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Medilines Distributors:  Growing, aging population drives healthcare growth

MEDICAL equipment distributor Medilines Distributors, Inc. is gearing up to grow as healthcare spending is expected to continue its upward trend, the company’s chairman said.

“We believe that there will always be demand for medical products, in as much as there will always be a patient needing care,” Medilines Distributors Chairman Virgilio B. Villar said in an e-mailed statement on Friday.

In a report by Ken Research, healthcare spending went up by a CAGR (compound annual growth rate) of 10.9% to P911.4 billion in 2020 from P489.1 billion in 2014. It is projected to grow by 11.2% to P1.5 trillion in 2025.

This takes into account the overall spending by the government as well as private healthcare units and household expenses.

“The growth of the healthcare sector is driven by a growing and aging population,” Medilines Distributors said, adding that the increase in incidences with non-communicable diseases and respiratory diseases in the country is also a factor.

Medillines Distributor is a distributor of medical equipment to private and public healthcare facilities across the country, offering products from brands such as Germany-based Siemens Healthineers for diagnostic imaging and B. Braun for dialysis equipment, as well as US-based Varian for cancer therapy equipment.

“Because of the alarming increase in Filipinos with serious diseases, there has been a huge demand for medical devices, particularly for the diagnosis and treatment of patients, thereby showcasing the promising growth prospects for the medical device industry in the Philippines,” the company said.

Medilines Distributors is preparing to go public with a P2-billion offer, selling as much as 825 million common shares for up to P2.45 apiece.

The company will offer up to 550 million common shares. The majority, or P743.1 million, of the proceeds will be used to repay debt, while the P541.5 million will be used for product procurement and to fund its plans to enter the medical consumables segment.

Medilines Distributors’ Mr. Villar will be offering as much as 275 million common shares, the proceeds of which will not be received by the company.

The company aims to conduct its offer period from Nov. 22 to Nov. 26, with a tentative listing date of Dec. 7 on the Philippine Stock Exchange. It will list under the ticker symbol “MEDIC.”

PSE President and Chief Executive Officer Ramon S. Monzon said previously the PSE is “pleased to see a company in this space tap the stock market for capital raising” after the healthcare industry was put at the forefront due to the pandemic.

As the year ends, market sentiment is boosted by the reopening of the economy amid lower coronavirus cases as well as improved economic data.  

First Metro Investment Corp. (FMIC) Head of Research Cristina S. Ulang said they expect the benchmark Philippine Stock Exchange index (PSEi) to finish the year within the 7,400 to 7,800 range.

“We think there is a chance of the market overshooting above 7,400. That’s due to looser quarantine restrictions we earlier anticipated based on the vaccination drive which is on the way to the targeted 70% of the population,” Ms. Ulang said in a Viber message on Saturday.

The index is near FMIC’s initial 7,400 year-end forecast, as market sentiment is boosted by optimism on economic reopening and a “tamed virus.” On Friday, the PSEi climbed 137.05 points or 1.90% to close at 7,340.77.

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said the PSEi’s gains in the past week were supported by lower inflation data and the improvement in the country’s exports and imports. — Keren Concepcion G. Valmonte

Luxury ditches the slash-and-burn for share-and-care

Gucci, through its Vault online concept store, is customizing some vintage pieces for resale. — VAULT.GUCCI.COM

“IF only we could find the dumpster before they light the match.”

That was the joke circulating a few years ago when it emerged that Burberry Group Plc had burned millions of dollars worth of pricey designer goods that it couldn’t sell.

But the practice of destroying unsold luxury products is no laughing matter. Tapestry, Inc.’s Coach apologized recently after a story broke on the social media platform TikTok about the US label slashing its handbags and dumping them.

High-end retailers have traditionally sought to destroy goods they couldn’t sell in order to preserve their exclusivity. It was deemed better for unwanted designer handbags, shoes and dresses to go up in smoke than to get marked down, end up in down-market stores, or be worn by the less affluent. Seeing a brand’s logo in any of these scenarios would jeopardize its value, so the thinking went.

To put it mildly, this view has gotten old. Brand cachet doesn’t just revolve around being exclusive anymore; consumers care more about inclusivity and ethics. Any monetary gain that might come from getting rid of excess supply is now outweighed by shoppers’ outrage at harmful practices. Millennials and Gen Z are most likely to be concerned about whether a brand pollutes or preserves the planet. France is banning the destruction of unsold non-food items next year.

Burberry was criticized by some investors in 2018 after it revealed in its annual report that it had destroyed £28.6 million ($38.9 million) worth of goods. Coach came under fire last month after a video suggested the company slashed bags that customers had returned to stores. Because they were deemed damaged, they could no longer be sold or donated, the company responded.

It’s hard to put a monetary value on what a brand gains by preventing goods from being sold through unofficial channels, and what it loses from a consumer backlash. But there are some clues.

Consumer sentiment toward Burberry, and the company’s overall reputation, dipped in July 2018 after the stock destruction issue emerged, according to YouGov’s BrandIndex. Coach’s brand buzz has also edged lower over the past few weeks.

In Sept. 2018, Burberry said it would end the practice of bag-burning and promised to increase efforts to reuse, repair, donate, or recycle unsold products. It also said it would no longer use real fur. These commitments helped Burberry’s brand value climb in 2019, according to consultancy Interbrand. Of course, Burberry also recruited a new designer in 2018, but its environmentally friendly policies likely also made a difference.

That’s because more shoppers, particularly younger ones, care about going green. According to Tensie Whelan, director of New York University’s Center for Sustainable Business, having a reputation for being environmentally friendly elevates clothing brands, as it does for Reformation and Patagonia. Shares in green sneaker-maker Allbirds, Inc. rose 93% on its first day of trading on Wednesday last week.

Luckily, there are a number of ways that fashion groups can make sure that, 1.) they don’t have too much leftover stock, and, 2.) they dispose of any excess supply ethically.

Preventing a glut starts with controlling inventory. According to McKinsey & Co., 40% of all apparel produced ends up being discounted or disposed of in some way. For example, companies including Gucci owner Kering SA, which prohibits the destruction of unsold products, are already investing in artificial intelligence to better predict how many dresses or handbags they will be able to sell.

Leftover goods can then go to a brand’s discount stores, private sales for employees, or donations to charities and fashion schools. Earlier this year, Coach started a program for goods it couldn’t sell or donate called Reloved, where damaged items could be rehabilitated and sold again. About 40% of stores give their damaged bags to the program, but the company says it’s committed to increasing that number and will no longer destroy returned merchandise that can’t be sold or donated.

Luxury groups are also reusing and recycling materials, such as the metal hardware on bags at Gucci and old sneakers at LVMH Moet Hennessy Louis Vuitton SE’s biggest brand, Louis Vuitton. A decade ago, Hermes International set up Petit H to create new items from ends of lines and leftover materials, including leather scraps and silk.

But fashion could go further.

Gucci, for example, through its Vault online concept store, is customizing some vintage pieces for resale. Why couldn’t the same approach be taken to unsold stock? Reconditioning items from past seasons in a creative way could turn them from discount to desirable. The rise of luxury resale platforms, such as the RealReal, Inc. in the US and Vestiaire Collective in Europe, creates an alternative channel to traditional outlet stores.

Perhaps the most striking stance was taken by Italian cashmere maker Brunello Cucinelli SpA, which donated unsold garments from the first half of 2020, estimated to be worth about $35 million, to those in need. Yes, such projects take effort and resources, but top-end groups on both sides of the Atlantic have enjoyed a rebound in sales in the wake of the pandemic. They can afford it.

Amidst a growing environmental and social consumer consciousness, donating unwanted luxury goods to the less fortunate is more likely to win over shoppers than alienate them. — Bloomberg

Agricultural output expected to come in flat in third quarter

PHILIPPINE STAR/MICHAEL VARCAS

By Revin Mikhael D. Ochave, Reporter

THIRD-QUARTER GROWTH in agriculture output is expected to be flat after typhoons disrupted production, analysts said.

Pampanga State Agricultural University Professor Roy S. Kempis said in a phone message that he projects growth to be negative to flat, weighted on the contraction side.

“I believe that growth figures will remain flat closer to a negative number between minus 1.5 to 0.5%; about minus 1.0%,” Mr. Kempis said.

The Philippine Statistics Authority is scheduled to release its third-quarter estimate for agriculture growth on Nov. 8, Monday.  

The agriculture sector posted growth of 0.7% in the third quarter of 2020 and contracted 1.5% in the second quarter of 2021.

For 2021, the Department of Agriculture (DA) is targeting growth of 2% for the industry.

“Production was still a challenge because of the weather disturbances. These challenges happen also because of the effects of 3rd Quarter syndrome, when productivity is reduced when the available production is more difficult to dry, as in the case of rice and corn,” Mr. Kempis said.  

“Livestock tend to get sick more in this quarter. Fishing is more difficult in stormy weather. On the other hand, the movement of goods and services improved with the easing up of lockdowns as vaccine supply substantially improved,” he added.

Mr. Kempis said the poultry subsector is likely to post growth as chickens are grown in climate-controlled areas.

According to the DA, Typhoon Jolina caused an estimated P1.36 billion worth of losses to the industry.  

Another weather disturbance that resulted in significant agricultural losses was the rains brought by the southwest monsoon and enhanced by Typhoon Fabian, which caused P698.53 million worth of damage.   

Rolando T. Dy, executive director of the Center for Food and Agri Business of the University of Asia and the Pacific, said growth in the farm sector is expected to be flat in the third quarter.

“For me, (the growth) is flat. The (third) quarter is affected by seasonality. The subsectors of livestock (hogs) and poultry will not recover,” Mr. Dy said in a mobile phone message.

Federation of Free Farmers National Manager Raul Q. Montemayor said in a mobile phone message that the growth rate of the agriculture sector could be negative due to the effect of the typhoons.  

“The gross value of production at constant 2018 prices for the first three quarters of 2020 was P1.30 trillion. In order to equal this in 2021, the value of production for the third quarter should be around P439 billion, or about 5.2% higher than the 3rd quarter output in 2020. This is a tall order, particularly given the spate of typhoons we encountered during the third quarter,” Mr. Montemayor said.  

Southeast Asian Regional Center for Graduate Study and Research in Agriculture Director Glenn B. Gregorio estimated that the farm sector will post improved output in the third quarter.

“I am hopeful that the overall value of production in the Philippine agriculture and fisheries sector would register a positive growth around 0.7 to 1.0%,” Mr. Gregorio said in a mobile phone message. 

“I have been observing positive growth in our crops sector which also has a high probability of achieving positive growth during this quarter as well. The typhoon months of the third quarter did not affect the production especially in rice and corn causing an expected increase in the value of production in the crop sector,” Mr. Gregorio said.  

Mr. Gregorio said the livestock subsector is expected to decline as it is still affected by the African Swine Fever outbreak.

He said the government should institutionalize biosecurity measures for the livestock sector.

“I would like to emphasize again the importance of instituting biosecurity measures for our livestock sector as we aim for a more system intervention that will overall strengthen its ability to respond to current and future diseases. In addition, a more action-oriented disease surveillance system would need to be actively promoted and instituted by regulatory bodies,” Mr. Gregorio said.

Physical remittance network remains important despite rise in online channels

THE PHYSICAL remittance network will continue to be relevant even as digital channels grow amid habits and some gaps that still make online transactions difficult, according to Western Union.

“In future-proofing your business, you need to have a digital strategy. But we’re not saying that retail will just be left behind,” Jeffrey D. Navarro Western Union’s head for the Philippines, Malaysia, Brunei & Indochina, said in an online interview.

“Our long-term view is that it (retail network) will continue to be substantial — it can also continue to grow. We don’t think that the growth may be as fast compared to digital, but retail will continue to be significant in terms of performance,” he added.

The central bank wants 50% of all transactions done online by 2023.

Mr. Navarro said 30-35% of their transactions are sent through digital channels, while 65% continue to be coursed through retail.

He said sender side economies like North America, Australia and Singapore are becoming more reliant on digital transactions. Meanwhile, he said retail remains huge in the Middle East and most of ASEAN.

“What we saw year on year is the percentage contribution of digital is growing and it really accelerated in the last few years because of the pandemic, but retail remains to be significant in the portfolio,” Mr. Navarro said.

He added that ensuring migrant workers have access to the “nakasanayan” or what they’re used to is also important, especially for Filipinos.

“When we go abroad, even though some of these [digital] facilities may be available, there’s nothing wrong if I’m using this certain service the same way. And sometimes, until something really inconvenient happens, we never shift,” he said.

The need to keep both retail and digital channels is also significant in a country where financial inclusion is still an issue. Mr. Navarro noted that while account accessibility in the Philippines has been increasing, it is still far from 100%.

“There is still the portion of the population that still needs it in cash, while there is also a growing percentage of the population who can also facilitate and get it via digital channels or bank accounts,” he added.

Western Union earlier this year teamed up with UnionBank of the Philippines, Inc. and Pera Hub to allow remittance recipients with the option to claim their cash in real time through UnionBank’s online app.

Mr. Navarro said they also have working partnerships with GCash, PayMaya Philippines and Coins.ph to let receivers transfer the money sent to them straight to their e-wallets.

He said they are keen to build more partnerships to expand Western Union’s offerings, taking advantage of its strength as a cross-border platform.

“We’re always monitoring the different players in the fintech space, including the top banks, because we want to also ensure that we partner with them in putting these services in their digital offering. So that’s going to be the strategy short to medium term,” he said. — Luz Wendy T. Noble

Powertrains and promises

Geely intends to have BEV, HEV, and long-range PHEV vehicle models as the core of its product offerings. — PHOTO FROM GEELY

Geely looks to get ahead of the future

THE GEELY Auto Group — which by now is no stranger to the Philippine motoring public — very recently revealed some amazing news about its big plans for the future.

Firstly, it officially launched a new global powertrain brand, Leishen Power, and with it, a new, world-class modular intelligent hybrid powertrain platform, called Leishen Hi-X. The latter carries not only an engine with ultra-high thermal efficiency (at an impressive 43.32%), but also the world’s most advanced three-speed dedicated hybrid transmission (DHT). Moreover, the Leishen Hi-X will boast of full powertrain firmware over the air (FOTA) updating capabilities, alongside a 40% reduction in fuel consumption (per its NEDC rating). Having said all that, the Hi-X is now the industry’s most adaptable and expandable powertrain in terms of space, levels of electrification and power delivery.

Think about it. This new intelligent hybrid powertrain platform can soon be used for vehicles in the A- to C-segments for any of the models carried by brands within the Geely Auto Group. Though the first models which it says will be bestowed with the Leishen Hi-X platform powertrain system are those under its “Star series,” namely: the Xing Yue (Tugella) and Xing Rui (Preface) vehicles.

Secondly — and quite timely for the 2021 Glasgow International Climate Change Conference that is currently ongoing in Scotland — the Geely Auto Group also officially unveiled its Smart Geely 2025 Strategy. It is basically the group’s road map that outlines the future development of more electric vehicles and sustainably developed central components for vehicles. Among the highlights of this disclosure is how Geely intends to have BEV, HEV, and long-range PHEV vehicle models as the core of its product offerings.

Furthermore, the group also wishes to underline its unwavering commitment toward sustainable development, and having said so, wish to reduce total emissions by 25% by the year 2025 (that’s almost just three years from now!). Ultimately, the brand wishes to achieve carbon neutrality in its business by 2045.

China is the world’s biggest source of greenhouse gas emissions, and in its updated pledges during the ongoing Glasgow Climate Change Summit, it includes promising its country’s emissions to be cut to “net zero” by the year 2060. The Geely Auto Group definitely appears to be in line with achieving this goal, if not already ahead of schedule.

Both the announcements of the Smart Geely 2025 Strategy and the launch of its new Leishen Power brand represent the group’s acceleration towards its ideal of becoming a technology-led, global automotive group committed to technological innovations. Of course, it doesn’t hurt that this is also forecast to boost Geely Auto’s sales (across the Geely Auto, Lynk & Co., Geometry, and Zeekr brands) to 3.65 million units by 2025. In case you are not familiar, Zeekr is its premium electric vehicle brand, and it already aims to contribute about 650,000 units to the Group’s annual sales figure by 2025.

Furthermore, Geely sees itself focusing on developing its markets in the Eastern Europe, Middle East, Southeast Asian, and South American markets. It plans to introduce new energy products to the EU and to Asia-Pacific markets, as well as expand its presence in Russia, Australia, and New Zealand.

By 2023, the Geely Auto Group will also be launching a new battery-swapping mobility brand, and alongside it five new smart “battery-swapping” electric models. Also by 2023, Geely plans to begin its mass production of silicon carbide power modules for its 800V car technologies. So far, that’s already a lot of great things to watch for from the forward-thinking Chinese multinational automotive company headquartered in Hangzhou.

In a nutshell, Smart Geely 2025 capitalizes on three smart systems to seamlessly achieve its ambitious goals: smart power, smart manufacturing, and smart service. Technology has always been a main driving force behind Geely, and it sure looks like it’s all primed to bring the future of automotive tech to its consumers.

Aboitiz Group sees growth for business units

ABOITIZ Equity Ventures, Inc. (AEV) is optimistic about the growth of its business units, including its land, infrastructure, and food firms.

AEV expects its property business, AboitizLand, Inc., to exceed its year-end target by 10%, closing at P4.2 billion. The listed company sees this as AboitizLand’s “strongest performance in history,” owing to a shift in consumer preferences during the lockdown.

On the back of increased construction activity and stronger sales, AboitizLand’s residential business contributed 73% of total revenue.

“AboitizLand sales continue to perform strongly, with our 2021 target in reservations already achieved as of [the third quarter],” David L. Rafael, AboitizLand president and chief executive officer (CEO), said at a briefing on Thursday last week.

“We have generated P3.7 billion, an 89% increase versus the previous year, resulting from improved sales operations across the different projects and continued efforts in building up sales momentum,” he added.

The real estate firm will also be working with Aboitiz-led UnionBank of the Philippines, Inc. to develop an artificial intelligence (AI)-powered sales program to address its problems on forfeitures.

“We’re developing a program using AI that will allow us a reasonable expectation of a buyer given certain parameters, given certain information of their probability of forfeiting their accounts. That should help us in reducing cancelation of sales,” Mr. Rafael said.

Meanwhile, Aboitiz InfraCapital, Inc. said the first phase of its LIMA estate’s industrial expansion is “substantially complete” and that 80% of its inventory has been reserved.

Phase 2 construction, which will add 49 hectares to its inventory, will start in January next year.

Aboitiz InfraCapital President and CEO Cosette V. Canilao also said the unit is “assessing the opportunity” to bid for PLDT, Inc.’s telecommunications towers via Unity Digital Infrastructure, Inc.

For its part, food holding firm Pilmico & Gold Coin Group said it will open two new The Good Meat physical stores before the end of the year, bringing its total to three.

The food group also announced the completion of mills in Malaysia and Vietnam. It also aims to complete its warehouse expansion in Indonesia by the first quarter of 2022.

“Once completed, the facility will help improve efficiencies, stability of production, and reduce the need for external warehouse dependencies,” Pilmico President and CEO Tristan S. Aboitiz said.

The group has already begun building new mills in Vietnam and China.

AEV said on Thursday it expects to complete Pilmico’s third breeder farm in Nueva Ecija by June next year. It will have a 2,500-sow level capacity.

AEV earned P19.5 billion in core net income from January to September, up 133% year on year, while its consolidated EBITDA (earnings before interest, taxes, depreciation, and amortization) increased 28% to P49.5 billion.

Meanwhile, listed Aboitiz Power Corp. accounted for 58% of total income contributions in the first nine months of the year, followed by banking arm UnionBank with 26%, Pilmico Foods Corp. with seven percent, Aboitiz InfraCapital with six percent, and AboitizLand with three percent.

“If the trends hold up — our business units have been performing well [while] our EBITDA has been growing quarterly — I think that bodes well for us,” Manuel R. Lozano, chief finance officer of AEV, said.

On Friday, shares of AEV at the stock exchange climbed 0.88% or 45 centavos to close at P51.45 apiece.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls. — Keren Concepcion G. Valmonte

Company teaches how to do live selling online

TECH STUDIO

MANY people have fought over a bag or a book during a social media live selling gig, where shoppers can tune in to a livestream while a host displays their wares (sort of like an auction). But for those interested in being on the other side of the camera, a company which started in 2019 has studios and training programs for live sellers and brands to showcase their items for better exposure and sales.

Hiyasmin Neri-Soyao, Shoppertainment Live CEO and former home shopping television host, opened her own selling studio in 2019 — a rudimentary one then with just a blanket and a ring light, she said during a press conference on Oct. 20. In the intervening two years, they’ve upgraded a lot, with seven studios — called “Livestyle” studio sets — in Quezon City which are equipped with different features for different categories: style studios for fashion and beauty, kitchen studios for cooking and home appliances, lifestyle studios for talk shows and homecare, technology studios for mobile and gadgets, and music studios and recreation studios for entertainment.

“With more studios, we expect more action for the market. The team’s confidence stems from handling the smallest local businesses to the biggest global brands as part of our roster of clients. Shoppertainment Live’s strength is making products sellable, handling diverse products such as cosmetics, clothing, electronics, and everything in between,” she said in a statement.

Shoppertainment Live enables big advertising agencies, multinational companies such as Unilever, Del Monte, etc., and e-commerce giants, namely Lazada and Shopee, to properly sell their products in an online broadcast setup, with in-house presenters from their talent pool.

During the press conference, she pointed out that in China during the pandemic’s early days in 2020, the live selling business earned $168 billion in revenue.

As for their team, they’ve done about 1,000 livestream e-commerce campaigns, partnered with 150 brands, and hit an average between 80-100 livestreams every month.

In a statement, she said, “Shoppertainment Live has seen 200% growth from its numbers last year in terms of the demand for livestreams from brands.” During the press conference, she said, “When you put it on social media, most of the people would really look for entertainment. When it comes to e-commerce platforms, they really have more intent to buy.”

Shoppertainment Live also launched an incubation program for influencer sellers (who are called “influensales”) through the Shoppertainment Academy, a company initiative that educates and equips Shoppertainment Live presenters to be sale-centric, entertaining, and engaging to the market.

Lawrence Lee, the company’s Chief Broadcast Officer, said that the Shoppertainment Live studios have the capability to produce 50 livestreams in a 12-hour day.

Mr. Lee, who once produced and directed home shopping TV broadcasts through ACJ O Shopping that once aired on ABS-CBN, said that during his stint on ACJ O Shopping, he had been sent to the South Korean headquarters of O Shopping (by home shopping company EJ ENM). There, he learned how to demonstrate a product properly. “There’s an art behind showcasing a product onscreen — how to sell and be creative the right way.” And that is just one thing that Shoppertainment Academy will teach. — JL Garcia

Indigenous community ventures into Cardava banana to expand income from traditional crops

BANGSAMORO.GOV.PH

UPLAND FARMERS in Maguindanao, mostly members of the Teduray indigenous people, have started developing an initial five-hectare area to plant the Cardava banana variety to diversify their income sources away from traditional crops such as rice and corn.

“I hope that this will encourage other people to go into Cardava planting (and not just Cavendish which is the traditional export variety) because there is also available market and good income for Cardava,” Ishak V. Mastura, chair of the regional Bangsamoro Board of Investments (BBoI), said following the Oct. 29 groundbreaking ceremony for the project.

The BBoI helped forge a partnership between Datucampong Banana Plantation, the new investor, and Usman Banana Plantation, the source of Cardava seedlings which provides technical as well as marketing assistance.

Datucampong is planning to develop a 50-hectare area for Cardava.

Cardava, called kamison in Maguindanao and more commonly known as saba in other parts of the country, is usually used for cooking and processing. It is also exported frozen in vacuum packaging.

“We are also eyeing future ventures to develop 150 hectares of Cavendish Banana Plantation here in the area that will generate at least 250 jobs, mostly for the local resident farmers,” Mr. Mastura added.

In August, the BBoI held a forum for farmers and residents of South Upi, North Upi and Datu Odin Sinsuat in Maguindanao to present agribusiness opportunities and available assistance to farmers. — Marifi S. Jara

Peso may decline vs the dollar on expectations of weak GDP

THE PESO may depreciate versus the greenback this week amid expectations of slower economic growth in the third quarter. 

The local unit closed at P50.33 per dollar on Friday, gaining 26.5 centavos from its P50.595 finish on Thursday, based on data from the Bankers Association of the Philippines.

The peso also appreciated by 8.5 centavos from its finish of P50.415 per dollar a week earlier.

The local unit’s Friday close was its strongest since it ended at P50.27 on Sept. 22, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said in a Viber message.

Positive market sentiment on the back of improved external trade also supported the peso on Friday, Mr. Ricafort said.

Data released by the Philippine Statistics Authority (PSA) showed the trade deficit widened by 14% to $4 billion in September from the $3.51-billion gap in August and by 67% compared with the $2.27-billion deficit a year earlier.

That month, imports rose by 24.8% to $10.67 billion from a year earlier, while exports increased by 6.3% to $6.68 billion.

The widely expected decision of the US Federal Reserve to announce the start tapering its asset purchases while maintaining rates near zero also boosted the peso, UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion said.

The Fed, as widely expected, announced on Wednesday that it would begin reducing its $120 billion in monthly purchases of Treasuries and mortgage-backed securities at a pace of $15 billion per month, with a plan to end the purchases altogether in mid-2022, Reuters reported.

Fed Chairman Jerome H. Powell also said they could stay patient and keep rates low to support the economy as the job market remains weak.

Peso-dollar trading week could be affected by the third-quarter gross domestic product (GDP) data set to be released by the PSA on Nov. 9, RCBC’s Mr. Ricafort said.

A BusinessWorld poll of 18 economists yielded a median estimate of 4.7% for third quarter GDP growth. If realized, this would be slower than the 11.8% expansion seen in the April to June period but still better than the 11.5% contraction a year earlier.

Analysts said the lockdown imposed amid the Delta variant surge last quarter likely dented growth.

Meanwhile, UnionBank’s Mr. Asuncion said the market will also consider the US nonfarm payrolls data released last week.

Reuters reported Friday that US employment gains were better than expected in October as challenges caused by the infection surge during the summer season subsided.

The US Labor department said nonfarm payrolls rose by 531,000 jobs last month, higher than the 312,000 logged in September as well as the 450,000 jobs estimated by economists in a Reuters poll. 

For this week, Mr. Asuncion said he expects the local unit to move within P50.40 to P50.90, while Mr. Ricafort gave a stronger forecast range of P50.15 to P50.60 per dollar. — Luz Wendy T. Noble with Reuters

New Suzuki S-Presso Special Edition highlights model’s mini-SUV image

PHOTO FROM SUZUKI PHILIPPINES, INC.

SUZUKI PHILIPPINES, Inc. (SPH) unboxes a new variant of its affordable, quality S-Presso hatchback. Since its launch in March of last year, the S-Presso has made an impact in the market as “a vehicle that redefines excitement and fun that can surely boost… adventures on the road.”

The new Suzuki S-Presso Special Edition is said to highlight a “retro design infused with modern features.” Like the only other variant, it is fitted with halogen headlights and a four-slot grille which pays homage to Suzuki’s brand identity. The S-Presso Special Edition receives black cladding and skid plates which serve to heighten its “athletic mini-SUV look,” said the company. On its side profile, is a high visual line that aims to make it look taller. Adding to the new look are stylish alloy wheels and a rear upper spoiler.

Inside, the Suzuki S-Presso Special Edition is complemented with silky silver accent on the center console, A/C louver, and side-door molding.

The S-Presso Special Edition comes in a unique colorway, Starry Blue Pearl, “leaving a lasting impression to those who spot the automobile on the road.” It is priced at P568,000. For more information, contact or visit any of Suzuki’s 73 dealerships nationwide or visit the online showroom at www.auto.suzuki.com.ph.

Focus on RE capacity-building, active mobility needed

EDUCATION and support for active mobility are critical as the Philippines strives to become more climate friendly, a climate and energy policy group said.

Arturo A. Tahup, associate for community resilience at the Institute for Climate and Sustainable Cities (ICSC), called on the private sector to not only invest in renewables, but also invest in courses to help educate people in managing renewable energy (RE) systems.

“Invest in education and capacity-building courses so that we can have more trained, educated, and empowered RE technicians and engineers,” Mr. Tahup said at a virtual forum last week.

Small islands and coastal communities are said to be the most vulnerable to climate impacts. Access to electricity is also one of the pressing issues, however, Greenergy Solar PH Co-Founder Philline Marie P. Donggay said this is an opportunity “to provide clean energy systems.”

Meanwhile, Arielle Celine L. Tabinga, urban transition analyst at the ICSC, stressed that the “mobility revolution” is underway.

Citing a report by the IEA (International Energy Agency) and the International Council on Clean Transportation in 2018, she said the transport sector is the largest source of global transport emissions accounting for 24% of global carbon dioxide (CO2) emissions for the year’s study.

Nearly half or 45.1% of the emissions come from passenger road transport, which includes cars, motorcycles, buses, and taxis. It is also expected to grow at a faster rate compared with other sectors such as freight road transport, aviation, shipping, and rail, among others.

“The level of air pollution that we have… is essentially equivalent to every Filipino smoking one cigarette per day,” said Center for Research on Energy and Clean Air (CREA) Analyst Isabella L. Suarez.

She said greenhouse gas emissions also contribute to air pollution, which is said to be the “leading environmental health threat” in the Philippines. The economic impact of poor air is also affecting healthcare costs as well as the ability to work.

“The estimates are essentially equivalent to 23% of our GDP (gross domestic product) in 2019,” Ms. Suarez said. “With the level of air pollution that we are breathing and the impacts on our health and cost and spending, it’s scraping 23% of our GDP every year.”

On the other hand, ICSC’s Ms. Tabinga noted that one of the solutions to reduce CO2 emissions is a shift to the “most efficient modes,” an example of which is non-motorized transport.

The private sector, as well as the government, is urged to promote programs that enable active mobility, like cycling and walking.

“Not only does active mobility [reduce] emissions, it also taps into the concerns [and] takes into consideration [issues such as] equity and accessibility,” Ms. Tabinga said.

The Mobility Awards recognizes establishments as well as cities that are deemed “bicycle-friendly.” CREA’s Ms. Suarez said, “Companies that invest in solutions to address air pollution can simultaneously reduce their carbon footprint.”

“We believe that businesses, together with the local governments, have an essential role to play in developing programs where the ultimate aim is not defined by scale or size, but their impact on the working households in the country,” Ms. Tabinga said. — Keren Concepcion G. Valmonte

Yields on government debt inch up on inflation, Fed meeting

DEBT YIELDS at the secondary market mostly rose last week on still elevated inflation and the US central bank’s policy meeting.

Yields on government securities (GS) increased by 4.46 basis points (bps) on average week on week, based on PHP Bloomberg Valuation Service Reference Rates as of Nov. 5 published on the Philippine Dealing System’s website.

At the short end of the curve, rates of the 91- and 364-day Treasury bills (T-bills) inched up by 0.33 bp and 3.22 bps, respectively, to 1.2164% and 1.655%. Meanwhile, the six-month paper’s rate inched down by 0.61 bp to finish at 1.4427%.

At the belly, yields on the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) rose by 3.7 bps (to 2.4128%), 8.3 bps (to 2.9645%), 12.28 bps (to 3.4782%), 13.66 bps (to 3.9137%), and 11.02 bps (to 4.5083%), respectively.

Meanwhile, yields on the 20- and 25-year T-bonds fell by 4.62 bps to 5.109% and 8.84 bps to 5.1254%, respectively. On the other hand, the rate of the 10-year paper increased by 10.61 bps to end the week at 4.9573%.

A trader said debt yields inched higher after the Bureau of the Treasury (BTr) last week awarded T-bonds at a higher-than-expected rate.

“It didn’t help that market also anticipated the consumer price index data, which despite coming lower than expected failed to calm the selling pressure,” the trader said in a Viber message.

The government made a full award of the reissued T-bonds it offered on Wednesday as rates went up, with the market anticipating the result of the US Federal Reserve’s policy review.

The BTr raised P35 billion as planned via the reissued five-year T-bonds with a remaining life of four years and five months.

Tenders reached P46.65 billion, higher than the offer but lower than the P56.08 billion in bids fetched the last time these debt papers were auctioned off on Oct. 12, where the government made a full award.

The five-year notes fetched an average rate of 3.762%, up by 18.6 bps from the 3.576% quoted for the tenor during the previous auction.

Meanwhile, inflation eased to a three-month low in October amid a slower increase in food prices, the Philippine Statistics Authority (PSA) reported on Friday. Headline inflation settled at 4.6%, slower than the 4.9% median estimate of 21 analysts in a BusinessWorld poll.

The October figure was slower than the 4.8% in September, but faster than 2.5% a year earlier. Still, this was the third straight month inflation exceeded the 2-4% target of the Bangko Sentral ng Pilipinas (BSP) for the year. Inflation has topped the BSP target this year except in July.

This brought headline inflation for the first 10 months to 4.5%, faster than the 4.4% forecast by the central bank for the year.

The market also priced in the policy meeting of the Federal Open Market Committee last week, where it announced its plan to start reducing its monthly asset purchases, as expected, another trader said. 

“There was some caution ahead of the US Federal Reserve policy meeting,” the second trader said in an e-mail.

The Fed on Wednesday announced it will start reducing its monthly Treasury asset purchases, although it maintained policy rates near zero. Both are in line with market expectations.

For this week, yields could continue to rise ahead of key local and US data.

“Local yields this week are seen to move with some upward bias as the likely stronger US consumer and producer inflation reports might reinforce more hawkish views by market participants,” the second trader said.

“This upside, however, might be limited due to some market caution ahead of the third- quarter Philippine (gross domestic product) growth report,” he added.

Third-quarter GDP data will be released by the PSA on Nov. 9. A BusinessWorld poll of 18 economists yielded a median estimate of 4.65% for third-quarter GDP growth. If realized, this would be slower than the 11.8% expansion seen in the April to June period but better the 11.5% contraction in the same period last year.

Analysts said the lockdown imposed amid the fresh surge in coronavirus cases due to the Delta variant last quarter likely dented growth.

“Expect upward pressure on yields and wait for more clues on the weekly auctions,” the first trader said. — Luz Wendy T. Noble

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