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SSS 2020 contributions fall 7.1% to P204.75 billion

THE Social Security System’s (SSS) contributions collected from members fell 7.1% in 2020 to P204.75 billion, reflecting the job losses caused by the pandemic.

Citing preliminary data from the SSS, the Department of Finance (DoF) said in a statement Friday that contributions missed the P246.83-billion target set for the year by 17%.

“The drop was the result of 1.5 million members unable to pay their contributions because of COVID-related job losses,” the DoF said.

The SSS released P192.84 billion in benefits last year, down 2%.

The pension fund’s contribution-benefit surplus fell 81% to P11.92 billion.

Loans released to members rose 53.6% to P62.35 billion, while loan payments fell 17.6% to P32.44 billion due to the debt moratoriums imposed during the public health crisis.

Calamity loans disbursements hit P31.69 billion last year, salary loans amounted totaled P30.47 billion and pension loans amounted to P3.4 billion.

Operating expenses fell 17.7% to P8.18 billion.

In a separate statement Friday, the SSS said it earned P32.47 billion from its investments in 2020, down 20.7% after the economic crisis dampened returns from the stock market and from interest-bearing securities.

The pension fund said its return on investment was 5.89%, well below the average of 8.07% recorded in the past decade.

It closed the year with a P589 billion investment portfolio last year, with government securities accounting for 41.9%, member loans 19.1%, equities 16.7%, property 10.1%, corporate notes and bonds 5.8%, bank deposits 2.8%, external funds 2.2%, and housing and development loans 1.5%.

“SSS investment performance has consistently outperformed major investment benchmarks. Whatever are the prevailing market conditions, we continue to perform well in our investment activities. As guided by our charter, we adhere to the principles of safety, good yield, and liquidity,” SSS President and CEO Aurora C. Ignacio in the statement.

The government is now working to suspend the scheduled increase in contributions of members to the pension fund. The Senate last month approved on third and final reading a bill granting the President the authority to suspend the contribution rate hike for up to a year.

Under Republic Act No. 11199 or the Social Security Act of 2018, the SSS is scheduled to raise its contribution rate to 13% from 12% this year. A one percentage point increase in contributions is scheduled every other year starting 2019 until the rate hits 15%. — Beatrice M. Laforga

RCBC to offer fixed-rate ASEAN Sustainability peso bonds

Rizal Commercial Banking Corp. (RCBC) said Friday that it will issue fixed-rate ASEAN Sustainability bonds denominated in pesos to fund projects qualifying under its sustainable finance framework.

In a disclosure Friday, RCBC said that the securities have tenors of either 2.5 years or 5.25 years.

“The bonds will have a minimum issue size of P3 billion, with an option to upsize…(They) will be offered at a fixed interest rate of 3.20% per annum for the 2.5-year tenor and 4.18% per annum for the 5.25 year tenor,” RCBC said.

The bank said that the public offering will run until March 19, but the time frame can be extended or shortened by RCBC after consultation with the sole lead arranger and financial advisor. It added that it expects to list the peso bonds on the Philippine Dealing and Exchange Corp. (PDEx) debt market by the end of March.

Standard Chartered Bank’s Philippine branch (SCB) is the issue’s sole lead arranger and bookrunner, while RCBC Capital Corp. stood as the financial advisor for the issue. Both SCB and RCBC Capital are selling agents.

Proceeds from the ASEAN Sustainability bonds will go to “supporting asset growth, re-financing maturing liabilities, general funding purposes and eligible loans defined in the bank’s sustainable finance framework.”

RCBC’s sustainable finance framework is certified by independent research firm Sustainalytics, an environmental, social, and governance, and corporate governance research and ratings company.

The ASEAN Capital Markets’ Forum said that the proceeds from ASEAN Sustainability bonds will be “exclusively used to finance or refinance a combination of green and social projects that offer environmental and social benefits, respectively.”

RCBC’s latest bond issue is the sixth drawdown of its P100-billion bond and commercial paper program. In the past two years, it has tapped the domestic bond market for P15 billion worth of ASEAN green bonds; P8 billion in ASEAN Sustainability Bonds; and a combined P31.15 billion worth of other bonds.

In 2019, the bank launched the first peso-denominated ASEAN green bond on PDEx, according to the PDS Group. PDEx is the trading services arm of the PDS Group.

On Friday, RCBC shares fell 1.71% or 0.3 centavos to P17.20. — Angelica Y. Yang

Diokno sees financial inclusion boost from satellite liberalization

AN executive order (EO) liberalizing entry into the satellite industry may improve financial inclusion by increasing access to online financial services, according to the Bangko Sentral ng Pilipinas (BSP).

“This will be a big push for financial inclusion toward a more resilient and truly inclusive digitally-enabled new economy,” BSP Governor Benjamin E. Diokno said in a statement Friday. Mr. Diokno chairs the Financial Inclusion Steering Committee (FISC), an interagency body.

President Rodrigo R. Duterte signed EO 127 Thursday allowing registered internet service providers (ISPs) and value-added service providers (VASP) the use of all satellite systems to provide internet services

Prior to the EO, only telecommunications companies with legislative franchises were permitted to do so.

Mr. Diokno said the measure will promote competition and attract investment in satellite broadband services, as well as fill in the infrastructure gap in connectivity for remote areas.

The EO was endorsed by the 20-member FISC to the president in November, according to the central bank, as it was considered crucial in promoting financial and economic inclusion by providing more people with fast internet.

“In combination with the roll-out of the Philippine National Identification System (PhilSys) and its electronic know-your-customer facility, greater internet access will allow more unbanked rural clients and low-income communities to use digital financial services and meaningfully benefit from digital innovation,” the FISC said.

The central bank has been pushing for the acceleration of financial inclusion, including the Open Access in Data Transmission bill which removes the need to secure congressional franchises for broadband.

The BSP has set a target of 70% of the adult population having at least one bank account by 2023. As of 2019, that indicator stood at 29% of adults. An estimated 51.2 million remain unbanked.

The central bank wants 50% of financial transactions by volume and value to be performed digitally by 2023. — Beatrice M. Laforga

BSP bill issue raises P77.45-B, undersubscribed

The Bangko Sentral ng Pilipinas (BSP) said it raised P77.45 billion via the issue of short-term securities Friday, with the auction undersubscribed as rates continued to increase.

The BSP accepted all bids for the 28-day bill offer but fell short of its target to issue P80 billion. Demand declined from the bids of P106.674 billion recorded during the previous auction.

The average rate rose 14.4 basis points (bps) to 1.944% from the previous auction.

Investors sought yields of between 1.84% and 2.15%, against the range of 1.725-1.95% last week.

The increase in rates was within expectations due to high inflation, BSP Deputy Governor Francisco G. Dakila said in a statement.

“Nevertheless, financial system liquidity remains ample. Up ahead, the BSP’s monetary operations will continue to be guided by its assessment of the latest liquidity condition and market developments,” Mr. Dakila said.

The Philippine Statistics Authority (PSA) reported headline inflation of 4.7% last month, picking up from 4.2% in January and 2.6% a year earlier. Last month’s inflation was the highest reading since 5.1% in December 2018.

This brought the two-month average to 4.5%, above the central bank’s 2-4% annual target.

Both the BSP securities and term deposits are used by the central bank to mop up excess liquidity in the financial system and to better guide short-term market rates.

The lower-than-target proceeds could be due to the issue of three-year retail Treasury bonds (RTBs) on March 9, which sapped demand for securities, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said in a Viber message Friday.

Mr. Asuncion said the lack of demand drove rates higher in order to attract buyers seeking yield.

The government raised P463.3 billion worth of RTBs last week, consisting of P411.8 billion in fresh funds and P51.5 billion from switch subscriptions.

This was the Treasury’s second-biggest RTB sale in history, following the record P516.3 billion in five-year bonds issued last year. — Beatrice M. Laforga

Peso strengthens on import slump

The peso finished stronger Friday following the release of data pointing to the acceleration of the decline in imports in January.

The peso closed at P48.455 against its P48.50 finish on Thursday, according to the Bankers Association of the Philippines.

The peso opened at P48.44, hitting a high of P48.38 and a low of P48.50.

Week on week, the peso was little changed from its P48.56 close on March 5.

Dollar volume rose to $913.73 million from $792.65 million Thursday.

“The peso closed stronger after the latest trade data that showed declines in imports, thereby reflecting a softer economic recovery as well as a softer recovery in imports,” Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

The Philippine Statistics Authority reported that merchandise imports fell 14.9% year on year to $7.911 billion in January, accelerating from the 8.2% decline in December and the 2.8% contraction a year earlier.

Other factors that pushed the peso higher were the correction in global oil prices and the continued increase in 10-year US Treasury yields after the signing of the $1.9-trillion stimulus bill in the US.

US President Joseph R. Biden, Jr. signed the stimulus package Thursday to inject more funds into the US economy.

A trader said profit-taking in the dollar was expected ahead of the US producer price data due Friday. — Beatrice M. Laforga

Shares inch up as investors assess updates on COVID-19

Philippine shares inched up on Friday as investors tried to figure out how to position themselves following developments in the coronavirus disease 2019 (COVID-19) situation in the country.

The Philippine Stock Exchange index (PSEi) inched up by 9.37 points or 0.13% to close at 6,728.55, while the all shares index went up by 9.15 points or 0.22% to 4,059.58.

“The market ended marginally up [on Friday] as the investors grappled on how to best position themselves in light of current information,” PNB Securities, Inc. President Manuel Antonio G. Lisbona said in a text message.

“Reports of increasing numbers of new COVID-19 cases and the resultant call for renewed curfews signalled many investors to move to the sidelines. Confidence was slightly buoyed by government pronouncements that the economy will be reopened,” Mr. Lisbona added.

COVID-19 cases in the country have been surging in the past weeks, with over 2,000 new infections reported daily. An 11.4% positivity rate was recorded on Wednesday, March 10, the highest infection rate the country reported since August 2020.

Metro Manila mayors have imposed a 10 p.m. to 5 a.m. curfew in an attempt to curb the spread of the disease. It will be implemented starting on Monday, March 15, and will last for two weeks.

“Plus, the fact that there’s a fear of inflation and that the interest rate may slightly go up,” Summit Securities, Inc. President Harry G. Liu said in a phone interview.

The sectoral indices were split on Friday. Holding firms increased by 27.64 points or 0.39% to finish at 6,948.59; industrials improved by 22.13 points or 0.25% to end at 8,589.96; and property inched up by 3.04 points or 0.09% to 3,380.

Meanwhile, mining and oil declined by 56.63 points or 0.64% to 8,761.45; financials decreased by 4.39 points or 0.31% to close at 1,410.28; and services went down by 2.02 points or 0.13% to 1,456.22.

Value turnover went down to P6.87 billion on Friday with 3.41 billion shares switching hands, from the P8.58 billion with 5.05 billion issues traded on Thursday.

Advancers outnumbered decliners, 108 against 99, while 60 names closed unchanged.

Net foreign selling declined to P602.86 million on Friday from the P808.82 million seen on Thursday.

“What would be the prime fundamental, I suppose here in the Philippines [is an] improvement of [COVID-19 cases] and that the vaccination increases, [then] there is a chance that we would be rolling upward,” Mr. Liu said.

PNB Securities’ Mr. Lisbona said he expects the market support at 6,612, with a possibility of retesting the 6,500 level, and placed its resistance at 7,000.

“I think the market will consolidate but if it should trend, it will be downward barring any surprises over the weekend,” Mr. Lisbona said. — Keren Concepcion G. Valmonte

‘Don’t chase returns’ — financial consultant

Recessions are cyclical, but so are recoveries. “Your future is not about waiting for the economy to get better,” said Marvin P. Germo, financial consultant, stock market trader, and president of Stock Smarts Learning Publishing Inc., which publishes books on finance. “It’s about you being faithful with what you have right now and being better at investing so you can determine your future.” 

At a recent webinar organized by insurance company Manulife Philippines, Mr. Germo advised investing in financial instruments that give growth or long-term capital appreciation, cash flow or predictability of income, and hedge or additional protection in case things don’t go as planned. “The younger you are, the more you should focus on investments that are growth-oriented,”  he added. “The older you are, the more you should focus on investments that give predictability.” 

Based on a 2020 Manulife Asia Care study, 87% of Filipinos are considering purchasing an insurance product this year, with 90% saying that retirement planning has become more important since the coronavirus disease 2019 (COVID-19) pandemic began—this is above the region-wide average of 73%.

This year is a recovery year, but there are risks to consider, according to Zed J. Matubis, vice-president and head of wealth sales of Manulife Asset Management. “While the rolling out of the vaccines provides optimism for the re-opening of economies, resulting in higher gross domestic product (GDP) growth and corporate earnings, we still have to be cautious of the increasing COVID-19 cases, which will have a great impact,” he said. “It would be best for investors to have a long-term investment horizon and diversify their portfolios.”

Investing is about hitting a goal, and investment earnings are a byproduct of how a goal is structured, Mr. Germo said. The sooner individuals prepare for the next recession, the better prepared they are to structure their investments well. “Don’t chase returns. Returns are a byproduct of how you plan. You invest to meet a need so that when the market drops, you don’t get rattled, because you have a plan.” 

Variable universal life (VUL), a type of life insurance policy with a built-in savings component that allows for the investment of the cash value, was mentioned by Mr. Germo as a way to get one’s feet wet and own a piece of the country’s largest companies. It’s an instrument that offers a hedge of protection as well as an investment component, he said.

“A VUL allows me to go all in [on riskier investments] because I protected all the bases already,” he added. 

Another important piece of advice by the financial consultant was to only invest in one’s excess money. “Never put in money you need today,” Mr. Germo said. “It has to be an amount that—even if the value drops to zero—you can still sleep soundly at night.”

Globe 5G traffic up 24x in February

Globe experienced a significant increase in traffic — up 24 times to 416.76 TB in February 2021 from September 2020 as it continued to expand its 5G network locally.

Sustained fire ups and boosting of 5G sites, as well as availability of affordable devices that allow customers to enjoy better data experience have contributed to the rise of this technology.

5G’s unbeatable speeds and almost real-time latency opens a world of countless possibilities that Filipinos can look forward to as more and more areas are transformed into 5G-powered smart cities, delivering new experiences in retail, entertainment, gaming and healthcare.

Globe is a pioneer in 5G technology in the Philippines, as the first mobile operator in Southeast Asia to commercially launch 5G AirFiber for Home use in 2019. Subsequently, the telco launched its 5G for mobile in 2020. The telco continues to expand its 5G network, now covering 82% of Metro Manila. Continuous expansion is being done in key areas nationwide driven by the demand of the public for better connectivity.

In fact, these vigorous and sustained efforts have shown positive results as the Philippines led the rest of the world in improvements in 5G technology compared to 4G, when it comes to Video Experience* with a 40% score, international analytics firm Opensignal reported in its latest insight analysis, “Benchmarking the global 5G experience.” The country bested Thailand which placed second to the Philippines, posting a 29% boost while Hong Kong showed an improvement of 14%.

The country has also overtaken countries like Australia and Hong Kong, ranking second in 5G Download Speed Improvement with 10.1 times increase versus 4G at 117.2 Mbps.

According to Ian Fogg, Opensignal lead analyst, “For 5G to be relevant to mainstream mobile users, the latest mobile technology must offer an excellent and superior mobile network experience. In this analysis, we quantify just how good the 5G experience can be.”

As of February 19 this year, Globe’s 5G coverage is present in 960 locations in the National Capital Region and 240 areas in Visayas and Mindanao.

*Independent data referenced with consent from Opensignal, “Benchmarking the global 5G experience – February 2021″ © 2021 Opensignal Limited.

Novavax vaccine 96% effective against original coronavirus, 86% vs. British variant in UK trial

Novavax Inc.’s coronavirus disease 2019 (COVID-19) vaccine was 96% effective in preventing cases caused by the original version of the coronavirus in a late-stage trial conducted in the United Kingdom, the company said on Thursday, moving it a step closer to regulatory approval.

There were no cases of severe illness or deaths among those who got the vaccine, the company said, in a sign that it could stop the worse effects of new variants that have cropped up.

The vaccine was 86% effective in protecting against the more contagious virus variant first discovered and now prevalent in the United Kingdom, for a combined 90% effectiveness rate overall based on data from infections of both versions of the coronavirus.

Novavax shares jumped 22% in after-hours trading to $229. They were trading below $10 on Jan. 21, 2020, when the company announced it was developing a coronavirus vaccine.

In a smaller trial conducted in South Africa—where volunteers were primarily exposed to another newer, more contagious variant widely circulating there and spreading around the world—the Novavax vaccine was 55% effective, based on people without HIV, but still fully prevented severe illness.

Novavax Chief Medical Officer Filip Dubovsky said the performance in South Africa suggests there may still be a case for using it in areas where the South African variant is dominant.

Novavax is also developing new formulations of its vaccine to protect against emerging variants and plans to initiate clinical testing of these shots in the second quarter of this year.

Results from the final analysis of the UK trial were largely in line with interim data released in January.

The company expects to use the data to submit for regulatory authorization in various countries. It is not clear when it will seek US authorization or if regulators will require it to complete an ongoing trial in the United States.

Novavax expects data from a 30,000-person trial in the United States and Mexico by early April.

Mr. Dubovsky said that Novavax is still planning to file for authorization from UK regulators early in the second quarter of 2021.

The UK trial, which enrolled more than 15,000 people aged 18 to 84, assessed efficacy of the vaccine during a period with high transmission of the UK virus variant now circulating widely.

The shot’s effectiveness in the South Africa trial declined to around 49% when the analysis included data from HIV-positive participants.

The vaccine could be cleared for use in the United States as soon as May if US regulators decide the UK data is enough to make a decision. It could take a couple of months longer if they insist on first seeing data from the US trial, its chief executive told Reuters earlier this month.

“Ultimately, they have to decide whether the data we can bring to the table is adequate or whether they would prefer to wait on data from our US study,” Mr. Dubovsky said on Thursday.

Novavax’s vaccine production plants should all be fully functional by April, executives said on a March investor call. The drugmaker expects to have tens of millions of doses stockpiled and ready to ship in the United States when it receives authorization, Novavax Chief Executive Officer Stanley Erck told Reuters.

Novavax plans to produce its two-shot vaccine at eight manufacturing locations, including the Serum Institute of India.

If authorized, it would follow three COVID-19 vaccines previously approved for use in Britain from Pfizer and partner BioNTech, Moderna Inc and the AstraZeneca shot developed with Oxford University.

The Maryland-based company has received $1.6 billion from the US government in funding for the vaccine trial and to secure 100 million doses. — Dania Nadeem and Carl O’Donnell/Reuters

Ransom-seeking hackers are taking advantage of Microsoft flaw — expert

WASHINGTON — Ransom-seeking hackers have begun taking advantage of a recently disclosed flaw in Microsoft’s widely used mail server software, a researcher said late Wednesday—a serious escalation that could portend widespread digital disruption.

The disclosure, made on Twitter by Microsoft Corp. security program manager Phillip Misner, is the realization of worries that have been coursing through the security community for days.

Since March 2, when Microsoft announced the discovery of serious vulnerabilities in its Exchange software, experts have warned that it was only a matter of time before ransomware gangs began using them to shake down organizations across the internet.

Mr. Misner didn’t immediately respond to follow-up messages and Microsoft did not return emails seeking comment. The U.S. Cybersecurity and Infrastructure Security Agency and the Federal Bureau of Investigation also didn’t immediately respond.

Even though the security holes announced by Microsoft have since been fixed, organizations worldwide have failed to patch their software, leaving them open to exploitation. In Germany alone, officials have said that up to 60,000 networks remained vulnerable.

The fixes are free, but experts attribute the sluggish pace of many customers’ updates in part to the complexity of Exchange’s architecture.

All manner of hackers have begun taking advantage of the holes—one security firm recently counted 10 separate hacking groups using the flaws—but ransomware operators are among the most feared.

Those groups work by locking users out of their devices and data unless the victims cough up big chunks of digital currency. They now potentially have access “into a huge number of vulnerable systems,” said Brett Callow of Canadian cybersecurity company Emsisoft.

He said more modest companies—many of whom lack the ability or awareness to update their software—could be particularly affected by the latest variant of ransomware.

“This is a potentially serious risk to small businesses,” he said. — Raphael Satter/Reuters

China’s antitrust regulators weigh levying record fine on Alibaba — WSJ

China’s antitrust regulators are considering levying a record fine on Alibaba Group Holding Ltd. over suspected anticompetitive behavior, the Wall Street Journal reported on Thursday, citing people familiar with the matter.

The fine could surpass the $975 million that Qualcomm paid in 2015 over anticompetitive practices, the report said. The regulators are also considering whether the Chinese e-commerce giant should divest some assets unrelated to its main online-retailing business.

Alibaba declined to respond to a Reuters request for comment.

Founder Jack Ma’s business empire has been put under intense scrutiny by Chinese regulators following his stinging criticism of China’s regulatory system in late October.

In late December China’s State Administration for Market Regulation announced it launched an antitrust probe into Alibaba.

That news came after authorities in Beijing halted a planned $37 billion initial public offering from Ant Group, Alibaba’s internet finance arm.

The company has come under fire in the past from rivals and sellers for allegedly forbidding its merchants from listing on other e-commerce platforms, a practice known as “two-choose-one.”

Alibaba’s Hong Kong shares climbed 1.7% on Friday morning, after its New York shares gained 2.8% overnight amid a broad stock market rally. The New York shares are still down about a quarter from their October levels. — Reuters

SoftBank-backed Grab in talks to go public in nearly $40 bln SPAC deal — sources

Grab Holdings Inc. is in talks to go public through a merger with a special purpose acquisition company (SPAC) that could value the ride-hailing giant at nearly $40 billion, making it the largest ever blank-check deal, people familiar with the matter said on Thursday.

The Wall Street Journal reported earlier in the day SoftBank-backed Grab was in talks with Altimeter Capital Management LP. 

Grab is expected to raise between $3 billion and $4 billion from private investors, according to the report.

Reuters first reported in January, citing sources, that Singapore-based Grab was exploring a listing in the United States.

Silicon Valley-based venture capital firm Altimeter has backed two SPACs—Altimeter Growth Corp and Altimeter Growth Corp 2. The WSJ report did not specify which of the two SPACs Grab was in talks with.

Special purpose acquisition companies, or SPACs, are shell companies that raise funds through an initial public offering to take a private company public.

Other recent large SPAC deals include UMW Holdings Corp’s $16-billion merger with a blank-check firm backed by billionaire Alec Gores, and the $24-billion deal that luxury electric vehicle maker Lucid Motors struck with a Michael Klein-backed SPAC. — Joshua Franklin and Anirban Sen/Reuters

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