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PHL an ‘outperformer’ in frontier technology

By Arjay L. Balinbin, Senior Reporter

THE Philippines is considered among developing countries that performed better on frontier technologies than their per capita gross domestic product (GDP) would suggest, a 2021 report by the United Nations Conference on Trade and Development (UNCTAD) showed.

UNCTAD’s “Technology and Innovation Report 2021” released on Thursday identified developing countries that have performed better on frontier technologies than their per capita GDP.

Frontier technologies include artificial intelligence (AI), the internet of things (IoT), big data, blockchain, 5G, 3D printing, robotics, drones, gene editing, and nanotechnology.

“The extent of ‘overperformance’ is measured as the difference between the actual index rankings and the estimated index rankings based on per capita income… The greatest overperformer is India, by 65 ranking positions, followed by the Philippines by 57,” UNCTAD said.

The Philippines was followed by Ukraine, with an actual ranking of 47, Vietnam (45), and China (40).

The UNCTAD report scored countries on their readiness for frontier technologies based on five building blocks: information and communications technology (ICT) deployment, skills, research and development (R&D), industry activity and access to finance.

The Philippines also has a high ranking for industry.

“This reflects high levels of foreign direct investment in high-technology manufacturing, particularly electronics,” it added.

Multinational businesses are attracted by the Philippines’ “strong” supply chains and “solid” base of parts manufacturing, UNCTAD said.

“The Philippines also has pro-business policies along with a skilled, well-educated workforce and a network of economic zones,” it added.

However, the top overperforming developing countries, including the Philippines, have lower rankings for “ICT connectivity and skills.”

Developing countries need to work towards “universal internet access and ensure that all their citizens have opportunities to learn the skills to be more ready for frontier technologies,” it said.

In the Philippines, there are generally wide urban-rural disparities in terms of connectivity as shown in the recent analysis by Asian Development Bank and Thinking Machines Data Science, Inc., where nearly a million Filipinos in rural areas do not have access to digital connections, as most cell towers are located in wealthy cities.

According to the UNCTAD report, top overall performers on the adoption of frontier technologies are wealthy nations: United States, Switzerland, United Kingdom, Sweden, and Singapore, among others.

“The top overall performers have well-balanced performances across all building blocks of the index and are typically associated with high innovation and GDP,” it said.

Sought for comment, Terry L. Ridon, convenor of InfraWatch PH,  said he was not surprised.

“This is not surprising given that the Philippines ranks next to India in the global outsourcing industry, which uses various emerging technologies to improve operational efficiencies, such as artificial intelligence, blockchain and big data. Global cloud services led by Amazon Web Services have offices in major Philippine cities,” he said in a phone message.

Mr. Ridon said Filipinos have spearheaded the adoption and consumption of new technologies, such as 5G, drones, and IoT gadgets.

“Through a handful of domestic solar companies, we manufacture our own solar panels instead of full importation. Our top exports have always been in the semiconductor sector in the last decade,” he explained.

The Philippines’ performance should mean that these sectors remain “very competitive areas,” which the government should help further develop, Mr. Ridon said.

He noted the BPO sector contributes at least 7% of the country’s GDP, or $26 billion. “This should only mean a continuing upward trend in these high-growth sectors, which had continued to sustain growth despite the coronavirus pandemic and contributed to the job security of BPO employees.”

Central banks say no tapering, but markets are not buying it

A security guard walks in front of an image of the Federal Reserve in Washington, DC, March 16, 2016. — REUTERS/KEVIN LAMARQUE/FILE PHOTO

LONDON/NEW YORK — Central bankers worldwide have been unequivocal: There are no plans to cut back on money printing any time soon, let alone raise interest rates.

Markets do not seem to be buying it.

US 10-year Treasury yields rose on Wednesday to one-year highs above 1.4%, extending this year’s near 50-basis-point (bp) jump that has dragged up sovereign borrowing costs in Europe, Japan and elsewhere. Yields retreated later in the session to 1.37%.

The reckoning is that the spending step-up by US President Joseph R. Biden’s administration and post-vaccine economic reopening will fuel global growth and an inflation rebound, forcing central banks to “taper” or withdraw stimulus ahead of schedule.

A brighter outlook may indeed justify higher yields. But what has started to spook markets is a sudden move up in so-called real yields, or returns in excess of inflation. That shift can tighten financial conditions, suck cash from stock markets and in general, hamper the recovery.

It is spooking policy makers, too. Central bankers have weighed in this week to stress policy will remain loose for some time. But the mantra seems to be falling on deaf ears.

US Federal Reserve Chair Jerome Powell knocked yields just a couple of basis points lower after commenting that the inflation target was more than three years away.

Euro zone yields only briefly heeded European Central Bank (ECB) chief Christine Lagarde’s warning on Monday that the bank was “closely monitoring” the recent rise in yields.

The reason, according to ING Bank, is that markets are pricing “with an increasing degree of conviction” the end of ultra-easy policies.

“Market confidence in the strength of the US recovery is so strong and widespread that the tapering boat has sailed already,” they said, predicting “tapering” would happen by the end of 2021, rather than 2022 as predicted by Fed surveys.

Money markets show investors expect a Fed rate rise next year; some bet on an even earlier move. Euro-dollar futures suggest a roughly 64% chance of a 25-bp rate hike by the end of 2022. A week ago it was seen at 52%.

“Markets heard central bankers saying ‘Stop it, markets, you are going too far,’ but they are worrying central banks might change their mind as new data emerges,” said April LaRusse, head of fixed-income investment specialists at Insight Investment.

If travel, dining out and shopping fully resume in coming months, it could unleash trillions of dollars in pent-up savings worldwide. Just in the United States, personal savings totaled $2.38 trillion at a seasonally adjusted annual rate in December, higher than at any time before the pandemic.

The steeper yield curve is “a reflection of the fact that we’re seeing these green shoots in terms of economic stats, comfort that the vaccine is kicking in,” said Anders Persson, chief investment officer of global fixed income at Nuveen.

Some investors are betting that the rise in yields will prompt the Fed to act, but not by tightening policy.

“I do feel that some form of yield curve control is on the cards. Reason being, inflation will likely not be sustained. We will see a pop as we emerge from the COVID crisis but it will not be permanent,” said Nick Maroutsos, head of global bonds at Janus Henderson.

The Fed discussed the possibility of reweighting its bond purchases toward the long end of the curve at its November and December meetings. While the bank chose not to act then, yield curve control, which was used in the wake of the 2007-2009 financial crisis, remains an option.

ELSEWHERE
The picture is similar elsewhere.

In New Zealand, warnings of downside risks to the economy by Reserve Bank of New Zealand Governor Adrian Orr contrasted with buoyant data.

Bond yields shrugged off his comments to hit 11-month highs, while overnight index swaps (OIS) began pricing in the possibility of an end-2021 rate hike.

There is of course the possibility that the pledges to keep policy ultra-loose in the face of recovering growth only fan inflation expectations further. So could markets force central banks to act rather than just jawboning?

Here the Fed faces less of a dilemma than its peers.

Japan’s 10-year yields are near the highest since late 2018 at 0.12%, posing credibility issues for a central bank that aims to hold yields around 0%.

The ECB too may have to step up bond purchases under its emergency asset purchase program to combat rising yields.

“At the moment it’s a tension between markets and central banks rather than a conflict,” said Jacob Nell, head of European economics at Morgan Stanley.

“The attitude of the Fed is that if markets think growth is stronger than we do then that’s fine, it will help growth and inflation expectations. So the Fed won’t fight the market — it just doesn’t believe it.” — Reuters

Cebu Pacific expects delivery of 8 aircraft this year

By Arjay L. Balinbin, Senior Reporter

BUDGET carrier Cebu Pacific is expecting to take delivery of eight more aircraft this year despite the ongoing pandemic crisis.

Cebu Pacific had 10 deliveries in 2019 and three last year, Candice A. Iyog, Cebu Pacific vice-president for marketing and customer service, told BusinessWorld in a recent phone message.

“Eight expected deliveries for 2021 — a mix of Airbus and ATR (Avions de Transport Regional) fleet,” she added.

On its website, the budget carrier said that it was expected to take delivery of 27 Airbus A321NEO and one more Airbus A320NEO between 2020 and 2026.

It also has “newly-confirmed orders” of 16 A330NEO, five A320NEO, and 10 A321XLR aircraft.

“This latest order accelerates the carrier’s plan to boost capacity while shifting to more fuel-efficient and eco-friendly aircraft,” it said.

The budget carrier hopes to have an “all-next generation” fleet of Airbus jets by 2024.

To recall, Cebu Pacific took delivery in 2019 of its 13th ATR 72-600 high-capacity aircraft of the 16 it had ordered in France in 2015.

“Cebu Pacific’s additional 72-600 aircraft are used to widen the CEB network through inter-island routes and boosting new city pairs between hubs. Between 2020 and 2022, Cebu Pacific will take delivery of three more ATR 72-600 to be utilized for more connectivity between the Philippines’ many islands,” it said.

In May last year, Cebu Air, Inc., the listed operator of Cebu Pacific, said it was undertaking an “overall review” of its long-term fleet plan due to the challenging conditions.

The company noted it already has “a very conservative” fleet growth plan compared with other low-cost carriers, “with a five-year estimated growth of only 8-9%.”

It said it had discussions with suppliers regarding its overall fleet plan and schedule “to establish flexibility to adapt to current events.”

As part of its cost-cutting measures in 2020, Cebu Pacific sent 14 aircraft to Australia for storage. It had a total of 75 aircraft, including those parked in Australia, last year.

Cebu Air suffered a net loss of P14.69 billion for the first nine months of 2020 from the P6.77-billion profit it generated in the same period in 2019.

Singing is praying twice

Jamie Rivera sings the official song celebrating 500 years of Christianity in the Philippines

JAMIE RIVERA in Mak Tumang’s creation

THE SINGER behind inspirational hits the “Jubilee Song,” “Only Selfless Love,” and “Heal Our Land” — among many other hits of the same vein, does it again with “We Give Our Yes,” the official mission song of “The 500 Years of Christianity in the Philippines” yearlong celebration.

The song was originally commissioned by the Catholic Bishops’ Conference of the Philippines (CBCP) to commemorate the 500th anniversary of the arrival of Christianity in the country, and, according to a press release, “conveys the power of faith and hope during difficult times and reminds Filipinos to keep saying ‘yes’ to the mission of Jesus.” The anniversary corresponds to Ferdinand Magellan’s arrival in Cebu, where the first Catholic mass in the Philippines was held.

The song was performed live for the first time at the Manila Cathedral during the Archdiocese of Manila’s launch of the 500 Years of Christianity festivities on Feb. 6. The music video, directed by Frank Lloyd Mamaril, was also shot in the cathedral.

The song was written by the multi-awarded composer Fr. Carlo Magno Marcelo. “We continue this blessing because we have to be grateful for the gift of Christianity,” he said during a press conference on Feb. 17, the first day of Lent, Ash Wednesday. Mr. Marcelo was also the composer behind “The Jubilee Song,” which transformed Ms. Rivera into a household name and made her voice familiar to churchgoers in the early 2000s.

He talked about his writing process: after receiving instructions and the materials from either bishops or heads of commissions, the priest, whose only formal training in music was in the seminary, does his homework using the texts provided. He then goes about his day. “I will wait. Maghihintay talaga ako (I really wait). It would come any time during the day.”

Ms. Rivera looked back on the 21 years that have passed since that first inspirational song (a release from Star Music calls her the “Inspirational Diva”). “Lahat ito (all of this), it’s divine providence. Hindi ko naman siya pinlano. Ito na yung mission ko (I didn’t plan it. This is my mission now.),” she said.

Bakit ba ako binigyan ng talent ni Lord? Bakit niya ba ako ginawan ng career? Bakit niya ako tinap ng year 2000? (Why did the Lord bless me with talent? Why did he give me a career? Why did he tap me in 2000?),” she said. “As we grow older, hindi natin alam ang plano ni Lord sa atin (we don’t know what plans the Lord has laid for us). God’s plan is bigger than ours.

“It’s a preparation for a bigger mission, which is saying ‘yes’ to Jesus for 21 years already, and proclaiming his gospel, his love, not only to Filipinos but to billions of Asians and people all over the world who have yet to come to know Jesus,” said the singer.

Ms. Rivera takes her career seriously — several times, she called it a mission; not even a path or a calling, or any word usually used to describe a person’s job. “I think this is really my mission — for me to be able to give people a prayer; at the same time they could sing with it.”

Quoting St. Augustine, she said, “Singing is praying twice.”

“We Give Our Yes” is now available on music streaming services worldwide. Watch the video here: https://www.youtube.com/watch?v=BldPppoWmaw.  Joseph L. Garcia

Spotify to launch in 85 new markets, reach more than a billion listeners

STOCKHOLM/NEW YORK — Spotify said on Monday it would nearly double its market presence by launching in 85 new markets in the next few days, making the music streaming service available to more than a billion people around the world.

The Swedish company, which started its service more than a decade ago, is currently available in 93 countries and has 345 million monthly active users.

While Spotify is the leader in music streaming, entry in new countries across Asia, Africa, Europe, and Latin America would significantly increase the gap with its rivals, Apple Music and Amazon Music.

“Together these markets represent more than a billion people, with nearly half of them already using the internet,” said Chief Premium Business Officer Alex Norstrom. “Some of the places we’re going like Bangladesh, Pakistan, and Nigeria have the fastest growing internet populations in the world.” An earlier expansion drive in India, Russia, and the Middle East has already brought in millions of subscribers.

While paid subscribers got a boost during the coronavirus pandemic as people locked in their homes opted for its premium service, the company is now looking to boost its advertisement revenue.

In a one and half hour livestream featuring singing by Justin Bieber, Spotify released a host of new features for artists and tools for advertisers for better targeting its millions of users across music and podcasts.

PODCAST PLAY
In its efforts to make money from podcasts, Spotify announced the creation of a podcast advertising marketplace where advertisers can buy across a network of original exclusive and independent podcasts and target audiences both on and off Spotify.

It has spent hundreds of millions of dollars to boost its podcast range, which now has more than 2.2 million podcast titles, including The Michelle Obama Podcast and one by Prince Harry and his wife, Meghan.

Higher Ground Productions, Barack and Michelle Obama’s production company, announced another new show with Bruce Springsteen for Spotify called Renegades: Born in the U.S.A.

On Monday, Spotify announced a partnership with AGBO, a company led by Anthony and Joe Russo, creators behind films like Avengers: Infinity War, for multiple podcast series. It also signed a deal with Warner Bros. and DC for a range of narrative-scripted podcasts.

The first, Batman Unburied, will release later this year as part of a set of characters whose stories will be explored via audio, including Superman, Wonder Woman, the Joker, and Catwoman, among others.

Spotify also launched a new subscription service, Spotify HiFi, with which premium subscribers in select markets will be able to upgrade their sound quality of the songs to “lossless” CD-quality Music. — Reuters

SN Aboitiz to tap into 633-MW dependable hydro capacity for customers choosing ‘green’ energy

By Angelica Y. Yang

SN Aboitiz Power (SNAP) is tapping into the 633-megawatts (MW) of dependable capacity from its three hydroelectric plants in Isabela and Benguet for the country’s green energy option program (GEOP), its top official said on Thursday.

“For GEOP, SNAP-Magat and SNAP-RES would tap into the 633 MW of combined dependable capacities from their hydroelectric power plants in providing power to companies with demand greater than 100 kilowatts (kW),” SNAP President and Chief Executive Officer Joseph S. Yu told BusinessWorld.

Customers with a minimum of 100 kW of usage can source their supply from a retail energy supplier, according to the GEOP, a voluntary renewable energy policy mechanism launched in 2018.

Last month, the Department of Energy (DoE) granted GEOP operating permits to six firms, including SNAP-Magat, Inc. and SNAP-Res, Inc.

“SNAP-Magat and SNAP-RES will tap into the combined dependable capacities of SNAP Group’s hydroelectric power plants. SNAP-Magat will source from the 388-MW Magat hydroelectric power plant. SNAP-RES, on the other hand, will source from the 105-MW Ambuklao and 140-MW Binga plants,” Mr. Yu said in a response to e-mailed questions.

He said that the two firms planned to engage companies that had a demand greater than 100 kW, particularly those that wanted to meet their environmental sustainability goals; and environmental, social and governance standards.

Mr. Yu added that the SNAP firms were looking to work with companies that were part of the RE100, a global initiative made up of businesses that have committed to using 100% renewable power.

SNAP is a joint venture between SN Power AS of Norway and locally listed Aboitiz Power Corp.

Playing life, not notes

AWARD-WINNING American bassist Victor Wooten introduced his masterclass with an improv solo performance. The rhythm of jazz and bluegrass bass filled this writer’s room for the first 20 minutes. The music fulfilled the atmosphere of a physical live performance despite watching through a laptop screen.

After his solo performance, Mr. Wooten set the instrument aside and began to liken playing music to talking freely.

“I want to be able to play music that free, whether it’s good or not, is not important. What’s important is when I play, is it me?,” Mr. Wooten said in an evening Zoom session on Feb. 20.

“[When] you pay attention to what I’m saying, you don’t really pay attention to whether my voice sounds good or not, because what I’m saying becomes more important,” he added.

For the entire hour and a half, Mr. Wooten discussed playing not only the bass, but what it means to play and share music.

Born in September 1964, Victor Wooten grew up with parents who worked in the Air Force. He was the youngest of five sons who all grew up playing music in the Wooten Brothers Band.

Mr. Wooten has been the bassist for jazz and bluegrass band Béla Fleck and the Flecktones since 1988, and a member of the band bass guitar group SMV. He has also played bass for the metal band Nitro since 2017. He is the founder of independent record label Vix Records. Mr. Wootten is a five-time Grammy award winner including Best Pop Instrumental Performance in 1996 for the song “The Sinister Minister.”

GETTING INTO THE GROOVE
As the session continued, Mr. Wooten shifted from his stool to facing the camera beside a white board. He wrote down the 10 essential elements: notes; rhythm; technique; articulation (playing the notes shorter or longer); variety of feeling, phrasing; use of tone; dynamics or energy; space; and listening.

For half an hour, he discussed the importance of all elements. He stressed that music theory focuses solely on notes, and that playing music uses all the elements.

“When you put all of this together, what you get is the groove,” he said. “You can play the right notes, but with the wrong feel, it won’t groove.”

He recalled a story by American pianist Herbie Hancock who played the wrong chord during a performance with jazz musician Miles Davis. “[Miles] Davis did not care about it. But responded to it,” Mr. Wooten said.

“Getting every piece right is not the goal. It is getting the message across,” he said. “My music is better when I make mistakes. Embrace your mistakes, maybe even celebrate your mistakes. But in every case, go with them.”

Mr. Wooten asked the class participants: What is music to you?

The participants flooded the chat box to complete the statement, “Music is —” with the words such as “life,” “language,” “expression,” and “lifesaver.”

At this point, the award-winning bassist stressed that learning and playing music is beyond getting boxed with the technicalities. He observed that no participant answered that music was about notes or any instrument.

Mr. Wooten made an analogy of how instruments and music theory are like the tools used to fix a car. The tools are available, however it “belongs in the trunk” and are applicable when needed.

“As soon as we pick up the instrument we think, ‘Music is my bass.’ No. Those are tools,” Mr. Wooten said. “We should be playing life. We should be communicating. We should be playing expression.

“Don’t mistake the tools for music. Our goal is to play music, not the tools,” he concluded.

Hosted by the US Embassy in the Philippines, the Philippine International Jazz Festival, and Crossover Online Radio, the virtual masterclass was held in celebration of Philippine National Arts Month and US Black History Month. — Michelle Anne P. Soliman

Meralco says power bill may drop in March

CUSTOMERS of Manila Electric Co. (Meralco) have a “strong” chance of seeing their electricity bill next month to be lower as it will include the average refund rate of P0.1528 per kilowatt-hour (kWh) for “over-recoveries” as ordered by the Energy Regulatory Commission (ERC), a company official said on Thursday.

“Based on initial projections, there is a strong likelihood that power rates for March 2021 will go down, as this will be the second consecutive month of decrease for the year,” Meralco Vice-President and Head of Corporate Communications Joe R. Zaldarriaga said in a Viber message.

He added that the distribution utility was still waiting for the final bills from its power suppliers.

Mr. Zaldarriaga explained that next month’s power rate would include the average refund rate of P0.1528 per kWh based on the firm’s distribution rate “true-up” or Meralco’s actual weighted average tariff, which is derived by dividing its revenues by the total kilowatt-hour sales.

Over-recoveries happen when the actual weighted average rate breached the price cap based on the ERC-approved interim average rate.

Last week, the ERC announced that it had released the order for Meralco to refund P13.89 billion in over-recoveries based on the power firm’s actual weighted average tariff from July 2015 to Nov. 2020.

The refund would take effect starting March. The total amount must be refunded within 24 months or until fully returned to power consumers, according to the commission.

“Meralco’s refund rate will be reflected as a separate line item in the bills of the customers during the refund period,” Mr. Zaldarriaga said.

According to the Meralco executive, the projected decrease in power rates would continue “the downward trend in electricity costs, as overall rates have gone down by more than P1 per kWh since the start of 2020.”

On Feb. 8, Meralco announced that typical households in Metro Manila should expect to see a P14 drop in power rates this month. It attributed the decrease to lower generation charges. It said that the overall power rate in February stood at P8.6793 per kWh, which was P0.0704 per kWh lower than the rate in January.

Meralco’s controlling stakeholder, Beacon Electric Asset Holdings, Inc., is partly owned by PLDT, Inc.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has an interest in BusinessWorld through the Philippine Star Group, which it controls. — Angelica Y. Yang

San Miguel says prepayment offer for Ilijan plant ‘made in good faith’

SAN MIGUEL Corp. (SMC) said that its offer to pay off the 1,200-megawatt (MW) Ilijan power plant’s capacity charges ahead of schedule was done in good faith, according to a statement issued on Thursday.

This comes a day after state-led Power Sector Assets and Liabilities Management Corp. (PSALM) rejected what it described as a “preposterous” settlement in the payment scheme put forward by SMC power unit South Premiere Power Corp. (SPPC).

The agency received the settlement offer from the firm a letter dated Jan. 11. Details of PSALM’s position were shared on Wednesday by the Department of Finance (DoF). The Finance secretary chairs PSALM.

“SMC’s offer to pay off capacity charges for its Ilijan Power Plant, two years ahead of schedule, was made as a gesture of good faith to help boost government resources needed to address the immediate social and economic impact of the COVID-19 (coronavirus disease 2019) pandemic,” SMC said in its statement.

It explained that the turnover of the Ilijan plant to SPPC was “a natural consequence of prepaying the remaining P20 billion worth of capacity charges.”

SMC said that the remaining capacity charges were down to P14 billion as of end-January, as its unit SPPC had paid a total of P83 billion in capacity charges and P260 billion in generation charges for the plant.

“If all the capacity charges are paid then the selling price of the Ilijan Power Plant would have been deemed paid. In fact, SPPC would have overpaid, as P98 billion would have paid for a brand new, and not a 25-year old, power plant,” SMC said.

The DoF said PSALM rejected SPPC’s offer on Jan. 11 because it contained a “preposterous condition” that was not previously mentioned in the payment scheme suggested in March last year.

According to the Finance department, PSALM President and CEO Irene Joy Besido-Garcia said SPPC’s latest offer contains a condition that calls for PSALM to “cede control and ownership of the Ilijan Power Plant to SPPC upon full settlement of the Monthly Payments, and ahead of the June 2022 date of turnover provided in the Independent Power Producer Administrator agreement.”

The DoF said that PSALM had sent a letter dated Jan. 18 to SPPC, saying that the acceptance of the firm’s prepayment offer under the new condition would “pre-empt any ruling of the judicial court on the matter and will undoubtedly prejudice PSALM’s legal position.”

The state-led entity added that the National Power Corp. and KEPCO Ilijan Corp. already agreed on the transfer date of the Ilijan plant.

“PSALM should not be obligated to fast-track or amend its current arrangements in the Energy Conversion Agreement (ECA) under another contract with a different party in order to accept SPPC’s offer,” the DoF said.

SMC, in its statement on Thursday, said that it is committed to pursue discussions with the government in swiftly resolving the issue. — Angelica Y. Yang

The cash-flush amateurs hunting game cards, handbags and art

LONDON — Stocks, bonds and commodities? Old hat.

Once the preserve of the super-rich, or just the eccentric, all kinds of unusual investments from vintage handbags and shares in fine art to rare Pokemon cards are now the happy hunting ground for stuck-at-home punters.

Often armed with lockdown-era savings, such amateur investors are seeking higher returns beyond conventional markets where rocketing prices are prompting warnings of bubbles. They have in turn driven prices on some “alternative” assets up several hundred percent higher in the past year.

And just like the no-fee trading apps such as Robinhood that enabled hordes of small-time equity traders to rattle seasoned hedge funds during the recent Gamestocks episodes, digital platforms are empowering wannabe investors with as little as $20 to dabble in collectables.

Value can apparently lurk in all sorts of places.

Collectors’ cards based on Nintendo’s 7974.T hit 1990s video game, Pokemon, have exploded in value in the past year.

One first-edition of its fire-flying character Charizard has rocketed 800% in a year, after YouTube star Logan Paul paid $150,000 for one in October. Recent auctions have valued the card at $300,000.

Chicago-based Pokemon enthusiast Zack Browning, who purchased four of the cards in 2016 for less than $5,000 each, estimates his overall Pokemon collection is now worth $3 million-$5 million.

Browning, who embarked on his Pokemon investing career after studying finance at university, described the game card’s resurgence as “astounding and incredible.” He said that parts of the Pokemon market were more predictable than stock markets, which he said were overvalued.

PICK-ME-UPS
Of course measuring profit or loss on a painting or gauging demand for such collectables is a lot harder than in equity or currency markets, given items often have little in common with each other and can be traded only occasionally, such as by auction.

But a luxury investment index published by compiler Knight Frank on Wednesday showed that although top-end assets such as fine art fell in value during the pandemic, “relatively affordable luxury pick-me-ups” did well.

While the AMR All-Art Index, based on auction prices, fell 11% last year, according to Knight Frank, Hermes’ iconic Birkin handbag first launched in the 1980s, rose 17%, ahead of fine wine and classic cars.

Andrew Shirley, who edits the Knight Frank report, said last year’s most expensive Birkin sold for $200,000, with Asian luxury collectors in Asia “very happy to bid on handbags online.”

For people unable to stump up $200,000 per item, there are platforms such as New York-based Otis which launched in 2019.

These platforms buy anything from a Pokemon card to a basketball jersey signed by basketball legend Kobe Bryant, securitize them and then offer investors shares in the items that they can buy and sell.

Last year, Otis offered customers the chance to buy shares in a work by British street artist Banksy at $20 a share. Those shares hit $34 earlier this month, a 70% gain that valued the piece at $722,000, Otis said.

Investors tend to be aged 25 to 45, with disposable incomes of $100,000-plus, Otis founder and Chief Executive Michael Karnjanaprakorn told Reuters.

He said the most expensive item on Otis is a 1986 Basketball card set by sports cards maker Fleer — sold two months ago at $10 a share, it has since surged 305% to over $40. Reuters could not independently verify the price gains.

DON’T INVEST YOUR PENSION
At another collectables platform, Rally, the number of users is doubling every 30 days, according to CEO George Leimer. He said “several hundred thousand” investors used the platform but declined to be more specific.

The platform has also seen sought-after Pokemon cards surge into six-figures, Mr. Leimer said. “The drive behind this is very similar to what we are seeing in the rest of the retail investing world,” he said, pointing to the surge in popularity of Robinhood and other such apps.

But few seem to be banking profits; Leimer said the percentage of investors who withdrew their winnings rather than reinvest was in the “low single digits.”

As more punters flock to alternative assets, many warn of risks.

John-Paul Smith, a former senior equity strategist at Deutsche Bank, now dabbles in buying northern British art. He sees little difference between the behavior of some “alternatives”  investors and the equity frenzy.

“Banksy is pure momentum, it’s like a hot tech stock,” he said. “The psychology is similar in any Market.”

But conceptually, it seems “less foolish” to buy unconventional assets today than at any time in the 30 years Smith says he has followed markets. Not only are stocks expensive, vast central bank and government stimulus will eventually spur inflation, he said.

He urges investors to differentiate between what might be a passion or a hobby and an investment. If they set out solely to profit, they probably won’t, given how esoteric each part of markets like art can be.

“I would not advise anybody (to) put their pension in,” he said, a stance also taken by Pokemon investor Browning. — Reuters

SEC warns public about R.L. Aggregates

THE Securities and Exchange Commission (SEC) has advised the public not to invest or to stop investing in R.L. Aggregates and Diversified Lending Group, Inc. after it received reports that the lending company has been soliciting investments without authorization or license from the regulator.

According to the SEC, the company offers a daily interest rate of one percent or a monthly interest of 30% for a minimum investment of P1,000 for a lock in period of only three months.

The company founded by Roberto S. Llorente is licensed to operate as a lending company and is not authorized nor licensed to collect investments as prescribed under Sections 8 and 28 of the Securities Regulation Code, the commission said.

It also said that the lending company had been circulating an altered copy of its Articles of Incorporation, which states that the “corporation shall direct solicit, accept or take investments/placements from the public and shall issue investment contracts.”

R.L. Aggregates and Diversified Lending Group’s original incorporation papers prohibit it from collecting and accepting investments from the public.

“The public should be made aware that the issuance of a Certificate of Incorporation and Authority with the commission as a lending company only grants entities juridical personality but does not constitute an authority or license for the corporation to engage in activities that require a secondary license from the SEC such as license to issue, sell, or offer securities to the public,” the SEC said in a statement.

The commission also warned the public that any investment program that promising a huge rate of return with little risk is an indication of a Ponzi scheme, which just pays off old investors using the money put in by newcomers.

“The public is advised to exercise caution in dealing with any individuals or group of persons soliciting investments for and on behalf of R.L. Aggregates and Diversified Lending Group, Inc. or any entities engaged in solicitation activities guised as lending companies,” it added.

Penalties of up to P5 million and/or a 21-year imprisonment await those who will be caught involved in the investment scheme.

The commission said the names of those involved in the scheme will be forwarded to the Bureau of Internal Revenue for further investigation and for respective taxes to be assessed. — Keren Concepcion G. Valmonte

Van Gogh painting to be shown in public for first time

PARIS — A painting of a Paris street scene by Vincent Van Gogh is to be shown to the public for the first time, after spending more than a century behind closed doors in the private collection of a French family. The work, painted by Van Gogh in 1887 while he was lodging with his brother Theo in the French capital, will be put on display by Sotheby’s auction house in Amsterdam, Hong Kong, and Paris, prior to being auctioned off next month. The auction house put an estimated value on the artwork of between 5 million euros ($6.08 million) and 8 million euros. Titled A street scene in Montmartre, the painting depicts a man and woman, strolling arm in arm past a ramshackle fence with a windmill in the background. The painting is part of a series that Van Gogh produced of scenes in Montmartre, a hilly district of Paris now dominated by the Sacre Coeur church. When the artist was there, the church was under construction and the area was a patchwork of fields, houses and windmills on the edge of the city that was starting to attract a bohemian artist set with its cheap rents. The auction house said the painting had been seen in catalogues, but has never itself been on public display. It did not identify the current owner. Sotheby’s said in a statement that very few paintings from Van Gogh’s Montmartre period remain in private hands. Van Gogh arrived in Paris in 1886. He left the city in 1888, saying he had tired of the hectic pace of Paris life. He moved to the south of France, where he cut off part of his ear during an episode of mental illness. The artist later shot himself and died near Paris on July 29, 1890. — Reuters