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How PSEi member stocks performed — December 2, 2020

Here’s a quick glance at how PSEi stocks fared on Wednesday, December 2, 2020.

Peso flat as Biden eyes stimulus

THE PESO closed flat versus the dollar on Wednesday amid the anticipated distribution of vaccines against the coronavirus disease 2019 (COVID-19) and after US President-elect Joseph R. Biden, Jr. asked Congress to pass a relief package.

The peso closed at P48.05 against the dollar on Wednesday, unchanged from its Tuesday finish, data from the Bankers Association of the Philippines showed.

The peso opened Wednesday’s session at P48.04 per dollar. It hit an intraday best of P48.025 while its weakest showing for the day was at P48.06 versus the greenback.

Dollars traded rose to $742.45 million on Wednesday from $722.6 million previously.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso was flat after Mr. Biden asked the US Congress to pass a COVID-19 aid package.

Mr. Biden on Tuesday urged the US Congress to pass a coronavirus aid package that has been stalled for months, and promised more action to help the economy after he becomes president, Reuters reported.

Meanwhile, a trader said in the peso was unchanged as the market waits for further news on COVID-19 vaccine candidates.

Britain on Wednesday became the first western country to approve a COVID-19 vaccine, jumping ahead of the United States and Europe after its regulator cleared a shot developed by Pfizer for emergency use in record time.

A vaccine is seen as the best chance for the world to get back to some semblance of normality amid a pandemic which has killed nearly 1.5 million people and upended the global economy.

Pfizer and its German partner BioNTech have said their vaccine is 95% effective in preventing illness, much higher than expected.

Other frontrunners in the vaccine race include US biotech firm Moderna, which has said its shot is 94% successful in late-stage clinical trials. Moderna and Pfizer have developed their shots using new messenger RNA technology.

AstraZeneca said last month its COVID-19 shot, which is based on traditional vaccine technology, was 70% effective in pivotal trials and could be up to 90% effective.

For Thursday, Mr. Ricafort sees the peso moving from P48 to P48.10 versus the dollar, while the trader expects it to range from P48.08 to P48.15. — with Reuters

Shares up on improvement in manufacturing PMI

By Revin Mikhael D. Ochave, Reporter

SHARES improved on Wednesday as investors reacted to the latest manufacturing purchasing managers’ index (PMI) report.

The 30-member Philippine Stock Exchange index (PSEi) climbed 71.06 points or 1.01% to close at 7,080.62 on Wednesday, while the broader all shares index increased 22.42 points or 0.53% to end at 4,222.09.

Philstocks Financial, Inc. Research Associate Claire T. Alviar said in a mobile phone message that the local market improved on the Philippine manufacturing PMI data for November.

“The improvement in the Philippine manufacturing PMI boosted sentiment although it remains in contraction territory. Expansion in the last month of the year is expected,” Ms. Alviar said.

Factory activity in the Philippines inched closer to stabilization in November, after output rose for the first time in five months and the rate of job losses slowed, a survey conducted by IHS Markit showed.

The IHS Markit Philippines Manufacturing PMI improved to 49.9 last month from 48.5 in October to post the second straight month of deterioration, nearing the 50-neutral mark that separates it from expansion.

Ms. Alviar added that the bourse improved following the positive performance of US markets.

The Dow Jones Industrial Average rose 0.63% to end at 29,823.92 points, while the S&P 500 gained 1.13% to 3,662.45. The Nasdaq Composite climbed 1.28% to 12,355.11.

For Regina Capital Development Corp. Head of Sales Luis A. Limlingan, the market sustained its rally as investor sentiment improved following a statement from a group of US lawmakers regarding a $908-billion stimulus plan.

“The local bourse ended with a gain despite dipping in red territory earlier this morning. Market on close-buying pushed the index higher despite foreigners being net sellers for the day,” Timson Securities, Inc. Head of Online Trading and Trader Darren Blaine T. Pangan said in a mobile phone message.

Majority of the sectoral indices at the PSE closed with gains on Wednesday. Holding firms picked up 135.45 points or 1.87% to 7,343.53; industrials improved 79.67 points or 0.87% to 9,205.41; property inched up 30.02 points or 0.84% to 3,596.28; and financials rose 2.73 points or 0.19% to 1,418.9.

Meanwhile, services dropped 12.13 points or 0.78% to 1,536.10, while mining and oil fell 1.76 points or 0.02% to 8,592.08.

Value turnover on Wednesday stood at P8.80 billion with 3.90 billion issues switching hands, down from the previous session’s P10.89 billion with 4.04 billion issues.

Decliners bested advancers, 116 against 108, while 39 names ended unchanged.

Net foreign selling was trimmed to P282.35 million from P1.33 billion in the previous session.

“Immediate resistance may be placed at 7,200 while nearest support is at 6,750,” Mr. Pangan said.

Barangay Ginebra buries TNT in 0-2 series hole

By Michael Angelo S. Murillo, Senior Reporter

The Barangay Ginebra San Miguel Kings raced to a 2-0 lead over the TNT Tropang Giga in their best-of-seven PBA Philippine Cup finals series after going on a late surge to take Game Two, 92-90, on Wednesday at the Angeles University Foundation Sports Arena in Pampanga.

Ahead in the series entering the contest, the Kings did themselves a favor by showing no let-up in coming back despite being in the ropes several times in Game Two to create further distance from the Tropang Giga in their Philippine Basketball Association All-Filipino championship joust.

Once again, the contest got off to a competitive start, with both teams not allowing one another to gain much headway.

But when the first quarter smoke cleared, Barangay Ginebra was on top by four points, 21-17.

In the second canto, the back-and-forth continued early on.

The count stood at 30-all midway into the frame before TNT went on a 10-6 run the rest of the quarter to hold a 40-36 advantage at the halftime break.

The Tropang Giga opened the third quarter with a 16-5 blitz in the first five minutes, led by Roger Pogoy and Troy Rosario, to build a 15-point cushion, 56-41.

Barangay Ginebra, however, regained its footing after, with Stanley Pringle at the helm, charging back to tie the score at 68-all with 22 seconds left on the frame.

A Poy Erram basket off a rebound as the clock wound up gave TNT a slight lead, 70-68, heading into the fourth period.

Rocked in the previous quarter, the Tropang Giga came out aggressive at the start of the fourth, going on an 8-2 run to stretch their lead to six points, 78-72, with 9:22 left to play.

The Kings tried to get back lost ground but TNT continued to keep them at bay, with the Tropang Giga still ahead, 84-77, with under five minutes remaining.

Barangay Ginebra though got to level the count at 84-all with 1:53 to go.

Jayson Castro gave TNT a one-point edge, 85-84, after splitting his free throws with 53 ticks remaining, only to be negated by a Scottie Thompson triple in the ensuing play to give the Kings the lead, 87-85.

The Tropang Giga sued for time with 30 seconds left.

They went to Mr. Castro but his three-point heave failed to connect, forcing them to foul LA Tenorio after.

The door was still left open for TNT, 88-85, after Mr. Tenorio hit only one of his two free throws with 18 ticks on the clock.

Off a timeout, TNT went to Mr. Pogoy to tie the count but his triple attempt did not go through.

Mr. Tenorio was once again fouled with nine seconds to go and he hit both his charities to extend their lead to five points, 90-85, and they never looked back from there.

Mr. Pringle had a team-high 34 points to go along with eight assists and six rebounds while Aljon Mariano had 20 points and nine rebounds for the Kings.

TNT, which played without top scorer Ray Parks Jr. because of calf injury, was led by Mr. Pogoy with 38 points, with Simon Enciso adding 15.

Game Three of the finals is on Friday at 6 p.m.

Duterte signs COVID vaccine emergency use

PRESIDENT Rodrigo R. Duterte has signed the executive order granting the emergency approval on coronavirus disease 2019 (COVID-19) medicines and vaccines.

On Wednesday, the Palace released EO No. 121, which allows the Food and Drugs Administration (FDA) to issue emergency use authorization (EUA) to coronavirus drugs and vaccines.

“Outside clinical trials and except in cases where a Compassionate Special Permit is issued, no unregistered COVID-19 drug and vaccine may be manufactured, sold, imported, exported, distributed or transferred without an EUA,” the EO states.

Mr. Duterte last month approved in principle the recommendation of the Department of Health (DoH) for EUAs.

An EUA will be issued and remain valid if there is evidence that the drug or vaccine is effective in diagnosing, treating, or preventing the coronavirus; the potential benefits of the COVID-19 drug or vaccine outweigh the risks; and there is no available or not enough alternatives to the drug or vaccine.

Earlier on Wednesday, Secretary Carlito G. Galvez Jr., designated as the country’s vaccine czar, said vaccines could possibly be procured as early as the first quarter 2021.

He was referring in particular to vaccines from China’s Sinovac Biotech Ltd. and Russia’s Gamaleya Research Institute of Epidemiology and Microbiology.

“There is a possibility that our best-case scenario will be shifted to the first quarter. Our best-case scenario that we have presented is more or less May but for now, if we will succeed in negotiating with two to three vaccines from different countries, we might be able to get it during the first quarter,” he said in a briefing.

The government is prioritizing its COVID-19 vaccine purchase from four firms: Sinovac, Gamaleya, AstraZeneca plc, and Pfizer, Inc.

Mr. Galvez also said they are currently in negotiations with other foreign firms, including four US vaccine developers.

He assured that the government is doing its best to acquire vaccines amid the global demand and insufficient supply.

He said around 80% of vaccines have already been pre-purchased by developed countries while 2% were bought by the World Health Organization (WHO) for its Solidarity Trials.

“Ang naiwan na lang po talaga sa atin (What is left for us) is 18% and there is really an acute source or supply of vaccine,” he said.

The Philippines has the second highest number of COVID-19 cases among southeast Asian countries, and experts have warned of a potential surge during the December holidays.   

CASES
The Health department reported 1,438 new coronavirus infections on Wednesday, bringing the total to 434,357.

The death toll rose by 18 to 8,436 while recoveries increased to 399,005 with 232 more patients who have gotten well, it said in a bulletin.

There were 26,916 active cases, 84.7% of which were mild, 7.1% did not show symptoms, 5.2% were critical, 2.7% were severe, and 0.29% were severe.

Davao City reported the highest number of new cases at 142, followed by Laguna at 89, Quezon City at 80, Manila at 63, and Pampanga at 63.

The department said six duplicates were removed from the total cases count and six recovered cases were reclassified as deaths.

Eleven laboratories failed to submit their data on Dec. 1.

About 5.5 million individuals have been tested for coronavirus, according to the agency’s COVID-19 tracker website. Around 64.2 million people have been infected and around 1.5 million people died of coronavirus globally, according to the Worldometers website, which cited various sources including data from the World Health Organization.

About 44.5 million people have recovered, it said. — Gillian M. Cortez and Vann Marlo M. Villegas

DoH against easing rules on minors

THE DEPARTMENT of Health is not in favor of easing quarantine rules for children below 15 years old, but will leave it up to local officials to take responsibility for setting and implementing guidelines should they decide to do otherwise.

“We discourage this, huwag na pong lumabas ang mga bata (let’s not allow the children to go out),” Health Secretary Francisco T. Duque III said in an online briefing Wednesday.

He noted that the current national policy already permits 15 to 65 year-olds to leave the house, particularly for areas under the modified and general community quarantine classifications.

“But of course the decision is up to the local government units… and it would be good if they support it with an ordinance,” Mr. Duque said in Filipino.

The health chief noted that of the total cases in the country, about 3-5% are composed of children.

He also cited the danger of infected children who are asymptomatic spreading the coronavirus to their family members.

The 17 mayors of the capital region Metro Manila, meanwhile, have sought the opinion of the Philippine Pediatric Society before making a decision on whether to allow minors, accompanied by parents or guardians, to go to shopping malls.

Metro Manila Development Authority General Manager Jose Arturo S. Garcia, Jr., speaking for the mayors in a briefing on Wednesday, said they expect the recommendation of the doctors’ group latest by Thursday.

“Status quo (for now), we will wait for the opinion of the experts,” he said.

Interior and Local Government Secretary Eduardo M. Año, in a statement Wednesday, said the mayors’ decision will be reviewed by the national task force handling the coronavirus response.

“If the Metro Manila mayors are able to come up with a common proposal allowing minors or children in malls and other public places, the final decision will still be with the IATF (inter-agency task force) and ultimately, the President,” he said.

Mr. Año on Tuesday said local executives have the final say on the matter. — Vann Marlo M. Villegas

Solon assures new job security bill ‘fair to both parties’

THE HOUSE of Representatives labor committee chair on Wednesday assured that the latest version of the proposed Security of Tenure Act prohibits all forms of labor contractualization “while being fair to both parties.”

“The proposed Security of Tenure Act does not legitimize labor-only contracting,” Party-list Rep. Enrico A. Pineda told reporters in a briefing.

The chamber on Tuesday approved House Bill No. 7036 with 204 affirmative votes, seven negatives, and three abstentions.

Mr. Pineda said while the measure prohibits labor-only contracting, it grants the Labor secretary, after consultation with the National Tripartite Industrial Peace Council, the right “to make appropriate distinctions” between labor-only contracting and legitimate job contracting.

President Rodrigo R. Duterte last year vetoed the proposed law’s earlier version.

House Minority leader Joseph Stephen S. Paduano, on the other hand, said the new version departs from the original intent of the proposed law, which was to eliminate contractualization.

“The current bill, to my mind, will not address the problem on labor-only contracting,” he told BusinessWorld Wednesday.

“The ‘substitute bill’ pales in comparison to the provisions of the Labor Code of the Philippines that clearly stipulate the prohibition of abusive workers’ contracts,” said Mr. Paduano, who represents the Abang Lingkod Party-list and one of the main authors of the original bill.

HB No. 7036 seeks to strengthen the security of tenure of employees in the private sector by amending Presidential Decree No. 442 or the Labor Code of the Philippines. — Kyle Aristophere T. Atienza

Nationwide round-up (12/02/20)

Senator looks into paper trail of P9.5-B DBP loan for 2019 SEA Games

A SENATOR on Wednesday asked the government-run Development Bank of the Philippines (DBP) for copies of the documents required and submitted for the P9.5-billion loan it released to MTD Berhad for the Southeast Asian Games in 2019. “Target namin ‘yung mga (Our target are the) files around May 2018 at hiningi namin ‘yung (and we are asking for the) loan or credit agreement, signing authority, minutes of the meeting,” Senator Risa N. Hontiveros-Baraquel said at an online briefing Wednesday. The senator is also requesting for copies of relevant presentations, management memorandum issued in connection with the MTD Berhad loan, and counsel’s opinion. Ms. Hontiveros-Baraquel had earlier called for the Senate to conduct an investigation on a contract the government entered into for sports facilities in the New Clark City. She said the Bases Conversion and Development Authority received a P9.5-billion fund upon the approval of the 2019 budget, which was then used to pay for the MTD Berhad loan to DBP. She questioned why the loan was paid for by money from the national budget. The senator said she hopes the Blue-Ribbon committee will agree to push through with the inquiry. She had earlier faced opposition from Senator Pia S. Cayetano, who argued that such investigations discourage construction of world-class facilities. Senate President Vicente C. Sotto III, meanwhile, said the investigation should be left to the hands of the Ombudsman. — Charmaine A. Tadalan

Lacson flags P10B under DPWH budget

A SENATOR on Wednesday flagged some P10 billion worth of infrastructure projects under the Department of Public Works and Highways (DPWH) that were realigned in the Senate version. “Questionable” realignments were found in the P4.5-trillion national budget for next year, Senator Panfilo M. Lacson said based on his initial examination, aside from the budget items he had earlier identified. “While some of my recommended slash from the Department of Public Works and Highways’ budget was adopted, we also noticed at least P10 billion worth of infrastructure projects realigned within the same agency under the Senate version,” Senator Panfilo M. Lacson said in a statement. Mr. Lacson said he can identify the location of the realigned projects under Senate Bill No. 7727, the proposed General Appropriations Act of 2021, but may be unable to trace the realignment on the proponent. “This is the reason why I have always called for transparency in all our individual amendments by posting the same on our official websites for the media and the public to see,” he said. “I already instructed my staff to coordinate closely with the Legislative Budget Research and Monitoring Office on whatever movements of funds before the final version of the bill is presented to the bicam (bicameral) members for our signatures and approval,” Mr. Lacson said. He earlier cited that some P68 billion has been earmarked for the completion of multi-purpose buildings that remained poorly built despite receiving funding in previous spending plans. He had also questioned appropriations of more than P1 billion each to around 220 districts in the budget, or around P474 billion in total. — Charmaine A. Tadalan

President appoints 2 advisers on telecom, red tape

THE Palace on Wednesday announced the appointment of two presidential advisers who will aid in red tape and telecommunication issues. Palace Spokesperson Harry L. Roque, in a statement, said Leoncio B. Evasco, Jr. will serve as adviser on streamlining of government processes while Ramon P. Jacinto will be adviser for telecommunications. Mr. Evasco has previously served as President Rodrigo R. Duterte’s cabinet secretary while Mr. Jacinto was an adviser on economic affairs and information technology before being appointed undersecretary of the Department of Information and Communications Technology. The President recently ordered to fast-track the rollout of telecommunication facilities by cutting down bureaucratic requirements. Mr. Roque said Mr. Evasco is fit for this job given his “familiarity with the present bureaucracy.” — Gillian M. Cortez 

House committee OK’s bill on stiffer penalties for wildlife exploitation

A MEASURE seeking to impose stiffer penalties on the exploitation and abuse of wildlife in the country hurdled a committee level at the House of Representatives. The House committee on natural resources has approved a consolidated bill of five measures calling for the “conservation and protection of wildlife resources and their habitats, and imposes penalties for violations.” The proposed law seeks to replace Republic Act No. 9147 or the Wildlife Resources Conservation and Protection Act, which was enacted 2001. “I am happy because of the penalties. We are prescribing longer prison terms and higher fines for those who abuse our wildlife, especially endangered species,” Cagayan De Oro Rep. Rufus B. Rodriguez said in a statement Wednesday. The proposed new penalties for serious offenses such as illegal killing of wildlife are imprisonment of 12 to 20 years and a fine of P200,000 to P2 million, stiffer than the current six to 12 years, plus a minimum fine of P100,000. For minor infractions, it would be a prison term of one month and one day from only 10 days, plus a fine of P20,000 from only P200. The existing law “has to be updated, improved and strengthened to meet and address the demands and problems we have today,” Mr. Rodriguez said. — Kyle Aristophere T. Atienza

Senate aims to pass counterpart bill on age of statutory rape

THE Senate committee on women, children and family relations will be working on the passage of the measure raising the age of statutory rape within the year, its chairperson said on Wednesday. “I’m hopeful… makahabol kami sa (of catching up with the) parliamentary status ng House and maipasa (pass it) within the year,” Senator Risa N. Hontiveros-Baraquel said at an online briefing Wednesday. She said the committee is to hold a technical working group meeting next week to finalize their report. The House of Representatives on Tuesday approved on final reading House Bill No. 7160, the Special Protection of Children Against Abuse, Exploitation and Discrimination Act. The House bill will raise the age of statutory rape to 16 years old from 12, which Ms. Hontiveros-Baraquel said is similar to the Senate committee’s proposal. Under the bill, sexual relations between a minor and an adult will also be considered a violation despite consent, she added. The Senate version will also include a “Romeo and Juliet” clause, which excludes two minors from the coverage of the bill provided their relationship is proven consensual and noncoercive. — Charmaine A. Tadalan

Regional Updates (12/02/20)

German government gives grant for project to protect Manila hospital from flooding

THE German government and German firm, Flood Control Asia will provide a grant that will protect the state-run Philippine General Hospital (PGH) from flooding by April 2021. “It is already a bad situation during COVID-19 (coronavirus disease 2019), but what if the hospital housing COVID-19 patients would be flooded at the same time, and cannot take care of the patients anymore,” Flood Control Asia RS Corp. President and Chief Executive Officer Andreas Klippe said during the launching at PGH on Wednesday. Mr. Klippe said construction of the flood control project will begin on Dec. 3 and is targeted for completion by April 30, in time for the rainy season starting May. “The benefit for the hospital is of course that the hospital will be flood proof, not the full hospital but essential paths, depending on the findings of the engineering assessment,” he said. The German firm, based in Clark Freeport Zone in Pampanga, said the grant money will still vary on the engineering assessment. The Philippines is located in the typhoon belt and an average of 20 storms enter the country annually. Also present during the signing of the Memorandum of Understanding were Ambassador of the Federal Republic of Germany to the Philippines Anke Reiffenstuel, PGH Director Gerardo Legaspi, and Manila Rep. Cristal L. Bagatsing. — Charmaine A. Tadalan

Tollway operators ordered to add offsite installation areas for RFIDs

THE Transportation department on Wednesday asked toll operators to add more offsite installation areas in shopping malls and gas stations to accommodate motorists who have yet to get radio frequency identification (RFID) stickers. Transportation Assistant Secretary Goddes Hope O. Libiran said the main cause of traffic on Dec. 1, the deadline for toll operators to go fully cashless, was the number of users who needed to have their RFIDs reloaded, apart from the volume of vehicles. “To help address the problem on long lines for RFID sticker installation in toll gates, the Department of Transportation calls on toll operators to add more offsite installation areas in malls, gas stations, and other strategic locations, so that people will no longer have to go to the toll gates just to have their RFIDs installed,” Ms. Libiran said in a statement. She said the government is keeping the Dec. 1 deadline, with a transition period of up to January 11. “The government has been giving considerations. That is precisely the reason why, on top of the 3-month transition period we gave from August to November, and the extension we granted from November 2 to December 1, we have decided to implement a transition period from December 1 to January 11, and to still maintain RFID stickering lanes even after that.” During the transition period, motorists with no RFID stickers will not be penalized. — Arjay L. Balinbin

Bagobo Village Museum in Sta. Cruz now open for culture-nature immersion

A VISIT to the Bagobo Cultural Village includes a taste of their culinary traditions with a meal of nilotlot na manok (native chicken cooked in bamboo) and salad with vegetables from the community garden, and a nature trek through the Baruring River and Balusong Waterfalls. — BW/MAYA M. PADILLO

STA. Cruz in Davao del Sur, a coastal town at the foot of Mt. Apo, has reopened to tourists, offering choices for outdoor activities as well as cultural immersion at the Bagobo Cultural Village. The town’s tourism officer, Julius R. Paner, said visitors can now go on organized trekking trips, stay at the beach, or have a taste of the life of the Bagobo indigenous group at their living museum. “We intend to make the Bagobo Cultural Village a flagship project on cultural tourism in Region 11 (Davao). A tour here is an encounter where one appreciates the life, existence and survival of the Bagobo-Tagabawa, a dominant tribe in the ancestral domain of Mt. Apo Natural Park,” Mr. Paner said in an interview. Part of the village experience is a tour of the surrounding Baruring River and Balusong Waterfalls, visit to their vegetable farm, and bird watching, among others. The Bagobo Cultural Village was a recipient of the 2016 ASEAN Award for Community-based Ecotourism. The village is managed by the Tribal Council of Tibolo with support from the local governments, National Commission for Indigenous Peoples, the non-government organization Kapiid Ka Banua, and Department of Tourism. — Maya M. Padillo

For guidelines, other information and booking a day tour or overnight stay, contact the Sta. Cruz Tourism Office through mobile number 09465690015, or visit facebook.com/StaCruzTourism or www.tourismstacruz.com

Construction spending of 5% of GDP seen as recovery ‘magic number’ — Chua

A CONSTRUCTION spending level equivalent to 5% of GDP will be the “magic number” that will likely drive an economic recovery, Acting Socioeconomic Planning Secretary Karl Kendrick T. Chua, said at a construction industry conference.

Speaking at the forum arranged by the Construction Industry Authority of the Philippines Wednesday, Mr. Chua said he expects a pickup in the sector with the government planning to ramp up spending on infrastructure projects to P1.12 trillion in 2021 and P1.018 trillion in 2022, equivalent to 5.5% and 4.5% of gross domestic product (GDP), respectively.

“The magic number that we are targeting is 5% (of GDP), which is sufficient (for the) economy to rebound strongly. That translates to a lot of jobs,” Mr. Chua said.

“The government is committed to increasing the infrastructure spending as a way to help the economy recover and to stimulate more demand and to prepare the economy for upper-middle-income status,” he added.

Mr. Chua said the National Economic and Development Authority (NEDA), which he heads, supports policies that open up the construction industry to foreign investment and promote more competition.

The Supreme Court recently struck down rules hindering the licensing of foreign contractors. House Bill 7337 also proposes to relax rules on foreign ownership in the construction industry.

“The NEDA supports, in principle, (policies that will) open the sector to more competition so we can get the best value for the people in terms of quality… In general, the position of NEDA is to have a more level playing field across industries, across size, across industries, and nationalities, subject to the usual caveats,” he said.

This year, however, Mr. Chua said infrastructure spending has been lower than usual due to budget cuts after funds were realigned to fund urgent pandemic spending. The budget for infrastructure for 2020 was cut by 21% to P785 billion or 4.2% of GDP. The initial budget was P989 billion.

Government spending on infrastructure fell 33% to P153.5 billion in the third quarter, but exceeded the reduced target for the period by 12%.

He said the construction industry overall should post a stronger rebound in the fourth quarter after posting a 39.8% year-on-year decline last quarter.

The sector has been a major contributor to economic growth, he said, with construction gross fixed capital formation accounting for nearly P3 trillion in real terms, or 1.8 percentage points of the 6.6% average GDP growth over the past four years.

“It is important to see a more solid recovery especially in the last two years (of the administration),” he said.

He said new jobs generated by the industry next year will be substantial, with government infrastructure projects in themselves creating 1.7 million direct and indirect jobs.

To address the funding needs of construction companies, First Metro Investment Corp. Chairman Francisco C. Sebastian said more firms should tap the capital markets to raise funds for expansion by issuing shares or bonds.

Mr. Sebastian said the financial sector is ready to support the industry, but companies have had “very little involvement” in the stock and bond markets.

He said there are only four publicly listed construction companies — DMCI Holdings, Inc., Megawide Construction Corp., D.M. Wenceslao & Associates, Inc., and EEI Corp. — out of the 274 listed companies on the bourse.

He said overall, fundraising via corporate and government bond issues as well as preferred shares rose 83% from a year earlier to P1.155 trillion in the first nine months of 2020 despite the COVID-19 pandemic. He said the total could double the year-earlier level by year’s end.

“Being a public company can become a realization of your vision, and could open your company not just to long-term sustainability and financial success but even future growth well beyond the construction business,” Mr. Sebastian said.

Speaking at a separate forum Wednesday, BDO Capital and Investment Corp. President Eduardo V. Francisco said banks have enough capital and the financial markets are awash with cash to fund big-ticket infrastructure projects, after the Bangko Sentral ng Pilipinas cut benchmark interest rates and their reserve requirement ratios.

“Maybe the question more is are there enough projects and are the projects bankable… projects have to be bankable and feasible unless there’s a government guarantee because if the government doesn’t give a guarantee, why will (investors) put up their equity, when there’s not enough usage, there’s not enough support?,” Mr. Francisco added. — Beatrice M. Laforga with Jenina P. Ibañez

Property price slowdown emerging risk for banks

THE property market could emerge as a risk to the banking sector if prices stall, while an increase in bad loans overall in 2021 is not likely to significantly threaten bank profits because of aggressive provisioning by many banks early on, Fitch Ratings said.

“We expect the deterioration in reported asset-quality metrics to accelerate in 2021 as debt moratoria mandated by regulations expire in December 2020, though the impact on profitability is likely to be cushioned by the banks’ pre-emptive general provisioning in the preceding year,” Fitch said.

“[A] sustained or significant decline in property prices would have wider repercussions on the banks’ balance sheets — given the sector’s high correlation with the broader economy and as it accounts for 20% of the banks’ loan portfolios,” Fitch said in a report.

According to the central bank, home prices rose by a record 27% year on year in the second quarter, driven by the luxury home segment.

“A moderation in Philippine property prices, which have appreciated strongly in recent years, is likely as remittance flows ebb and job market conditions remain weaker than pre-pandemic levels,” Fitch said.

At the end of September, the industry’s non-performing loan (NPL) ratio rose to 3.4%, the highest level since the 3.42% posted in May 2013. Bad loans rose 60% year on year to P364.762 billion.

The NPL ratio is expected to hit 4.6% by the end of 2020, according to the central bank.

Fitch Ratings said banks in the Philippines, Indonesia and Thailand will reap the benefits from their “superior” capital and leverage positions compared to their peers in India, China, Vietnam, and Sri Lanka.

The banking industry’s capital adequacy ratio was 15.4% on a standalone basis and 16% on a consolidated basis at the end of 2019, both above the 10% minimum requirement. — Luz Wendy T. Noble

Open-pit ban, mining permit freeze seen holding back industry’s GDP contribution

MINING INVESTMENT has been hindered by inappropriate policy, including the freeze on new mineral production sharing agreements and the current ban on open-pit mining, preventing the industry from contributing to the economy, the head of the mining industry association said.

At the 9th Arangkada Philippines Forum Wednesday, Chamber of Mines of the Philippines Chairman Gerard H. Brimo said: “The industry has been stymied by policy problems, resulting in no new investments and therefore no growth.”

Citing 2019 data from the Mines and Geosciences Bureau, Mr. Brimo said the metallic mining industry accounted for 0.6% of gross domestic product (GDP), equivalent to P124.5 billion, and around 6.3% of exports at $4.38 billion.

“For such a highly-mineralized country, the large scale metallic mining sector does not substantially contribute to the national economy,” Mr. Brimo said.

Mr. Brimo said the open-pit mining ban deprives the country of export receipts, tax revenue, and social programs.

“The open-pit mining method is practiced all over the mining world. For most types of near-surface mineral deposits, there is no alternative,” Mr. Brimo said.

Mr. Brimo said the three open-pit mining projects that are on hold include the Tampakan Copper Project of Sagittarius Mines, Inc., the King-King Copper-Gold Project of Nationwide Development Corp. and St. Augustine Gold & Copper Ltd., and the Silangan Copper and Gold Project of Philex Mining Corp.

“The three pending projects, all located in Mindanao, can bring the industry’s contribution to exports to 9% and total contribution to GDP to 1.5%,” Mr. Brimo said.

Separately, Cargill Philippines, Inc. Corporate Affairs Director Christopher A. Ilagan said the agribusiness industry should focus on organic and free-range exports while participating in the e-commerce revolution.

Mr. Ilagan said at the same forum: “Efforts should also be done for improved data collection and analytics to support agricultural production and market systems, while also allowing for a more effective targeting of government support programs in the agriculture sector.” — Revin Mikhael D. Ochave

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