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BSP to roll out digitized regulatory platform to select banks by January

THE BANGKO SENTRAL ng Pilipinas (BSP) is set to roll out a digitized regulatory and supervisory engine by January 2023 to further enhance the financial sector’s cyber resilience.

The central bank said in a memorandum signed by BSP Deputy Governor Chuchi G. Fonacier that it will deploy the Advanced SupTech Engine for Risk-Based Compliance (ASTERisC*) among selected BSP-supervised financial institutions (BSFIs) by Jan. 1, 2023 as it seeks to digitalize its supervisory and regulatory processes.

ASTERisC* is a unified regulatory and supervisory technology (regtech and suptech) solution that streamlines and automates reporting and compliance assessment for BSFIs’ cybersecurity risk management. It supports the BSP’s end-to-end process on cybersecurity supervision.

“With this platform, BSFIs can directly access and transmit cybersecurity-related reports and information in real-time. The system likewise enables deeper analyses and correlation capabilities to help the BSP implement risk-based and proactive supervisory decisions and set policy direction on cybersecurity,” the central bank said.

The BSP said ASTERisC* will initially be deployed to BSFIs that meet its criteria.

“The system scope, features and functionalities may be further expanded in the future to cover additional participating BSFIs, other key risk areas and/or modules in line with supervisory priorities and/or requirements,” it said. 

“BSFIs not yet covered in the initial implementation shall continue to submit the regulatory reports through the default processes established by the BSP,” it added.

The central bank said qualified BSFIs will be able to access the system through a cloud-based web application by providing the needed credentials. Users can then submit reports and assessments related to cybersecurity through web-based forms.

Users will also have access to a dashboard that shows the status of submissions, provides summary reports, e-mail notifications for report due dates, and BSP acknowledgement receipts.

To use ASTERisC*, BSFIs should at least have access to the internet, the latest versions of various web browsers, and a mobile device for authentication.

“The BSP shall directly coordinate with the participating BSFIs for the provision of login credentials authentication setup and schedule of training on the use of the system,” the central bank said. 

Each BSFI participant will be provided with a single user account at the initial phase of deployment of the platform. Additional accounts may be requested from the Technology Risk and Innovation Supervision Department (TRISD) of the BSP. 

Users will be required to complete the ASTERisC* training hosted by the TRISD before creating an account.

“Reporting through ASTERisC* shall be effective starting Jan. 1, 2023. Nonetheless, BSFIs may access the system in advance to prepare the IT Profile data for submission on Jan. 25, 2023,” the BSP said. — K.B. Ta-asan

Autospeedygo Group to open Peugeot Bulacan before yearend

IMAGE FROM AUTOSPEEDYGO

Peugeot Bulacan, located at the boundary of Marilao and Bocaue along the automotive row of MacArthur Highway, is expected to open before the end of 2022. Its showroom can accommodate at least five vehicles of the French car maker. An offsite after-sales facility will be built within 500 meters of the showroom. While waiting for the opening of the “boutique showroom,” Bulaceños are invited to check out and test-drive the latest Peugeot vehicles at SM Marilao. Peugeot Bulacan is Autospeedygo’s 13th dealer franchise, and its first Peugeot outlet.

UN-backed investors set fresh targets in sustainable food shift

ELAINE CASAP-UNSPLASH

LONDON —  United Nations (UN) – backed group of global financial institutions including Dutch lender Rabobank set out a series of company-specific environmental and social targets aimed at helping drive a shift to a more sustainable food system.

Set by a group of 11 firms in the Good Food Finance Network, including Nuveen Natural Capital and Mexican development lender FIRA, the new goals cover objectives such as stopping deforestation and expanding the use of agroforestry.

“This new generation of high ambition targets can enable a cleaner greener food and agriculture sector,” said Eric Usher, Head of the UN Environment Programme Finance Initiative, which helped convene the group and approved the targets as ambitious.

Ahead of the COP27 global climate talks in Egypt in November, investors are increasingly focusing on links between a healthy food system and efforts to fight global warming and preserve biodiversity.

“The wider finance sector must use COP27 to supersize its ambition and grow a more sustainable food and agriculture sector,” Mr. Usher said.

Among the group’s targets, which cover a collective $113 billion in assets, Rabobank said it would aim to lock away 150 million tons of carbon emissions per year across its agricultural holdings by 2030.

FIRA, one of the largest sources of financing to the rural sector in Mexico, said it aimed to increase the amount of money it invests in adapting to climate change to $3.6 billion by 2030.

The Global Environment Facility, a multilateral funder of biodiversity protection, said among its targets it would aim to restore 420,000 hectares of degraded land, and improve land management practices across more than 20 million hectares.

Nuveen, which manages around 3 million acres of land, said it aimed to expand its policy on zero deforestation across its portfolio by the end of 2023, and would complete a natural capital inventory of all its properties.

“Identifying what a state-of-the-art, credible target to finance sustainable food and agriculture looks like is a vital part of addressing the urgent climate and food crises,” said Wiebe Draijer, co-chair of the Good Food Finance Network and former CEO from Rabobank.

“Today’s new generation of high ambition targets provide a significant step forward in meeting that challenge.” Reuters

Rock ‘n’ roll pioneer Jerry Lee Lewis, 87

AMERICAN rock pioneer Jerry Lee Lewis — JERRYLEELEWIS.COM/

AMERICAN rock pioneer Jerry Lee Lewis, who was torn between his Bible-thumping upbringing and his desire to make hell-raising rock ‘n’ roll with hits such as “Great Balls of Fire” and “Whole Lotta Shakin’ Goin’ On,” has died at the age of 87.

Mr. Lewis passed away from natural causes at his home in Desoto County, Mississippi, with his wife, Judith, by his side, his publicist said. The musician had been ill in recent years and suffered a stroke in 2019.

Like Chuck Berry’s guitar, Mr. Lewis’ piano was essential in shaping rock ‘n’ roll in the mid-1950s. He was part of the dazzling Sun Records talent pool in Memphis, Tennessee, that included Elvis Presley, Johnny Cash, Carl Perkins, and Roy Orbison. Mr. Lewis outlived them all.

Mr. Lewis, also known by the nickname “The Killer,” was one of the first performers inducted into the Rock ‘n’ Roll Hall of Fame in 1986 and was so influential that when John Lennon met him backstage at a show in Los Angeles, the Beatle dropped to his knees and kissed Mr. Lewis’ feet.

Mr. Lewis filled his albums not only with ground-breaking rock but with gospel, country and rhythm and blues such as “Me and Bobby McGee” and “To Make Love Sweeter for You” as he endured a life often filled with alcohol, drugs and tragedy. His music was sometimes overshadowed by scandals — including his marriage to his 13-year-old cousin Myra in 1957.

In his prime, he performed with daring, originality and a lewd wild-man stage demeanor that thrilled his young fans as much as it agitated their parents. Typically, Mr. Lewis would kick away his piano bench and bang the keyboard with his foot while his long wavy blond hair flopped in his face.

According to legend, Mr. Lewis was once so upset that Chuck Berry had been chosen to close a show over him that he finished his set with a move that was hard to top — setting the piano on fire and walking off.

“I’m a rompin’, stompin’, piano-playing son of a bitch,” Mr. Lewis once told Time magazine in his Louisiana drawl. “A mean son of a bitch. But a great son of a bitch.”

FAMOUS COUSINS
Mr. Lewis was born Sept. 29, 1935, in Ferriday, Louisiana, and grew up poor with two cousins also destined for fame — television evangelist Jimmy Swaggart and country singer Mickey Gilley.

He became interested in the piano at age four and by 10 was sneaking in to roadhouses to hear blues performers. He absorbed a variety of musical influences, especially the Jimmie Rodgers records that belonged to his father, a farmer who went to prison for bootlegging.

Mr. Lewis’ family attended the Assembly of God church and his mother ensured he was thoroughly informed about the evils of liquor, honky-tonks, and promiscuity. But Mr. Lewis was intent on experiencing them first hand and began playing piano in bars while still a teenager. His mother, upset by the idea of her son performing the devil’s music, sent him to a Bible college in Texas.

It turned out to be a brief stay, with Mr. Lewis reportedly being dismissed from the school for playing a boogie-woogie version of “My God Is Real” during an assembly. The incident showed the dichotomy that Mr. Lewis had to live with.

“The man is tortured,” Myra Lewis told People magazine. “Jerry Lee thinks that Jerry Lee is too wicked to be saved.”

As Mr. Lewis himself once put it, “I’m dragging the audience to hell with me.”

MAKING IT IN MEMPHIS
Mr. Lewis had a son and was on his second marriage before he turned 20, even though he had not divorced his first wife. He was determined to be a musician and made his way to Memphis.

In 1957 he recorded two rollicking chart-topping hits for Sun — “Whole Lotta Shakin’ Goin’ On” and “Great Balls of Fire,” which he had been reluctant to record because he considered it blasphemous — that helped define early rock ‘n’ roll. Mr. Lewis quickly followed with more hits — “You Win Again,” “Breathless,” and “High School Confidential.”

His career came to a halt during a 1958 tour of Britain. Journalists discovered Mr. Lewis was now married to Myra, the daughter of his bass player, who not only was 13 years old but also was his cousin. News coverage was so intensely negative that the tour was called off.

Back in the United States, Mr. Lewis’ career was not revived until he shifted genres and recorded country hits such as “Another Place, Another Time,” “What’s Made Milwaukee Famous (Has Made a Loser Out of Me),” and “She Even Woke Me Up to Say Goodbye.”

Mr. Lewis’ string of hits was matched only by the tragedies in his life. His young son Steve Allen Lewis drowned in 1962 and another son, Jerry Lee, Jr., died in a 1973 car accident at 19.

After a divorce from Myra in the early 1970s, he married Jaren Pate in 1971 but she drowned in 1982. They had been separated for eight years but not divorced.

After only a few months of marriage, his next wife, Shawn Michelle Stevens, was found dead of a drug overdose in their home in 1983. Eight months later he started another stormy marriage with sixth wife Kerrie McCarver that lasted 20 years before they divorced and he married his seventh wife, Judith Brown, in 2012.

GUNPLAY
In 1976 Lewis accidentally shot his bass player and that same year was arrested drunk outside Mr. Presley’s Graceland mansion in Memphis with a loaded pistol, demanding to see Mr. Presley.

Mr. Lewis, who lived much of his later life on a ranch in Nesbit, Mississippi, also endured costly battles with US tax officials, a nearly fatal perforated ulcer, and a painkiller addiction that landed him in the Betty Ford Clinic.

In his later years he settled down but biographer Rick Bragg recalled interviewing Mr. Lewis for his 2014 book Jerry Lee Lewis: His Own Words. Mr. Lewis showed Mr. Bragg the pistol he kept under his pillow in a bedroom pockmarked with bullet holes and a Bowie knife stuck in the door.

“I don’t think Jerry Lee Lewis had to exaggerate his life one bit to make it interesting,” Mr. Bragg told the Atlanta Constitution Journal. “He really did make Elvis cry. He really did turn over more Cadillacs than most people purchased in the state of Mississippi.”

Mr. Lewis’ late recordings included featured guests such as Jimmy Page, Bruce Springsteen, Mick Jagger, Keith Richards, Neil Young, John Fogerty, Ringo Starr and other rockers he had influenced.

In addition to wife Judith, Mr. Lewis is survived by four children, a sister, and many grandchildren. — Reuters

Yields on gov’t debt rise

YIELDS on government securities (GS) traded in the secondary market climbed last week following the result of Treasury bureau’s bond auction and hopes of slower rate hikes by the US Federal Reserve.

Bond yields, which move opposite to prices, rose by an average of 14.23 basis points (bps) week on week, according to the PHP Bloomberg Valuation Service Reference Rates as of Oct. 28 published on the Philippine Dealing System’s website.

Rates climbed almost across the board, except that of the five-year Treasury bonds (T-bonds), which dropped by 1.74 bps to 6.7549%.

Yields at the short end of the curve went up, with the 91-, 182-, and 364-day papers gaining 19.49 bps, 15.52 bps, and 96.44 bps to 3.7503%, 4.5345%, and 4.888%, respectively.

At the belly, the two-, three-, four-, and seven-year Treasury bonds saw their rates climb by 1.64 bps (5.9251%), 2.38 bps (6.3028%), 0.29 bp (6.5533%), and 0.27 bp (7.0822%), respectively.

At the long end, rates of the 10-, 20-, and 25-year papers went up by 5.76 bps (7.4399%), 8.24 bps (7.2864%), and 8.25 bps (7.2794%).

Total GS volume traded increased to P4.62 billion on Friday from P4.58 billion seen on Oct. 21.

“Most trading interest was centered around the 13-year auction from the BTr (Bureau of the Treasury). Volatility in global rates continued to be a factor as well,” ATRAM Trust Corp. Head of Fixed Income Jose Miguel B. Liboro said in an e-mail.

“The 13-year auction cleared towards the high side at an average rate of 7.88%… At these levels, notwithstanding ongoing volatility and the likelihood of inflation to inch higher over the short term, investors began to see value,” Mr. Liboro said.

The government raised just P26.139 billion from its offer of reissued 25-year papers last week, less than the programmed P35 billion, even as total bids reached P46.988 billion.

The bonds, which have a remaining life of 12 years and 11 months, were awarded at rates ranging from 7.625% to 8%, bringing the average to 7.887%, which was 3.8 bps lower than the 7.925% quoted for the bond when it was first offered on Sept. 28, 2010 and also 11.3 bps below the 8% coupon for the issue.

“Since there is no local data, GS tracked the movements in global bond space. Last week, US Treasury yields dropped on increasing bets for a dovish pivot or a possible pause in rate hikes in the near future,” the bond trader said in a Viber message.

Weakening economic data in the United States last week affirmed expectations that the Fed might begin to consider smaller rate hikes, with officials also flagging the need to consider slower tightening to prevent a recession.

The market widely expects the Fed to raise rates by 75 bps for the fourth straight time at its Nov. 1-2 meeting and to continue hiking until next year. The Fed has increased borrowing costs by 300 bps since March.

For this week, the bond trader said yields may continue to go up on expectations of another rate hike by the Bangko Sentral ng Pilipinas (BSP) next month.

BSP Governor Felipe M. Medalla last week said the central bank could match the Fed’s rate hikes point by point to support the peso and prevent its depreciation from adding to inflation risks.

He said the Monetary Board may raise benchmark interest rates by 75 bps at their Nov. 17 meeting if the Fed delivers a hike of the same magnitude at their own review this week.

The BSP has hiked benchmark rates by 225 bps since May.

Meanwhile, Mr. Liboro expects reduced liquidity and market activity given the shortened trading week.

“With inflation likely to breach the 7% level for October, we could see a retracement higher once more over the coming weeks, but we expect yields to consolidate at these levels with buying interest starting to build up once more,” he said.

He said yields could peak next month and move lower towards the end of the year on expectations of slower inflation by 2023.

A BusinessWorld poll of 14 analysts last week yielded a median estimate of 7.2% for Philippine headline inflation in October.

If realized, this would be faster than the 6.9% seen in September and the 4% last year. It would also be the quickest in over 14 years or since the 7.8% print logged in December 2008, which was during the height of the global financial crisis.

This would also mark the seventh straight month that inflation breached the central bank’s 2-4% target.

The Philippine Statistics Authority will release October consumer price index data on Friday, Nov. 4.

Philippine headline inflation averaged 5.1% in the first nine months of 2022. The BSP expects inflation to average 5.6% this year and 4.1% in 2023. — L.O. Pilar

All-new Honda ADV 160 scoot priced at P164K

PHOTO FROM HONDA PHILIPPINES, INC.

HONDA PHILIPPINES, Inc. (HPI) recently launched the all-new ADV 160 scooter, available in all Honda 3S dealerships nationwide. It is the latest addition to the brand’s ADV line, noted for a commanding look, tires with semi dual-purpose pattern, and comfortable ride. The latest model features upgrades on all fronts from specs to styling and more, “making it one of the most anticipated motorcycle launches in the Philippines,” according to an HPI release.

The ride is now equipped with a new-generation 157cc, four-valve, liquid-cooled, eSP+ engine, offering advanced technology with four-valve mechanism and low-friction technologies to provide power and fuel efficiency. It delivers a maximum power of 15hp at 8,500rpm and torque of up to 14.7Nm at 6,500rpm, which, said HPI, should prove more than enough output for a reliable ride.

The ADV 160 features the new Honda Selectable Torque Control (HSTC), an advanced feature that prevents the slipping of the rear tires — especially on wet and slippery roads. Also set to prevent wheel locking and increase stability in case of sudden braking is the anti-lock braking system (ABS) with wavy disc brakes. The system provides better braking ability as well as an aggressive look. A new USB charging port has also been added for more convenience. The motorcycle’s twin rear suspension is equipped with a Showa subtank to maximize stable damping. It also makes suspension performance more responsive by separating oil and air chambers, making each turn smoother and lighter to the touch.

An anti-theft alarm and answer-back system through the Honda Smart Key System make it easier to find the motorcycle in a parking location while ensuring its safety, while an idling stop system reduces fuel consumption and increases efficiency. A simple throttle operation launches the engine back into full action.

The new model boasts a higher windscreen, adjustable to two levels to provide wind resistance in any situation, whether for city rides or long-distance travel. The seat height is now also made lower from 795mm to 780mm to ensure easy ground reach and better footing.

All-LED lighting includes LEDs in the rear with an X pattern that gives a futuristic vibe. To ensure safety, the Emergency Stop Signal (ESS) feature is designed to flash turn signals quickly when braking suddenly at high speed. This warns drivers of vehicles coming from behind, alerting them to take precautions and avoid a collision.

The all-new ADV 160 also include a new full-digital LCD meter panel with a sophisticated display and a new large luggage box whose capacity has been increased from 28 liters to 30 liters. The tank capacity has been increased from 8.0 liters to 8.1 liters to provide a longer cruising range. It also offers the convenience of having an additional designated area on the fuel tank lid to place the fuel tank cap while fuel is being pumped.

The scooter is available in three color variants: Matte Gunpowder Black Metallic, Matte Solar Red Metallic, and Matte Pearl Crater White with a suggested retail price of P164,900. For more information, visit www.hondaph.com and follow Honda Philippines, Inc. on Facebook and Instagram (hondaph_mc). Call (02) 8581-6700 to 6799 or 0917-884-6632.

In Britain’s inflation crisis, healthy diets are a casualty

IVE ERHARD-UNSPLASH

LONDON — Fresh vegetables and fish are falling off the menu. Packaged pizzas and processed meat are the dishes of the day.

Many British households are turning away from healthier foods as rampant inflation pushes them towards cheaper processed meals, according to consumer data and experts who are worried about the nation taking a nutritional nosedive.

Joanne Farrer used to regularly serve her three children roast beef dinners or stews packed with fresh vegetables. Now she’s more likely to give them chicken nuggets and fries or sausages and mashed potatoes, which are “cheaper and fillings.”

Her monthly welfare payment is mostly swallowed by rent and the rising cost of gas and electricity. “It doesn’t seem like there’s light at the end of the tunnel,” said the 44-year-old, who does voluntary work for a charity in the city of Portsmouth on England’s south coast. “You think, when’s it going to end? But it’s not.”

As grocery prices rise across the board, the cost of fresh food has largely been outpacing processed and packaged products, according to the official UK consumer price index (CPI). Prices for fresh vegetables rose about 14% in September versus the same month last year earlier for example, while fresh beef also jumped 14%, fish 15%, poultry 17%, eggs 22% and low-fat milk 42%.

Meanwhile, salted or smoked meat such as bacon and crisps went up a slower pace of about 12% each, packaged pizzas rose nearly 10%, sugary snacks like gummies increased by 6% and chocolate increased by just over 3%.

Shopping habits are changing too, according to exclusive data from NielsenIQ, which created a basket of 37 food products for Reuters. Volume sales of fresh vegetables fell by more than 6% and fresh meat by over 7% in August, for example, while sales of snacks and candy rose almost 4%.

The data underscore the trend towards processed food implied by the CPI figures, which do not include sales, raising red flags for public health advocates.

“There is plenty of evidence that poor diets lacking in fruit and vegetables have serious consequences for health,” said Shona Goudie, policy research manager at the Food Foundation, a British charity that promotes healthy diets. “We also know that cheap highly processed foods are the ones most likely to cause obesity.”

Packaged food products often contain unhealthy levels of salt, fat and sugar, plus flavor-enhancers and preservative chemicals to give them longer shelf lives, and are associated with higher risks of obesity, heart disease, type 2 diabetes and certain types of cancers.

Britain is already near the forefront of an “obesity epidemic” across Europe, where almost 60% of adults are overweight or obese, raising their risk of premature death and serious disease, according to a World Health Organization report in May.

Fresh food has become more expensive because it is more energy intensive to produce than packaged food made by consumer goods companies such as Nestle and Unilever, which are also more able to absorb a hit to margins due to their scale.

So far this year versus last year, the average price of healthier foods such as vegetables and fish have risen by more than eight pounds per 1,000 kilocalorie in Britain compared with about three pounds for less healthy foods like bacon and crisps, according to data from the Food Foundation.

For some, the consequences of rising prices are dire. Close to 10 million adults-or-one-in-five-households-are unable to put enough food on the table, with some skipping meals or going without for an entire day, the charity’s nationwide survey carried out in late September suggests. That’s double the number affected in January.

Sharron Spice, a London-based youth worker, said people visiting food banks had stopped requesting fresh food because they worried about having to use gas or electricity to cook it.

She added that many parents would go for buy-one-get-one-free deals in supermarkets: “Cheap food like pizza and everything that’s unhealthy for you, basically.”

The country is not alone in facing an inflation crisis that descended in the wake of the coronavirus disease 2019 pandemic and has been deepened by the war in Ukraine. More than half of consumers in the UK, France, Spain, Germany, Italy and the Netherlands have cut down on essentials, such as food, driving and heating, according to a poll by market research firm IRI this month.

Britain’s economic health has also been complicated by its messy withdrawal from the European Union (EU), and bruised by a period of political mayhem that’s seen three prime ministers in three months.

The Downing Street drama, which spawned a rout of government bonds that pushed up mortgage costs for many families, is frustrating for those struggling to make ends meet.

It took less than a year for Alex Spindlow to lose everything after the pandemic left him out of his job selling merchandise for concerts and caring for his 99-year-old grandmother.

Before he could get back on his feet, inflation sent his costs spiraling and left him mired in debt. “I have been eating nothing but toast with 39 pence loaves of bread for lunch about a week now, with things like super-cheap pizza for dinner,” said the 42-year-old from the town of Basingstoke in southern England.

“I’ve lost a lot of weight eating less. I’m getting less nutrients than ever,” he added. “It makes it harder to think and I have just got a new job and training is tough. My arms are as thin as when I was a teenager.”

Mark Mackintosh, a marketing manager and father-of-two who lives near Oxford, is aware that his family is more secure than many others, but he’s still struggling to budget for a weekly shopping bill that’s nearly doubled compared with two years ago to more than 150 pounds.

“Yes we are buying less fresh food, as this helps us plan meals,” said the 39-year-old, who has also cut back on energy usage and is canceling his gym membership. “If fresh food is cheaper then we’ll get that, but it’s not often on offer.”

“There isn’t much room to go lower,” he added. “I’ll try to grow some of our own veg in the spring of it works out as most cost effective.”

Peter van Kampen, a PwC consumer markets director, said healthy food in supermarkets was most affected by inflation. “An extremely bad effect of this is that it is hitting lower-income households hard – this is pushing people towards unhealthy food,” he added.

Eilis Nithsdale, a 29-year-old clinical practitioner in the city of Leeds in northern England, can afford fresh produce but is feeling the price pressure.

“Today, by the time I got all my fruit and vegetables, I’d spent over 10 pounds – that was probably 3.50 pounds more than before.” — Reuters

How PSEi member stocks performed — October 28, 2022

Here’s a quick glance at how PSEi stocks fared on Friday, October 28, 2022.


Analysts’ October 2022 inflation rate estimates

INFLATION likely quickened beyond 7% in October amid surging food prices and broadening second-round effects, analysts said. Read the full story.

Analysts’ October 2022 inflation rate estimates

Shares end lower on profit taking ahead of break

BW FILE PHOTO

LOCAL SHARES ended in negative territory last week as investors booked gains ahead of the long weekend and on data showing more “hot money” left the country in September.

The 30-member Philippine Stock Exchange index (PSEi) declined by 77.15 points or 1.23% to finish at 6,153.43 on Friday, while the broader all shares index went down by 25.09 points or 0.76% to end at 3,257.29.

AB Capital Securities, Inc. Vice-President Jovis L. Vistan said the PSEi went down as investors pocketed their profits after the market’s four-day rally.

“Local stocks weakened (on Friday) as investors took profits from recent gains,” Mr. Vistan said in a Viber message.

He said the PSEi snapped its four-day winning streak as investors wanted liquidity for long weekend.

Philippine financial markets are closed for public holidays on Oct. 31 to Nov. 1.

“Along with other Asian markets, the local bourse fell as investors booked gains after four consecutive days of rally, ahead of the long weekend,” Philstocks Financial, Inc. Research Analyst Claire T. Alviar said in a Viber message.

“Moreover, a wider net outflow of  foreign portfolio investments in September compared to the same period last year brought negative sentiment,” Ms. Alviar added.

Data from the Bangko Sentral ng Pilipinas (BSP) released last week showed hot money posted a net outflow of $367 million in September, the biggest since the net $374 million that left the country in April 2021.

For the first nine months, foreign portfolio investments yielded a net inflow of $222 million, a turnaround from the $495-million net outflow seen in the same period last year. The BSP expects hot money to yield a net inflow of $4.5 billion in 2022.

“The PSEi corrected lower on Friday after rising for four straight days, considered healthy profit taking, before the widely expected jumbo Fed (US Federal Reserve) rate hike in November,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Fed is expected to hike rates by 75 basis points (bps) for a fourth consecutive time at its policy meeting on Nov. 1-2. It has so far raised borrowing costs by 300 bps since March.

Back home, almost all sectoral indices ended lower on Friday. Property slumped by 68.38 points or 2.58% to finish at 2,572.75; mining and oil went down by 257.51 points or 2.56% to 9,802.95; holding firms lost 95.80 points or 1.58% to end at 5,933.37; services dropped by 9.56 points or 0.59% to 1,592.33; and industrials declined by 32.65 points or 0.36% to 8,987.90.

Meanwhile, financials rose by 8.66 points or 0.54% to end at 1,588.14. 

Value turnover declined to P4.21 billion on Friday with 421.67 million shares changing hands from the P5.64 billion with 629.95 million issues traded on Thursday.

Decliners outnumbered advancers, 95 versus 70, while 58 names closed unchanged.

Net foreign selling stood at P41.54 million on Friday versus the P195.71 million in net buying recorded on Thursday. — Ashley Erika O. Jose

Foreign investment unlocked by PSA seen flowing first to airlines

STOCK PHOTO | Image by L.Filipe C.Sousa from Unsplash

By Arjay L. Balinbin, Senior Reporter

AIRLINES and telecommunications companies are likely to be among the first to benefit from the amended Public Service Act (PSA), which raised foreign ownership limits, an analyst said.

“The initial salvo of foreign investment, if they come given the current global uncertainty, will be in telecommunications and air carriers,” Rene S. Santiago, former president of the Transportation Science Society of the Philippines, told BusinessWorld last week. 

“Both sectors are far more internationalized than the other sectors, (and some) domestic companies (e.g., DITO Telecommunity and Philippine Airlines) are in dire need of rescue or equity infusion,” he added in a phone message

Republic Act No. 11647, which amends the 85-year-old Public Service Act, excludes telecommunications, domestic shipping, railways and subways, airlines, expressways and tollways, and airports from the definition of a public utility. This means such industries will no longer be subject to the 40% foreign ownership cap for public utilities under the Constitution.

Mr. Santiago noted that shipping and railways also “badly need foreign investment, but these sectors have too many imponderables at the moment.”

He said the privatization of the Ninoy Aquino International Airport could attract foreign investors if the public-private partnership (PPP) design is “solid and credible.”

“Regional airports aren’t attractive. Toll roads are doing fine even without foreign money,” Mr. Santiago added.

Transportation Secretary Jaime J. Bautista recently invited foreign companies, especially those in Europe, to invest in Philippine transport infrastructure projects via PPP schemes.

Mr. Bautista said more private sector participation is needed in various infrastructure projects, including the privatization of the EDSA Carousel, seaport operations, the privatization of provincial airports, and the Cebu Bus Rapid Transit project.

“The country must erase first its bad reputation from past PPP deals for the Infrastructure program in PPP modes to gain traction. Railways would benefit most from foreign investment, if the obstacles beyond the PSA are (removed),” Mr. Santiago said.

According to Mr. Bautista, the revised implementing rules and regulations (IRR) for the Build-Operate-Transfer (BOT) Law ensure that PPP projects are not disadvantageous to Filipinos “by providing a balanced sharing of risks between government and the private sector project proponents while allowing reasonable rates of return on investments, incentives, support and undertakings.”

The IRR, published on Sept. 27, sought to address concerns over the financial viability and bankability of PPP projects while clarifying ambiguous provisions that might have caused delays in the PPP process.

Mr. Santiago cited the recent arbitration case filed by Light Rail Manila Corp. (LRMC), operator of Light Rail Transit Line 1 (LRT-1), against the government for “non-compliance on key contract provisions, including fare adjustments.”

“DoTr is focused on building the railway assets, but has not indicated the institutional (arrangements) for the long-term O&M (operations and maintenance). No clear track on how much private money is needed, how will these be recovered,” he added.

“In other words, there is no PPP structure/modality — unlike in the Clark Airport where the government pays for the civil works, and the private sector adds the electromechanical systems and gets their RoI (return on investment) from O&M of the airport.”

For railways, Mr. Santiago noted, the signal is “totally different,” as “everything is government — loans for all components come from ODA (official development assistance).”

There is “no skin in the game for the private sector on all railway projects under construction. Unlike the structure for LRT-1 South Extension, which was awarded to LRMC,” he added.

Foundation for Economic Freedom President Calixto V. Chikiamco said “all transport sectors” are now ripe for 100% foreign investment.

These are “shipping, transport network vehicles, airlines, railways, subways, airports, and tollways,” he said in an e-mail interview last week.

He also said that the amended IRR of the BOT Law “would be sufficient to make the Philippines attractive to foreign investors.”

“The patently anti-market provisions in the amended IRR under the Duterte administration have been amended and removed,” Mr. Chikiamco added.

The IRR was amended in response to concerns that the previous version of the rules compel private proponents to shoulder more risk while relieving the government of responsibility for delayed deliverables.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said “better economic recovery prospects and increased infrastructure spending to pump-prime/stimulate the economy also help attract more foreign investment.”

“These infrastructure projects help increase the country’s competitiveness over the long term in terms of improved movement of goods (exports, imports), workers, tourists (both foreign and local),” he said in an e-mail last week.

The Department of Budget and Management (DBM) reported recently that expenditure on infrastructure and other capital outlays rose to P73.7 billion in August, from P70.9 billion a year earlier. The August total was 4.4% lower than the P77 billion spent in July.