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How PSEi member stocks performed — November 4, 2020

Here’s a quick glance at how PSEi stocks fared on Wednesday, November 4, 2020.

Peso nearly flat vs dollar on election

THE PESO inched up versus the dollar on Wednesday on data showing the country’s trade deficit narrowed in September and amid uncertainties on the results of the presidential election in the United States.

The local unit closed at P48.40 versus the dollar on Wednesday, inching up by one centavo from its P48.41 finish on Tuesday, data from the Bankers Association of the Philippines showed.

The peso opened Wednesday’s session at P48.40 against the greenback. Its intraday best was at P48.35, while it hit a low of P48.46 per dollar.

Dollars traded rose to $730.86 million on Wednesday from $509.05 million previously.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the peso inched up after the government posted a slimmer trade deficit in September and amid uncertainties on the presidential election in the United States.

“The reduced trade deficit by about $1.7 billion in September 2020 versus the $3.4 billion a year ago fundamentally translated to less demand for dollars to pay for imports, thereby partly supported the peso’s appreciating trend,” Mr Ricafort said in an e-mail.

A trader, meanwhile, said the peso’s gain was slim as the market remained cautious of the impact of the results of the US presidential election.

“The peso almost closed flat amid uncertainty from the close results of the US presidential race and as tabulation in key swing states have not yet been conclusive,” the trader said in an e-mail.

The US dollar jumped and riskier currencies wilted on Wednesday as early results in the presidential election showed a tight race, surprising currency investors who had been betting on a decisive victory for Democrat Joe Biden, Reuters reported.

US President Donald Trump won in the key battleground states of Florida, Ohio and Texas, dashing market hopes for a clear result. Investors waited to see whether Mr. Trump would retain the Rust Belt states — Michigan, Wisconsin and Pennsylvania — that sent him to the White House in 2016.

The dollar was up 1% as European markets opened, while the offshore-traded yuan, Australian dollar and Norwegian crown, which have for years borne the brunt of Mr. Trump’s protectionist policies, weakened.

At 0718 GMT, the dollar was up around 1% against a basket of currencies, having earlier hit its highest level in more than a month.

For today, Mr. Ricafort expects the peso to range from P48.35 to P48.45 versus the dollar, while the trader sees it moving from P48.30 and 48.50. — with Reuters

Shares rally as markets await results of US vote

By Denise A. Valdez, Senior Reporter

PHILIPPINE SHARES moved in step with the acceleration of global equities as investors kept a close watch on the United States (US) election results on Wednesday.

The bellwether Philippine Stock Exchange index (PSEi) jumped 128.49 points or 2.02% to close the session at 6,464.05. The broader all shares index likewise grew 59.14 points or 1.56% to end at 3,848.61.

“The local market surged 2.03% following the overnight rally of the US markets with DJIA (Dow Jones Industrial Average) jumping more than 500 points as investors await the election results in the US,” Philstocks Financial, Inc. Research Associate Claire T. Alviar said in a text message.

On Tuesday’s election day, Wall Street rode a wave that brought the DJIA, S&P 500 and Nasdaq Composite indices up 2.06%, 1.78% and 1.85%, respectively.

As the US election results would have a direct impact on the global economy as well, other markets across the globe were likewise closely watching the results of the vote.

“Philippine shares jumped on Wednesday as investors hoped a clear winner would emerge from the US presidential election and a delayed, or contested, result would be avoided,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message.

Ballots were still being counted at the close of the local market, as this year’s election accommodated more absentee and by-mail votes.

“So far, Asian markets as well are in the green, also waiting for the US election results. Investors are closely monitoring it since whoever wins, it would have an impact on the global economy,” Philstocks’ Ms. Alviar said.

Apart from the US election, a local catalyst for Wednesday’s trading was the release of September trade data, which showed the trade gap was reduced on the back of export recovery.

“[G]rowth in export and contraction slowdown of import have also spurred positive sentiment… It may imply that domestic demand is slowly picking up again,” she said.

All sectoral indices ended Wednesday’s trading higher: mining and oil by 205.26 points or 2.7% to 7,790.96; holding firms by 154.93 points or 2.34% to 6,761.74; property by 64.06 points or 2.12% to 3,083.42; financials by 21.46 points or 1.72% to 1,263.08; industrial by 146.45 points or 1.71% to 8,704.15; and services by 12.23 points or 0.84% to 1,454.97.

Some 2.34 billion issues valued at P7.25 billion switched hands on Wednesday, against the previous day’s 4.2 billion issues worth P6.6 billion.

Advancers outnumbered decliners, 135 against 73, while 46 names ended unchanged.

Net foreign selling was trimmed to P431.49 million on Wednesday from P1.14 billion in the previous session.

“The market stays above 6,200 given the lingering optimism and participation of investors,” Ms. Alviar said.

Duterte orders price ceiling on coronavirus testing kits

PRESIDENT Rodrigo Duterte on Wednesday ordered a price ceiling on coronavirus test kits after reports of overpricing.

The President issued Executive Order 118 asking the Department of Health (DOH) and Trade department to determine the price range for test kits used in hospitals, clinics and laboratories.

Hospitals and other health facilities must comply with the price ceiling before they can be accredited as coronavirus disease 2019 (COVID-19) centers, according to the order.

The two agencies must “ensure that the price range for COVID-19 testing and test kits is just, equitable and sensitive to all stakeholders,” according to a copy of the order.

Health and Tourism officials have sought the price cap on swab tests after the government started reopening some sectors amid the pandemic. Travel restrictions have been eased as long as tourists can provide proof that they are coronavirus-free.

DoH reported 987 coronavirus infections on Wednesday, bringing the total to 388,137. The death toll rose by 49 to 7,367, while recoveries increased by 140 to 349,091, it said in a bulletin.

“The relative low report in the new cases is part of the effects of Typhoon “Rolly,” the agency said in a statement. “This decrease may still be observed over the next few days, and may be followed by a relative increase in newly reported cases in the coming days or weeks.”

There were 31,679 active cases , 82.6% of which were mild, 10.1% did not show symptoms, 2.6% were severe and 4.7% were critical.

Davao City reported the highest number of new cases at 136, followed by Iloilo at 67, Quezon City at 47, Taguig City at 43 and Iloilo City at 41.

DoH said 11 duplicates had been removed from the tally, while 13 cases tagged as recovered were reclassified as deaths. It also said 12 laboratories had failed to submit their data on Nov. 3.

Meanwhile, the agency said it was looking at two sets of COVID-19 vaccine makers for potential government orders when these become available, Health Undersecretary Maria Rosario S. Vergeire told an online news briefing.

The first group consists of drug manufacturers and bilateral partners that may want to conduct clinical trials in the Philippines first, she said.

The other group consists of drug companies that are willing to sell the vaccines to the government, she added.

DoH is also in talks with manufacturers for potential vaccine orders once they finish clinical trials in November, Ms. Vergeire said.

Carlito G. Galvez, Jr., the chief enforcer of the government’s anti-coronavirus efforts, earlier said they could finish evaluating and ordering coronavirus vaccines by December 2022. Mr. Galvez, who is also the country’s vaccine czar,  will handle negotiations for the purchase and distribution of COVID-19 vaccines. 

Ms. Vergeire said DoH has developed the expertise to enforce a national vaccine program for the coronavirus.

“We have already drafted our vaccine implementation plan,” she said. “It contains all the considerations and assumptions based on science and plans for operations,” she said in mixed English and Filipino.

Also on Wednesday, DoH said it had released at least P20 million worth of financial aid to three DoH-retained hospitals and local government units in the Bicol region, which was battered by Typhoon Goni, locally named Rolly.

The three hospitals were among eight health facilities in the region that were damaged by the typhoon.

Ms. Vergeire said 155 COVID-19 patients and 169 health workers who got transferred to hotels during the storm, had yet to return to treatment centers in Metro Manila. — Gillian M. Cortez and Charmaine A. Tadalan

US would probably continue to check China, analysts say

By Charmaine A. Tadalan, Reporter

THE UNITED States would probably continue to try to check China’s expansionist stance in the South China Sea even under a new president, though in a less aggressive way, political analysts said on Wednesday.

“The US stance toward China will continue, though a presidency under Joe Biden would likely be less confrontational than a Trump presidency,” Maria Ela L. Atienza, a political science professor from the University of the Philippines, said in an e-mailed reply to questions.

Mr. Biden was likely to emphasize dialogue and multilateralism and work with allies to contain China, she added.

Reuters reported that Mr. Biden had won 220 electoral votes as of 3 p.m. Manila time on Wednesday, compared with 213 for Donald Trump, the incumbent. A candidate needs 270 electoral votes to win.

Mr. Biden, however, might be more forceful than Mr. Trump on Philippine issues such as human rights and press freedom, Ms. Atienza said. She also said US foreign and defense policy toward the Philippines would continue.

Renato C. de Castro, an international studies professor at De La Salle University in Manila, said Mr. Biden would probably keep the “nurturing approach” and strategic patience of the Trump administration toward the Philippines.

“Trump basically saved the alliance after President Rodrigo R. Duterte got angry with then President Barack Obama,” he said in an interview via Zoom Cloud Meetings. He remained amicable by avoiding public criticisms of Mr. Duterte’s deadly war on drugs, he added.

Mr. de Castro expects Mr. Biden to tone down the “sharp rhetoric” of Mr. Trump, but would probably continue his competitive approach toward China.

The Philippines would also benefit economically from a Biden presidency, which is expected to reverse Mr. Trump’s “America first” policy, said Jay L. Batongbacal, head of the University of the Philippines Institute for Maritime Affairs and Law of the Sea.

“A Biden presidency will probably try to backpedal from Trump’s confrontational postures, including his America first policy,” he said by telephone. This could encourage American investments in the Philippines, he added.

The Philippine government does not expect major changes in bilateral relations with the US whoever wins the election, presidential spokesman Harry L. Roque told CNN Philippines on Wednesday.

“The State Department ensures continuity as far as US foreign policy is concerned,” he said. “We don’t expect any major changes in the bilateral relations between the Philippines and the United States.”

Mr. Roque noted that given time, Mr. Duterte could enjoy an “equally warm personal relations with whoever wins this election, even if it’s not President Trump.”

Gov’t urged to use anti-insurgency fund for typhoon-hit areas

LAWMAKERS on Wednesday urged the government to realign a large chunk of its anti-insurgency funds for the rehabilitation of communities battered by Typhoon Goni, locally named Rolly.

Party-list Rep. Carlos Isagani T. Zarate said the P19.1-billion budget of a task force that seeks to end the Maoist conflict — described by some congressmen as “pork-laden” — can make at least 38 million relief packs for almost two million Filipinos affected by the typhoon.

“Our people especially in the Bicol region are so devastated that it would take months and even years for them to recover,” he said in a statement. The anti-insurgency fund could be used to build houses and roads there, he added.

Opposition Senator Risa N. Hontiveros-Baraquel earlier said a large portion of the task force’s budget earmarked for village development should be channeled to recovery efforts in the Bicol region.

Senator Emmanuel Joel J. Villanueva said economic managers should consider the proposal.

Presidential spokesman Harry L. Roque on Wednesday said the task force is also mandated to promote the development of typhoon-hit areas “with ongoing insurgencies,” including some provinces in Bicol.

“I don’t think there is any inconsistency with the proposal to actually spend funds in typhoon damaged areas because it is a fact that Bicol also is a hotbed for insurgency,” he told CNN Philippines. — Kyle Aristophere T. Atienza

Nationwide round-up (11/04/20)

South China Sea code of conduct could be signed by next year

NATIONAL Security Adviser Hermogenes C. Esperon, Jr. on Wednesday said discussions on the South China Sea Code of Conduct is continuing and could be finalized by next year. In a virtual briefing on Wednesday, Mr. Esperon said he is “positive” that the ongoing talks with China and other members of the Association of Southeast Asian Nations (ASEAN) will be concluded in 2021. “We still hope by 2021 we could sign an agreement on the code of conduct,” he said. China and ASEAN economies agreed to complete by 2022 the code that is intended to ease strains from maritime disputes. In the meantime, Mr. Esperon said joint military explorations and exercises in the West Philippine Sea have been suspended to avoid further tensions. “We have put them on hold…. For now we think that getting into military exercises in the area don’t contribute to a peaceful West Philippine Sea and South China Sea,” he said. — Gillian M. Cortez 

No rush to US military pact cancellation, says Roque

PRESIDENT Rodrigo R. Duterte might extend the suspension of his order to cancel the Philippines’ Visiting Forces Agreement (VFA) with the United States by another six months, his spokesperson said on Wednesday. “Perhaps the President will invoke the second six-month time to finally abrogate the VFA,” Palace Spokesperson Harry L. Roque said in an interview with CNN Philippines. Mr. Duterte ordered the termination of the military exercises pact with the US in February, but backtracked in June, citing heightened political tensions and the coronavirus pandemic. The suspension of the notification to abrogate will expire in December. “There is no immediate rush for the President to decide because the notification we sent to the Americans gives them at least one year leeway before it’s abrogated,” Mr. Roque said. — Gillian M. Cortez 

On Duterte’s SALN: Not concealing, just following Ombudsman rules

PRESIDENT Rodrigo R. Duterte is not hiding his statements of assets, liabilities and net worth (SALN) but merely following rules of the Ombudsman, Palace Spokesperson Harry L. Roque said on Wednesday. “He is just respecting the recent guidelines issued by the Ombudsman because after all the Ombudsman is a constitutional body tasked with promoting accountability amongst public officers,” Mr. Roque said in an interview with CNN Philippines. Mr. Duterte has yet to make public his 2019 and 2019 SALNs, the annual filing required from all elected officials and all civil service workers. Ombudsman Samuel R. Martires restricted public access to SALNs with the release of new guidelines in September. — Gillian M. Cortez 

Regional Updates (11/04/20)


18 power transmission lines still down in typhoon Rolly’s aftermath

EIGHTEEN power transmission lines have yet to be restored from the impact of typhoon Rolly (international name: Goni), according to the National Grid Corporation of the Philippines (NGCP). In an advisory sent via Viber on Wednesday morning, the private-led grid operator said half of the affected lines are in the southern Luzon area. NGCP also reported that two lines in Naga City, Camariñes Sur have been restored. Teams from around the country have been deployed to the typhoon-affected areas to hasten damage assessment and restoration works, NGCP said. Meanwhile, the Department of Energy and National Electrification Administration said they have yet to fully evaluate the power situation in all the affected regions. However, Energy Assistant Secretary Redentor E. Delola, in a press briefing on Wednesday morning, reported that several power plants are already back online. “Moving forward, towards the rest of the week and even next week, we don’t expect any issues in the supply (for the) entire Luzon,” he said. Rolly, the world’s strongest typhoon so far this year and the 18th to enter the Philippines, swept through the southern part of Luzon and neighboring islands, making four landfalls on Nov. 1. Around two million people were affected, according to the national disaster management council. The Department of Social Welfare and Development reported on Wednesday that it has so far released P8.3 million worth of relief goods, apart from those distributed by local governments. Other government agencies, humanitarian organizations, and non-government groups have also been undertaking relief and recovery operations. — Angelica Y. Yang and Gillian M. Cortez

Slow-moving Siony intensifies into a severe tropical storm

THE slow-moving Siony  (international name: Atsani) intensified into a severe tropical storm category as of Wednesday afternoon and is expected to affect the extreme northern part of the country until Friday. Wind signal #1 was up in the northeastern portion of Cagayan province and the eastern portion of Babuyan Islands. Weather bureau PAGASA said Siony could further strengthen into a typhoon before making landfall between Thursday evening and Friday morning “over or very close to the Batanes and Babuyan Islands.” Typhoon Rolly, which exited the Philippine area Tuesday evening, was also still affecting parts of Luzon, along with the northeasterly winds. “The combined effects of the northeasterlies and the trough of Siony will bring light to moderate with at times heavy rains over Bicol Region, Aurora, Quezon, and the eastern portions of Cagayan and Isabela,” PAGASA said in its 5 p.m. bulletin on Wednesday. Siony is forecasted to be out of the country by Friday evening.

Military recovers Abu Sayyaf boat, weapons

WESTMINCOM

THE MILITARY has recovered the boat used by the seven Abu Sayyaf members who were killed by government forces Tuesday morning at the Sulu Sea, off Sulare Island. “The boat was cut in half with only the front portion remaining afloat while the rear must have sunk during the ramming by the navy ship-BA493,” Lt. Gen. Corleto Vinluan, Jr., head of the Western Mindanao Command, said in a statement Tuesday evening. Various weapons and gadgets were also recovered from the damaged boat, including M4 rifles and M14 short magazines. Maj. Gen. William N. Gonzales, commander of Joint Task Force Sulu that led the operation against the Islamic State-allied bandit group, said air, naval, and ground forces are continuing with retrieval operations. One of the seven killed was identified as Madsmar Sawadjaan, brother of terror bomber Mundi Sawadjaan, and another was Mannul Sawadjaan, also known as Abu Amara and is reportedly the successor of Abu Sayyaf senior leader Hajan Sawadjaan who was recently killed. The five other casualties have yet to be identified. Mr. Vinluan, in an earlier statement, said intelligence reports indicate the group was planning to conduct kidnapping activities in mainland Mindanao. The Abu Sayyaf has been notorious for kidnap-for-ransom operations, victimizing both locals and foreigners. Their last captive, an Indonesian, was rescued by government forces in January this year. With ties to international extremists, Abu Sayyaf members have also been involved in deadly bombings Jolo, the capital of Sulu, in January 2019 and August 2020.

Occidental Mindoro declares state of calamity

THE OCCIDENTAL Mindoro provincial government has declared a state of calamity due to typhoon Quinta (international name: Molave), which left 23 people dead, 39 injured and six missing across five regions. The province was also affected by the typhoon that followed, Rolly (international name: Goni), but not with heavy rains or strong winds. In a statement Tuesday evening, the office of Governor Eduardo B. Gadiano announced that the state of calamity declaration has been signed by the provincial board. With the declaration, the local government will be able to tap into its emergency fund for relief and recovery operations as well as freeze prices of basic goods.

ARTA sends warning to barangay officials as it files complaint vs Bulacan chief

THE Anti-Red Tape Authority (ARTA) warned community-level officials against violating the law on ease of doing business as it filed a complaint against a barangay chair in Bulacan. ARTA lodged the complaint before the Office of the Ombudsman against the head of Barangay Loma de Gato in Marilao, Bulacan, the agency said in a statement on Wednesday. ARTA said the case is based on its investigation arising from a grievance that the official was imposing additional requirements and costs to government processes. The barangay has also failed to meet the July deadline for the submission of its new charter. “Cases shall continue to be filed against officials who will continue to do red tape. We are calling on Barangay Officials, do not ask more than what is required,” ARTA Director-General Jeremiah B. Belgica said. BusinessWorld has yet to receive a response on its request for comment from the Loma de Gato official. — Jenina P. Ibañez

Co-op rice import clearances suspended pending DA probe

THE Department of Agriculture (DA) has suspended the rice import permit process for farm cooperatives and irrigators’ association on suspicion that some of them are serving as dummies for commercial traders.

Agriculture Secretary William D. Dar issued Administrative Order No. 34, which freezes permit issuances, processing and application filing of sanitary and phytosanitary import clearances (SPSICs) to such organizations until further notice.

Mr. Dar also instructed the Bureau of Plant Industry to consult stakeholders and open an investigation in preparation for new rules protecting farmers and their cooperatives from “exploitation.”

The Philippines is dealing with increased rice imports since Republic Act No. 11203 or the Rice Tariffication Law removed import restrictions in 2019.

Mr. Dar said the freeze follows reports that SPSICs for rice imports are being obtained by traders using farm cooperatives and irrigators’ associations as fronts.

The investigation will center on the alleged practice of “taking advantage of the privileges provided by law to the cooperatives to avoid their legal responsibilities and evade taxes,” Mr. Dar said.

Mr. Dar also cited Senate Resolution No. 536 which called for an investigation into alleged abuses of the importing privileges.

He added that many cooperatives and irrigators’ associations have also entered the business of importing rice instead of buying rice from domestic farmers.

“Farmer cooperatives… and irrigators’ associations imported almost half of the volume of imported rice in 2019,” Mr. Dar said.

In a mobile phone message, Samahang Industriya ng Agrikultura Chairman Rosendo O. So said that instead of freezing the import clearances process, Mr. Dar should suspend officials that facilitate the granting of SPSICs to cooperatives.

Mr. So added that the DA should issue a “blanket ban” on the issuance of SPSICs, and not limit the suspension to cooperatives and associations.

“SPSICs should not be issued until next year,” Mr. So said.

Former Agriculture Undersecretary and current Bangko Sentral ng Pilipinas Monetary Board member V. Bruce J. Tolentino said that it is vital to ban imports by groups that are not “true cooperatives.”

“There are enterprises and other businesses that have been organized as cooperatives in order to take advantage of such tax exemptions, and thus abusing the tax privilege,” Mr. Tolentino said in an e-mail interview.

“This is a regulatory task that the Cooperative Development Authority (CDA) has to undertake, in collaboration with the Bureau of Internal Revenue and Department of Finance,” he added. — Revin Mikhael D. Ochave

MRT-3 ridership rises on increase in permitted capacity

THE Transportation department said the Metro Rail Transit Line 3 (MRT-3) hit its highest ridership levels since July on Tuesday at 104,346, after the authorities allowed the rail line to carry passengers at 30% capacity and as higher train speeds increased throughput.

Commuter rail service resumed in June at 13% capacity to account for social distancing and other pandemic safety measures, in compliance with guidelines set by the Inter-Agency Task Force for the Management of Emerging Infectious Diseases, according to the department.

The department said the government’s recent decision to increase the cap on capacity to 30% has boosted ridership.

“Dinagdagan ang kapasidad ng mga tren sa 30% (124 na pasahero kada train car, 372 na pasahero kada train set), mula sa dating 13%. (Train capacities were raised to 30% or 124 passengers per rail car and 372 per train set from the old cap of 13%,” the department said in a statement Wednesday.

The MRT-3 also started increasing train speeds to 50 kilometers per hour on Tuesday, reducing waiting time between trains from 8-9.5 minutes to 4-5 minutes. MRT-3 operates 20 trains per day.

“This means that travel time from North Avenue station to Taft Avenue station will likewise be lessened from 1 hour and 15 minutes to just 1 hour and 5 minutes,” the Transportation department said in a separate statement.

“The improvement in train speed is a result of the installation of the new long-welded rails (LWRs) in all the MRT-3 stations as part of the massive rehabilitation program of the rail line, which is being implemented by Sumitomo-Mitsubishi Heavy Industries,” it added.

The department said the MRT-3 will further increase its speed to 60 kph by December. — Arjay L. Balinbin

DTI’s Lopez confident in manufacturing rebound

TRADE SECRETARY Ramon M. Lopez remains confident in the economic recovery despite weaker Philippine manufacturing in October, calling the decline a “pause” in momentum.

The manufacturing Purchasing Managers’ Index (PMI) fell to 48.5 last month from 50.1 in September, the seventh time the index fell below the 50-point level marking the line between expansion and contraction.

IHS Markit said operating conditions in the sector worsened as new orders declined, businesses closed, and consumer demand weakened while the pandemic persisted.

Mr. Lopez in a statement Wednesday said staffing at companies is still reduced even though fewer businesses closed. Restrictions on movement and large gatherings are still in force.

“But we have started the reopening of the economy and shall continue to do so gradually and safely,” he said.

He said that the government is working on ensuring strict implementation of health standards in workplaces to improve consumer confidence. The government has also introduced tax breaks to encourage the production of goods needed to address the health crisis, such as medical supplies and personal protective equipment.

“We are confident that the economy is generally on the path to recovery, although overall demand will still be subdued as compared to pre-pandemic levels, as some jobs are just starting to be recovered,” Mr. Lopez said.

The PMI presents the weighted average of five indices: new orders, output, employment, supplier delivery times, and purchase stocks. As a measure of expected orders by purchasing managers, it is considered a leading indicator for manufacturing activity as raw materials ordered are transformed into processed goods.

IHS Markit said Philippine production volumes and new orders fell due to weak demand. Manufacturing companies also continue to cut staff.

Supplier shortages due to uncertain demand depleted stocks of raw material and finished goods, while delivery times were delayed because of transport restrictions.

Manufacturers, IHS Markit said, expect production to increase next year, although they anticipate that the pandemic will have a long-term impact on production.

Among selected members of the Association of Southeast Asian Nations, the Philippine index was below those of Thailand and Vietnam, and was tied with Malaysia. — Jenina P. Ibañez

Emerging markets seen avoiding funding crunch

EMERGING MARKETS will largely continue to have access to funding this year but their timid spending risks prolonging the collapse in demand, think tank Oxford Economics said.

“A large-scale emerging market funding crisis will likely be averted this year, but the fiscal policy response to the pandemic has been timid, threatening to entrench weak demand and low inflation,” Oxford Economics said in a note issued Nov. 3.

It said most economies are on track to meet their overall funding needs for the year, defying the fears that many may struggle to access financing due to competition for the pool of funds as more governments report declining expenditures and tax collections during the pandemic.

It said quantitative easing measures rolled out by central banks to cushion the fallout have also been generally successful, while funding costs have fallen for many countries as bond yields decline.

“With COVID-related global risks still elevated, our funding vulnerability scorecard highlights those most at risk of funding problems that could see yields spike,” Oxford Economics said.

The funding outlook projects downside risks for emerging markets with the biggest fiscal response to the pandemic such as Kuwait, Brazil, South Africa, Saudi Arabia, Romania; those with the biggest funding needs like Pakistan, Egypt, Brazil, South Africa; countries with shallow domestic financial markets such as Uruguay, Ukraine, Indonesia, Romania, Peru; and those whose bond yields have soared including Turkey, South Africa, Hungary, and Indonesia.

It also flagged countries that have fallen behind the pace of their bond issue timetables such as South Africa, Malaysia, Turkey and the Philippines.

Oxford Economics also warned that bond yields in the Philippines “are too low for comfort.”

National Treasurer Rosalia V. de Leon said the Bureau of the Treasury is on track to hit the targeted number of bond issues for the year, saying Oxford Economics’ estimates, which cited the International Monetary Fund, might have not taken into account government borrowing from the central bank.

“We are not behind our programmed local issues. (The report maybe did) not consider (recent transactions with) the BSP (Bangko Sentral ng Pilipinas),” she said in a Viber message Wednesday.

“Strong bid to cover ratio in auctions shows rates remain attractive to investors,” she added.

The government plans to issue P1.67 trillion worth of Treasury bonds and P48 billion worth of Treasury bills this year. It also aims to raise P500 billion from the central bank through repurchase agreements and advances.

The government’s economic team also decided to tap the domestic bond market for most of its borrowing program this year, with a domestic borrowing target of P2.2 trillion out of P3 trillion overall.

It issued P300 billion worth of securities to the central bank in March under a repurchase agreement. This was settled in October but another P540 billion of provisional advances was extended by the BSP to the government that month.

The government borrows from domestic and foreign sources to plug its budget deficit, which is expected to be equivalent to 9.6% of gross domestic product this year.

Oxford Economics said emerging markets, like advanced economies, should “learn to live with higher debt” to fund fiscal stimulus packages and to pump-prime their economies.

“Fiscal measures now are timid, though so will be future fiscal adjustment. But widespread emerging market crises will likely be averted. Weak demand, low inflation, and high savings suggest low yields imply a slow recovery with rumbling vulnerabilities,” Oxford Economics said. — Beatrice M. Laforga

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