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Stocks to move sideways ahead of US CPI report

PHILIPPINE STOCKS may move sideways this week as investors await the release of latest US inflation data, which may provide hints on the Federal Reserve’s next move, as well as local economic reports.

The benchmark Philippine Stock Exchange index (PSEi) went up by 9.50 points or 0.15% to close at 6,361.82 on Friday, while the broader all shares index rose by 5.37 points or 0.15% to 3,410.76.

Week on week, the PSEi jumped by 196.47 points or 3.19% from its close of 6,165.35 on July 1.

Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said the market sustained its positive momentum last week.

“The sustainability of this rally is questionable, however, amid the lingering economic headwinds that may dampen sentiment. This includes the peso’s further weakening, and the supply problems of certain agricultural goods, both of which pose upside risks to inflation,” Mr. Tantiangco said in a Viber message.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the PSEi rose as part of a “relief rally” following hawkish signals from the Bangko Sentral ng Pilipinas (BSP) chief.

BSP Governor Felipe M. Medalla last week said the central bank is prepared to raise its policy rate by 50 basis points in their Aug. 18 meeting to keep inflation in check after the peso on Thursday breached the P56 level against the dollar to move closer to its record low.

Headline inflation reached 6.1% in June, the fastest in nearly four years. This brought inflation in the first half to an average of 4.4%, above the central bank’s 2–4% target but still lower than its 5% forecast for this year.

“The PSE also gained recently as US stock markets similarly gained to a near one-month high, as global market sentiment supported by China’s planned $220-billion economic stimulus mostly through infrastructure spending, as well as recent signals from Fed officials about a possible soft landing or preventing an economic contraction,” Mr. Ricafort added.

For this week, he said the market will monitor the release of US consumer price index (CPI) data and the Fed’s Beige Book on July 13, as this could give some hints on the US central bank’s future policy path.

“The situation in the financial markets would remain similar for as long as the Russia-Ukraine conflict drags on, in terms of relatively elevated global commodity prices and inflation,” Mr. Ricafort said.

He put the PSEi’s support for the week at the 6,000-6,100 range and resistance between 6,500 and 6,600.

Meanwhile, Philstocks Financial’s Mr. Tantiangco said aside from US inflation data, investors will also take cues from upcoming reports on Philippine foreign trade, foreign direct investments, and overseas Filipino remittances.

He placed the PSEi’s immediate support from 6,100 to 6,150 and resistance at 6,350 to 6,400. — J.I.DP. Tabile

Monde Nissin ends flat after Lucky Me! noodle brand recall

INVESTORS sold off Monde Nissin Corp. shares last week following the recall of some of its instant noodle product lines in some countries due to traces of antimicrobial pesticide ethylene oxide.

Data from the Philippine Stock Exchange (PSE) showed a total of 59.06 million Monde Nissin shares worth P794.20 million were traded from July 4 to 8, making the stock 11th most actively traded in the local bourse last week.

Shares in the food manufacturer finished at P13.04 apiece on Friday, unchanged from their July 1 close. Monde Nissin has lost 16.9% since the P15.70 finish on the first trading day of the year.

Analysts pointed out that the ban of Lucky Me! products in some countries dragged the share price of Monde Nissin and could affect its financial performance.

“We expect that this news will negatively affect investors’ sentiment toward the stock. First, the revenues from the countries imposing a ban will decline especially if they will not lift it soon. Second, since consumers were already aware of the situation, the demand for Lucky Me! noodles may drop as long as the ban remains,” Philstocks Financial Research Associate Claire T. Alviar said in an e-mail.

“On the upside, the negative sentiment may somehow be tempered once the Philippine food regulators assured the public that it is still safe to consume the said products,” she added.

“We think that this incident may cause anxiety among investors regarding the impact of this incident to the company’s sales and brand reputation. Hence, the sell-off we have seen in the past couple of days,” Philippine National Bank (PNB) Senior Equity Research Analyst Jonathan J. Latuja said in an e-mail.

The company made a statement after the Food Safety Authority of Ireland released last week a food alert regarding the recall of Lucky Me! Instant Pancit Canton Noodles Original Flavor with a best-before date of July 20 showing “unauthorized pesticide” ethylene oxide.

On Thursday, Monde Nissin said it was aware of the information being shared about some of its products in an ongoing recall in the European Union and Taiwan caused by the presence of the chemical, commonly used to treat spices and seeds to control microbial growth.

“Rest assured that all Lucky Me! products are Philippine FDA (Food and Drug Administration) registered and comply with local food safety standards and even the US FDA standards for ethylene oxide,” the company said.

Monde Nissin, a global food and beverages company based in the Philippines, has a portfolio of market-leading brands across fast-growing categories, including Lucky Me! noodles, SkyFlakes crackers, Fita crackers, Monde Nissin baked goods and Quorn meat alternative products. Its manufacturing plants in the country are located in Laguna, Cebu, and Davao.

Monde Nissin’s attributable net income went up by 4.4% to P2.33 billion in the first quarter from P2.23 billion a year ago.

Its consolidated revenues increased by 5.3% year on year to P18.45 billion due to the strong performance of the Asia-Pacific branded food and beverage (APAC BFB) domestic business.

“Once the demand for Lucky Me! noodles declines, this may significantly affect the financial performance of Monde Nissin particularly since its noodles segment contributes over 50% to its revenues,” Ms. Alviar said.

“We haven’t accounted for this yet in our forecasts and its potential impact on revenues, but as long as it will not affect the Philippine business (which accounts for more than 70% of Monde Nissin’s consolidated revenues), we think that topline impact could be minimal,” Mr. Latuja said.

PNB expects for 2022 that revenues for the APAC BFB segment of Monde Nissin to grow by 7% year on year. “We are more keen on the impact of inflation to the company’s margins and profitability,” added Mr. Latuja.

“Stock price movement will depend on any developments that will unfold regarding the product recall and how the Philippine regulator will respond to the issues raised by the overseas regulators. On the other hand, this can provide buying opportunities if the stock price continues to fall,” Mr. Latuja said.

“For next week, we are expecting a sideways movement but if it falls near the support level of P12.75, bargain hunting may start especially after its two-day decline by almost 10%. We pegged the psychological resistance at P14.00 then the next one is at P14.40-P14.50,” Ms. Alviar said. — L.O. Pilar

How PSEi member stocks performed — July 8, 2022

Here’s a quick glance at how PSEi stocks fared on Friday, July 8, 2022.

How minimum wages compare across regions in June

This infographic compares the current daily minimum wages set by the country’s Regional Tripartite Wages and Productivity Board and the inflation-adjusted minimum wages as of June based on latest data by the Philippine Statistics Authority (PSA). While the current minimum wages are determined at the regional level to account for factors such as companies’ capacity to pay and costs of living, real wages are obtained after factoring in the general price increases (i.e. inflation rates). Inflation-adjusted wages were 9.8-15.8% lower in June than their respective current salaries.

How minimum wages compare across regions in June

Russian reject Rybakina plays it cool to win Wimbledon title

ELENA RYBAKINA with The Venus Rosewater Dish after defeating Ons Jabeur in The Final of the Ladies’ Singles on day 13 of the 2022 Wimbledon Championships at the All England Lawn Tennis and Croquet Club, Wimbledon. — REUTERS
ELENA RYBAKINA with The Venus Rosewater Dish after defeating Ons Jabeur in The Final of the Ladies’ Singles on day 13 of the 2022 Wimbledon Championships at the All England Lawn Tennis and Croquet Club, Wimbledon. — REUTERS

LONDON — Elena Rybakina was considered surplus to requirements by the Russian tennis federation in 2018, but after she won Wimbledon representing Kazakhstan on Saturday, they might be regretting allowing her to slip through the net.

The big-serving 23-year-old, who was born in Moscow and reportedly still lives there, could never have known when making the switch to Kazakhstan on financial grounds that Russian and Belarussian players would be banned from Wimbledon in 2022.

But the change of flag meant she was free to compete and she cashed in spectacularly to claim the women’s title with an ice-cool comeback win against favorite Ons Jabeur — becoming the first player representing Kazakhstan to win a Grand slam title.

There was an almost apologetic air about Rybakina after becoming the youngest women’s champion since 2011 — a smile barely discernible as she walked to the net after converting her first match point for a 3-6, 6-2, 6-2 win.

She was more expressive later as she held the trophy aloft, making a point to thank the support of long-standing Kazakhstan Tennis Federation president Bulat Utemuratov, the billionaire who cheered her victory on Centre Court.

While cynics will suggest that her victory will give Russia some bragging rights, the poise with which she carried herself throughout the fortnight despite some probing questions about her origins was admirable.

Rybakina was wholesome in her praise of Tunisian trailblazer Jabeur, who she described as an inspiration, and thanked the Duchess of Cambridge after receiving the trophy from the British royal.

“She said that I played really well. I was in shock so maybe half I didn’t hear. I’m very sorry. But for sure she was super nice. It was amazing to get the trophy from her,” Rybakina said.

The tears did eventually flow though as the enormity of what she had achieved began to sink in. Asked in her news conference when she would see her parents, who were not present on Saturday, Rybakina teared up.

“You wanted to see emotion,” she said. “I kept it too long. Probably, they’re going to be super proud.”

Inevitably, questions about her Russian heritage returned on Saturday in the wake of the country’s invasion of Ukraine in February, which Moscow calls a “special operation,” but Rybakina stuck to the line she has taken throughout.

“From my side, I can only say that I’m representing Kazakhstan. I didn’t choose where I was born,” she said. “People believed in me. Kazakhstan supported me so much.”

Rybakina, who struck 144 winners on the way to the final and 29 more on Saturday, said her “big weapon” the serve had helped her recover after a nervous first set.

“It didn’t work out for the whole first set. I was just thinking that I need these big serves right now because if not, it’s going to be very tough,” she said. — Reuters

Netherlands, Sweden share spoils in Euros group opener

SHEFFIELD, England — Netherlands midfielder Jill Roord canceled out Jonna Andersson’s opener for Sweden as the defending champions salvaged a 1-1 draw in their heavyweight Group C clash at the women’s European Championship on Saturday.

Both teams started cautiously and a dull first half at Bramall Lane sprung to life when Sweden took a deserved lead in the 36th minute through Andersson who smashed home from close range following some excellent wing play from Kosovare Asllani.

Lina Hurtig almost got a second with a diving header minutes later before Danielle van de Donk blazed over for the Dutch, capping a miserable half in which they took off goalkeeper Sari van Veenendaal and defender Aniek Nouwen due to injury.

Netherlands manager Mark Parsons told reporters that both players had been taken to hospital, but he was not sure of the extent of the injuries.

“We remained calm. How often do you lose your captain and central defender in the first half?” he said.

“We are concerned about their situation, but their replacements (keeper Daphne van Domselaar and Marisa Olislagers) did very well. I’m proud of how we fought back. In the end, it’s a shame we didn’t win.”

Netherlands, watched by their men’s team’s head coach Louis van Gaal, flew out of the traps after the break and hit back through Roord in the 52nd minute after she was brilliantly set up by Arsenal forward Vivianne Miedema.

Miedema grew into the game as the half wore on, driving at the Swedish defense with real menace, and nearly played in Roord for the winner but the Wolfsburg player was denied by a superbly timed tackle from Magdalena Eriksson.

“We kept it compact, and from there on, we started playing football,” said Miedema.

“Sweden is a great team. We were kind of surprised that they came out with five at the back, but we picked that up well in the end. I think they will go very far, and I hope we can do the same.”

Portugal and Switzerland, the other teams in the group, played out a 2-2 draw earlier on Saturday. — Reuters

Boston Red Sox rally in 10th to defeat NY Yankees

BOSTON Red Sox left fielder Alex Verdugo (99) drives in the game-winning runs during the 10th inning against the New York Yankees at Fenway Park. — REUTERS

ALEX Verdugo drove in a run to forge a tie in the eighth inning and ripped a two-run single in the 10th to rally the host Boston Red Sox to a 6-5 victory over the New York (NY) Yankees on Saturday.

Staked to a 5-3 lead, Wandy Peralta (2-2) allowed a single by former Yankees farmhand Rob Refsnyder to put runners on the corners. Jeter Downs recorded his first career hit with an RBI single to halve the deficit, and Yankees third baseman Josh Donaldson bobbled a grounder that spoiled a chance at a game-ending double play.

Verdugo made the Yankees pay with a hard-hit liner to right field, allowing Refsnyder and Downs to score to end Boston’s four-game skid.

White Sox 8, Tigers 0: Johnny Cueto allowed five hits over a season-high eight innings and Gavin Sheets clubbed a first-inning, three-run homer as Chicago cooled off visiting Detroit.

Cueto (3-4) continued his strong 2022, lowering his ERA to 2.91 while completing at least six innings for the ninth time in 11 starts. The 36-year-old right-hander cruised on Saturday, yielding just one extra-base hit without a walk and striking out five on 101 pitches to help the White Sox end Detroit’s season-high six-game winning streak.

Jose Abreu and Tim Anderson also had two hits apiece, while combining for three RBIs, as the White Sox won for just the second time in six games.

Phillies 1, Cardinals 0: Kyle Gibson, Jose Alvarado and Corey Knebel combined on a two-hitter as visiting Philadelphia defeated St. Louis for its second straight shutout.

Alex Bohm decided the game with his ninth-inning sacrifice fly off Cardinals reliever Giovanny Gallegos (2-3). After hitting two solo homers on Friday night in the Phillies’ 2-0 win, Bohm has driven in the only three runs in the first two games of this four-game set.

The Phillies won their third in a row and fifth in their past six games, including four shutout wins in a six-game span for the first time since August 1969. Adding to Sunday’s 4-0 blanking, they have held the Cardinals scoreless for 27 straight innings — the first time the Phillies’ staff has done so against St. Louis since a 36-inning streak in 1944. — Reuters

Dealing Durant, Irving

The National Basketball Association Summer League has been a critical staple for longtime hoops habitués, and not simply because of the games. The significance of the flurry of activity inside the lines has traditionally been muted at best, but, every once in a while, diamonds in the rough do crop up; just ask Division II baller Max Strus, who parlayed stellar efforts in Las Vegas into a starter’s spot with the Heat. That said, it’s the wheeling and dealing off the court that has appeared to make lasting impacts on the future of franchises casting longing glances at the hardware.

Take last Friday’s festivities at the Thomas & Mack Center, which featured, among other contests, the Suns taking on the Lakers and prominent figures in attendance. There was embattled Russell Westbrook behind the bench of the purple and gold, taking in the action and taking up would-be teammates — ultimately, to no avail. There was top dog LeBron James on the other end of the arena, munching on snacks from a Ziploc bag he brought in; apparently, even billionaires are loath to spend $40 on overpriced popcorn. And in between was a parade of known personalities exchanging pleasantries with the latter.

Interestingly, James wound up engaging Lakers general manager Rob Pelinka and head coach Darvin Ham in a discussion during a break in the set-to. Fans can only guess the subject of their powwow. Later on, the front-office head could be seen beside Nets counterpart Sean Marks, who also happened to be with Raptors president Masai Ujiri; the picture painted a thousand words, and no prompting was needed for social media to kick up a storm. Perhaps deals for Kyrie Irving and Kevin Durant were being explored.

Insofar as awkward scenes go, none was more telling than the fact that James never connected with Westbrook in the one and a half hours he was there. He was able to press flesh with the likes of agent Rich Paul, current teammates Talen Horton-Tucker, Juan Toscano-Anderson, and Thomas Bryant, and former teammates James Jones and Jerry Stackhouse, but evidently did not see the need to greet the one player he recruited heavily this time last year. Now, he’s angling to get Irving vice the former Most Valuable Player awardee, and to the point where he’s said to refuse a contract extension if the planned trade falls through.

At this point, conventional wisdom pegs the Irving-to-Lakers scenario to be a matter of when, not if. For La-La Land diehards, the hope is that Summer League rumblings will pave the way for it to be done sooner rather than later. Judging from the looks of things, though, they may want to stay patient. The Nets are seeking a king’s ransom for Durant, and it’s a deal that looks to go first. Until then, waiting — and, yes, no small measure of praying — is what’s in store.

 

Anthony L. Cuaycong has been writing Courtside since BusinessWorld introduced a Sports section in 1994. He is a consultant on strategic planning, operations and Human Resources management, corporate communications, and business development.

Diokno says PHL may tap G7 infrastructure fund

PHILIPPINE STAR/ RUSSELL PALMA

FINANCE Secretary Benjamin E. Diokno said the government will consider tapping the Group of Seven’s (G7) Partnership for Global Infrastructure and Investment (PGII) program to support the Philippines’ building efforts.

To continue the momentum of the previous administration’s Build, Build, Build program, “we are considering all possible sources of funding” to meet a target for infrastructure spending of 5-6% of gross domestic product (GDP), Mr. Diokno said after the Development Budget Coordination Committee’s (DBCC) meeting on Friday.

Aimed at supporting the infrastructure needs of low- and middle-income countries, the PGII hopes to mobilize $600 billion over the next five years, of which $200 billion will consist of grants. It is intended to leverage private sector investment, according to US President Joe Biden.

The G7 is composed of Canada, France, Germany, Italy, Japan, the UK, and the US.

Mr. Diokno said however that the government intends to reduce its foreign exchange risks, which would make minimizing foreign borrowing a consideration.

“The financing mix, if I remember right, is 75%-25% (in favor of domestic borrowing) and for the longer term we will try to increase this to 80-20. We will borrow domestically at 80% and 20% from foreign sources,” he said.

“The way we borrow is that we try to be opportunistic. There are many sources of borrowing in terms of foreign debt, so we will choose the least cost as far as we’re concerned and the one that will offer the best terms. For example, (if) it’s 40 years to pay, we would tend to borrow from those sources,” he added.

Regarding public-private partnerships, Mr. Diokno reiterated that mode of financing projects can help the Philippines expand its fiscal space for infrastructure.

“For example, there are some airports. We can actually offer them for unsolicited or solicited proposals (for the) private sector to operate,” he said.

“An example will be in Bohol. We have constructed the Bohol international airport… I think it will significantly improve the operations and management of that airport if the private sector runs it, and we might consider giving it to the private sector,” Mr. Diokno added.

The amended Public Service Act now allows foreign direct investors to own and manage a wide range of infrastructure like airports, seaports, telecommunications companies, railroads, subways, skyways and tollways.

“Disbursements for 2022 to 2023 will be maintained above 20% of GDP at P4.955 trillion and P5.086 trillion, respectively, to ensure continuous implementation of priority programs on infrastructure and socio-economic development, among others,” the DBCC said on Friday.

Similarly, disbursements for 2024 to 2028 are also projected to be above 20%, as indicated in the DBCC’s revised macroeconomic targets released on Friday.

The target of 5-6% infrastructure spending relative to GDP was extended to 2028, the last year of President Ferdinand R. Marcos, Jr.’s term. — Diego Gabriel C. Robles

Retail association outlook positive for remainder of 2022

PHILIPPINE STAR/RUSSELL A. PALMA

THE Philippine Retailers Association (PRA) said its outlook for the rest of 2022 as the public resumes its pre-pandemic consumption patterns.  

PRA President Rosemarie B. Ong said: “We’re expecting the second quarter to even be better than the first quarter. So far, the outlook (for) this year is very positive despite the challenges. Those challenges are external. We have no control of that. I think the main driver was home consumption,” Ms. Ong said on the sidelines of the PRA’s recent second quarter general membership meeting in Makati City.  

Asked about rising local coronavirus disease 2019 (COVID-19) cases, Ms. Ong said that the PRA is hoping that the infection count “does not escalate” and hinder the retail industry’s recovery.

“I think things are under control and besides, majority of the population has been vaccinated already. From the reports that we got, most of the infected easily recover if they are vaccinated,” Ms. Ong said.

The Health department on Saturday reported 13,021 active COVID-19 cases, following the detection of 1,825 new infections. 

Ms. Ong said however that PRA members are reporting challenges in logistics due to a shortage of shipping containers.

“It is a world container shortage because the world is ramping up (from the pandemic),” Ms. Ong said.

“Lead times have been prolonged. Retailers have to strategize. Before, it was two weeks, now (they have to plan around) one month. The lead time has doubled, depending on the origin,” she added.

Ms. Ong said some retailers have increased their prices due to rising fuel costs, though the trend cannot be “generalized — it depends on the sector.”  

“By and large, retailers are resilient. We’ve gone through the pandemic, we’ve gone through so many challenges, and we work together. We collaborate and share ideas,” she added.

Ms. Ong added that “we need to tech up the industry. For one, it will help the retailers to be more efficient in their processes — and (to handle) digital payments.”

The Department of Trade and Industry estimates the retail trade’s gross value added at over P600 billion in the first quarter of 2022, up from over P500 billion in early 2018. — Revin Mikhael D. Ochave

Gov’t borrowing falls 43.38% at end of May

BW FILE PHOTO

GROSS BORROWING dropped by 43.38% year on year at the end of May, as the National Government (NG) stepped up debt repayments.

According to preliminary data from the Bureau of the Treasury (BTr), gross borrowing was P883.11 billion in the year to date.

In May, the government’s debt position was a net redemption of P282.58 billion, with repayments outweighing new borrowing.

Domestic net redemptions were at P270.68 billion, against P104.4 billion a year earlier.

At the end of May, the NG’s outstanding debt also declined 2.1% month on month to P12.5 trillion, after it repaid advances made by the Bangko Sentral ng Pilipinas (BSP).

The record high for NG outstanding debt was P12.76 trillion at the end of April.

The May position on Treasury bills was a net issuance of P85.89 billion.

Fixed-rate Treasury bonds (T-bonds), meanwhile raised P115.21 billion.

Foreign gross borrowing rose 50.33% to P11.71 billion in May, consisting entirely of project loans accounting for all of it.

The government repaid P23.61 billion to foreign creditors in May.

In the year to date, gross domestic borrowing fell 57.37% year on year to P644.82 billion.

The government generated P457.8 billion from Retail Treasury bonds, and P446.45 billion from fixed-rate T-bonds.

Gross external borrowing rose 10.50% year on year to P279.61 billion in the five months.

The government borrows from domestic and foreign sources in order to fund a budget deficit that has since grown due to the need to finance the country’s pandemic response.

The government wants to raise P2.47 trillion to help fund its budget deficit this year, with about 77% coming from domestic sources. — Diego Gabriel C. Robles

PHL signs on to UN convention on electronic communications in trade contracts 

REUTERS

THE PHILIPPINES has submitted its instrument of ratification of a United Nations (UN) convention recognizing the use of electronic communications in trade contracts, the Department of Foreign Affairs (DFA) said in a statement on Friday.

The instrument was deposited by the Philippine Mission to the UN in New York, the DFA said.

Philippine Mission Deputy Permanent Representative Ariel R. Peñaranda, speaking at Digital Week of the 55th annual session of the United Nations Commission on International Trade Law on Thursday, called the treaty a “significant milestone in strengthening our cross-border international trade with key trading partners, some of whom are already States Parties, as it ensures that fundamental principles of e-commerce are recognized and enforced across borders.”

With the ratification of the Convention on the Use of Electronic Communications in International Contracts, the Philippines “will also move forward with the establishment of guidelines for cross-border mutual recognition of digital signatures, electronic communication and contracts, noting that the Convention facilitates technology-neutral mutual recognition among parties,” Mr. Peñaranda said.

The convention, which was adopted on November 2005 and came into force in March 2013, mainstreams the use of contracts concluded and other communications exchanged electronically, recognizing them as valid and enforceable.

“Ratification… sends a strong signal of the Philippines’ readiness to adopt a modern and predictable legal regime for international electronic contracts. It will further bolster our efforts to promote cross-border transactions,” former Trade Secretary Ramon M. Lopez has said.

Mr. Peñaranda said signing on to the convention is in line with the Philippines’ E-Commerce Roadmap.

The Philippines signed the convention in September 2007. It is the 16th state-member of the convention and the second Association of Southeast Asian Nations state to ratify it.

In a 2021 United Nations Global Survey on Digital and Sustainable Trade Facilitation, the Philippines scored 86%, higher than the Southeast Asia average of 74%. — Alyssa Nicole O. Tan

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