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Carrying the mark of leadership

Much is expected of leaders, especially during times of crises. Cocolife President and CEO Atty. Jose Martin A. Loon had held his title for about a year before the pandemic hit, being the youngest to hold the position in the company’s history.

He had done much to get this far, of course. He had graduated from the University of the Philippines College of Law and passed the bar examinations in 2014. He earned his Master of Laws in National Security from Georgetown University the following year, and then accepted a slew of public and private leadership roles before becoming appointed as Cocolife’s chief.

Martin during his 2015 graduation at Georgetown University

When the COVID-19 pandemic broke out, Martin, along with all the other leaders of the world, had to bring all this skill and experience to bear. Dubbed as the biggest global challenge since World War II, COVID-19 has decimated parts of society all over the world, killing millions and putting so much more out of work. Many businesses crumbled under the weight of the pandemic, and being in the health and insurance sector did not help ease the pressure off of his shoulders.

“From the very start, the priority has always been the safety, financial security, and peace of mind of our people in these uncertain times. We have made huge strides as a company to ensure that our clients and stakeholders will continue to have timely access to our services at a time when they need us the most,” Martin said in an interview.

Fortunately, before the crisis, Cocolife had already begun the streamlining and digitalization of its internal processes to enable its entire workforce to continue working efficiently from home. In fact, in response to the call of government to reduce the processing time of all COVID-19 related claims, the company had successfully ensured that its hotlines remain accessible 24/7 to approve requests for medical procedures and hospital admissions.

Additionally, working closely with the company’s established network of hospitals across the country, Cocolife has ensured that they would have enough financial resources for the procurement of new medical equipment, PPEs, and support their expanded operations.

“Our various initiatives for our clients, employees, and the Filipino people through our donations to COVID relief efforts have enabled our company to live up to our ideals and to confidently claim that we have played our role well – that we have not shirked away from our commitment to our clients and to the Filipino people to be there for them in their time of need,” Martin said.

“We continue to believe in the resiliency and ability of the Filipino to bounce back from seemingly insurmountable odds, in the same way we know that the choices we have made as a company has already set us on the path to recovery.”

Even before this, Martin had been committed to enacting sweeping systemic changes to Cocolife. He spearheaded reforms within the company to institutionalize good corporate governance – emphasizing the importance of integrity, transparency, efficiency, and ethics to streamline internal processes and comply with external regulatory requirements. He also led efforts to transform the operations of the old and outdated company to be at par with global standards, recently receiving zero audit findings from its latest ISO Audit for the first time in its history.

Martin shifted the paradigm of the employees from a day-to-day work mindset into a value system centered on service, sacrifice, and people’s welfare, aiming to inspire their workforce to believe in their capacity to serve the people and be aware of their role in nation-building as providers of life insurance.

He had to conquer numerous challenges in his short time as Cocolife’s CEO, and this time he was facing his biggest challenge yet. Looking back, he recalls how he took inspiration from his mentors and from how his parents had raised seven children while juggling work “that made the country and its people part of their lives”.

Martin in his early years with his mother Pong Azcarraga-Querubin

“Being among the young CEOs in the corporate world, I find myself blessed to have mentors whose response to the pandemic has set a clear example of how the business and private sector can become a reliable partner of the government in crisis management and nation-building,” he said.

The training he had gained from Georgetown University was also extremely valuable in that it guided him in his approach with the crisis.

“I constantly found myself reverting to my training on ‘scenario building’ and led the management discussions to focus on analyzing and understanding the current trend in health and insurance claims, possible changes in direction of government policy, consumer behavior, and employee morale. This then enabled us to have a clear picture of possible future scenarios and to develop and identify possible pathways toward the direction and initiatives we wanted to take as a company,” he added.

Doing so allowed Cocolife to establish and maintain well-paced operations that is poised to deliver within their expected output for 2020, overcoming the setbacks and challenges of the pandemic. All while ensuring the continued employment of all Cocolife employees with “no one left behind”. Cocolife will also provide free COVID-19 vaccine for all its employees and their families once vaccine is already available.

The challenges are far from over. “I believe that in 2021 and perhaps even a few years after, we would feel the full impact of COVID-19 and eventually reap the consequences of the decisions that we have made to address the challenges brought about by the pandemic,” he said.

“Life will definitely not get any easier and we need to be ready for more complex challenges that we have to face head on. This year has shown that the best-laid plans and strategies can easily be thrown out the window by black swan events – or those that no one could predict or could fully comprehend the impact. Complacency does not have a place in our time. In approaching 2021 and the coming years, it would be important for me to deal with problems immediately, while being continuing to be flexible, innovative, and daring but always remaining grounded by my core values.”

Martin noted that he remains committed to transforming Cocolife for better in the years to come, intending to lead the company through whatever other crises looming on the horizon by sticking to their core values and helping more Filipinos.

“Cocolife plans to further strengthen its digital servicing even better by establishing efficient customer portals for its policyholders and potential clients. We have already initiated and worked on the needed updates in our core system and we’re looking at going full speed with the technological improvements by 2021,” he shared.

He added, “With our enhanced product development efforts, we also aim to launch more products and services that are responsive to the changing landscape and consumer needs.”

Visit The President’s Corner for more info on Atty. Jose Martin Loon.

 

Gov’t borrowings swell to P3 trillion

THE National Government borrowed P3.048 trillion in the first 11 months of the year, already exceeding the P3-trillion full-year target, data from the Bureau of the Treasury (BTr) showed.

According to the BTr data, the government’s gross borrowings in the January to November period was more than triple the P982 billion raised during the same period in 2019.

Since May, government borrowings have already surpassed the P1.02 trillion raised for the entire 2019.

To compare, the P3.048 trillion borrowed so far this year is nearly as big as the P3.2 trillion raised between 2017 and 2019.

In November alone, gross borrowings surged by 764% to P124 billion from P14.346 billion a year ago. Domestic debt accounted for 92% of the total borrowings.

Gross borrowings from local lenders skyrocketed by 1,324% to P114.835 billion in November, from P8.061 billion in the same month a year ago. This consisted of P69.835 billion worth of Treasury bonds (T-bonds) and P45 billion in Treasury bills (T-bills).

The BTr did not make any amortization payments in November.

The government also secured a P9.202-billion project loan during the month, 46% higher than the P6.285 billion a year ago.

It paid P6.752 billion for its existing debt, reducing the net external borrowings to P2.45 billion.

Year to date, gross borrowings consisted of 81% in domestic debt and 19% in foreign debt.

Local borrowings surged by 261% to P2.464 trillion during the 11-month period, from P682 billion in the same period last year.

The government raised P827 billion from the sale of retail Treasury bonds; P632 billion from T-bonds; P540 billion through short-term borrowing from the central bank; and P465.31 billion from T-bills.

Meanwhile, foreign debt reached P583.64 billion in the 11 months, nearly double the P300 billion logged the year prior. This included P365 billion in program loans and P33 billion in project loans. The government also raised P119 billion via dollar-denominated bonds and P67 billion in euro bonds issued earlier this year.

Excluding the debt repayments made in the January to November period, the government’s net borrowings hit P2.824 trillion, up 232% year on year.

The government runs a budget deficit as it spends more than the revenue it generates. It borrows to fill in the budget gap expected to hit 7.6% of gross domestic product this year. — Beatrice M. Laforga

Local gov’t units on track to raise P241 billion by year end

By Beatrice M. Laforga, Reporter

LOCAL GOVERNMENT UNITS (LGUs) appear on track to collect up to P241 billion by year end, after exceeding the full-year collection target of P193 billion as of end-September.

Niño Raymond B. Alvina, executive director of the Bureau of Local Government Finance, told BusinessWorld that local treasurers, provinces, cities and municipalities collected P205.71 billion in the first nine months of the year, surpassing the already downgraded P193.04-billion target for the entire 2020 by 7%.

The nine-month tally was also 2% bigger than the P201.69 billion collected in the same period last year, he said.

“Given this development and with the easing of restriction on business activities, we are projecting the full year 2020 collections to possibly reach P241.39B, if the trend from third quarter collections continue,” Mr. Alvina said in a text message last week.

Economic managers earlier slashed the target collections of LGUs by 37% from the initial goal of P307 billion due to the recession caused by the coronavirus pandemic.

Local governments allowed the deferred payment of taxes, fees and other charges in light of the pandemic-induced disruptions to business activities and to provide relief to affected sectors.

Mr. Alvina said LGUs were still able to report year-on-year growth since the local taxes collected for the current year are based on the prior year’s assessment or in 2019.

At the height of strict lockdown, however, LGUs saw tax collections fall by 2% to P159.15 billion in the second quarter from P162.24 billion a year ago.

“[The third quarter] collection performance of LGUs picked up as many of them adopted relief measures for taxpayers, especially on interests and penalties, and managed to innovate and use alternative payment and collection schemes,” Mr. Alvina said.

“As for FY2021 target, we are revising our P144.89-billion projections issued in August 2020 to account for the Q2 and Q3 actual performance of LGUs,” Mr. Alvina added.

The National Government extended P37 billion, one-time Bayanihan grants to LGUs, P30.8 billion to cities and municipalities and P6.2 billion to provinces, as financial support amid the pandemic.

The amount is equivalent to one month of their internal revenue allotment, or their share of the national taxes, for cities and municipalities and half a month’s worth for the provinces.

State-run banks Land Bank of the Philippines and the Development Bank of the Philippines also launched low interest rate and subsidized interest rate loan programs for LGUs.

Finance Secretary Carlos G. Dominguez III earlier told LGUs to maximize their borrowing capacity to fund recovery measures and allow local economies to bounce back faster.

Philippines eyes $200-M World Bank loan

THE World Bank has lent $2.78 billion (P133 billion) to the Philippine government so far this year. — PHILIPPINE STAR/MICHAEL VARCAS

THE Philippine government is seeking a $200-million loan (P9.6 billion) from the World Bank to fund programs that will strengthen the financial sector and widen financial inclusion in the country, a document from the multilateral lender showed.

The World Bank said the executive board will likely act on the loan, formally called the “Philippines First Financial Sector Reform Development Policy Financing,” on July 14, 2021.

The loan will support programs that aim to make the country’s financial sector more stable and resilient, expand financial inclusion among Filipinos and businesses, as well as promote disaster risk and sustainable finance.

It will support policy reforms meant to promote digital financial services and help micro, small and medium enterprises gain more access to financing by de-risking private commercial bank financing.

The Washington-based multilateral lender said the loan is one out of two that its lending arm International Bank for Reconstruction and Development  is planning to extend to the Philippine government to strengthen the financial sector.

“The financial system, while smaller than Asian peers, has broadly withstood the impact of COVID-19 (coronavirus disease 2019). In terms of financial depth, access and efficiency, the Philippines’  financial development is above average among emerging markets but on the lower side among emerging Asian economies,” the document read.

The bank capital adequacy ratio in the country was stable at 15% in the past decade, but still lower than other emerging markets in Asia.

Meanwhile, the non-performing loans ratio of banks reached 2.8% at the end of August, higher compared to the two percent before the coronavirus pandemic escalated, but still below the levels seen after the Asian Financial Crisis in 1997 to 1998.

“The key risks to financial stability arise from significant interlinkages between banks and non-financial corporates through mixed conglomerate ownership structures and large lending exposures,” it added.

The World Bank has lent $2.78 billion (P133 billion) to the Philippine government so far this year, the most recent is the two loans worth $900 million approved last week.

This included a $600-million (P29 billion) loan for programs that will promote competitiveness and boost resilience to natural disasters, and a $300-million (P14.4 billion) loan to provide additional financing for the National Community Driven Development program.

The government borrows from local and foreign lenders to support its budget deficit, seen hitting 7.6% of gross domestic product. — Beatrice M. Laforga

Court denies JG Summit move on tax liabilities

THE Court of Tax Appeals (CTA) denied for lack of merit the motion for reconsideration of JG Summit Holdings, Inc. over the denial of its alleged tax liabilities of P1.3 billion for 2009.

In a 22-page decision dated Dec. 11, the court’s second division affirmed its previous ruling.

The court in March denied for lack of jurisdiction the petition of JG Summit, saying the time for it to appeal the Final Decision on Disputed Assessment (FDDA) of the BIR had already lapsed for nine months.

The company argued in its appeal that the revised FDDA “superseded” the FDDA and that the final decision of the BIR was appealable to the court.

The court cited Section 228 of the Tax Code, which said that if a protest is denied in part or in whole or is not acted upon within 180 days from submission of documents, this should be raised to the CTA within 30 days from the receipt of the decision or lapse of the prescribed period.

“It is undisputed that a party adversely affected by a decision of the CIR (Commissioner of Internal Revenue) may file an appeal with this Court within thirty (30) days after the receipt of such decision,” the decision read.

The court said that the FDDA issued contains a statement that read “this is our final decision,” which only means that it is appealable to the court.

It also cited provisions of revenue regulations that said a decision may be appealed within 30 days from the receipt of the decision.

The court said that while the petitioner may file a motion for reconsideration on the assessment, “the same shall not toll the 30-day period to appeal to this Court.”

“Simply stated, while petitioner is not prevented from filing a request for reconsideration with respondent, the resort to this Court within the 30-day period is mandatory and indispensable in order to prevent such decision from becoming final, executory, and demandable,” the ruling read.

The CTA also said the claim of JG Summit that the same wordings of the FDDA appeared in the revised document meant that it is intended to replace the first one issued is “likewise bereft of merit.”

The court said that even if it would assume jurisdiction, it still finds no reason to invalidate the assessment based on the grounds raised in the appeal.

The court said that the absence of an electronic letter of authority (LoA) does not invalidate the assessment, contrary to the claim of the company.

It noted that while Revenue Memorandum Order No. 69-2010 requires  that manual LoAs be retrieved and be replaced with an electronic LoA (eLA), it does not state that the conduct of the audit pursuant to a previously issued manual LoA would be invalidated if the electronic is not issued.

“Neither does it provide a blanket revocation of the manual LoA if the said manual LoA is not replaced with an eLA,” it said. “As it is, the manual LoA still validly clothed the examiners the authority needed to conduct an examination or assessment in accordance with Sections 10 and 13 of the NIRC of 1997.”

The court also said the period to assess the company had not prescribed as the second waiver executed to extend the assessment period showed that it received the accepted waiver based on record, contrary to the claim of the company.

The court also said that even if the waiver is defective, the two parties continued to deal with each other.

JG Summit claimed that the formal letter of demand  (FLD) was not accompanied by assessment notices. But the CTA said records show that the subject assessment notices were received by the company.

The court said the BIR “properly served” the FLD with the final assessment notice to the company, which contained the due date for payment.

It also ruled that the absence of a fixed date for payment in the FDDA and the revised FDDA (RFDDA) does not render the assessment void.

“Even if we are to rule that FDDA and RFDDA are invalid and defective for lack of fixed date prescribed for the payment of the deficiency taxes, the assessment against petitioner would remain valid as the invalidity of one does not necessarily result to the invalidity of the other,” it said.

JG Summit was assessed for liabilities of P6.55 billion under its FDDA. When appealed, the BIR issued the RFDDA, which protested before the court, for deficiency income tax of P581.9 million, value-added tax of P202.6 million, and documentary stamp tax of P555.3 million as it paid its other deficiencies. — Vann Marlo M. Villegas

Vessel-monitoring measures seen adding teeth to closed fishing season

THE CLOSED fishing season declared over the Visayan Sea and the Zamboanga Peninsula will be more adequately enforced once the rules on sardine management and vessel monitoring are implemented, environmental non-government organization (NGO) Oceana said.

“The declaration of closed fishing season by the Bureau of Fisheries and Aquatic Resources (BFAR) this year takes a more significant turn because the National Sardines Management Plan was signed and up for implementation. Secondly, we have the rules on vessel monitoring measures also ready for implementation that will help in effectively enforcing the closed season,” according to a statement from the organization, quoting its vice president Gloria Estenzo Ramos.

The Bureau of Fisheries and Aquatic Resources, in Fisheries Administrative Order no. 167-3, closed off the Visayan Sea on Nov. 15 to all fishing activity involving sardines, herring and mackerel, while the ban on the Zamboanga peninsular waters was imposed on Dec. 1, covering sardines. The closed seasons end on Feb. 15 and March 1, respectively.

“With the spatial and temporal closure in the portion of the Visayan Sea, it is imperative for Fisheries Management Area 11 and pertinent Fisheries Management Areas (FMAs) through the Management Body to put in place a monitoring and evaluation mechanism that will look into the biological condition of the fisheries resources, and socio-economic impact of this harvest control measure. This science-based intervention of policies and plans that are developed through the participatory mechanism of the Fisheries Management Area will be most helpful,” Ms. Ramos said.

Oceana touted the Sardines Management Plan as an opporunity to take a more participatory approach to fisheries management, engaging fisherfolk, local governments and civil society groups.

Sardines are important for food security going forward, in the context of the pandemic and climate change, she said, adding that the needs of fishing communities must be looked after.

On the enforcement side, Ms. Ramos said Oceana backs the use of technology like Visible Infrared Imaging Radiometer Suites (VIIRS) to detect violators, as well as tracking devices in commercial fishing vessels.

VIIRS is used to determine vessel locations at night.

Joyce Sierra, the Oceana Communications manager, told BusinessWorld that Oceana is asking for FMAs and law enforcement agencies to enforce the commercial fishing ban in municipal waters alongside the closed seasons in the Visayas Sea and Zamboanga Peninsula.

“Part of the plan is to determine the impact of the close season and support the provision of job opportunities during the close season. As we continue to grapple with the challenges of the pandemic, climate change and fisheries management, our fisherolk bear the heavier burden than any other sections of our population. Ironically, they are our food producers that suffer the most from hunger, barely able to give their children their basic necessities of shelter and education,” Ms. Ramos said. — Angelica Y. Yang

Metro Manila Film Festival 2020: Tarnishing the Superstar

By Joseph L. Garcia, Reporter

MOVIE REVIEW
Isa Pang Bahaghari
Directed by Joel Lamangan

YOU’VE got a problem in your hands if Superstar Nora Aunor can’t quite get you to focus on a movie.

Isa Pang Bahaghari sounds like a follow-up to Joel Lamangan’s 2018 hit Rainbow’s Sunset. Not having seen that movie, we won’t be able to compare Bahaghari to that 2018 MMFF Best Picture awardee. Suffice it to say that we don’t think this movie could stand up to its predecessor.

Dom (played by Philip Salvador), is an aged and ailing seaman who, after a maritime accident, disappeared for 20 years. He had been marooned in Cuba and came to live with his rescuers. In that span of time, he had been with a common-law wife, and her death and his release from that life prompts him to return to the Philippines. His wife, Lumen (Nora Aunor), believing him to be dead, raises his children in squalor by a seaside town, where she makes tuyo (dried fish).

Before I get angry at the rest of the film’s details, let me first commend the Superstar for an entrance that is a testament to her powers. She’s shuffling fish, dishevelled and disabled; but still managing to elicit a gasp from the audience. That’s the last time in this film that I could say I loved her’ because I would say this film painfully underutilized its cast. Right after her entrance, any love or sympathy I may have had for her character has disappeared. Even The Superstar is no match against unimaginative camerawork and a lack of texture; the film appears to be a long Sunday TV drama, fit only for the small screen. The cast is also a victim of unlikely writing: after seeing my spouse whom I had long believed to be dead, without prior knowledge of his soap-operatic circumstances, I wouldn’t run up to him and try to beat him up with my crutch. Lumen’s crutch is explained as a consequence of a workplace accident (how Dickensian!), but frankly, I think she hobbled from trying to carry the whole movie on her back.

The film spins on the axis of the friendship between Dom and an old gay man, Rhey (Michael de Mesa), who tries to reconcile both his old friends. Lumen was his high school best friend, while Dom was an old flame he couldn’t quite put out. This is problematic: I can forgive Rhey being an old gay trope: he does hair, he speaks with an old-fashioned gay lisp, he lipsyncs kundimans in drag. Fine. He is a product of his times. What I find hard to forgive is that despite him being a main character, he serves only as an accessory to a heteronormative storyline: fixing up his two best friends. Isn’t he a little bit too old for that?

Well, Rhey has a lot on his plate either way: that plot! In the first 40 minutes (the movie runs for two hours), he is supposed to help the pair with the following: Dom’s estrangement from his wife and kids; his son being a drug pusher in this climate (he constantly receives warnings about his death in the hands of the law — more on this later), his daughter as an exotic dancer (she defends herself by saying she never took all her clothes off), and his other son in jail due to a false accusation of rape. Add this to the fact that everyone is quite poor and miserable. In one scene, Dom reveals to Rhey that he also has stage 4 cancer, and I said the same thing as Michael de Mesa’s character: “Ha?! Cancer?!”

From this plot comes my praise for MMFF’s streaming service for this year: in the time I spent trying to avoid the plot, I had time to reorganize my jewelry and try two different hairstyles. I wouldn’t have had that freedom had this been shown in the theaters.

(Spoilers ahead!)

I say that the film doesn’t optimize its stars — and in hindsight, its material. For example: there’s the son’s subplot involving his trade in drugs, and his death at the hands of the law. In one scene, where he’s almost killed, it’s implied that the bounty on his dead head was set by his bosses, and not the tentacles of the law with which he is constantly threatened. Really? As for my commentary about the stars: you’ve got Nora Aunor in there. There were several opportunities for monologues, but they were either unceremoniously interrupted; or else given up to badly-shot flashbacks. Instead, Nora Aunor’s most memorable line in the movie is, “Puki mong fake!,” translated as “You’re a fake, Rhey!” in the subtitles.

Speaking of the subtitles, whenever Rhey is called “bakla” (gay) onscreen, it’s translated as the six-letter F-word slur in the subtitles. Surely we can find a much better word? Even just removing the last three letters would soften the blow. I don’t know if I’m reading far too much into it, and I’ve become too PC for comfort, but problematic gay tropes are just everywhere in this movie, leaving one to label the film as regressive and reductive. For example: Dom meets up with an old childhood friend, who turns out to have been gay for him in their youth. “Lagi kitang binobosohan noon (I used to peep at you),” said his friend, a line that made me stop polishing a ring, because it was played for laughs. Another scene, a flashback, shows a young Rhey feeling up a sleeping Dom. Dom says that he wasn’t that drunk when he was felt up, so there was a measure of consent there; and that encounter was supposed to prove their love for each other. They do admit their love to each other, albeit on different planes: Dom loves Rhey as a very dear friend who has given him so much (because he helped pay for his tuition, helped raise his kids) while Rhey loves Dom romantically, spiritually, physically, etc. (because he is Dom). Any and all gravity this scene might have had been killed. I’ll spare you the details and tell you that Nora and Philip both die, and their young selves run towards the sea.

Why should you watch this film? Well, watch it for Nora, but lower your expectations, and just remember her as a living, imperfect relic. Otherwise, there’s a bevy of other, better choices for learning about being both queer and old; and they won’t make you smirk.

Investors rethink role of bonds, tech after chaotic year

THIS has been a year like no other.

Hammered by an unprecedented health crisis, global stocks tumbled into a bear market at record speed, and then rallied to new highs thanks to a flood of central bank money. Bond yields tanked to uncharted lows and the world’s reserve currency surged to all-time highs, only to then retreat to its weakest level in more than two years as 2020 draws to a close.

Global asset allocators from BlackRock, Inc. to JPMorgan Asset Management have outlined their takeaways for investors from the volatile year. Here are some of their reflections:

RETHINK BONDS’ ROLE IN PORTFOLIOS
The massive stimulus doled out by global policy makers when markets seized up in March led to one instance of a breakdown in what has long been a negative correlation between equities and bonds. The 10-year US Treasury yield rose from 0.3% to 1% within a week, and simultaneously equity markets continued to fall.

Now, as investors face lower-for-longer rates even as growth picks up, doubts are emerging whether developed-market government bonds can continue to provide both protection and diversification as well as satiate investors seeking income gains. There’s also a debate over the traditional investing policy of putting 60% of funds in stocks and 40% in bonds, even though the strategy proved to be resilient during the year.

“We expect more active fiscal stimulus than any other modern period in history in the next economic cycle, as monetary and fiscal policy align,” said Peter Malone, portfolio manager at JPMorgan Asset’s multi-asset solutions team in London. “Future returns from a simple, static stock-bond portfolio will likely be constrained.”

Some Wall Street giants recommend investors take a pro-risk stance to adapt to the changing role of bonds. Among them, BlackRock Investment Institute advised investors to turn to equities and high-yield bonds, according to a note published in early December.

‘DON’T FIGHT THE FED’
Few would have expected the swift turnaround in markets we saw in 2020. As COVID-19 spread, the S&P 500 Index plunged 30% in just four weeks early in the year, a much faster tumble than the median one-and-a-half-years it had taken it to get to the bottom in previous bear markets.

Then, as governments and central banks shored up economies with liquidity, stock prices rebounded at an equally astonishing pace. In about two weeks, the US benchmark was up 20% from its March 23 low.

“Normally you get more time to position your portfolio in a correction,” said Mumbai-based Mahesh Patil, co-chief investment officer at Aditya Birla Sun Life AMC Ltd.. With markets moving so fast, someone in cash “would have been caught napping on this rally and it would have been difficult to catch up.”

Being a bit contrarian helps, Patil said, adding that it’s better for investors not to take too large a call on sitting on cash. They should also focus on a bottom-up portfolio so they can go through both up and down cycles, he said.

SooHai Lim, head of Asia Equities ex-China at Barings, said the speedy market recovery proved the soundness of the old saying “Don’t fight the Fed.”

That said, some fund managers warned that investors should not take swift central banks support as guaranteed.

“It was a flip of a coin where it went from there and whether they’d stepped in early enough,” said John Roe, head of multi-asset funds at Legal & General Investment Management in London. “The downside could have been unprecedented.”

TEFLON TECH
This year’s dizzying rally in tech stocks gave investors an opportunity of a lifetime. Anyone who missed out on this theme that benefited greatly from stay-at-home and digitization trends in the pandemic would most likely find their portfolios lagging benchmarks. The top 10 US companies that have contributed the most gains to the S&P 500 Index this year are all technology-related stocks, ranging from cloud-computing pioneer Amazon.com Inc to chip maker NVIDIA Corp.

Even with a short pause in November when positive trial results from a Covid-19 vaccine spurred a rotation into lagging cyclical shares, technology has ended as the top-performing sector in Asia and Europe. Adherents of the value strategy saw multiple false starts during the year, as investors bet that the group of shares, defined by cheapness and mostly comprising names sensitive to economic cycles, would finally have their day. They were disappointed.

“Never underestimate the impact of technology,” said Alan Wang, portfolio manager at Principal Global Investors in Hong Kong. Thanks to cheap borrowing costs, “a lot of new technology has been re-rated and this (pandemic) just created a great opportunity for them to re-invent our lives.”

Innovative stocks now are being valued on intangible factors such as goodwill and intellectual property rather than traditional methods like price-to-earnings ratios, Wang said, adding that investors should adopt such valuation strategies.

CASH IS KING FOR COMPANIES
The pandemic and the speed with which it roiled markets showed investors they should stick with companies with strong balance sheets that can ride the waves of uncertain times.

“The resilience of stocks in a year like this helps to prove their worth and justify their higher valuation multiples in a low rate world,” said Tony DeSpirito, chief investment officer of US fundamental active equity at BlackRock.

2020 reaffirmed two important lessons DeSpirito has learned over the years: investors should undertake stress tests on companies to see if those firms’ earnings and balance sheets are strong enough to survive recessions during normal times; and they should diversify investments risks and also increase sources of alpha potential.

BE MINDFUL OF COLLATERAL DAMAGE
Policy makers’ decisive rescue plans came at a cost for investors in some sectors. European banking shares tanked after being ordered to halt dividends to preserve capital. In Asia, real estate became the second-worst-performing industry after energy shares this year, weighed down by property owners when some markets like Singapore’s passed laws asking landlords to provide some tenants with rent relief.

“The government this time around has been quite heavy-handed,” said SooHai Lim, head of Asia Equities ex-China at Barings. “They have been more coordinated, a lot faster and more decisive.”

Lim said he will price in a higher risk level when investing in certain sectors like banks, which are “definitely more exposed to regulatory intervention.”

DOUBLING DOWN ON ESG
ESG-related assets managed to outperform in many pockets of the market during volatility, proving skeptics wrong. For example, an FTSE index of global stocks with significant involvement in environmental markets is up 35% this year, outperforming the global equity benchmark by more than 20 percentage points.

“The Covid crisis has brought the need for more rapid change into sharp focus and we are seeing clients of all types reassess their long-term objectives and the outcomes required of their investments,” said Harriet Steel, head of business development at Federated Hermes.

In fact, the pandemic has prompted massive inflows to ESG-related products. Global funds investing in or adopting strategies related to clean energy, climate change and ESG have grown their assets under management by about 32% from a year earlier to a new record $1.82 trillion in 2020, according to data compiled by Bloomberg. — Bloomberg

Philippines ranks 110th in internet speed

THE PHILIPPINES ranked 110th out of 139 countries in mobile internet speeds in November, according to the Speedtest Global Index run by American internet testing and analysis firm Ookla.

The country’s ranking inched up one spot with average mobile connectivity download speeds of 18.49 megabits per second (Mbps). In contrast, the top ranked United Arab Emirates saw 170.30 Mbps on average.

Southeast Asian neighbor Singapore ranked 16th, followed by Thailand (44th), Vietnam (63rd), Malaysia (88th), and Cambodia (102nd).

The Philippines also went up four spots to rank 103rd out of 176 countries for fixed broadband download speeds, with 28.69 Mbps compared with top-ranked Singapore’s 241.10 Mbps.

Thailand ranked third, while Malaysia came in 43rd followed by Vietnam at 49th. Cambodia came in 113th with 25.31 Mbps.

While lockdowns had affected internet speeds due to surging traffic, Ookla by July said that global internet speeds had mostly stabilized to pre-pandemic levels.

President Rodrigo R. Duterte in July threatened to shut down telecommunications companies Globe Telecom, Inc. and Smart Communications, Inc. if they fail to improve services by the end of the year.

National Telecommunications Commissioner Gamaliel A. Cordoba earlier this month said that telecommunications companies had improved services since then, noting that the average fixed download speed in the country was at 25.07 Mbps and mobile download speed was at 16.95 Mbps in July.

He said that internet connectivity demand increased by 500% during the stricter lockdown in March and April. — Jenina P. Ibañez

China to import record 100 million tons of soybeans in 2020 — COFCO

GUANGZHOU — China is expected to import more than 100 million tons of soybeans in 2020, a record high, said an executive with leading state-owned grains trader COFCO on Tuesday, as rebuilding of the country’s huge hog herd boosts demand for the protein.

The country is expected to crush 92.6 million tons of the beans this year, Zhou Jishuai, deputy general manager of the hedging and trading department of COFCO Oils and Oilseeds, a unit of COFCO Group, told a conference in Guangzhou.

After being decimated by African swine fever, China’s agriculture ministry has said the country’s pig herd recovered to more than 90% of normal levels by the end of November, even though some analysts remain skeptical about the extent of the recovery.

Mr. Zhou said soymeal demand will remain strong this quarter and into the first quarter of next year.

Demand for soybean oil is also set to rise more than 6% this year, thanks to increasing use of the oil in biodiesel and animal feed. — Reuters

Don’t let the door hit you on your way out, 2020

We should never let go of hope, and good news indeed appears to be on the horizon

AND SO it is upon us: the last breath of 2020.

The seemingly interminable year of heartache, disappointments, death, sickness, violence, natural calamities is coming to its inevitable close. A year marked by pain and suffering inflicted upon us by both ourselves and nature is now ready to be torn off from our walls and discarded in the trash bin like the much maligned 2020 planner that we almost never needed to use.

The recent deluge of news offers both hope and even more reasons to rue the year that should have been a lucky one. Yes, there are several vaccines available, but we don’t know when the Philippines will get any of them. While we wait with bated breath, social media exploded with a viral video of a double murder, starring a police officer. The long parade of horrors seemingly never ends.

As we plod on to Jan. 1, the irony is that we never quite managed to get, well, 20/20 vision on 2020. It was a rollercoaster ride that just jarred us from the get go. We got all the G forces and very little straights. How could we enjoy the view or even get a breather to focus when it was one haymaker after another?

If you’ve been a constant reader of this space, first, please accept my gratitude. You should also know that I’ve wanted to see how 2020 would pan out for the auto industry. From the direst days of the ECQ lockdown, we’ve seen the path to recovery — not a very clear-cut trajectory, but definable as it was directly impinged by the quarantine level and natural disasters (specifically a volcanic eruption and a slew of typhoons).

“There’s no way to go but up,” said dealer principal Vincent Licup, who is involved with the following brands (in alphabetical order): Chery, Chevy, Foton, MG, and Nissan. “The industry has stayed buoyant amid the waves. But of course, a lot is anchored on banks’ appetite to lend to consumers.”

If you talk to industry executives, this remains a common concern as loan facilities enable (depending on who you talk to) up to 80% of vehicle purchases. The role of finance institutions cannot be overstated. On the side of car distributors and brands, Mr. Licup said, “New models and better promos will propel the comeback.”

Continued the executive, “I’m confident that banks will renew their confidence on consumer financing next year, because it has the highest yield backed by a collateral (a vehicle). Second, they are in the business of banking; the only way to recover from losses is to lend. In fairness, interest rates were maintained.”

Meanwhile, Southgatemotors Ventures Corp. President and Auto Transport Ventures Managing Director Tey Sornet shared with “Velocity,” “Overall, the industry from January to November 2020 had a monthly average of 14,492 units or a -41.8% decline compared to the same period last year. We expect the total industry to finish the year 2020 at around 240,000 units or a decline of 42% compared to the full 2019 results of 410,000 units.”

Mr. Licup observed that the shuttering of hotels and schools in 2020 also negatively impacted vehicle sales. “The demand for vans disappeared. The number coding was also lifted, so the need for additional cars also dissipated.”

2021 HERE WE COME
Chamber of Automotive Manufacturers of the Philippines President Atty. Rommel Gutierrez confirmed to “Velocity” that 2021 will be a year of recovery for the auto industry, with a projected growth rate ranging from 20%-30%.

Mr. Sornet shared, “Our forecast for 2021 is at 320,000 units level or a growth of +33% compared to the result this year. It would be recovery year for the industry that has been greatly affected by the pandemic but would still be 22% below the peak level of 2019. This is mainly due to the continued weakness of the economy continuing to affect the demand and the appetite of the banks in approving auto loans.” I must add that the industry veteran has consistently been very vocal about how important it is for banks to loosen up and, well, start lending out to people again.

“Similar to the trend the past two years, we expect the top three next year to remain Japanese brands: Toyota, Mitsubishi and the brand we carry, Nissan. Their strong brand presence, proven quality and top-notch reliability is expected to keep them atop a very competitive market situation,” he continued.

Having said that, Mr. Sornet averred, “Chinese brands like MG, Foton, Chery, Geely would continue to be strong players next year with their striking designs, strong crossover lineup and attractive pricing. We expect the commercial vehicle segment to continue to increase its ratio of 34.60 versus passenger/SUV vehicles. Trucks, buses, van, and pickups will continue to be in strong demand.”

He also observed that smaller cars are now back to selling “at almost pre-pandemic levels.” This is indicative of a segment of the population “avoiding the use of public transportation.” Mr. Sornet anticipates this trend to continue next year.

For Atty. Gutierrez, the availability of that much-coveted COVID-19 vaccine can be the game changer — one that can enable the industry to realize a sharper growth trajectory. “It will definitely help restore confidence in the buying public,” he concluded.

Let’s cross our fingers and keep praying that tomorrow will be infinitely better than yesterday. We’ve had more than our share of sufferings this year.

Happy holidays, everyone. Keep safe!

Metro Manila Film Festival 2020: A whole new world

By Zsarlene B. Chua, Senior Reporter

MOVIE REVIEW
Magikland
Directed by Christian Acuna

CHRISTIAN ACUNA may have helmed Magikland, but for all intents and purposes, the fantasy-adventure film was a Peque Gallaga and Lore Reyes film, harkening back to more than two decades ago when Magic Temple premiered at the Metro Manila Film Festival in 1996, winning 14 of the festival’s prizes.

Magikland, while a tribute to the cinematic career of Peque Gallaga (fondly called by some the “Steven Spielberg of the Philippines” for his ambitious works) is also a look at what the Filipino industry is capable of: that with enough time and a big enough budget, it is possible for a film to almost completely be done with great computer-generated imagery (CGI).

Mr. Gallaga passed away in May of this year.

During a press conference for the Metro Manila Film Festival in November, Mr. Acuna and Mr. Reyes (who, along with Mr. Gallaga and Albee Benitez, served as the film’s executive producers) noted that the film is “95% CG” and that it took about three years to complete — post-production alone took two years said Mr. Acuna. The budget for the film also went beyond P100 million.

And it’s easy to see why. This is the best-looking made-in-the-Philippines CGI film I have seen — the movements of the dragons (there are two) were smooth and the detailing for the world of Magikland was beautiful.

It is such a pity that the film cannot be shown in theaters this year as it clearly was meant for a bigger screen than my smartphone.

Inspiration was clearly taken from fantasy series and film franchises like Lord of the Rings and Game of Thrones (the title scene of Magikland is especially reminiscent of the HBO series based on George R. R. Martin’s books). The film’s main villain is called Mogrodo-or (played by Jamir Zabarte) — in the Lord of the Rings, Mordor is the base of the main villain Sauron, though interestingly, Mogrodo-or’s styling is very similar to Grima Wormtongue, the slimy spy of the evil wizard Saruman.

But while I have nothing but praise for the film’s production design and special effects, it has its shortcomings, mainly its actors, and, in part, the story itself.

It’s a very simple story: four children are summoned to Magikland to help save that world from the clutches of Mogrodo-or who wants to sow discord and chaos. Each of the children has their own issues: Boy Bakunawa (played by Miggs Cuaderno) has a dying mother and an unsympathetic family; two sisters Mara Marapara (Elijah Alejo) and Pat Patag (Princess Rabara) have had their lives torn apart by the acrimonious separation of their parents; and Kit Kanlaon (Josh Eugenio) lives on the streets. Each of these issues are brought forward in the first few minutes of the story. After the children earned high scores on the video game Magikland, the four are summoned to the in-game world to actually save it. The bulk of the film focuses on the trials the four children undergo as they try to obtain powers and attempt to reconcile their issues in the real world.

But while the story is simple and uses much of “the savior of the world also has issues” trope, the child actors sadly, didn’t deliver. It was a lot of stilted dialogue and the most emotional scenes felt emotionless. Not even the presence of award-winning actors such as Jaclyn Jose (as Boy’s mother) and Bibeth Orteza (as the summoner and the children’s guide) was able to make the emotional scenes effective.

It should be worth noting that none of the leads of Magikland were nominated for Best Child Performer in the Metro Manila Film Festival Awards.

Acting issues aside, Magikland is worth a watch if only to see how a Filipino was able to finally create a beautiful CGI world and film.

And do stick around after the end-credits because there is a very poignant tribute to Mr. Gallaga that I think is, ironically, the most emotional scene of the entire film.

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