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Deere workers go on strike as UAW, company fail to reach deal

REUTERS

THOUSANDS of workers at Deere & Co., the world’s biggest farm machinery maker, began picketing Thursday for the first time in more than three decades to demand better pay as the company heads for its most profitable year ever. 

Representatives from the company and the United Auto Workers (UAW) union failed to reach an agreement over a new labor contract, which ignited the strike around midnight Chicago time. Workers rejected a tentative agreement calling for a 5%-6% wage increase for this year, and are also demanding better health benefits.

The move comes amid a labor shortage in the US, and as pandemic-induced chaos in global supply chains upends business as usual for manufacturers. But Deere stands out because it’s enjoying boom times despite the challenges. Its shares have risen 38% in the past year amid a rally in crop prices that buoyed farmer earnings and demand for tractors. The company is set to enjoy its most successful year ever, with Wall Street analysts predicting record earnings minus items.

During leaner times, employees made concessions to the company, the union said. Now it’s time for the company to pay them back.

The 10,000 Deere employees, or about 14% of the workforce, are on strike “for the ability to earn a decent living, retire with dignity and establish fair work rules,” Chuck Browning, a vice-president at the union said in a Facebook post.

White House press secretary Jen Psaki said she wouldn’t speak to individual labor actions but said the president supported union workers and called the right for workers to organize and strike a “fundamental right.” Democratic Senator Bernie Sanders tweeted his support for the workers.

ANALYST DOWNGRADE
The dispute may not end quickly. Evercore ISI downgraded the company’s stock on Thursday, citing risks for a prolonged fight. Shares rose 0.2%, trailing a 1.7% surge in the S&P 500 Index.

The strike isn’t happening in a vacuum. US workers have been seeking better compensation broadly amid labor shortages. Employees at Kellogg Co. cereal plants went on strike last week.

The timing of the strike is also significant. It’s coming in the middle of the North American harvest. While that is a period of weaker production for Deere, it could disrupt the harvest if farmers experience equipment breakdowns and Deere is unable to respond speedily. 

A work stoppage beyond a few days may make it tougher to get hold of replacement parts if equipment breaks during the harvest, according to Brian Strasser, a manager at Sinclair Tractor in Kalona, Iowa.

“Even though farmers are very resilient, if something breaks now, rather than taking hours it could take days to fix,” Strasser, who also farms corn and soybeans in East Central Iowa, said by phone. 

The last time Deere employees went on strike was in 1986 for 163 days. The impact to financial results for the company will depend on how long it takes for both sides to reach an agreement, according to Matt Arnold, an analyst at Edward Jones. Arnold wrote in a note to clients on Thursday there likely will be a temporary affect to Deere’s operations as they will be less efficient.

Stephen Volkmann, an analyst at Jefferies LLC, said labor accounts for about 15% of Deere’s costs.

“We are determined to reach an agreement with the UAW that would put every employee in a better economic position and continue to make them the highest paid employees in the agriculture and construction industries,” Deere’s vice-president of labor relations Brad Morris said in a statement. He added that the company would keep operations running while negotiations continued. — Bloomberg

Profit taking prevails after Converge ICT lockup period expires

By Lourdes O. Pilar, Researcher

INVESTORS of Converge ICT Solutions, Inc. opted to pocket gains after the lockup period expired.

Data from the Philippine Stock Exchange (PSE) showed Converge ranked first in value turnover with a total of P5.04-billion worth of 150.43 million shares traded from Oct. 11 to 15.

Shares of Dennis Anthony H. Uy-led fiber internet company provider closed at P31.80 apiece on Friday, down 5.4% from P33.60-per-share close on Oct. 8. Share price has more than doubled since the start of the year.

“Investors actively traded Converge [last] week as some found its price to be relatively more attractive versus its previous levels. This could mean that people still see Converge as a reliable long-term investment given its solid fundamentals,” Regina Capital Development Corp. Equity Analyst Anna Corenne M. Agravio said in an e-mail interview.

“This positive sentiment was further boosted by the firm announcing midweek that it launched Converge Business,” she added.

In a separate e-mail, COL Financial Group, Inc. Research Analyst Adrian Alexander N. Yu said that foreign selling made the stock the most active this week.

“Converge witnessed heavy foreign selling for the week, which may have been driven by the expiration of Coherent Cloud Investments B.V. 365-day lockup,” said Mr. Yu.

“Regarding the Converge’s business segment, it is still too early to tell how this segment will contribute to the growth of Converge moving forward. Currently, 87% of Converge’s revenues still come from its consumer segment,” added Mr. Yu.

Coherent Cloud, owned by US private equity firm Warburg Pincus, has a 15.83% stake (representing 1.19 billion shares) in Converge, which were put under lockup for 365 days, expired last Oct. 8 and became tradable starting Oct. 11.

Meanwhile, Converge introduced last week its “Converge Business” segment, an umbrella brand focusing on business connectivity services and solutions.

The brand covers the company’s data transport and other information and communications technology solutions aimed at enabling small and medium enterprises, conglomerates, and large enterprises to thrive.

“Aside from the business segment news, more investors are attracted with the news that the company is gaining traction globally as it was included in the Financial Times Stock Exchange (FTSE) ASEAN Stars Index and will be traded in the US via ADRs,” Mercantile Securities Corp. Analyst Jeff Radley C. See said in a Viber message.

In a disclosure on Oct. 6, Converge was included in the global benchmark FTSE ASEAN Stars Index as the company shows strong growth.

The FTSE ASEAN Stars Index is intended as a “barometer and not to be used as the basis for investment products,” investment management company FTSE Russel, a subsidiary of London Stock Exchange Group.

For the first half of the year, Converge saw its bottom line nearly tripled to P3.25 billion, while its revenue increased by 81.5% to P11.78 billion.

“The company will likely be able to sustain its strong growth trend for the remainder of the year. We expect high double-digit net income growth,” Ms. Agravio said.

COL Financial is forecasting P24.9 billion in revenues for Converge for full-year 2021, up 59.2% from its full-year 2020 revenues.

“Given the high share price volatility this week, Converge will likely cool down and consolidate in the next few trading sessions,” added Ms. Agravio.

She placed the stock’s support at P30.00 per share and resistance at P36.00 apiece.

Mr. See expects Converge to trade sideways this week, ranging between P30.50 and P36.50. He pegged the stock’s support between P30 and P30.50, while resistance is at P33.70 and P36.50.

“Over the next few trading days, we should see some support around the P30.00-per-share region, or just before Converge went on its parabolic run to P46.00 per share,” Mr. Yu said.

“At its current price of P31.80 per share, Converge has already retraced 30.8% of its value from its recent high,” he added.

Mr. Yu put Converge’s resistance level at P38.00 to P40.00 per share.

Yields on government debt climb on Fed taper bets

YIELDS at the secondary market climbed last week following the auction of five-year Treasury bonds (T-bonds) and amid near-term inflation concerns, as well as expectations the US central bank would start winding down its asset purchases by next month.

Yields on government securities (GS) rose by 11.58 basis points (bps) on average week on week, based on PHP Bloomberg Valuation Service Reference Rates as of Oct. 15 published on the Philippine Dealing System’s website.

Rates at the short end of the curve mostly went up, with the 91- and 182-day Treasury bills (T-bills) adding 2.72 bps and 0.62 bp, respectively, to end at 1.1994% and 1.4348%. The 364-day paper, meanwhile, saw its yield edge down by 0.82 bp to 1.616%.

Meanwhile, at the belly of the curve, the rates of the two-, three-, four-, five-, and seven-year T-bonds increased by 11.19 bps (to 2.2526%), 17.42 bps (2.7686%), 21.90 bps (3.2556%), 23.71 bps (3.7078%), and 22.99 bps (4.4069%).

Likewise, at the long end, the 10-, 20-, and 25-year papers added 21 bps, 2.31 bps, and 4.36 bps, respectively, to fetch yields of 4.9426%, 5.0166%, and 5.0173%.

“Inflation and tapering angst continued to take center stage, which caused local yields to rise and for the GS curve to steepen on a week-on-week basis,” a bond trader said in a Viber message.

“Dealers and investors continue to strategically position ahead of [US Federal Reserve] tapering, where short-end bonds were bought while some players were observed selling securities at the far end of the curve to reduce some holdings,” the bond trader added.

ATRAM Trust Corp. Head of Fixed Income Jose Miguel B. Liboro said investors “remained largely defensive” amid the highs hit the previous week, adding that caution persisted going into the Bureau of the Treasury’s (BTr) auction of five-year bonds on Tuesday.

“BTr was able to fully award its auction of five-year papers… Market activity remained muted with most investors remaining defensive against sustained pressure higher in rates,” Mr. Liboro said in an e-mail.

The BTr on Tuesday borrowed P35 billion as planned via the reissued five-year T-bonds with a remaining life of four years and five months. Total tenders reached P56.08 billion, higher than the initial offer but lower than the P76.167 billion in bids recorded the last time the government offered the bond series on Sept. 1.

The reissued notes fetched an average rate of 3.576%, climbing by 83 bps from 2.746% recorded in the previous auction of these papers.

Meanwhile, worries that elevated consumer prices may slow economic recovery at a time when restrictions are loosened to spur market activity also affected debt rates.

Headline inflation was at 4.8% in September, slowing from the 4.9% in August but above the 2.3% print recorded in the same month last year. Year-to-date inflation settled at 4.5%, still above the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target and forecast of 4.4% for this year.

BSP Governor Benjamin E. Diokno last week said these recent price spikes are “transitory.”

On the other hand, the US central bank last month said it could start reducing its monthly bond purchases as soon as November and signaled interest rate increases may follow more quickly than expected.

The US last week reported weekly jobs claims falling below 300,000 for the first time in 19 months, fueling bets that the Fed will proceed with its planned taper timeline.

“We expect the bearish sentiment to persist over the short term and for rates to continue to edge higher. However, we see value on the 10-year papers at just below the 5% area and expect the yield curve to flatten towards yearend as investors begin to reposition on this part of the yield curve,” ATRAM Trust’s Mr. Liboro said.

For the bond trader: “With global energy prices still elevated, the angst on inflation will still be on players’ thoughts.”

“Adding fuel to the fire is the market trying to time US Fed’s tapering and trying to assess its implications in the local bond market. With that, yield curve is expected to remain steep and continue to monitor US Treasury movements,” the trader added. — A.M.P. Yraola with Reuters

Mitsubishi rolls out low down payment deals

PHOTO FROM MITSUBISHI MOTORS PHILIPPINES CORP.

MITSUBISHI MOTORS Philippines Corp. (MMPC) said it is “getting an early start on the holiday rush” with its “Year-Ender Specials” promo. Until the end of October, MMPC serves up all-in low down payment deals on the Mirage, Strada, Xpander Cross, Montero Sport, and L300.

The Mitsubishi Mirage hatchback, known for its dependable performance, fuel-efficiency, and affordability, is now available for as low as P28,000 all-in low down payment. The Strada pickup, on the other hand, is the perfect option for people with an active lifestyle and those into adventure. Positioned as a conqueror of tough terrain, the Strada is offered by MMPC for as low as P88,000 all-in low down payment on the GLS 2WD A/T.

On the other hand, P78,000 is all it takes for a down payment on the multi-awarded Xpander Cross, a “family-friendly seven-seater crossover MPV developed with SUV styling.”

For customers looking at SUVs, the Montero Sport can be had for as low as P168,000 all-in down payment on the GLS 2WD A/T. This Mitsubishi is a powerful, comfortable SUV that can seat up to seven, and features “on-board technology to make… drives more enjoyable.”

Lastly, the proudly Filipino-made Mitsubishi L300 is touted as the best-selling utility van in the market. MMPC said it’s known for its dependable power, durability, and easy maintenance — which have made it the “preferred vehicle partner of most business owners.” The L300 is now available for as low as P88,000 all-in down payment.

“We are very excited to offer better promotions in the last quarter of 2021. This is to provide better opportunities for customers to own their dream Mitsubishi vehicle before the year ends. This latest offer from MMPC is an early Christmas gift to all our valued customers,” said MMPC President and CEO Takeshi Hara.

For more info, visit www.mitsubishi-motors.com.ph or contact a Mitsubishi dealership.

Style (10/18/21)

Greenbelt 3

Greenbelt 3 unveils new flagship stores

HAVING been under construction for most of the quarantine period, Greenbelt 3 is reopening with several major flagship stores and first-in-the-Philippines retail concepts along its newly renovated wing. Opening boutiques in Greenbelt 3 before the end of 2021 are Louis Vuitton, Fendi, Dior, Off White, Univers and Thom Browne, Bvlgari, Kenzo, Max Mara, RIMOWA, Patek Philippe, and L’Officine Universelle Buly. Meanwhile, 2022 will see the launch of Celine, Salvatore Ferragamo, Tod’s, Ermenegildo Zegna, Roger Vivier, Loewe, Jimmy Choo, and the store expansion of Hermes. The new Greenbelt 3 will feature over 18 soon-to-launch brands plus an expansion of Hermes’ boutique. It flows seamlessly with the boutiques found Greenbelt 4. Store openings at the renovated wing will commence gradually starting this month. The first to open is French fashion house Louis Vuitton, which will unveil its newly renovated 1000-sqm boutique that incorporates Filipino culture through its collaborations with local artists and interior design firm, Philux. Dior will be opening its biggest flagship store in the country and will exclusively carry Dior’s seasonal women’s ready-to-wear for the first time. Italian brand Max Mara will open in the Makati mall offering its collections of ready-to-wear and accessories for women. Greenbelt 3 will house German luggage label RIMOWA’s first flagship store, which will offer the brand’s most recognizable collections alongside one-of-a-kind collaborations and seasonal designs. The RIMOWA Personal in a limited-edition Bamboo shade collection will be available exclusively at the flagship store to celebrate its opening. Kenzo will open its first inline space at the Ground Floor of the refreshed wing. Two globally acclaimed brands will open stores in the Philippines for the first time at Greenbelt 3: Roger Vivier, known for its footwear, bags, and accessories; and L’Officine Universelle Buly, a Parisian perfume and cosmetics brand. For everyone’s safety, Greenbelt partnered up with the Department of Health and the LGU to immunize all mall employees. The mall also a recipient of the Safety Seal.

Pond’s launches AI-powered skin analysis

THE PHILIPPINES’ biggest beauty brand, Pond’s, unveils real-time skin analyzing technology in partnership with Watsons. The Skin Advisor Live (SAL) skin analysis is a virtual beauty experience developed using cutting-edge AI and AR technology that provides users with near-instant skin analysis and a personalized skincare regimen tailored to their specific concerns. Drawing from data gathered from 1 million sources, the SAL skin analysis is a diagnostic tool that provides users with accurate, real-time results and solutions to their skin concerns. With the rise of at-home treatments, and the downturn in beauty services and clinic visits, the SAL skin analysis provides the next best option for users who wish to get expert updates on their skin condition and a deeper understanding of how to best care for their skin. It utilizes artificial intelligence (AI) technology to power its skin analysis, relying on a combination of machine vision and machine learning methods to detect faces and lighting conditions, and to extract and analyze facial information. To get their free skin analysis, users can simply scan their skin using their smartphone or web cameras on the SAL skin analysis platform and can get their Skin Scores —gauging levels of hydration, wrinkles, acne, or pigmentation — in less than eight seconds, all from the comfort of their homes. A personalized skin care regimen for both day and night, with products selected to best address each person’s specific skin challenges, is then provided by an advanced algorithm. Visit https://www.watsons.com.ph/ponds-skin-advisor-live to experience the Pond’s Skin Advisor Live skin analysis.

Tod’s No_Code J urban sneaker

TOD’S No_Code projects (a synthesis of advanced technology and high production quality) latest is the No_Code J, equipped with performance suitable for rough terrains. Korean designer Yong Bae Seok took many points of inspiration for the ‘J’ project from his trip to Silicon Valley in 2020 to produce the book, Silicon Valley, No_Code Life. In Yong’s words, “The new No_Code J (where ‘J’ stands for journey) answers the needs of people who are looking for adventure, contact with nature and the outdoors, even in a more urban context; thus making ‘J’ ‘all terrain’ where, in the words of the architect Louis H. Sullivan, ‘Form follows function.’” In the Philippines, Tod’s is exclusively distributed by Stores Specialists, Inc., and is located at Greenbelt 4, Rustan’s Shangri-La, and Shangri-La Plaza and online at Trunc.ph, Rustans.com, Zalora, and Lazada.

Asics’ new footwear and apparel collection

ASICS launches their new Celebration of Sport Collection, a cross-category footwear and apparel collection that celebrates the power of sport to uplift the world. Launching alongside a full apparel range, the Celebration of Sport Collection sees footwear across Asics’ Performance Running, Core Performance Sport and Sport Style categories given a striking design revamp. Each piece in the collection features bright, bold confetti-style detailing, taking visual cues from the sense of uplift and celebration that sport will inspire across the world this 2021. The 46-piece collection encompasses more than five different sports. For runners there are new iterations of the Gel-Kayano 28 and Novablast 2; tennis and volleyball players get the supportive, lightweight Court Speed FF and the responsive Netburner Ballistic FF 2. There is also an array of re-imagined Sport Style silhouettes, including the Gel-quantum 360 6 and Gel-quantum 180. The Celebration of Sport Collection is available online and instore. For details visit https://www.asics.com/ph/en-ph.

Blythe launches new Lip Treat After Party Collection

TO CELEBRATE Careline’s young brand ambassador Andrea Brillantes, Careline has launched its Blythe Lip Treat After Party Collection. It is an elegant nude lip collection that is enriched with vitamin E that protects lips from irritation and reduces damage caused by UV rays. It comes in five versatile shades namely Oatmeal, Pudding, Cheesecake, Banoffee, and Tiramisu. Whether one prefers a neutral or earth-toned shade, this collection has the shade to match a preferred look and skin tone. The Blythe Lip Treat After Party Collection is available on Careline’s official store on Lazada (bit.ly/CarelineLazada), Shopee (bit.ly/CarelineShopee), and in leading supermarkets, department stores, and drug stores nationwide.

Holiday gift shopping at RWM

RESORTS World Manila (RWM) integrated resort offers one-stop, non-stop shopping for those who are eager to start their holiday gift hunting. Streetwear brand Vans, and classic casual wear brand Dickies recently opened retail outlets at RWM’s Garden Wing, 3F Newport Mall. RWM has also opened its own signature retail outlet, The Exclusives Store, at the Ground Floor gaming area of the Grand Wing. RWM’s The Exclusives Store offers a curated selection of premium branded items from gadgets to apparel and accessories, and many more. Customers can pay for purchases using RWM membership points, cash, and credit cards. The Apple iPhone 13 now available for reservation at The Exclusives Store, which is open daily from 11 a.m. to 10 p.m. The Exclusives Store also carries premium signature items from RWM’s food outlets. Mall goers are assured of safety within the entire RWM complex, especially when shopping as the Newport Mall boasts of 100% vaccination rate of all retail frontliners. To know more about RWM’s shopping offers and operating hours, visit www.rwmanila.com or follow RWM’s official social media accounts, @rwmanila on Facebook and Twitter, and @resortsworldmanila on Instagram.

Uniqlo reopening Iloilo store

JAPANESE global apparel retailer, Uniqlo, is set to reopen its store at SM City Iloilo mall on Oct. 29. The revamped store, stationed at the Upper Ground floor of the mall’s North Wing, has been expanded from 608 sqm to 969 sqm sales area to ensure a better shopping experience for the Ilonggos. To celebrate the reopening of Uniqlo SM City Iloilo, a number of items will be offered for special prices during the opening weekend: Men’s Dry Pique Short Sleeve Polo Shirt will be available at P790 from P990; the Men’s and Women’s U Crew Neck Short Sleeve T-Shirt will be available at P390 from P590; the Women’s Mercerized Cotton Short Sleeve Mini Dress will be available at P790 from P990; the Women’s Ultra Stretch Cropped Leggings will be available at P790 from P990; and the Kids Easy Shorts will be available at P390 from P590. For updates, visit Uniqlo Philippines’ website at uniqlo.com/ph or download the Uniqlo App via Google Play Store or Apple Store.

Shop with Ayala Malls’ Zing App

TO SHOP and dine from home, Ayala Malls has come up with Zing, its customer convenience and rewards app. Shoppers are assured that only authentic items will get delivered as they access the stores’ official websites, plus, they get to earn points and access perks while shopping. Zing makes it easier for patrons to shop online via ZingShops. The feature lets customers scroll through Ayala Malls’ retail offerings. Participating labels and merchants are categorized accordingly: Fashion, Sports Active, Beauty & Health, Gadgets & Appliances, and Specialty. It also features Pinoy Artisano, which carries an assembly of distinctive brands featuring stylish local and international collections. Browse, click, and get redirected to various brands’ online stores. To assuage hunger pangs, check out ZingEats, the newest food ordering platform that lets customers pick and choose from multiple Ayala Malls food outlets including Botejyu, Denny’s, Italianni’s, Las Flores, and Wingzone among many others. Earn points for every ZingShops and ZingEats order by upgrading as a Zing Plus member. Zing Plus members have access to exclusive promos and flash sales.

Smart sprayers targeting farm weeds to hit US market

GREENEYE

AMERICAN FARMERS will soon be able to buy smart weed sprayers that promise to significantly reduce the use of farm chemicals.

Israel-based Greeneye Technology is planning to sell the sprayers powered by artificial intelligence in the US beginning in 2022. The equipment, which attaches to tractors, can identify some 200 different plants and apply chemicals only on the ones that need it. It could lower herbicide volumes by up to 90%, according to Nadav Bocher, chief executive officer of the startup.

“Farmers are running out of options for crop protection,” Bocher said.

Companies are looking for new solutions to rid farms of weeds. For decades, farmers have been blanketing crops with herbicides like Roundup, which won’t kill corn and soybeans that have been genetically modified to survive it. But recently, some superweeds are also becoming resistant, which is hurting yields. The smart sprayers allow farmers to specifically target the invasive plants and dramatically reduce use of chemicals.

While other companies, including the largest machinery maker Deere & Co., have been developing similar technology, Bocher said Greeneye, whose investors include agriculture supplier Syngenta Group, is the only one to offer equipment that could be installed on existing tractors.

The smart sprayers come as farm input costs such as fertilizer and chemicals have soared and as machinery parts have been hard to get due to snags in the supply chain. Greeneye so far has piloted the technology on corn and soybean farms in Illinois, Iowa and Nebraska.

“We’re ready to move from controlled lab conditions to real field deployment,” Bocher said in a phone interview. — Bloomberg

Filipino consumers more optimistic in Q3 2021

THE POTENTIAL EFFECTS of looser Metro Manila mobility restrictions on consumer spending and this year’s economic growth have drawn mixed levels of optimism from economists and industry heads. Read the full story.

Filipino consumers more optimistic in Q3 2021

How PSEi member stocks performed — October 15, 2021

Here’s a quick glance at how PSEi stocks fared on Friday, October 15, 2021.

Peso to appreciate against the dollar on lower daily coronavirus cases

BW FILE PHOTO

THE PESO will likely strengthen this week on the back of lower active coronavirus cases and ahead of the release of the latest budget balance data.

The local unit closed at P50.711 per dollar on Friday, shedding 10.6 centavos from its P50.605 finish on Thursday, based on data published on the Bankers Association of the Philippines’ website.

The peso was also weaker by 13.1 centavos from its close of P50.58 per dollar a week earlier.

The local unit depreciated versus the greenback on Friday amid a continued increase in global oil prices, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

Reuters reported on Friday that oil prices settled at a three-year high on expectations of supply constraints in the coming months amid demand spurred by easing travel restrictions.

Brent crude futures rose 86 cents or 1% at $84.86 a barrel on Friday. Meanwhile, US West Texas Intermediate crude futures rose 97 cents or 1.2% to $82.28 per barrel.

Hawkish signal from the minutes of the previous policy review of the US Federal Reserve also affected peso-dollar trading last week, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

The Fed signaled on Wednesday it could start reducing its crisis-era support for the US economy by the middle of next month, with a growing number of its policy makers worried that high inflation could persist longer than previously thought, Reuters reported.

Eased restrictions in Metro Manila also supported the peso, Mr. Asuncion said.

Restrictions in National Capital Region were eased to Alert Level 3 from Alert Level 4 from Oct. 16 to 31, with more businesses allowed to operate.

The market will continue to wait for more leads from the Fed on its plan to taper its bond purchases, Mr. Asuncion said.

Seasonal remittance inflows could also provide support for the peso, he added.

Cash remittances rose 5.1% to $2.609 billion in August from $2.483 billion a year ago, data released by the Bangko Sentral ng Pilipinas on Friday showed. This brought inflows for the first eight months of the year to $20.38 billion, up 5.7% from the $19.285 billion logged in the same period of 2020.

Meanwhile, Mr. Ricafort said the market will continue to monitor the country’s coronavirus infections to see if new cases stay low.

Active cases rose 7,772 to 85,048 on Saturday, based on data from the Department of Health.

The release of latest budget balance data scheduled on Oct. 22 will also be a driver for the market this week, he added.

The government’s budget deficit was at a four-month low of P120.9 billion in August.

For this week, Mr. Asuncion gave a forecast range of P50.30 to P50.80 per dollar, while Mr. Ricafort expects the local unit to move within P50.40 to P50.90. — L.W.T. Noble with Reuters

PSEi to move sideways ahead of firms’ Q3 results

REUTERS

PHILIPPINE shares are expected to move sideways this week as investors monitor the country’s coronavirus disease 2019 (COVID-19) situation and in anticipation of third quarter (Q3) corporate earnings reports.

The 30-member Philippine Stock Exchange index (PSEi) rose by 30.35 points or 0.42% to close at 7,213.46 on Friday, while the broader all shares index went up by 4.86 points or 0.10% to 4,448.81.

Week on week, the benchmark index climbed 306.60 points from its 6,906.86 finish on Oct. 8.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the market’s gains were driven by improved sentiment on the back of lower COVID-19 infections and progress in the country’s vaccination program.

According to the national COVID-19 vaccination dashboard of the Health department, the country has administered nearly 51.99 million vaccine jabs with almost 21.17 million or 22% of the population already fully vaccinated against the disease.

Analysts said the market may move sideways this week as investors continue to monitor the country’s COVID-19 situation and anticipate the release of companies’ third quarter earnings.

“Market sentiment could also be shaped by some leads related to the May 9, 2022 presidential elections,” Mr. Ricafort said in an e-mail, adding that preparations for the national elections would spur “increased government spending, especially infrastructure, as a major pillar to the economic recovery program.”

The “expected increase in COVID-19 vaccine arrivals in the coming weeks or months” as the country aims to inoculate more of the population may also boost market sentiment, he added.

“The brightening economic prospects brought by the alert level downgrade in the National Capital Region (NCR) is seen to keep the positive sentiment in the market,” Japhet Louis O. Tantiangco, senior research and engagement supervisor at Philstocks Financial, Inc., said in a Viber message on Saturday.

Metro Manila will be under Alert Level 3 until end-October amid the decline in COVID-19 cases. The new classification allows for the reopening of movie theaters and amusement parks, as well as eased restrictions for vaccinated individuals.

“If the cases further decline [this] week, then it may strengthen investors’ confidence since it raises the possibility of more easing of restrictions in the country,” Mr. Tantiangco said.

“The elevated global oil prices serve as downside risk, however,” he added. “The benchmark Brent crude is already nearing $85 per barrel. If oil prices remain high, worse, if they rally further, then it is seen to raise inflation worries which could weigh on the local bourse.”

Mr. Tantiangco placed the PSEi’s support at 7,000 to 7,100 and its resistance at 7,300.

Meanwhile, RCBC’s Mr. Ricafort said the immediate support level is at 6,800 to 7,000, while the resistance level is at the 7,400 to 7,500 range. — Keren Concepcion G. Valmonte

Finance dep’t says funding available for UHC

THE DEPARTMENT of Finance said it does not expect problems with the rollout of universal healthcare (UHC) even with funding pressures caused by the pandemic.

Finance Secretary Carlos G. Dominguez III said the UHC will not be compromised by the coronavirus disease 2019 (COVID-19) pandemic.

“For 2022, we proposed an allocation of P80 billion for the premium subsidies for indirect contributors under the UHC law,” he said. The health insurance premiums of indirect contributors such as senior citizens and persons with disabilities are government-subsidized.

Mr. Dominguez also estimated that the government health insurer, known as PhilHealth, had around P164 billion in reserve funds as of June available for the UHC.

Fitch Solutions Country Risk and Industry Research has said the more contagious Delta variant worsened the effects of the pandemic in the Philippines.

It said the slow vaccine rollout and pandemic containment setbacks will delay the goal of achieving universal healthcare because of the diversion of healthcare funds to deal with the emergency.

The bulk of funding for UHC comes from the general appropriations act and tax collections from “sin” products such as tobacco and vaping products.

Excise tax collections from cigarettes rose 31% to P83 billion in the first seven months due to higher tax rates and growing sales after a pandemic-induced slump last year.

PhilHealth was allocated P79.9 billion for 2022 under the national budget approved by the House of Representatives. After it realigned part of the budget to fund COVID-19 booster shots, the House expects to transmit the proposed spending plan to the Senate by Oct. 27. — Jenina P. Ibañez

Senate expects to approve budget by end of November

BW FILE PHOTO

By Alyssa Nicole O. Tan

THE SENATE aims to approve its version of the 2022 General Appropriations Act (GAA) by the end of November, the chamber’s President, Senator Vicente C. Sotto III, said.

In a Viber message to BusinessWorld, he said discussions will start on Nov. 6, the goal is to approve the P5.024-trillion budget in the same month, with Dec. 1 seen as the latest possible date to pass the chamber’s budget bill.

The House on Sept. 30 approved with no abstentions its version of the 2022 GAA or House Bill 10153 on third and final reading, which will be transmitted to the Senate on Oct. 27.

Amid budget hearings for individual agencies in the Senate, Senator Juan Edgardo M. Angara, who chairs the chamber’s finance committee, said that the pandemic response will be given the highest priority.

“Funds are very tight this year because as noted by our colleagues during the DBCC (Development Budget Coordination Committee), it seemed like the budget submitted by the DBM (Department of Budget and Management) was not for COVID,” he said in an earlier statement, noting that the proposal did not include funds for contact tracing, booster shots, the testing of minors, and benefits for healthcare workers.

While the Senate will work hard to meet the various requests from the agencies for more funding, the bias will be weighted towards strengthening the pandemic containment effort, Mr. Angara added.

“Self-preservation is the ultimate goal of any individual or society. So, let’s preserve ourselves first and then we can go pursue more lofty goals,” he said.

The budget department has said that the lack of allocations to deal with the coronavirus 2019 (COVID-19) was due to the preparation of the budget proposals before the emergence of the more contagious Delta variant.

Sen. Emmanuel Joel J. Villanueva, vice-chairman of the finance committee, told BusinessWorld via Viber that he will pursue measures to ease joblessness and upgrade worker productivity.

He wanted to ensure that the National Employment Recovery Strategy program “hits its target of generating 1.22 million jobs for our workers.”

“We’re also looking at sufficient funding for programs, such as the Tulong Trabaho Scholarship program, that would help retool and upskill our workers to make them employable,” Mr. Villanueva added.

Sen. Sherwin T. Gatchalian, also a finance vice-chairman, noted plans to provide a 94% budget hike to the education department to enhance its computerization program in 2022.

“However, the education department should ensure that funds are properly used to procure and provide computers for the public schools,” he said in a statement Saturday.

“Looking at the past experience of the department in terms of dispensing the budget on computerization, I’ve noted that it has some issues in terms of obligations and disbursement,” Mr. Gatchalian, who chairs the Senate Committee on Basic Education, Arts and Culture, added, noting the need to pay thorough attention to suppliers after recurrent supplier issues in previous years.

He is also filing a bill that will accelerate the digital transformation of the education sector.

Meanwhile, Sen. Panfilo M. Lacson, also a vice-chairman of the finance committee, earlier this month noted that large portions of the budget were wasted.

According to Mr. Lacson, who is running for president, budget ceilings imposed by the DBCC also often neglect the needs of smaller communities in putting together National Expenditure Program.

“We have observed that for so many years — and I am driven (to address this concern) because year-in, year-out, I like to go over and scrutinize the national budget — a lot of money is being wasted under the General Appropriations Act,” he said in a statement.

He said that he planned to adopt a zero-based budgeting system to give government agencies more flexibility when spending taxpayers’ money.

Zero-based budgeting requires all expenses to be justified for each new fiscal period, similar to the private sector approach to budgeting, he said.

“This is to avoid future incidents of wasting public funds because of unused appropriations, or underspending that could reach to over P400 billion, because most agencies under the executive branch have been operating with a budget ceiling,” he added.

Mr. Lacson said he will encourage more citizens through their barangay officials to participate in their local development councils, all the way to the regional chapters of the DBCC, to propose useful projects that can be included in the national budget.

He hopes this approach will make the process more organized and minimize unauthorized budget insertions, which have delayed the preparation of past budgets.

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