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Stocks may trade sideways amid lack of drivers

BW FILE PHOTO

LOCAL EQUITIES may trade sideways this week due to bargain hunting and a lack of fresh leads.

The Philippine Stock Exchange index (PSEi) declined by 95.23 points or 1.47% to 6,379.03 on Friday, while the broader all shares index went down by 33.65 points or 0.97% to close at 3,422.28.

Week on week, the PSEi fell by 89.04 points or 1.38% from its close of 6,468.07 on June 30.

Online brokerage 2TradeAsia.com said in a report that the PSEi fell due to profit taking as investors shrugged off data showing slower June inflation.

“Local inflation came in slower as expected, driven by heavily-weighted baskets. This sequential improvement in CPI (consumer price index) strengthens the case for another status quo on the BSP’s (Bangko Sentral ng Pilipinas) end next Monetary Board meeting in August),” 2TradeAsia.com said.

Inflation slowed to 5.4% in June from 6.1% in May 2023 and June 2022, but marked the 15th straight month that the consumer price index exceeded the BSP’s 2-4% target for the year.

The June print was slightly lower than the 5.5% median estimate by 17 analysts in a BusinessWorld poll conducted the prior week.

For the first six months, inflation averaged at 7.2%, still higher than the central bank’s 5.4% forecast for 2023.

The BSP will hold its next policy review on Aug. 17. It has held rates steady in its last two meetings amid expectations that inflation will return within its target band by the end of the year.

For this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said bargain hunting may persist as prices remain attractive.

“However, worries over a possible resumption of the Federal Reserve’s monetary tightening may still weigh on investors’ sentiment. This is as further rate hikes by the Fed put downside risks on the US and the global economy. Investors are also expected to wait for catalysts that could strengthen market confidence. As they wait, trading participation could remain tepid,” Mr. Tantiangco said in a Viber message.

The Fed last month paused its tightening cycle after hiking rates for 10 straight meetings by a total of 500 basis points (bps) to a range between 5% and 5.25%.

Fed Chair Jerome H. Powell has said one or two more 25-bp hikes are possible within the year as stronger-than-expected economic data support further tightening.

The US central bank will next meet to review policy on July 25-26.

“While waiting for turnover to thicken over the next few weeks, upcoming earnings might provide the much-needed electric touch,” 2TradeAsia.com added.

Mr. Tantiangco placed the PSEi’s support at 6,400 and resistance at 6,600, while 2TradeAsia.com put immediate support at 6,300 and resistance at 6,600. — A.H. Halili with Reuters

Peso may move sideways ahead of key US data

BW FILE PHOTO

THE PESO is expected to trade sideways against the dollar this week ahead of the release of US economic data that could affect the US Federal Reserve’s next move.

The local currency closed at P55.62 versus the dollar on Friday, weakening by 12 centavos from Thursday’s P55.50 finish, data from the Bankers Association of the Philippines’ website showed.

Week on week, the peso also depreciated by 42 centavos from its P55.20 finish on June 30.

The local unit opened Friday’s session at P55.65 per dollar. Its weakest showing was at P55.67, while its intraday best was at P55.52 against the greenback.

Dollars traded went down to $1.01 billion on Friday from the $1.06 billion recorded on Thursday.

The peso weakened on Friday as investors awaited US employment data released later that day for leads on the Fed’s next move, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The US added fewer jobs than anticipated in June but still-strong wage growth and a slight drop in the unemployment rate will likely keep the Federal Reserve on track to raise interest rates at the upcoming July meeting, Reuters reported.

The 209,000 payroll jobs added in June continued a steady climb down in the pace of hiring from the highs seen in the months when the economy was still reopening from the pandemic.

But it remains above the 183,000 average jobs added per month in the decade before the health crisis, and the steady pace of average hourly earnings gains, stuck around 4.4% on an annual basis since April, was a sign the US remains a seller’s market for workers.

Combined with still-sticky inflation and other data in recent weeks, it is likely to embolden the large majority of Fed officials who feel further rate hikes will be needed — and can be sustained by the economy without causing a major meltdown in employment.    

The US central bank paused its tightening cycle last month after hiking rates for 10 straight meetings by a total of 500 basis points (bps), bringing the fed funds rate to a range between 5% and 5.25%.

Fed Chair Jerome H. Powell previously said one or two more 25-bp hikes are possible within the year as stronger-than-expected economic data support further tightening.

The Fed will hold its next policy review on July 25-26.

For this week, Mr. Ricafort said the peso may trade sideways as investors await the release of the June US consumer price index (CPI) report on July 12 and latest US jobless claims data on July 13, as both could affect the Fed’s next move.

The US CPI edged up 0.1% in May as gasoline prices fell, after increasing 0.4% in April. In the 12 months through May, the CPI climbed 4%. That was the smallest year-on-year increase since March 2021 and followed a 4.9% rise in April.

Core CPI increased 0.4% in May, rising by the same margin for the third straight month.

Mr. Ricafort sees the peso trading between P55.30 and P55.80 a dollar this week. — AMCS with Reuters

Philippines told to monitor US planes with entry of 2nd aircraft in two days

PHOTO shared by a passenger with Senator Imee Marcos shows two C-17 Globemaster transport planes of the US on an unidentified runway in the Philippines. — OFFICE OF IMEE MARCOS

A SENATOR on Sunday urged the government of President Ferdinand R. Marcos, Jr. to monitor the presence of US military planes in the country, as she questioned the entry of a second C-17 Globemaster transport aircraft in two days.

Authorities should find out whether covert US military flights had aggravated the already tense situation in the South China Sea and Taiwan Strait and weigh the risks to public safety, Senator María Imelda “Imee” R. Marcos told reporters in a Viber message.

“Too little is known about ongoing US military activity in our territory, while we constantly call out the presence of Chinese vessels in the South China Sea,” the head of the Senate foreign relations committee said.

The lawmaker said she is aware of exercises between Philippine and foreign militaries this month. “But the same zeal in tracking any violations in our maritime territory and exclusive economic zone must also apply where Philippine air traffic rules and joint military agreements with the US are concerned.”

On July 8, a C-17 that took off from Tokyo the night before with flight code RCH323 was spotted north of Busuanga Island past 10 a.m., Ms. Marcos said.

The plane was off the radar until late afternoon when it appeared again in the same vicinity flying toward Polillo Island before leaving the Philippine territory past 6 p.m., she added.

On Friday, Ms. Marcos issued a statement on a similar military plane that landed in Manila but which US flight planners had failed to coordinate with ground handlers at Manila’s international airport.

The first C-17 aircraft with flight code MC244/RCH244 landed in Manila at 6:03 a.m. on July 7 after leaving Andersen Air Force Base in Guam, she said, citing global flight tracker AirNav Systems.

It then flew to Palawan before 1 p.m. and headed for Yokota Air Base in the city of Fussa, Japan later in the afternoon, she added.

Although the plane’s call signal was repeatedly out of coverage during its journey, flight tracker Flightradar24 recorded its departure from Palawan shortly before 4 p.m., Manila time, and its arrival at Yokota Air Base four-and-a-half hours later, the senator said.

The flight route from Palawan showed the plane passing over Pampanga, Cagayan and off the eastern coasts of Batanes and Taiwan before it landed at Yokota Air Base, Ms. Marcos said.

“Passengers on commercial flights to and from Manila’s international airport noticed two US military planes near the runway and shared pictures with Marcos’ office,” according to the statement.

The C-17 Globemaster is a high-wing, four-engine, T-tailed military transport aircraft made by Boeing. It can carry large equipment, supplies and troops directly to small airfields in harsh terrain anywhere in the world, according to the aircraft maker’s website.

The Philippines this year gave the US wider access to its military bases under their Enhanced Defense Cooperation Agreement, amid China’s increasing assertiveness in the South China Sea.

Joint patrols between the Philippines and US in the South China Sea might begin later this year, Philippine Ambassador to the US Jose Manuel Romualdez said in May, days after Washington reiterated its commitment to defend the Philippines from an attack at sea. — Jan Jiminel Cacdac

Europe could play bigger role to keep Indo-Pacific region free, analysts say

A CHINESE Coast Guard ship ‘shadowing’ a Philippine vessel on its way to deliver supplies on Dec. 17, 2022 to troops stationed at the BRP Sierra Madre, which is grounded in Ayungin Shoal in the West Philippine Sea. — WESTERN COMMAND AFP

ESCALATING tensions in the Indo-Pacific region may be pushing the European Union (EU) to pursue maritime deals with the Philippines amid China’s increased assertiveness in the South China Sea, according to political analysts.

EU commitment to support regional stability is also a sign of insecurity on the bloc’s part after Russia’s invasion of Ukraine, they added.

“The peace, security, and openness of the South China Sea matters a lot to the economic interests of EU countries,” Don Mclain Gill, who teaches foreign relations at De La Salle University in Manila, said in a Facebook Messenger chat.

“With the demographic decline in the West, along with constrained economic activities brought by the war in Ukraine, EU countries need alternative sources of economic growth and development,” he added.

EU and Philippine officials have agreed to form a subcommittee on maritime security during their third joint committee meeting in Brussels in June in a bid to ensure freedom of navigation and overflight in the disputed waterway.

Mr. Gill said the Association of Southeast Nations (ASEAN), which the Philippines is a member of, is the EU’s third-largest trade partner.

About 40% of the EU’s foreign trade passes through the South China Sea, which is being claimed by China almost in its entirety, he added.

“Given this reality, the stability of the South China Sea matters greatly to the EU,” he said.

He also noted that as China continues to militarize the South China Sea and shifts the regional balance of power in its favor, “it has become more emboldened to operationalize its de facto regional exclusionary policies against extra-regional powers.”

“Such actions from Beijing have the potential of disrupting the flow of international commercial activity that transits through the South China Sea,” he said. “It is in this context that EU counties have been quick in forging their Indo-Pacific strategies with like-minded countries.” 

“It is against this backdrop that the Philippines serves as an important partner of the EU given their mutual adherence to democratic principles and their shared goals of maintaining the rules-based order in the Indo-Pacific,” he said. “Manila’s strengthening ties with the US, Japan, and Australia also complement the interests of EU countries.”

On Friday, the Armed Forces of the Philippines said it had spotted at least 48 Chinese fishing vessels near Iroquois Reef, south of gas-rich Recto Bank, and five Chinese Coast Guard and People’s Liberation Army Navy vessels near Sabina Shoal.
These activities prove that China has been aiming to surround the maritime features within the Philippines’ exclusive economic zone (EEZ), Chester B. Cabalza, founder of the Manila-based International Development and Security Cooperation, said in a Facebook Messenger chat.
“They are aiming to surround the maritime features within the EEZ of the Philippines. These are part of the Kalayaan Island Group in the province of Palawan,” he said.
He said the presence of Chinese vessels near Sabina Shoal should alarm the government since it’s near the rusted BRP Sierra Madre, which has been serving as an outpost for Philippine troops.
“The worst case scenario is when the decommissioned vessel sinks,” Mr. Cabalza said. “China will possibly take this opportunity to invade Sabina Shoal.”
“We had precedence in the past,” he said, citing the standoff between Philippine and Chinese troops in 2012 at Scarborough Shoal and the Chinese occupation of Mischief Reef in February 1995.
“To protect our interest in Iroquois Reef near the Recto Bank, our government must advance its interest on joint exploration and other scientific activities with China,” Mr. Cabalza said.

The US, Japan, Australia and the Philippines held their first defense talks as a group in Singapore last month. Some analysts see their ties as a version of the US-led Quadrilateral Security Dialogue (QUAD), which is composed of the three foreign powers along with India.

Washington, Manila and Tokyo have also vowed to work as a trio in maintaining peace and stability in the Indo-Pacific region, which has also been beset by the conflict between China and self-ruled Taiwan.

“The EU-Philippines partnership will be centered on keeping the Indo-Pacific free, open and stable,” Mr. Gill said.

With the instability caused by Russia’s invasion of Ukraine and the “internal inconsistencies” of members like France and Italy, the EU “would rather expand to Asia,” Hansley A. Juliano, a political economy researcher studying at Japan’s Nagoya University’s Graduate School of International Development in Japan, said in a Facebook Messenger chat.

“EU economies have depended on China’s patronization of its products, as well as tourism/education ties from the Chinese middle classes, so the geopolitical struggles have definitely been bad for business on both sides,” he said.

“However, the fact that the EU as a body has been willing to take China to task on the major issues is commendable, even if it clashes with the domestic interests of member states like France,” he added.

Mr. Juliano said the Philippines has an opportunity to build better support at sea, especially since Europe is also in significant need of more partners.

But inconsistencies within the government of President Ferdinand R. Marcos, Jr. might not bode well for the Philippine pivot to the West, he said.

“While I can attest to our line offices especially the Department on Foreign Affairs seeking to do adhere to their commitments, I wonder if the ever fractious ruling coalition of Marcos is helping build confidence,” he said.

Mr. Marcos Jr. is seen veering away from the foreign policy of his predecessor Rodrigo R. Duterte, who led a pivot to China in exchange for investment pledges, few of which had materialized. 

In February, Mr. Marcos gave the US access to four more military bases on top of the five existing sites under their 2014 Enhanced Defense Cooperation Agreement — a move that has angered China. — Kyle Aristophere T. Atienza

Congressmen seek probe of ‘Love the Philippines’ fiasco

A GROUP of congressmen is seeking to investigate the gaffe involving the Philippines’ latest global tourism campaign in which the ad agency used stock footage from other countries.

“It is imperative that we shed light on this ‘Frasco fiasco’ to ensure that public funds are being utilized appropriately and that there is no undue influence from individuals associated with the Marcos regime,” Deputy Minority Leader and Party-list Rep. France L. Castro said in a statementat the weekend. 

“While the Department of Tourism stressed that no public funds have been paid for the video, Congress should investigate the matter if there are lapses in appropriate laws, rules and regulations, especially that billions of public funds and resources were allocated for such rebranding,” the lawmakers said in an unnumbered resolution. 

The Tourism department got P1.27 billion from the National Government for its branding campaign this year, 37.3% higher than the Tourism Secretary’s budget and more than thrice the last year’s budget, the congressmen said.

The agency last week said it would terminate its contact with the ad agency that designed its global campaign after it was found to have used stock footage of destinations in other countries for its “Love the Philippines” promotional video.

In a statement, it noted that DDB Philippines, the contractor, had publicly apologized and taken full responsibility for using nonoriginal materials in its audio-video presentation, which drew flak when it was launched on June 27.

DDB Philippines has called the presentation a “mood video to excite internal stakeholders about the campaign.”

Tourism Secretary Christina G. Frasco has said DDB Philippines had not been paid.

“Congress is duty-bound to ensure that public funds were used efficiently and effectively, and that government agencies are held accountable for their actions,” according to the resolution.

Aside from Ms. Castro, also signing the resolution were Party-list Reps. Arlene D. Brosas and Raoul Danniel A. Manuel.

“Love the Philippines” replaced “It’s more fun in the Philippines,” which was launched in 2012 under the late President Benigno S.C. Aquino III and which Filipinos loved instantly. The 2012 campaign also won international awards during its lifetime.

It replaced “Wow Philippines,” which was launched in 2002 under then President Gloria Macapagal Arroyo and which also easily got the thumbs up of many Filipinos.

Brand experts have criticized the slogan for its lack of creativity and for sounding like a command. — Beatriz Marie D. Cruz

MWSS told to act vs Maynilad

PHILSTAR

SENATOR Grace Poe-Llamanzares on Sunday asked the Metropolitan Waterworks and Sewerage System (MWSS) to take action against Maynilad Water Services, Inc. with its planned water service interruption affecting almost 600,000 customers starting July 12.

“MWSS should not take this matter sitting down as these recurring service cuts will affect over half a million consumers,” the head of the Senate committee on public services said in a statement.

“More people are being affected by longer water interruption that has also become more frequent,” Ms. Poe-Llamanzares said in Filipino. “This is unacceptable.”

MWSS Administrator Leonor C. Cleofas did not immediately reply to a Viber message seeking comment.

Maynilad said its customers might experience up to nine hours of nightly water service interruptions starting July 12 due to the decreasing water level of Angat Dam.

Ms. Poe-Llamanzares said MWSS should determine whether water utilities like Maynilad are adhering to their obligations based on their franchise.

“MWSS should be proactive. It can’t be just the bearer of bad news to consumers of Maynilad’s water cuts,” she said. — Jan Jiminel Cacdac

DoJ rules on Nayong Pilipino

THE NAYONG Pilipino Foundation (NPF) need not hold a bidding to lease part of its park to Westside City, Inc., according to the Department of Justice (DoJ).

In a legal opinion dated July 6, Justice Undersecretary Nicholas Felix L. Ty. said there is no law that requires public bidding for the lease of government property.

“Since the lease by NPF of its property to Westside City Inc., formerly known as Resorts World Bayshore City, Inc. is a straightforward lease, it is the considered view of this department that the same is not covered by the Build-Operate-Transfer Law,” he said.

Under the agreement, NPF leased part of the Nayong Pilipino Cultural Park to then RWBCI for P1.2 billion. — John Victor D. Ordoñez

Few Filipinas get cancer tests

ONLY 1% OF FILIPINO women are screened for breast and cervical cancer, according to a government think tank, the Philippine Institute for Development Studies (PIDS) said in a statement on Sunday.

“Screening for breast and cervical cancer among Filipino women could be the lowest in the world with just 1% of eligible women getting themselves screened, the first step to cancer prevention,” the state think tank said.

The Philippines’ cancer screening rate is way lower than that of Malaysia and Thailand at 20% each, PIDS said.

“Cambodia and Myanmar have better numbers than the Philippines,” it said, citing PIDS senior research fellow Valerie Gilbert Ulep, who made a study on the issue last year. “The West has a 50% screening rate.”

PIDS said the low screening has been traced to lack of government funds especially for the poor.

“This results in very few government hospitals offering this screening service,” it added. — Kyle Aristophere T. Atienza

Carmona now a city of Cavite 

THE TOWN of Carmona in Cavite province is now a city after residents on Saturday voted in favor of a law on the conversion, the Commission on Elections (Comelec) said on Sunday, paving the way for a bigger share in national taxes for the city.

More than 30,000 residents voted yes for the town’s conversion into a city, while 1,016 opposed it, Comelec told reporters in a Viber message.

President Ferdinand R. Marcos, Jr. signed the law for the town’s conversion in February.

The former first-class municipality is now the eighth city in the Cavite province, after Cavite City, Trece Maritres, Tagaytay, Dasmariñas, Bacoor, Imus and General Trias

Carmona was the wealthiest municipality last year with assets worth P6.212 billion, based on data from the Commission on Audit. — John Victor D. Ordoñez

Poor mental health tack cited

THE PHILIPPINES lags in mental health care due to poor enforcement of its laws, as well as the lack of psychologists in the country, experts said at the weekend.

“We have fewer than 3,000 psychologists in the country,” Arsenio S. Alianan, Jr., associate director of the Ateneo Bulatao Center, said in a video interview.

He cited the lack of scholarships available to students who wish to take up a psychology degree, as well as the shortage of psychologist positions in government hospitals. The cost of mental health services has also increased.

Alyanna Lagasaca, national secretary-general of Youth for Mental Health Coalition, Inc. cited unreported mental health cases especially during the coronavirus pandemic.

The Mental Health Act was signed in 2017 to make mental health services more accessible to the public. The National Center for Mental Health got a P2.15-billion budget this year, while the Mariveles Mental Wellness and General Hospital got P466.6 million. — Beatriz Marie D. Cruz

Three provincial airports could undergo Swiss challenge this year

DOTR PHOTO

THE Department of Transportation (DoTr) said it hopes to kick off the public procurement process for three provincial airports within the year, starting with Swiss challenges on three projects.

“There are three pending proposals with the National Economic and Development Authority (NEDA) right now. Then we will have the other provincial airports which we expect to submit to NEDA in the coming months,” DoTr Undersecretary for Aviation and Airports Robert C.O. Lim told reporters last week.

Asked whether the three proposals can undergo Swiss challenge this year, Mr. Lim said: “I think for the three proposals, yes, I believe so as the three are already with the Investment Coordination Committee (ICC).”

The unsolicited proposals for the three airports — Laguindingan Airport in northern Mindanao, Bohol-Panglao International Airport, and Bicol International Airport — were submitted by Aboitiz Infracapital, Inc. during the last administration.

“Remember… They are subject to policy changes, and then they got stranded during the pandemic. And then, early on last year, the ICC came up with new regulations. They also had to make the changes to their proposals to comply with the new ICC regulations in October,” Mr. Lim said.

Aboitiz Infracapital confirmed that its proposals for the regional airport projects are still currently under evaluation.

“We remain optimistic though that the government will find great value and decide in favor of our proposal soon as we share the local government’s vision to transform the Bohol-Panglao International Airport into a world class gateway while keeping the distinct Filipino brand identity alive,” the company said in a Viber message.

Mr. Lim said that the DoTr is hoping for the NEDA to make its decision on the three unsolicited proposals in July or August.

“We hope that this month or next month, NEDA comes up with a decision and then after that, finishing touches like negotiations will take place and then the Swiss challenge can be within the year,” he said. — Justine Irish D. Tabile

Water interruptions seen likely as Angat Dam levels dwindle

PHILSTAR

DECLINING water levels at Angat Dam will likely result in water interruptions and power generation, water and energy regulators said.

On Saturday, the National Water Resources Board (NWRB) reduced the water allocation for Metropolitan Waterworks and Sewerage System (MWSS) to 48 cubic meters per second (CMS) from 50 CMS, according to Patrick James B. Dizon, head of the MWSS Angat/Ipo operations management division.

Last week, the NWRB said it will automatically modify the allocation for MWSS once the elevation in Angat Dam drops below the 180-meter minimum operating level.

As of 6 a.m. on Sunday, the water level in Angat Dam had declined to 179.56 meters from 179.99 meters a day earlier.

Mr. Dizon said that the reduced water allocation is expected to affect almost 600,000 customers in areas served by Maynilad Water Services, Inc.

“We think it will replenish for the next months; this is consistent with the projection of PAGASA (the government weather service) for the near-normal rainfall in the watershed,” Mr. Dizon said in a Viber message on Sunday.

PAGASA said El Niño has started, and is expected to last until next year. Nevertheless, it continues to count on an enhanced southwest monsoon until September.

Mr. Dizon, citing historical records, said even during El Niño years, the dams usually replenish between July and October.

He said that MWSS is not expecting any further reduction in its water allocation as reservoir elevation is only expected to hit a low of 177-178 meters by the end of the month.

This water elevation remains adequate for the current MWSS water allocation of 48 CMS, Mr. Dizon said.

Separately, Energy Undersecretary Rowena Cristina L. Guevara said that the Department of Energy is also monitoring the dam water levels because they can also affect the power supply.

“We are monitoring our hydroelectric power plants, particularly Angat Dam which has 218 megawatts (MW) capacity,” Ms. Guevara said in a Laging Handa briefing on Friday.

Ms. Guevara said the department is expecting a reduction in hydroelectric power output of about 75% in December.

She said that due to El Niño the Luzon power grid may likely experience thin reserves which may result in four yellow alerts in the July to August period.

“The National Grid Corp. of the Philippines is preparing ancillary services in case generation supply is inadequate,” she said. — Ashley Erika O. Jose

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