FOREIGN DIRECT INVESTMENT (FDI) net inflows to the Philippines dropped to the lowest in five months in June, as investors worry over slowing economic growth, elevated inflation, and high interest rates. Read the full story.
BEIJING — China’s financial regulator on Sunday reduced the risk weighting it attaches to insurance companies’ holdings of blue-chip shares and tech stocks, encouraging them to invest more in the country’s lagging stock market.
The National Administration of Financial Regulation said on its website that the risk weighting for CSI300 Index constituents would be reduced to 0.3 from 0.35, while that for stocks listed on Shanghai’s tech-focused STAR Market would be cut to 0.4, from 0.45.
A lower risk weighting frees up more capital for insurers to invest.
In addition, the watchdog reduced the risk weighting it assigns to investments in Real Estate Investment Trusts, which in China channel money mainly into infrastructure projects.
It also set a relatively low risk weighting for private equity investments in China’s strategic and emerging sectors.
China has unveiled a slew of measures to boost investor confidence and revive its stock market. They include halving stamp duty on stock trading and slowing the pace of initial public offerings. — Reuters
LOS ANGELES — The final album recorded by late “Margaritaville” singer Jimmy Buffett will be released in November, his record label said on Friday as it released three singles including a collaboration with Paul McCartney called “My Gummie Just Kicked In.”
Buffett cut the record, titled Equal Strain On All Parts, earlier this year before he died from skin cancer on Sept. 1 at age 76. The 14-song album will debut on Nov. 3.
“Gummie,” a celebration of marijuana-laced candy, was inspired by a dinner party attended by Buffett, former Beatle McCartney and their wives, Mailboat Records said in a press release. McCartney wound up playing bass on the track, which Buffett wrote.
Two other singles — “Like My Dog” and “Bubbles Up” — also were released on Friday.
Buffett went from Key West beach bum to billionaire behind the always-on-vacation Margaritaville commercial empire with legions of fans known as Parrotheads. — Reuters
Here’s a quick glance at how PSEi stocks fared on Monday, September 11, 2023.
THE PESO inched down against the dollar on Monday as investors were cautious ahead of the release of August US consumer price index (CPI) data this week.
The local currency closed at P56.69 versus the dollar on Monday, weakening by six centavos from Friday’s P56.63 finish, data from the Bankers Association of the Philippines’ website showed.
The local unit opened Monday’s session flat at P56.63 per dollar. Its intraday best was at P56.53, while its weakest showing was at P56.695 against the greenback.
Dollars traded went down to $1.19 billion on Monday from the $1.62 billion on Friday.
“The peso weakened amid market caution prior to the release of the US consumer inflation report for August 2023,” a trader said in an e-mail.
August US CPI data will be released on Wednesday.
The peso inched down due to signals from the Bangko Sentral ng Pilipinas (BSP) that inflation could return to its 2-4% target in the first quarter next year instead of this year, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.
BSP Governor Eli M. Remolona, Jr. last week said he expects inflation to be back within its target range early next year amid lingering price risks.
He added that the BSP could upwardly revise its full-year inflation forecast of 5.6% for 2023 at their Sept. 21 policy meeting.
For Tuesday, the trader said the peso could depreciate further ahead of key US data releases.
The trader sees the peso moving between P56.60 and P56.85 per dollar on Tuesday, while Mr. Ricafort sees it ranging from P56.60 to P56.80. — AMCS
PHILIPPINE SHARES inched up on Monday ahead of the release of August US consumer price index (CPI) data that could affect the US Federal Reserve’s policy decision this month.
The benchmark Philippine Stock Exchange index (PSEi) went up by 10.80 points or 0.17% to end at 6,233.74 on Monday, while the broader all shares index rose by 3.22 points or 0.09% to close at 3,363.45.
“Philippine shares were bought up as investors look to a fresh new batch of economic data that could influence price action activity. For the week ahead in the US, investors are looking forward to key inflation data,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a Viber message.
“Local stocks moved sideways with no major catalyst to move the market either way. Investors also opted to stay on the sidelines, anticipating the release of US CPI data, which is expected to provide clearer insights into the direction of US monetary policy,” AB Capital Securities, Inc. Vice-President Jovis L. Vistan said in a Viber message.
August US CPI data will be released on Wednesday.
The US CPI rose 0.2% in July, matching June’s gain. On an annual basis, the CPI advanced by 3.2%.
The US central bank raised borrowing costs by 25 basis points (bps) in July, bringing its target rate to a range between 5.25% and 5.5%.
It has hiked rates by 525 bps since it began its tightening cycle in March last year.
The Federal Open Market Committee will hold its policy meeting on Sept. 19-20.
“Meanwhile, it’s going to be a relatively quiet week for us here in the Philippines. The only economic data due for this week is the remittances [report],” Mr. Limlingan added.
The Bangko Sentral ng Pilipinas (BSP) is scheduled to release July remittance data on Friday.
In June, cash remittances coursed through banks inched up by 2.1% to $2.81 billion from $2.75 billion in the same month last year, BSP data showed.
For the first six months of 2023, cash remittances rose by 2.9% to $15.79 billion.
Sectoral indices were split on Monday. Mining and oil climbed by 188.54 points or 1.87% to 10,266.96; industrials went up by 94.04 points or 1.06% to 8,910.16; and services rose by 4.17 points or 0.27% to 1,538.10.
Meanwhile, financials fell by 5.20 points or 0.29% to 1,788.26; property declined by 2.77 points or 0.1% to 2,586.13; and holding firms dropped by 4.32 points or 0.07% to 5,979.78.
Value turnover went down to P3.62 billion on Monday with 639.89 million shares changing hands from the P3.85 billion with 445.34 million issues seen on Friday.
Decliners outnumbered advancers, 103 to 95, while 41 names closed unchanged.
Net foreign selling rose to P504.93 million on Monday from P347.89 million on Friday.
For this week, Mr. Vistan placed the PSEi’s support at 6,120 and resistance at 6,350. — S.J. Talavera
THE Philippine Economic Zone Authority (PEZA) said it tallied P10.8 billion worth of investment commitments, representing proposed expansions by current locators.
In a statement, the investment promotion agency said that its five-day mission to Tokyo obtained commitments from Terumo Corp. (P1 billion), Taiyo Yuden Co., Ltd. (P1.6 billion), TDK Corp. (P7.2 billion), and Almex Technologies (P1 billion).
PEZA Director General Tereso O. Panga said the planned expansions reflect strong demand for the companies’ products.
“PEZA will make sure that the country will receive these investments, as we have a small window to get (started with) the manufacturing of new high-tech products in the Philippines given the competitiveness of the industry,” he added.
Taiyo Yuden’s investment plan covers 2023 and 2024. Manufacturing company TDK’s first expansion will run between 2023 and 2026, while a second expansion will start in 2024.
The mission, which returned on Sept. 2, included meetings to pursue investment leads. In one case, PEZA met with Sumitomo Corp. and First Philippines Industrial Park, Inc.
PEZA added that it explored collaboration with Tokyo’s Kiraboshi Bank and the Organization for Small & Medium Enterprises and Regional Innovation, known as SME Support.
“Talks with the SME Support led to the possible inclusion of the Philippines in the conduct of CEO Business Meetings that will allow direct linkage between Japanese SMEs and PEZA-registered business enterprises,” PEZA said.
PEZA said the proposed partnership with SME Support will help Japanese SMEs locators meet their staffing needs.
SME Support Senior Director-General Soma Hirohisa said the organization is “looking forward to the possible partnership with PEZA to produce more success stories for Japanese SMEs, similar to those who set up manufacturing facilities in the ecozones to export these products to Japan and other global markets.”
PEZA said it also entered into a memorandum of understanding (MoU) with NEOJAPAN that will allow it to use the latter’s desknet’s NEO and Appsuite, free of charge until the end of 2023.
“The use of these groupware solutions will allow PEZA to digitize, automate, and centralize most of its internal documents and processes under a secure IT environment,” PEZA said.
The MoU will also help PEZA become the first Philippine government agency to use the NEOJAPAN product as a standard operating office system. — Justine Irish D. Tabile
THE Philippines will seek to become a top two destination within the region for foreign direct investment (FDI) by 2028, Trade Secretary Alfredo E. Pascual said.
“Our dream target is to (have) the second highest FDI in ASEAN,” Mr. Pascual said in an interview with ANC on Monday.
He said the projections are based on the results of government investment promotion missions overseas.
In a separate interview on the sidelines of the Asian Regional Conference in Support of Accelerated Life Sciences Innovation on Monday, Mr. Pascual said that the numbers suggest there is a basis to aspire to higher FDI.
“As of now the total is $71 billion… So, it is possible to aspire to be at a higher level,” he said, citing the combined value of investment leads generated by the Department of Trade and Industry (DTI) and the Board of Investments (BoI).
Mr. Pascual said that for this year, 16 big-ticket projects worth $1.2 billion are expected to flow in, nine of which are already operational.
He said that the remaining seven are registered with the BoI or the Philippine Economic Zone Authority and are awaiting implementation.
In total, he said 15 projects are being processed via the BoI’s Green Lane.
Some of the proposed projects are not registered but covered by “letters of intent or memoranda of understanding with their local partners, so it’s (only) a matter of time the investment (is realized),” he said. — Justine Irish D. Tabile
By Adrian H. Halili, Reporter
RICE RETAILERS said that the P15,000 in cash aid to compensate them for complying with price controls on the grain is equivalent to a few 25-kilogram sacks of rice.
Rosie B. Quinquin, a rice retailer at Mega Q Mart in Quezon City, said the subsidy is likely to run out before the temporary price controls expire.
“Baka mga ilang sako ng bigas lang ang mabibili nun, hindi nga ata tatagal ’yun sa amin (It might buy a few sacks of rice, and won’t last long), she told BusinessWorld.
Another rice seller said retailers are also dealing with higher market rents, making selling rice a losing proposition.
“Kung kukwentahin, parang kukulangin dahil sa lahat ng mga babayarin dito hindi siya makukuha sa P15,000,” Jennifer A. Tomas said.
The retailers said a 25-kilogram sack of rice costs between P2,000 and P2,500.
“I-ilang sako lang ang mabibibili nun, kasi sa P2,000 pataas mga seven na sako lang ang mabibili ko, pero mahigit pa kasi sa P2,000 ang isang sako (I can only buy seven sacks at P2,000 but less so if the price is more than P2,000), Ms. Tomas said.
Last week, the government issued Executive Order No. 39, which temporarily capped rice prices at P45 per kilo of well-milled rice and P41 for regular-milled.
The Department of Social Welfare and Development (DSWD) meanwhile, was ordered to disburse up to P15,000 in cash aid to small rice retailers.
Both Ms. Quinquin and Ms. Tomas said that they have yet to receive the subsidy.
Geny F. Lapina, an economist from the University of the Philippines-Los Baños, said some rice retailers may end up not receiving the subsidy.
“Given the tight fiscal space… you cannot give it to everyone, so (they) should prioritize the poorest,” Mr. Lapina said in an online briefing.
He added that the government should also aid to poorer farmers and households.
Also on Monday, the DSWD distributed the subsidy to 337 beneficiaries, which had been listed by the Departments of Trade and Industry and Agriculture. The recipients are from Pateros, Navotas, and Parañaque City.
About 15 rice retailers received the subsidy in Pateros, 161 in Navotas, 129 in Parañaque, and 32 in Zamboanga del Sur.
RAW SUGAR production could decline by 10-15% depending on the severity of the ongoing El Niño, though the official production estimate of 1.85 million metric tons (MT) remains above year-earlier levels.
The estimates were contained in the Sugar Regulatory Administration’s (SRA) Sugar Order No. 1, covering the 2023-2024 crop year.
The SRA said the El Niño has been determined by the government weather service to be active throughout most of the crop year, which runs between Sept. 1, 2023 and to Aug. 31, 2024.
Official weather projections put the peak of the El Niño at late 2023 and early 2024.
SRA Administrator Pablo Luis S. Azcona told reporters last week that sugar production could benefit from an estimated 3,000-hectare increase in land planted to sugar cane.
Sugar production dropped to about 1.8 million MT, in the recently concluded crop year, from 2.1 million MT a year earlier.
The sugar regulator said that 100% of domestic market sugar production will be allocated to millers.
“SRA may from time to time adjust the percentage allocation/distribution to other classes of sugar in accordance to its power and function and to establish domestic, export and reserve allocations,” it said.
It added that total domestic withdrawals from inventory for the crop year are estimated at 2.2 million MT. — Adrian H. Halili
THE SENATE approved on third reading on Monday a priority bill outlining measures designed to revive the salt industry.
At Monday’s plenary session, the vote was 22 in favor with no abstentions and no votes against for Senate Bill No. 2243, which will lead to the drafting of a Philippine Salt Industry Development Roadmap.
The bill also seeks to promote investment in salt industry development programs, as well as in research and development into new salt production technology.
The bill proposes to establish a national salt council responsible for preparing the five-year salt industry roadmap.
If passed, the measure would reclassify salt as an agricultural product, giving the Department of Agriculture jurisdiction over the industry. The salt industry is currently being overseen by the Department of Environment and Natural Resources.
Senator Cynthia A. Villar, who wrote the bill and heads the committee on agriculture, has said that the salt industry should be developed as an export enterprise and as a means for fisherfolk to supplement their income.
The bill, which is one of the 20 priority measures before Congress, aims to reduce reliance on imported salt.
The House of Representatives passed its version of the measure on May 29. — John Victor D. Ordoñez
THE Philippines is expected to post gross domestic product (GDP) growth of 5.8% in 2024 due to weak external demand, elevated inflation, and high interest rates, Nomura Global Markets Research said.
The forecast downgrades to a previous estimate of 6.3%. The new projection is also below the government’s growth target of 6.5-8% next year.
“The revision to our 2024 GDP forecast reflects weakening external demand, led by China, Europe and the US, while persistently high inflation weighs on household purchasing power and consumption spending,” Nomura Global said in a research note written by analyst Euben Paracuelles.
Nomura Global said that 5.8% still reflects a slight improvement from a likely 5.3% expansion this year due to higher public infrastructure spending.
It had earlier slashed its Philippine growth forecast to 5.2% for this year from 5.5%. The projection is below the 6-7% government GDP target for this year.
The economy grew by a slower-than-expected 4.3% in the second quarter, from 6.4% in the first quarter and 7.5% a year earlier.
This was the weakest reading in over two years, bringing average growth to 5.3% in the first half.
“However, private investment faces strong headwinds from high interest rates and weak business sentiment,” Nomura Global said.
Nomura Global also expects the current account deficit to hit the equivalent of 4.1% of GDP this year, before easing to 3.7% in 2024.
This reflects “weak export growth, rising capital goods imports due to infrastructure projects and higher food imports to address domestic shortages, at a time when prices are likely to rise as a result of El Niño and protectionist measures by large food exporters, particularly on rice,” Nomura Global said.
The central bank reported a current account deficit of $4.3 billion in the first quarter, equivalent to 4.3% of GDP, up from $4 billion a year earlier. The current account deficit is projected to hit $15.1 billion, or 3.4% of GDP, this year.
Meanwhile, Nomura Global also raised its Philippine inflation projection to 5.9% for this year from 5.3% previously. It also hiked its 2024 inflation forecast to 3.6% from 3.1%.
“This takes into account the higher-than-expected outturn in August but also the fact that food price inflation risks are materializing early,” it said.
Inflation unexpectedly accelerated for the first time in seven months in August, as food and transport costs rose. Headline inflation accelerated to 5.3% in August from 4.7% in July, ending six months of decline.
Inflation in the seven-month period averaged 6.8%, still above the central bank’s revised 5.6% full-year forecast.
The Bangko Sentral ng Pilipinas (BSP) is unlikely to end its policy pause despite stronger August inflation.
“We maintain our forecast for BSP to leave its policy rate unchanged at 6.25% over the next few months, but see a rising risk of the BSP resuming its hiking cycle,” Nomura Global said, adding that the BSP will likely maintain its hawkish stance.
The Monetary Board last month paused for a third straight meeting, keeping its key policy rate at a near-16 year high of 6.25%. From May 2022 to March 2023, the central bank hiked benchmark interest rates by 425 basis points.
“A continued surge in food and energy prices and a deeper global growth slowdown are downside risks to growth,” Nomura said.
On the other hand, higher foreign direct investment, more structural reforms and accelerated implementation of infrastructure programs may boost economic growth. — Keisha B. Ta-asan
