Easy, with classic shades aimed for easy looks. The line includes EB Easy Compact Powder, available in Natural and Beige, for P290. This powder provides lightweight coverage and sets makeup for a flawless finish. The EB Easy Lip & Cheek Tint (P190) multitasks for the lips and cheeks, in shades of Sexy Red, Pretty Pink, and Juicy Berry. The EB Easy Eyebrow Pencil (P150) is infused with Cacao Seed Butter and Castor Oil for nourished, defined brows, in taupe or brown. To match, they also have the EB Easy Velvet Eyeliner Pencil (P150). It also has castor oil for smooth application, and is available in black. There’s also the EB Easy Matte Foundation with SPF 6, made with Glycerin and Shea Butter, which comes in shades of Sand Oriental, Radiant Beige, and Warm Vanilla. Finally, finish off with EB Easy Liquid Lipstick (P190) in shades of Deep Blush, Sweet Raspberry, Golden Brown, and Absolute Red. Ever Bilena’s new collection is available at Ever Bilena Direct Sales distributors, SM Supermarkets, Savemore, SM Hypermart, Waltermart and W Department Stores, Puregold, Robinsons Department Stores, Alfamart, the Gaisano Group of Stores, and LCC Department Stores an Supermarkets. They can also be found online at Ever Bilena’s flagship stores on Shopee, Tiktok, and Lazada.

Momzilla Fair at Rockwell

Momzilla, a company that specializes in baby goods and children’s items, invites mothers to the Fifth at Rockwell for parent-friendly offerings at up to 70% off from over 250 brands on March 16-17 at the Momzilla Fair. Beyond shopping, there will also be free-play and activities for children facilitated by Kaleidoscope Kids at the Booboo Proof Kids Village. Nursing moms are welcome to take a breather and recharge at the Milk Lounge by Milk Easy, complete with comfy seating, breastfeeding essentials, and a snug spot for little ones. There will also be talks on newborn care, breastfeeding, pregnancy, postpartum challenges, and more, in partnership with The Parenting Emporium. Reserve a seat by sending a Viber message to 0917-152-5586. Tickets cost P100 per head. For more information, follow @MomzillaPH on Instagram, Facebook, TikTok, or visit momzillaph.com.

Listed banks’ price dip in Q4 as market braces for rate cuts

March 11, 2024 | 12:01 am

By Lourdes O. Pilar, Researcher

MAJORITY of the bank stocks dropped quarter-on-quarter in the final three months of the year as investors get ready for possible interest rate cuts in the latter half of 2024.

The Philippine Stock Exchange index (PSEi) gained 2% on a quarter-on-quarter basis in the final three months of 2023, a reversal from the 2.3% decline in the third quarter. Year on year, PSEi dipped by 1.8%.

Meanwhile, the financials subindex, which included the banks, fell by 6.6% quarter on quarter at the end of the October-December period, a turnaround from the 0.8% growth recorded in the third quarter. The subindex, however, rose by 5.7% annually.

Ten banks’ stock performance declined out of 15 banks covered in the fourth quarter last year. Leading the quarter-on-quarter decliners were Security Bank Corp. (SECB, -10.6%), East West Banking Corp. (EW, -9.3%), and BDO Unibank, Inc. (BDO, -8.0%).

Five banks were able to gain with their banks’ stock performance in the fourth quarter: Philippine Trust Co. (PTC, 20%), Asia United Bank, (AUB, 6.4%), China Banking Corp. (CHIB, 1.6%), Philippine Business Bank (PBB, 1.2%), and Philippine National Bank (PNB, 0.3%).

Aggregate net income of universal and commercial banks went up by 16.3% to P334.27 billion as of end-December from P287.34 billion last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Gross total loan portfolio of these big lenders rose by 8.8% to P12.85 trillion as of end-December from P11.80 trillion a year ago.

The big banks’ gross nonperforming loans (NPLs) ratio, however, edged up to 2.94% in December from 2.85% in December the previous year.

The big banks’ net interest margin (NIM) — a ratio that measures banks’ efficiency in investing their funds by dividing annualized net interest income to average earning asset — grew to 4.52% in the fourth quarter from 3.43% recorded in the same period in 2022.

Despite healthy earnings growth, the banks covered by Maybank Investment saw stock prices weakening in the fourth quarter was a result of some investors pricing in the impact of potential rate cuts in 2024 to the banks’ margins and the slower industry lending growth.

“We, on the other hand, remain positive on the sector, particularly on the big three (BDO, BPI, and MBT), given their scale and pricing power which gives them the advantage on the corporate lending segment, as well as the capacity to fund huge infrastructure projects,” Rachelleen A. Rodriguez, head of research for Maybank Investment Banking Group, said in an e-mail.

“The Philippine banking system remained relatively stable with strong capital and liquidity buffers and improving asset quality. Most banks kept their credit standards generally unchanged for lending to businesses and consumers in the fourth quarter of 2023,” said Toby Allan C. Arce, head of sales trading at Globalinks Securities and Stocks, Inc., in an e-mail.

Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in an e-mail that key drivers banks growth in the fourth quarter were interest rate movements, economic indicators such as gross domestic product (GDP) growth and unemployment rates, regulatory changes, and market sentiment towards the financial sector.

“Interest rate hikes or cuts by central banks, for instance, can impact net interest margins and profitability. Economic indicators reflect the health of borrowers and overall loan demand. Regulatory changes, especially in terms of capital requirements and compliance costs, can affect operational efficiency and profitability,” added Mr. Limlingan.

Data from the Philippine Statistics Authority (PSA) showed the Philippine economy grew by 5.6% in 2023, falling short of the government’s full-year target of 6-7%. It eased from the 7.6% expansion in 2022.

Preliminary results from the PSA’s Labor Force Survey showed the average unemployment dropped to a record low of 4.3% rate last year, it was lower than 5.4% logged in 2022.

This was the lowest jobless rate in almost two decades since the PSA revised the definition of unemployed in April 2005 to refer to Filipinos aged 15 years and older without a job and are available for work and actively seeking one.

“Continued loan growth and margin expansion drove higher revenues. This was accompanied by lower loan loss provisions for Bank of the Philippine Islands (BPI) and Metropolitan Bank & Trust Co. (MBT). As for Union Bank of the Philippines, despite its strong topline performance, its profitability was dragged down by much higher increases in operational expenses and provisions,” said PNB Research in an e-mail.

The Monetary Board hiked interest rates 450 basis points (bps) from May 2022 to October 2023, bringing the key interest rate to a 16-year high of 6.5% to control inflation.

Latest central bank data showed gross outstanding loans by big banks reached P12.85 trillion at end-December, 8.9% increase from P11.80 trillion in 2022.

BANK STOCK PICKS
In choosing bank stocks, analysts said that investors should look for banks’ loan growth and the consistency of NIM expansion.

“We continue to look to loan growth and net interest margin as the factors driving bank lending income, and thus earnings growth. For the most part, the banks who have been able to keep funding cost low and manage this well, thereby maintaining consistent NIM expansion, are the ones that outperform,” Charmaine Co, research analyst at COL Financial Group, Inc., said in an e-mail.

Mr. Limlingan said that when considering buying bank stocks in the future, investors and traders should weigh several factors.

“Firstly, they should assess the economic environment, including interest rate expectations and GDP growth projections, as these directly impact bank revenues and loan quality. Secondly, regulatory developments, especially those affecting capital adequacy ratios and lending practices, should be monitored closely. Thirdly, competitive positioning within the banking sector, including market share, product offerings, and digital capabilities, is crucial for long-term growth prospects,” he said.

For Ms. Rodriguez, she said that investors should look into the bank’s pricing power, deposit franchise, and lending appetite.

“Scale gives banks pricing power, which we believe is essential to preserve margins. Strong deposit franchise would also help contain the impact of elevated funding costs; we prefer banks with higher current and savings account ratios,” said Ms. Rodriguez.

On the lending side, she recommends going for the banks with the strongest high-yielding consumer loan growth push and the most appetite and scale to take on infrastructure loan demand given the government’s more aggressive infrastructure push this year.

INFLATION
In response to persistent inflationary pressures, the central bank is expected to maintain a hawkish stance on monetary policy in the near term, aimed at curbing inflationary forces. While this strategy may benefit banks through increased interest income, prolonged high interest rates could potentially lead to a rise in loan defaults and NPLs.

“Even if the Monetary Board decides to maintain its current stance, the stringent monetary policy is likely to exert downward pressure on economic growth,” said Mr. Arce.

It is anticipated that the central bank will prolong its pause on rate adjustments until inflation expectations are firmly anchored.

“Looking ahead, the central bank is expected to maintain its cautious approach well into 2024, with the possibility of considering rate cuts only towards the latter part of the year, contingent upon favorable economic conditions and subdued inflationary pressures,” Mr. Arce added.

“This 2024, we expect earnings to expand by 11.1% year on year against 22.5% year on year growth in 2023. The increase in earnings is expected to be driven by higher lending income as loan growth continues and net interest margin expansion tapers off,” said Ms. Co of COL Financial.

“We expect to still see growth in select names due to still healthy expected income growth to be driven by robust consumer lending, improved cost-to-income ratios from the banks’ digital push, and lower overall credit costs.” Ms. Rodriguez of Maybank said.

“For 2024, we forecast earnings growth of around 10% for index banks,” PNB said.

Pocofino Hong Kong expansion under way

March 11, 2024 | 12:01 am

By Aubrey Rose A. Inosante

PHILIPPINE coffee brand Pocofino said it has line up several store expansions this year, including one in Hong Kong store and the delayed Ninoy Aquino International Airport (NAIA) project last year.

“We’re also considering ourselves as an international company, so we’re also looking to expand in Hong Kong, which has already started,” Pocofino Director Tuesday S. Angliongto told BusinessWorld on the sidelines of an event on Friday.

Pocofino has major brands in Bonifacio Global City (BGC), Greenhills Promenade and Wack Wack Road in Mandaluyong City.

In line with its aggressive push for expansion, Ms. Angliongto said the company’s next locations will be at Ellis condominium in Makati City, Eastwood and Gateway Mall.

There are kiosk-like Pocofino branches at Greenhills and NAIA called Chiosco Pocofino.

Ms. Angliongto said Pocofino is considering setting up a branch on Boracay Island in Aklan province, but they would focus on Metro Manila in the first half while operations are still small.

“We had some inquiries already for outside Manila,” she said. “We just need to get our backend ready to support these new businesses and partnerships.”

Ms. Angliongto said last year’s performance was positive even if several expansion plans did not proceed due to “external circumstances.”

Pocofino is in partnership with restaurants such as Frankie’s New York Buffalo Wings, Raintree Hospitality, Wolfgang’s Steakhouse, Mama Lou’s Italian Kitchen and more.

Ms. Angliongto said Pocofino has considered an initial public offering but is “not yet there.”

Its first brick-and-mortar shop in BGC runs 24 hours and sees people on night shifts, students studying late and business process outsourcing workers.

She also said Pocofino is eyeing a price increase this year.

“And especially since we work with imported coffee, the shipping is up this year because of the conflicts in the area,” she said.

Pocofino is known for its espresso shots and use of authentic Italian blends.