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Yields on gov’t debt drop

YIELDS on government securities (GS) traded in the secondary market fell last week following Tuesday’s auction of fresh 10-year bonds.

GS yields, which move opposite to prices, dropped by 3.7 basis points (bps) on average week on week, based on PHP Bloomberg Valuation Service Reference Rates as of Aug. 18 published on the Philippine Dealing System’s website.

Rates were mixed across all tenors last week as yields on the 91- and 182- Treasury bills (T-bills) declined by 9.26 bps and 5.55 bps to 5.7649% and 5.9996%, respectively. Meanwhile, the 364-day T-bills went up by 5.28 bps to fetch 6.3285%.

The belly of the curve went down as yields on the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) fell by 2.78 bps (6.2707%), 3.72 bps (6.2849%), 5.73 bps (6.2851%), 7.88 bps (6.2929%), and 7.80 bps (6.3815%), respectively.

At the long end, the rates of the 10-, 20-, and 25-year debt papers inched down by 1.21 bps (6.5527%), 1.54 bps (6.6839%) and 0.46 bp (6.6999%), respectively.

Total GS volume traded on Friday amounted to P10.68 billion, higher than the P4.65 billion seen on Aug. 11.

“Yields declined over the week as the new 10-year bond issuance auctioned last Aug. 15 saw strong market participation garnering over [twice] the demand oversubscription into the Bureau of the Treasury’s (BTr) P30-billion bond offering,” Lodevico M. Ulpo, Jr., vice-president and head of Fixed Income Strategies at ATRAM Trust Corp., said in an e-mail.

Yields declined last week following a recent bond maturity, a bond trader said, adding that the latest central bank decision did not have an immediate effect on the market.

Last week, the BTr fully awarded the new 10-year bonds it auctioned off as total bids amounted to P66.824 billion.

The bonds were awarded at a coupon rate of 6.625%. Accepted yields ranged from 6.4% to 6.625% for an average of 6.558%.

Meanwhile, the Bangko Sentral ng Pilipinas (BSP) kept benchmark interest rates steady for a third straight meeting on Thursday, but signaled it is prepared to resume tightening if needed amid risks to inflation.

The Monetary Board left its overnight reverse repurchase rate unchanged at a near 16-year high of 6.25%, as expected by 13 economists in a BusinessWorld poll. Interest rates on the overnight deposit and lending facilities were maintained at 5.75% and 6.75%, respectively.

The BSP has raised borrowing costs by 425 basis points (bps) from May 2022 to March 2023 to tame inflation.

“Post the BSP action, we anticipate markets to focus on global economic data and market movements as medium-term disinflation expectation by the BSP is tempered by near term inflationary risks on food, climate, and energy,” Mr. Ulpo said.

He added that global curve’s steepening may temper the persistent demand for duration, but this may be temporary as the market looks forward to better global and local monetary conditions in 2024 and 2025.

“We expect demand for bonds and duration to persist albeit at specific yield levels given broadly anchored front-end yields,” he said.

For this week, Mr. Ulpo said the 15-year bond reissuance will likely test the market’s resolve.

On Wednesday, the BTr will offer P30 billion in reissued 20-year papers with a remaining life of 15 years and five months. — A.M.P. Yraola

Philippines: Balance of payments (BoP) position

THE OVERALL balance of payments (BoP) deficit sharply narrowed to $53 million in July, as more dollars flowed out of the country to pay for the government’s foreign debt. Read the full story.

SM Investments dips as postponed reclamation project prompts sell-off

SHARES in SM Investments Corp. slipped last week due to a market sell-off prompted by the postponement of the reclamation projects in Manila Bay and the disappointing second-quarter economic growth.

The Sy-led conglomerate was the most actively traded stock with a total of 25.12 million shares worth P21.61 billion having exchanged hands on the trading floor from Aug. 14 to 18, data from the Philippine Stock Exchange showed.

Week on week, SM Investments’ share price declined by 2.5% to P860.00 per share on Friday from its Aug. 11 closing price of P882.50 apiece. Since the start of the year, its share price has fallen by 4.4%.

Philippine National Bank Equity Research Department Head Jonathan J. Latuja said in an e-mail that SM Investments stock’s decline accelerated due to a sell-off amid the disappointing second-quarter of gross domestic product (GDP) growth and regulatory industry-related suspension of reclamation projects in Manila Bay.

“SM Investments is the largest index stock by market capitalization size and typically used as a proxy by investors who want exposure in the Philippine growth story. Sentiment towards the stock turned pessimistic when the weaker-than-expected second-quarter GDP results came out,” said Mr. Latuja.

“Another reason for the sell-off is related to the government’s suspension of reclamation projects in Manila Bay which directly affects SM’s real estate subsidiary, SM Prime Holdings, Inc., given their 360-ha. (hectare) reclamation project in Pasay City,” added Mr. Latuja.

In a Viber message, Mercantile Securities Corp. Head Trader Jeff Radley C. See also said that investors reacted negatively to the government’s announcement of halting reclamation projects on Manila Bay.

“The delay of the planned REIT offering wasn’t really a big influence to the price movement due to the market condition,” said Mr. See.

During the PSE STAR event held last week, the conglomerate announced the postponement of the market listing of its real estate investment trust (REIT) to next year.

Earlier this year, SM Prime said that it was planning to launch its REIT portfolio by the second half of the year.

The company’s target REIT offering is likely to be valued at around $3.5 billion to $4 billion and initially composed of 12 to 15 assets, which will come from the 82 malls it currently has, as 30 to 35 malls are now fully matured.

SM Investment also said that it fully stopped its reclamation operations after the government suspended all Manila Bay reclamation projects to review the environmental and social effects.

In a previous news briefing, President Ferdinand R. Marcos, Jr. suspended all reclamation projects in Manila Bay ahead of a review of their environmental and social effects.

The Philippine Statistics Authority earlier reported that the country’s GDP grew at 4.3% in the second quarter, slower than the 6.4% growth in the first quarter and 7.5% a year ago. It was the slowest growth in over two years.

The slower-than-expected growth as of June was dragged by elevated inflation, the impact of interest rate hikes, and a decline in government spending.

For the second quarter, SM Investment’s attributable net income amounted to P19.23 billion, up 30.7% from P14.72 billion in the comparable three months last year.

Its consolidated revenues also increased by 15.1% to P148.18 billion during the period.

In the first semester, its attributable net income rose 31.8% to P36.53 billion from P27.71 billion last year. Its top line rose by 18% to P286.24 billion in the first half.

“We project a full-year 2023 revenue growth of 13% to P583.4 billion,” Mr. Latuja said.

Mr. See pegged the stock’s support and resistance levels this week at P850.00 and P945.50 per share, respectively.

“Overall, SM group did pretty well but market sentiment weighed down its quarterly results. The stock might move sideways for now,” Mr. See said. — Lourdes O. Pilar

Gov’t expects military pension system to be self-sustaining in 20 years

FILIP ANDREJEVIC-UNSPLASH

By Aaron Michael C. Sy and Beatriz Marie D. Cruz, Reporters

THE GOVERNMENT is expecting the military and uniformed personnel (MUP) pension system to be self-sustaining after 20 years if the proposed bill hiking contributions would be implemented, especially with new entrants in the uniformed services.

According to a proposed bill by the House of Representatives ad hoc committee, all MUPs would now be required to contribute a bigger percentage of their salaries to the pension fund, with new entrants contributing the largest percentage of their salary at 9%.

Under the proposed measure, incremental increases for active personnel would have them contribute 5% of their salary to the fund for the first three years, 7% for the next three years, and 9% thereafter.

The effort will be matched by a larger government contribution to the fund at about 11% of the MUP standard salary. Finance Undersecretary Maria Cielo Magno said this would be equivalent to about P40-P50 billion in the first year of implementation.

Finance Undersecretary Maria Luwalhati C. Dorotan-Tiuseco said the new schedule of contributions from the new entrants will shorten the spending of the government on the pension versus the 60 years it would take for it to be self-sustaining.

Finance Secretary Benjamin E. Diokno said this will help free up the government to spend on other purposes such as health or education.

Meanwhile, Mr. Diokno also said that the Government Service Insurance System (GSIS) will be given assets to liquidate for the management of the MUP pension system.

While there is no decided amount yet on the capital that GSIS will need, Mr. Diokno cited P9 trillion in unfunded liability that could factor into the budget.

Meanwhile, defense and security analyst Chester B. Cabalza said the proposed reform could be revised further to differentiate percentages according to the nature of an MUP’s work.

Mr. Cabalza, founding president of Manila-based International Development and Security Cooperation, said over the weekend that the new pension system will certainly impact the promotion and recruitment system of the MUP because of the increasing percentage of contributions.

However, it would be a scourge to new entrants, since their contributions under the proposal is quite heavy. “If that’s the case, young MUPs will not stay longer in the service and will use the opportunity as a stepping stone to high paying jobs in private firms and abroad,” he said.

Mr. Cabalza said contribution percentages could be set per organization of MUPs, as “all of them differ in the number of recruits, promotions, and retirees,” he said.

“Since there will be differing pension system based on the rate of percentages due to their own respective force structure, the benefits will matter as it becomes more competitive and fruitful to their career or professional development,” he said.

Hansley A. Juliano, a political economy researcher studying at the Nagoya University’s Graduate School of International Development in Japan, urged for more consultations with veteran MUPs themselves.

“Making the reform sustainable, equitable and fair to the affected personnel does require a clear setting of what is the general quality of life of that retired personnel really have,” Mr. Juliano said in a Facebook Messenger chat.

Surviving Beatles join Dolly Parton on ‘Let It Be’ cover

LOS ANGELES — Paul McCartney and Ringo Starr, the two living members of The Beatles, have reunited for a cover of their 1970 hit “Let It Be” on country singer Dolly Parton’s coming rock album.

Parton released the single on Friday ahead of the November debut of her album Rockstar. Mr. McCartney sang and played piano while Mr. Starr played drums on the recording.

Two other music luminaries joined the collaboration, Ms. Parton said. Peter Frampton played guitar and Mick Fleetwood of Fleetwood Mac did percussion.

“I mean, seriously, how much better does it get?” Ms. Parton wrote on X, formerly known as Twitter. The Rockstar album was inspired by Ms. Parton’s induction into the Rock & Roll Hall of Fame last year. It will include nine original songs and 21 covers with an all-star list of collaborators, including Elton John, Miley Cyrus, Stevie Nicks, Debbie Harry, Joan Jett and Chris Stapleton. — Reuters

Sub-P1M crossover Geely GX3 Pro now here

PHOTO BY KAP MACEDA AGUILA

GEELY IN THE PHILIPPINES surely made its bones with the Coolray — a popular crossover that further helped to shore up the reputation of Chinese car makers.

Sojitz G Auto Philippines (or Geely Philippines), local distributor of the Hangzhou, Zhejiang-headquartered automaker, looks to build on its popularity and growing consumer base in the country with the release of the GX3 Pro. The A-segment crossover is said to target the “young and entry-level market,” with a price point well below the P1-million mark.

Measuring 4,005-mm long (with a 2,480-mm wheelbase), 1,760-mm wide, and 1,575-mm tall, the GX3 Pro is powered by a 1.5-liter, 16-valve DOHC mill with DVVT (Dual Variable Valve Timing). Mated to either a five-speed manual (S trim) or CVT (Comfort trim), the engine submits 102hp and 142Nm — the latter achieved from 4,400rpm to 4,800rpm. It clears the ground by 185mm. The five-seater is said to boast a maximum cargo volume of up to 400 liters.

The GX3 Pro gets three driving modes (Normal, Eco, and Sport) and rolls on 16-inch alloys. It wears halogen headlamps, with the Comfort variant getting Auto Headlight Control. Both trims have LED daytime running lamps, power side mirrors, a glass-printed antenna, and silver roof rails.

Inside, its instrument panel boasts a 3.5-inch multi-information display, while the eight-inch infotainment screen can support mobile devices through CarbitLink. Audio content is expressed via two speakers on the S variant and six speakers on the Comfort. The driver can manually adjust his/her seat in six ways, while the front passenger gets four-way manual adjustment.

For safety, Isofix anchors are available in the rear seats, and both trims receive driver and passenger air bags, electronic brake distribution with brake assist, a reversing camera, rear parking sensors, low-tire pressure warning, and a central locking system. The Comfort additionally features traction and stability control, hill start assist, hill descent control, cruise control, and an anti-theft system with immobilizer.

“This model holds a strategic significance for Geely, as it aims to capture an entirely new customer base, particularly Gen Z. With its enticing introductory pricing and an emphasis on an enjoyable driving experience, the GX3 Pro is poised to play a pivotal role in expanding our reach and achieving five-digit annual sales figures,” said Geely Philippines President and CEO Yugo Kiyofuji.

During the launch event held recently, Geely Philippines also stressed its efforts and focus on improving after-sales experience with the launch of the so-called G-Serv+. “(We) take pride in having garnered over 20,000 customers to date, a number that is set to grow exponentially. Over the past year and beyond, we have dedicated significant efforts to revamp our after-sales operations,” continued Mr. Kiyofuji. “With G-Serv+, we are confident that Geely owners will enjoy peace of mind throughout their ownership journey, further solidifying our customer base and fostering a sense of belonging within the Geely family.”

The Geely GX3 Pro is priced at P698,000 for the S variant, and P798,000 for the Comfort. It is available in four exterior colors: red, white, blue, and gray. Geely Philippines says that each purchase comes with a five-year/150,000-km warranty and one year of free emergency roadside assistance. — Kap Maceda Aguila

Empowering patients for enhanced healthcare

FREEPIK

In recent years, patient-centered care has been the center of discussion in the healthcare community as well as a buzzword for excellence in care delivery. Yet patients still have little influence in matters that impact them the most, observed the New England Journal of Medicine (NEJM).

In its publication “The Power of Patient Voice,” NEJM added that patients are said to be the center of healthcare but too often their voices are ignored or put to the side when decisions are being made. These decisions include those relating to their health, their treatment plans, the cost of their care, and more. It asserted that care is patient-centric if input from patients themselves is a core part of the process.

Patient-centered healthcare has emerged in the past decades as an approach for better-functioning healthcare systems. It represents a shift from “doctor knows best” to a new pact between patients and healthcare professionals, where the patient is actively involved in any decisions about their wellbeing. To cite just one example, patients can provide feedback to healthcare professionals about how a medicine is working for them and which ones may be most fit for them.

Patient empowerment is both a pre-requisite for and an outcome of patient-centered healthcare — a goal as well as a process, according to the European Patients Forum (EPF). EPF defines patient empowerment as a “process that helps people gain control over their own lives and increases their capacity to act on issues that they themselves define as important.” Aspects of empowerment include health literacy, shared decision-making, and self-management.

Recognizing the vital importance of a strong patient voice in enhancing healthcare systems, the Philippine Alliance of Patient Organizations (PAPO) in partnership with the Asian Institute of Management (AIM) co-developed the Post-Graduate Certificate Course on Healthcare Leadership and Management.

This first-of-its-kind customized program under the AIM School of Executive Education and Lifelong Learning gives patient leaders the opportunity to hone their leadership skills in creating a people-centered approach to healthcare. It aims to enhance the capabilities of patient leaders and empower them to effectively lead and transform their organizations. By equipping them with the necessary skills and knowledge, patient leaders can play pivotal roles as members of local health boards, actively participate in decision-making processes, and contribute to the improvement of healthcare systems at the grassroots level.

The Universal Health Care (UHC) Act mandates the creation of local health boards that are responsible for setting the overall health policy directions and strategic thrusts, including the development and implementation of the integrated strategic and investment plans of the province-wide and city-wide health system. These health boards also oversee and coordinate the integration and delivery of health services; manage the Special Health Fund (SHF); and exercise administrative and technical supervision over health facilities and health human resources within their respective territorial jurisdiction.

“We want the patient’s voice to be represented in the local health boards, so we need to be prepared. This post-graduate course further enhances our leadership, strategic thinking, and empathy through design thinking,” said PAPO President Karen Alparce-Villanueva.

During the graduation ceremony, five groups presented their Action Learning Projects, which are real-life case studies designed to help ensure classroom learning is implemented in the real world. The patient leaders discussed Project Padayon, a toolkit guide for local health officials in organizing and partnering with patient groups; developing strategic partnerships for people-centered healthcare; automating medical records through mobile application development; increasing access to financing for patients with rare diseases; and enhancing the patient experience in accessing financial assistance through the Malasakit Centers.

PAPO trustee Mel Lamsin said that the course gave them more confidence as it equipped them with knowledge on how to frame problems and propose solutions in a better way.

“We stand with PAPO, AIM, and the broader community in championing patient-centered healthcare for Filipino patients. We laud PAPO for bringing this vision closer to reality by equipping patient leaders through this postgraduate course,” said Andreas Riedel, President and Managing Director, MSD Philippines.

Along with MSD, Roche Philippines, and Boehringer Ingelheim Philippines provided support to the strategic collaboration between PAPO and AIM.

Patient-centric care may be the latest byword for quality healthcare but for us to get there, patients must be part of the conversation and decision-making. Borrowing from PAPO on its discussion about patients: “It is not about us, without us.”

 

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.

PFDA opens processing facility at Navotas fish port

THE Philippine Fisheries Development Authority (PFDA) inaugurated the new processing facility at the Navotas Fish Port Complex, which will be operated by a women’s organization producing smoked fish.

In a statement, the PFDA said that Eco-Friendly Women of Navotas Fish Port, Inc. will run the processing facility.

The PFDA also added 44 food stalls to the freshly renovated Market 3.

“This new infrastructure also aims to provide more employment opportunities and an additional sources of income for the members of the association,” the PFDA said.

The PFDA is also looking into constructing additional regional fish port (RFP) complexes and establishing modern fish trading centers elsewhere in the Philippines.

Six ports are being upgraded in Davao, Iloilo, Zamboanga, Camaligan, Camarines Sur, Sual, Pangasinan, as well as Navotas.

Fish landed at RFPs totaled 42,814.19 metric tons in May, down 4.26% from a month earlier, mainly due to the early onset of the rainy season. — Sheldeen Joy Talavera 

India faces record low rains in August, posing threat to summer crops

MUMBAI — India is heading for its driest August in more than a century, with scant rainfall likely to persist across large areas, partly because of the El Niño weather pattern, two weather department officials told Reuters on Friday.

August rainfall, expected to be the lowest since records began in 1901, could dent yields of summer-sown crops, from rice to soybeans, boosting prices and overall food inflation, which jumped in July to the highest since January 2020.

The monsoon, vital for the $3-trillion economy, delivers nearly 70% of the rain India needs to water farms and refill reservoirs and aquifers.

“The monsoon is not reviving as we had expected,” said a senior official of the India Meteorological Department (IMD), who sought anonymity as the matter is a sensitive one.

“We are going to end the month with a significant deficit in the southern, western, and central parts.”

India is on course to receive an average of less than 180 mm (7 inches) of rainfall this month, he added, based on rains so far and expectations for the rest of the month.

The weather authorities are expected to announce August totals of rainfall and the forecast for September on Aug. 31 or Sept. 1.

India received just 90.7 mm (3.6 inches) in the first 17 days of August, nearly 40% lower than normal. The month’s normal average is 254.9 mm (10 inches), he said.

Earlier, the IMD had anticipated a rainfall deficit of up to 8% in August. The lowest August rainfall on record was in 2005, with 191.2 mm (7.5 inches).

Monsoon rainfall is expected to improve over the next two weeks in the northeast and some central regions, but dry conditions in northwestern and southern states are likely to persist, said another IMD official.

“Normally, we experience a dry spell of five to seven days in August,” said the official, who also spoke on condition of anonymity. “However, this year the dry spell has been unusually prolonged in southern India. The El Niño weather pattern has begun to impact the Indian monsoon.”

El Niño, a warming of waters that usually stifles rainfall over the Indian subcontinent, has emerged in the tropical Pacific for the first time in seven years. This monsoon has been uneven, with June rains 10% below average but July rains rebounding to 13% above average.

Summer rains are crucial as nearly half of India’s farmland lacks irrigation. Farmers typically start planting rice, corn, cotton, soybeans, sugarcane and peanuts, among other crops, from June 1, when the monsoon begins to lash the southern state of Kerala.

The lengthy dry spell has led to extremely low soil moisture, which could inhibit growth of crops, said Harish Galipelli, director of trading firm ILA Commodities India Pvt Ltd. 

“Crops are in dire need of rainfall,” he added. “Any further delay could lead to reduced yields.” — Reuters

Philippines ranks 49th in Energy Vulnerability Index

The Philippines ranked 49th out of 100 countries in the first Global Energy Vulnerability Index by London-based market research company Euromonitor International. The index ranks countries to help leaders and businesses assess and benchmark a country’s energy security, providing insights into potential risks, challenges and opportunities in the markets where they operate or plan to expand into in the future. In the region, the Philippines was the fifth most resilient after Indonesia (8th overall), China (28th), Myanmar (38th), and Japan (48th).

How PSEi member stocks performed — August 18, 2023

Here’s a quick glance at how PSEi stocks fared on Friday, August 18, 2023.

Diokno: Tuition-free college education ‘unsustainable’

THE UNIVERSITY of the Philippines Diliman campus in Quezon City. — UP.EDU.PH 

By Keisha B. Ta-asan, Reporter

FREE ACCESS to state university education is “unsustainable,” Finance Secretary Benjamin E. Diokno said on Saturday, signaling a possible push to amend a signature piece of legislation signed into law during the Duterte administration. 

Speaking at a forum organized by the University of the Philippines School of Economics, Mr. Diokno said he had been opposed to Republic Act (RA) 10931, or the Universal Access to Quality Tertiary Education Act of 2017, when he was part of the economic team in the previous government.

Mr. Diokno, who had served the last government as budget secretary and central bank governor, also called the law “anti-poor” because “there are more poor people who do not attend college.”  

“This is really a subsidy to those who can pay for their college education,” Mr. Diokno said. “Plus, it really consumes a lot of funds.”  

The law provides eligible students free tuition and renders them exempt from other fees charged by state universities and colleges (SUCs), as well as local universities and colleges.

It was passed at a time when government finances were looking solid, but before it took on massive debt to fund its pandemic containment measures.

According to Mr. Diokno, if the government wants to help the poor, it should focus more on enhancing basic education.

“If you improve elementary and secondary education, then you increase the chances of (gaining entry into) SUCs. So, I think we should focus more on (the basic education system) rather than the SUCs,” he said.

Mr. Diokno also noted that if a fixed number of students enter SUCs and benefit from the free tuition fee, funding for the law’s entitlements will be “adequate.”

“But now, a lot of students want to enroll, but drop out after a year in college. Nasasayang ang pera (the money is wasted),” he said.  

Under the 2024 National Expenditure Program, education was granted an allocation of P924.7 billion, 3.3% higher than this year’s budget.

This includes P51.12 billion to implement RA 10931, P12.04 billion for textbooks and other instructional materials and P11.71 billion for feeding programs in schools. 

The Department of Education will see its budget rise 5.37% to P758.6 billion in 2024.

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