Gov’t debt yields inch down on data

December 9, 2024 | 12:01 am

YIELDS on government securities (GS) traded on the secondary market were mixed last week as the market was cautious ahead of the release of key US and domestic data that could affect the direction of monetary policy moving forward.

GS yields, which move opposite to prices, inched down by an average of 0.49 basis point (bp) last week, based on data from PHP Bloomberg Valuation Service Reference Rates as of Dec. 6 published on the Philippine Dealing System’s website.

At the short end of the curve, the rates of the 91-, 182-, and 364-day Treasury bills (T-bills) went up by 5.10 bps (to 5.6955%), 4.88 bps (to 5.9724%), and 7.56 bps (to 6.0804%), respectively.

Meanwhile, at the belly, yields on the two-, three-, four-, five-, and seven-year Treasury bonds (T-bonds) decreased by 1.48 bps (5.9194%), 1.31 bps (5.9196%), 2.09 bps (5.9210%), 3.63 bps (5.9205%), 7.89 bps (5.9082%), respectively.

At the long end of the curve, the rate of the 10-year debt paper declined by 11.41 bps to 5.8846%, while the 20- and 25-year T-bonds saw their yields increase by 2.50 bps (to 6.1725%) and 2.37 bps (6.1726%), respectively.

GS volume traded reached P35.18 billion, lower than the P48.25 billion recorded a week prior.

“The local bond market was broadly moving sideways during the week as market participants remained cautious ahead of key Philippine and US economic releases, which are expected to influence the policy decisions of the BSP (Bangko Sentral ng Pilipinas) and the Federal Reserve respectively later this month,” the first bond trader said in an e-mail.

“The downturn [last] week was likely due to improved sentiment ahead of the BSP’s MB (Monetary Board) meeting this month mirroring the easing sentiment in US yields, with similar sentiment on the US Fed meeting this month as well,” the second bond trader said in a Viber message.

Philippine headline inflation picked up to 2.5% year on year in November from 2.3% in October, the government reported last week.

Still, this was slower than 4.1% in the same month a year ago and was within the BSP’s 2.2%-3% forecast for the month.

The November print also matched the median estimate in a BusinessWorld poll of 15 analysts.

For the first 11 months, the consumer price index (CPI) averaged 3.2%, a tad higher than BSP’s 3.1% full-year baseline forecast but well within its 2-4% annual target.

“As domestic inflation for November came within market expectations and remains at the lower end of the BSP’s target range, this has solidified views that local inflation appears to be manageable, pushing both medium- and long-term yields [last] week. However, short-term yields are slightly moving higher as expectations that the BSP might hold policy rates unchanged in its December meeting,” the first trader said.

The second bond trader said the CPI result was within expectations and thus was mostly taken as a “non-event.”

“If anything, the print just reaffirmed the view that the BSP has some leeway to cut rates this month,” the trader added.

The BSP’s policy-setting Monetary Board will hold its last review for the year on Dec. 19, a day after the Federal Open Market Committee’s Dec. 17-18 meeting.

The Philippine central bank has cut benchmark borrowing costs by a total of 50 bps since kicking off its easing cycle in August, bringing its policy rate to 6%.

BSP Governor Eli M. Remolona, Jr. has said that the central could either cut or pause at this month’s meeting.

Meanwhile, Fed officials appear on track to cut interest rates this month after data showed the US labor market remained strong but continued to cool in November, even as debate emerged over a possible pause to rate cuts in the new year, Reuters reported.

US employers added 227,000 jobs last month, a rebound from a hurricane-impacted slowdown in October, but the unemployment rate ticked up to 4.2%, the Labor department’s monthly employment report showed on Friday.

For this week, GS yields may rise on expectations of faster US consumer inflation in November, the first bond trader said. US CPI data will be released on Dec. 11 (Wednesday).

The trader added that the market could react to the US nonfarm payrolls (NFP) data released on Friday.

“We could see some slight momentum carry over into [this] week, depending on the release of the US NFP, which could influence the Fed’s decision the following week,” the second trader likewise said.

“Locally, we’ll be looking at the results of the BTr’s (Bureau of the Treasury) last bond auction for the year, but traders will likely be wary of the first-quarter auction schedule that could come out before Christmas and see the BTr revert to more frequent auctions with higher offer amounts,” the second trader added.

On Tuesday, the Treasury will offer P15 billion in reissued 10-year T-bonds with a remaining life of nine years and one month. This would be the last T-bond auction for 2024. — Kenneth H. Hernandez with Reuters

DA seeks to boost palay yield in Iloilo province

December 9, 2024 | 12:01 am

THE Department of Agriculture (DA) on Sunday said it would allocate P82.5 million more to boost rice production in farms in Iloilo province.

In a statement, the agency said the extra budget would fund 16,500 hectares more allotted for hybrid rice production in the province.

The agency said this would increase the farm area planted with unmilled rice by “more than 50%.”

“Weather permitting, the additional hectarage that will be planted with hybrid varieties should increase our rice harvest during this dry season,” Dennis R. Arpia, executive director for Region VI, said.

He added that attaining five metric tons (MT) per hectare on hybrid seeds would suffice despite the potential yield of 10 MT per hectare for the seed variety, citing the unpredictable weather in Western Visayas.

The average yield of palay in Iloilo was 3.4 MT per hectare in 2023, below the national average yield of 4.2 MT per hectare.

“If rains come during the flowering stage, they could significantly impact yields,” Mr. Arpia said.

Iloilo is among the country’s top rice-producing provinces, producing 1.07 million MT last year or 5.33% of the total 20.06 million MT output in 2023.

The DA said the potential yield for rice in the province could be improved with higher-yield varieties, better irrigation, proper nutrition and recommended cultural management practices.

The department said some areas in Western Visayas have begun planting palay for the incoming dry season, while farmers have been delayed in their harvest due to El Niño. — Adrian H. Halili

Listed banks rise in Q3

December 9, 2024 | 12:01 am

By Lourdes O. Pilar, Researcher

LISTED BANKS rose in the third quarter propelled by higher loan growth thanks to cheaper borrowing costs that boosted net interest income.

The Philippine Stock Exchange index (PSEi) gained 13.4% on a quarter-on-quarter basis in the third quarter of 2024, a reversal from the 7.1% drop in the second quarter. Year on year, PSEi climbed by 15.1%.

Meanwhile, the financials subindex, which included the banks, inched up by 19.4% quarter on quarter at the end of the July-September period, a turnaround from the 5.4% decline recorded in the second quarter.

The subindex, however, rose by 23.4% annually.

Out of 15 banks covered in the third quarter of this year, 13 banks’ stock performance rose.

Quarter-on-quarter top performers were Security Bank Corp. (SECB, 52.5%), Bank of Commerce (31%), China Banking Corp. (27.5%), Philippine National Bank (27.3%), and BDO Unibank, Inc. (BDO, 23.2%).

Philippine Trust Co. and Philippine Business Bank performed poorly as their stock prices in the third quarter declined by 3.2% and 5.6%, respectively.

Aggregate net income of universal and commercial banks went up by 51.9% to P271.73 billion as of end-September from P178.91 billion last year, data from the Bangko Sentral ng Pilipinas (BSP) showed.

Gross total loan portfolio of these big lenders rose by 14% to P13.81 trillion as of end-September from P12.11 trillion a year ago.

The big banks’ gross nonperforming loans (NPLs) ratio, however, edged up to 3.18% in September from 3.09% in September the previous year.

The big banks’ net interest margin (NIM) — a ratio that measures banks’ efficiency in investing their funds by dividing annualized net interest income to average earning asset — grew to 4.06% in the third quarter from 3.83% recorded in the same period in 2023.

“Most of the banks under our coverage posted double-digit growth in the bottom line, attributable to high net interest margins and lower provisions for losses amid benign asset quality,” Wendy B. Estacio-Cruz, Unicapital Securities head of Research, said in an email.

Ms. Estacio-Cruz said that Union Bank of the Philippines and Bank of the Philippines (BPI) posted high net income growth in third quarter alone with 77% and 28% year-on-year growth, respectively.

UBP’s bottom line was driven by high top line growth and managed operating expenses and for BPI, high trading income contributed to the growth.

BDO Securities Corp. First Vice-President and Head of Research Abigail L. Chiw said that most banks reported stronger loan growth, stable lending margins, and improving asset quality, which contributed to record high incomes.

“The big banks continue to do well, as they registered above-average industry loan growth given their extensive branch network and expanding digital presence, strong asset quality with low NPL ratios and solid profitability with robust double-digit return on return on equities (RoEs),” said Ms. Chiw.

“During the third quarter, majority of banks booked trading gains which helped push noninterest income higher. This was the result of lower interest rates in the period. On the other hand, majority of banks continue to enjoy high net interest income margin as majority continue to grow consumer loan book which is high yielding in terms of assets,” said Kervin Laurence Sisayan, Maybank Securities Philippines, Inc. head of Research.

Mr. Sisayan also said that SECB stood out given the very strong loan growth year on year. Meanwhile, BDO and Metropolitan Bank & Trust Co. (MBT) continued to show high NPL coverage and stable NPL ratio, implying sustained asset quality.

RCBC Securities, Inc. said that the main factor for the performance of listed banks during the third quarter was the double-digit loan growth under the consumer segment, as business confidence improved along with the BSP’s rate cut.

“BDO and MBT stood out because both managed to improve their asset quality while increasing topline and beating industry loan growth. Their ability to make it happen provides them a shield from inflationary risks or flexibility to deal with slower interest rate cuts,” RCBC Securities said.

BANK STOCK PICKS
In choosing bank stocks, analysts said that traders and investors should continue to monitor market conditions that may affect loan demand and asset quality of banks.

“Uncertainties with regard to the potential impact of protectionist policies from US president-elect Donald J. Trump may temporarily weigh on credit appetite and temper loan growth for banks,” said Ms. Chiw.

Ms. Chiw also added that the risks of reaccelerating inflation and interest rates remaining high and restrictive could also have knock-on effects to the ability of borrowers to repay their debts.

“Traders should watch potential rate changes, loan demand stability, and credit quality trends. Digital transformation will also be pivotal in enhancing banks’ competitiveness and profitability,” said Arielle Anne D. Santos, an equity analyst at Regina Capital Development Corp.

Investors should keep an eye on the movement on NIMs given that they saw more policy rate cuts, Maybank’s Mr. Sisayan said.

“Eventually when we see a more pronounced decline in interest rates as inflation continues to ease, then we could also start looking more closely at an acceleration on loan growth,” Mr. Sisayan said.

Ms. Estacio-Cruz said that they are cautiously optimistic about the banking sector and believe that operating income is likely to peak in mid-2024.

“We anticipate a 20-bps decline in NIMs for the banks within our coverage, given the ease of interest rates. However, we expect that strong asset quality and improved loan growth will help to partially offset the effects of these rate cuts next year, thereby supporting the sector’s RoE,” Ms. Estacio-Cruz added.

“Year-to-date, the financials index remains the most outperforming index and rose 28% compared to the PSEi’s gain of 3%. Nevertheless, we advise a selective approach, particularly considering banks with substantial discounts,” said Ms. Estacio-Cruz.

RATE CUTS
This year, the BSP has delivered a total of 50 basis points (bps) worth of rate cuts in increments of 25-bp reductions at its August and October meetings.

BSP has signaled a possible interest rate cut in December, following the slower-than-expected economic growth in the third quarter and the within-target inflation print in October. Further rate cuts could be expected in 2025, BSP said.

“Rate cuts are expected to compress banks’ net interest margins, which may weigh on short-term profitability. However, they could also stimulate loan demand, potentially benefiting banks with diversified loan portfolios like BDO and BPI,” said Ms. Santos.

She added that lower rates might support asset quality by easing debt burdens, a factor investor may view positively.

“Overall, rate cuts could have a mixed impact on bank stocks, balancing margin pressure with potential gains from loan growth and improved asset quality,” said Ms. Santos.

For BDO Securities, the negative impact of rate cuts to margins can be offset by the positive impact of the reserve requirement ratio (RRR) reductions, such that banks are largely expecting NIMs to remain stable.

“Lower interest rates or borrowing costs are also seen to potentially lift consumer and business sentiment, which in turn, could translate to better investment spending and faster loan growth, which are positive for bank earnings,” Ms. Chiw said.

“We believe that there is room to cut another 25 bps in the last month of the year. So, for the 25-bps cut, this could lead to lower interest rates and lower asset yields,” Mr. Sisayan said.

Meanwhile, Ms. Estacio-Cruz expects net interest margins stable for this year as banks manage to lower cost of funds while keeping asset yields steady.

Addressing barriers to shingles prevention

December 9, 2024 | 12:01 am

One out of three adults aged 50 years or older is at risk of contracting shingles (herpes zoster). After an individual recovers from chickenpox (which they usually caught as a child), the varicella-zoster virus which causes chickenpox continues to live in some of their nerve cells. People get shingles when the varicella-zoster virus reactivates in their bodies after they have already had chickenpox.

Shingles usually develops on just one side of the body or face, and in a small area. The most common place for shingles to occur is in a band around one side of the waistline. Common symptoms include fluid-filled blisters; burning, shooting pain; tingling, itching, or numbness of the skin; and chills, fever, headache, or upset stomach.

For some people, the symptoms of shingles are mild, such as itching. For others, shingles can cause intense pain that can be felt from the gentlest touch or breeze.

If you notice blisters on your face, see your doctor right away because this is an urgent problem, warns the US National Institute on Aging (NIA). Blisters near or in the eye can cause lasting eye damage and blindness. Hearing loss, a brief paralysis of the face, or, very rarely, inflammation of the brain (encephalitis) can also occur.

Most cases of shingles can be diagnosed by a doctor from a visual examination. Although there is no cure for shingles, early treatment with antiviral medications can help the blisters clear up faster and limit severe pain.

Most cases of shingles last three to five weeks. After the shingles rash goes away, some people may be left with ongoing pain called postherpetic neuralgia (PHN). The pain is felt in the area where the rash occurred. The older a person is when they get shingles, the greater their chances of developing PHN.

The PHN pain can cause depression, anxiety, sleeplessness, and weight loss. Some people with PHN find it hard to go about their daily activities, such as dressing, cooking, and eating. Consult your doctor if you are experiencing PHN or have any of these symptoms. Usually, PHN will lessen over time.

Shingles vaccination is the only way to protect yourself against this painful disease, according to the US Centers for Disease Control and Prevention (CDC). Vaccination is over 90% effective at preventing shingles and PHN in adults 50 years and older with healthy immune systems.

The CDC recommends two doses of recombinant zoster vaccine to prevent shingles and related complications in adults 50 years and older. The CDC also recommends the recombinant zoster vaccine for adults 19 years and older who have weakened immune systems because of disease or therapy.

Doctors from various specialties across the country, particularly geriatricians and dermatologists, see many cases of shingles with PHN as the most common complication, revealed a paper by Panaligan et al.

The paper was published in the August 2023 issue of the international monthly peer-reviewed medical journal Human Vaccines & Immunotherapeutics. It presented the insights and recommendations of two multispecialty advisory boards participated in by specialists in adult infectious diseases, dermatology, geriatrics, obstetrics-gynecology, pulmonology, endocrinology, neurology, hematology, medical oncology, rheumatology, transplant surgery, and nephrology.

The specialists noted that shingles imposes a heavy socioeconomic burden on patients in terms of the high cost of antiviral treatment and distress due to pain. Moreover, antiviral medicines do not prevent shingles complications such as PHN. Shingles may also complicate the treatment of ongoing conditions, they added.

The specialists agreed that the introduction of the recombinant zoster vaccine, which has received regulatory approval from the Philippine Food and Drug Administration, could help in the prevention of shingles.

To address low disease awareness, the specialists recommended stepping up education on the burden of shingles and benefits of vaccination through patient advocacy groups, social media, and the dissemination of infographics. They underscored the importance of educating local healthcare professionals (HCPs) on shingles vaccination guidelines, efficacy, and vaccinology principles to improve confidence in making strong recommendations for shingles vaccination.

Capacity building and increased support for shingles immunization infrastructure is also crucial for enabling HCPs to start vaccination in their practice. With an improved infrastructure, shingles vaccination could be offered at primary care facilities and dermatology centers.

Among others, the specialists suggested forming a collaborative, multispecialty special interest group to address barriers to shingles vaccination in the country.

Teodoro B. Padilla is the executive director of Pharmaceutical and Healthcare Association of the Philippines which represents the biopharmaceutical medicines and vaccines industry in the country. Its members are in the forefront of research and development efforts for COVID-19 and other diseases that affect Filipinos.

URC shares drop on gloomy outlook despite increased production

December 9, 2024 | 12:01 am

UNIVERSAL ROBINA Corp. (URC) shares dropped last week as challenges outweighed the opening of a new flour mill in Quezon.

URC was the seventh most actively traded stock last week with 14.26 million shares worth P1.11 billion changing hands from Dec. 2-6, data from the Philippine Stock Exchange showed.

Shares of the Gokongwei-led food and beverage company closed at P76.15 apiece, 3.6% lower than the P78.95 close on Nov. 29.

For the year, the stock’s price fell 35.6% from a P118.2 close on the last trading day of 2023.

Analysts attributed the weaker week-on-week close to the lingering effects of its earnings report released on Nov. 12 and higher inflation in November.

“In our view, the recent decline in the stock price [last] week appears to be a continuation of the negative sentiment following last month’s dismal earnings. This spillover effect suggests that investors’ confidence remains fragile as concerns over its near-term prospects persist,” Jemimah Ryla R. Alfonso, equity analyst at Unicapital Securities, Inc., said in an e-mail.

For the third quarter, URC posted a net attributable income of P1.42 billion, falling 53.7% from P3.07 billion in the same period last year.

The company’s revenues likewise dropped 1.81% to P38.14 billion in the third quarter.

“It is hard to say how long the negative effects from its earnings report will last,” Mercantile Securities Corp. Head Trader Jeff Radley C. See said in a Viber message.

“The latest inflation data may have also added to the decline in investors’ sentiment [last] week,” Ms. Alfonso added.

Inflation quickened to 2.5% in November, as typhoons increased prices, the Philippine Statistics Authority (PSA) said on Dec. 5.

Meanwhile, the Department of Agriculture (DA) said on Dec. 1 that the opening of URC’s flour milling factory in Quezon province is seen to improve production.

Spanning 10 hectares, the plant is expected to increase URC’s flour capacity to 3,500 metric tons per day.

The DA said that the plant is expected to “play a key role in ensuring a stable and affordable supply of products.”

“While the recent capacity expansion may be viewed as a positive news for the firm, it appears that it did not provide enough padding for the continued gloomy outlook for URC [last] week. Investors remain focused on the broader challenges that the company is facing including the negative price mix, struggling feed volumes, and the drop in sugar profits,” Ms. Alfonso said.

“Our consolidated net income forecast for URC stands at P2.4B, with an expected topline growth of 6% to P168.4B,” she added.

Mr. See saw resistance at P88 and support at P70.

Ms. Alfonso pegged her support between P73-75.8 and resistance between P80.25-86.25.

“Chart-wise, URC remains in a bearish trend. A shift in bias would require the stock to recover and sustain levels above P86 in the short term,” Ms. Alfonso concluded. — Karis Kasarinlan Paolo D. Mendoza

Honda Cars PMS promo ongoing until yearend

December 9, 2024 | 12:01 am

VELO_PAGE2_image8 — Honda Civic Type R — PHOTO BY KAP MACEDA AGUILA

HONDA CARS PHILIPPINES, INC. (HCPI) has announced the start of a new service promo, “Holiday Drive.” “HCPI is a company that prides itself in prioritizing the safety and quality of service given to its customers,” the firm said in a release. “Right in time for this season, HCPI is here to ring in the holidays by treating Honda Connect users to special perks and discounted offers until Dec. 31, 2024.”

All Honda customers are entitled to this promo. To join, download the Honda Connect app, create an account, and visit the nearest Honda Cars dealership. Perks awaiting Honda Connect users include a free 50-point checkup with tire and battery assessment, P1,000 discount for two tires, and P200 off on value-added product bundles.

Value-added bundles include an engine cleaner plus engine oil treatment, and air-conditioning lubricant plus leather wax. A P500 fuel card will also be given to Honda owners who have not brought their vehicles to a Honda Cars facility for service in the past year. To commemorate HCPI’s 34^th anniversary, customers can also get P340 off on complete periodic maintenance service and up to 34% off on select official Mugen and Honda merchandise such as apparel, umbrellas, keychains, and more.

Honda Connect was launched in the Philippines last September 2023 for “Honda owners to harness security, safety, and convenience all within the app. Users can now control their vehicles remotely with no subscription fees.” The latest version of the app allows owners to remotely switch on their vehicle’s air-conditioner, and the ability to lock and unlock their doors remotely from their phone for added security and convenience.

Other functions include emergency calls, location search, and notifications straight from HCPI through the non-telematics platform. Honda Cars dealerships are now easier to navigate, contact, and booked for services.

For more information, visit https://www.hondaphil.com/programs/holiday-drive-promo. Find the nearest dealer at https://www.hondaphil.com/dealer-finder and view Honda’s virtual showroom at https://www.hondaphil.com/virtual-honda.

Asset and loan growth of Philippines’ biggest banks surges in Q3

December 9, 2024 | 12:00 am

THE COMBINED ASSETS and loans of the Philippines’ biggest banks rose by double digits in the third quarter, amid increased economic activity. Read the full story.

How PSEi member stocks performed — December 6, 2024

December 9, 2024 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Friday, December 6, 2024.

US jobs data, Fed view to drive peso-dollar trading this week

December 8, 2024 | 9:00 pm

THE PESO could move sideways against the dollar this week as the market reacts to key US labor data released on Friday that boosted expectations of another rate cut by the US Federal Reserve this month.

The local unit closed at P57.735 per dollar on Friday, strengthening by 14.5 centavos from its P57.88 finish on Thursday, Bankers Association of the Philippines data showed.

This was the peso’s best finish in more than six weeks or since its P57.59 close on Oct. 21.

Week on week, the peso jumped by 88.5 centavos from its P58.62 finish on Nov. 29.

“The dollar weakened following the release of US initial jobless claims and local inflation,” a trader said by phone on Friday.

Philippine headline inflation picked up to 2.5% in November from 2.3% in October, the government reported last week.

Still, this was slower than the 4.1% print in the same month a year ago and was within the central bank’s 2.2%-3% forecast for the month.

For the first 11 months, headline inflation averaged 3.2% in the 11-month period, a tad faster than the BSP’s 3.1% full-year baseline forecast but well within its 2-4% annual goal.

Meanwhile, the number of Americans filing new applications for unemployment benefits rose slightly in the last week of November, pointing to steadily easing labor market conditions heading into the final stretch of 2024, Reuters reported.

Initial claims for state unemployment benefits rose 9,000 to a seasonally adjusted 224,000 for the week ended Nov. 30, the Labor department said on Thursday. Economists polled by Reuters had forecast 215,000 claims for the latest week.

The data included the Thanksgiving holiday, which could have injected some noise into the report. Claims are entering a period of volatility, which could make it difficult to get a clear picture of the labor market.

The peso also continued to be supported by the seasonal increase in remittances from overseas Filipino workers amid the holidays, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said in a Viber message.

For this week, the trader said the foreign exchange market will react to the US nonfarm payrolls (NFP) data released on Friday.

“Softer NFP figures may encourage dollar selling, while a surprisingly stronger NFP may push the dollar-peso to P58,” the trader said.

The trader sees the peso moving between P57.50 and P58 per dollar this week, while Mr. Ricafort expects it to range from P57.25 to P57.85.

US job growth surged in November after being severely hindered by hurricanes and strikes, but a rise in the unemployment rate to 4.2% pointed to an easing labor market that should allow the Federal Reserve to cut interest rates again this month, Reuters reported.

The labor market’s resilience is driving the economy through strong consumer spending, with the closely watched employment report from the Labor Department on Friday showing solid wage growth last month. The economy created 56,000 more jobs in September and October than previously estimated.

Nonfarm payrolls increased by 227,000 jobs last month after rising by an upwardly revised 36,000 in October, the Labor department’s Bureau of Labor Statistics said. Economists polled by Reuters had forecast payrolls would gain 200,000 jobs following a previously reported rise of 12,000 in October.

Job growth averaged 173,000 per month over the past three months.

Financial markets see a roughly 89% chance of a quarter-percentage-point rate cut at the US central bank’s Dec. 17-18 policy meeting, up from 72% earlier, CME Group’s FedWatch tool showed. The Fed has lowered interest rates by 75 basis points since September, when it launched its easing cycle. Its policy rate is now in the 4.50%-4.75% range, having been hiked by 5.25 percentage points between March 2022 and July 2023. — A.M.C. Sy with Reuters

Stocks may extend climb on BSP rate cut hopes

December 8, 2024 | 9:00 pm

PHILIPPINE STOCKS could climb further this week on hopes of further monetary easing by the Bangko Sentral ng Pilipinas (BSP) as the November inflation print was within market expectations.

On Friday, the Philippine Stock Exchange index (PSEi) rose by 0.57% or 38.37 points to close at 6,729.14, while the broader all shares index increased by 0.36% or 13.79 points to 3,790.68.

Week on week, the PSEi climbed by 1.74% or 115.29 points from the 6,613.85 close on Nov. 29.

“The local bourse shrugged off the slight uptick in domestic inflation, posting gains to end the week,” online brokerage firm 2TradeAsia.com said in a market note.

Philippine headline inflation picked up to 2.5% year on year in November from 2.3% in October, the government reported last week.

Still, this was slower than 4.1% in the same month a year ago and was within the BSP’s 2.2%-3% forecast for the month. The November print also matched the median estimate in a BusinessWorld poll of 15 analysts.

For this week, Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a Viber message that the market could continue to rise amid improving sentiment, placing the PSEi’s support at 6,700-6,800 and resistance at 7,000.

“The market could move with an upward bias amid hopes that the BSP will further ease monetary policy. This comes as inflation is seen to remain under control based on the latest figures,” he said.

The Monetary Board will hold its last review for the year on Dec. 19. The BSP has cut benchmark borrowing costs by a total of 50 basis points (bps) since kicking off its easing cycle in August, bringing its policy rate to 6%.

“In addition, the local currency’s appreciation against the US dollar, if it continues, may give the market a boost,” Mr. Tantiangco added.

On Friday, the peso closed at P57.735 per dollar, strengthening by 14.5 centavos from its P57.88 finish on Tuesday, Bankers Association of the Philippines data showed. This was the local unit’s best finish in more than six weeks or since its P57.59 close on Oct. 21.

“Investors are also expected to watch out for the US’ upcoming November inflation numbers as these would give clues on the Federal Reserve’s policy outlook,” Mr. Tantiangco said. US consumer and producer inflation data will be released on Dec. 11 (Wednesday) and Dec. 12 (Thursday), respectively.

The Fed will hold its last policy meeting for the year on Dec. 17-18. Markets widely expect the US central bank to cut rates by 25 bps next week.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort and 2TradeAsia.com put the PSEi’s support at 6,500 and resistance at 7,000.

“Local equities, fundamentally, are in a position of strength relative to counterparts in developed markets, common headwinds notwithstanding… Forces in the short-run are likely to maintain pressure on the PSEi, which may camp south of 7,000 until yearend,” 2TradeAsia.com said. — Revin Mikhael D. Ochave

Japan trade agreement overdue for review, trade department says

December 8, 2024 | 8:42 pm

THE Department of Trade and Industry (DTI) said that the Japan-Philippines Economic Partnership Agreement (JPEPA) should be reviewed to account for developments in digital trade, among others.

At the National Exporters Weeks, Undersecretary Allan B. Gepty said an upgraded JPEPA may include rules and arrangements necessary to establish a resilient supply chain.

“(It may also) include a comprehensive chapter on digital trade, intellectual property, sustainable development, and even a forward-looking economic cooperation arrangement focused on innovation and technological development,” he added.

The JPEPA is the Philippines’ first bilateral free trade agreement (FTA), which entered into force in December 2008.

It covers trade goods, rules of origin, customs procedures, investment, movement of natural persons, intellectual property, and government procurement.

“Notably, this FTA has no provisions or elements relating to sustainable development, environment, e-commerce, or even the circular economy, which are critical in promoting sustainable trade and economic empowerment for our stakeholders,” he said.

“We can say that JPEPA is more focused on market access and the conventional rules and disciplines in conducting trade and investment,” he added.

Japan is the country’s third-largest export market and the third-largest source of imports. Total trade between the two countries amounted to $20.7 billion last year.

The Philippines’ top exports to Japan are digital monolithic integrated circuits, ignition wiring sets, and other wiring sets for vehicles, aircraft, or ships, bananas, nickel oxide sinters, and other vessels for the transport of goods and persons.

“Clearly, trade with Japan is anchored heavily on electronics and semiconductors. If the Philippines and Japan want to promote sustainable trade, I would say that it is imperative that we strengthen the supply chain for these key products,” he said.

“This means Japan should invest more in these sectors, especially product or design development and the production of high-technology-based products, especially as the Philippines positions itself now as a hub for smart and sustainable manufacturing,” he added.

Mr. Gepty said that the review of the JPEPA has been long overdue. Under the agreement, it was to have been reviewed after five years of implementation.

“I would like to stress that sustainability is not just about the environment. People also matter; thus, cooperation on talent and skills development means a forward-looking approach to sustainability,” he said.

“This is what the Philippines and Japan must do moving forward. This arrangement must be entrenched in an FTA or other international agreement. In fact, this will also complement Japan’s co-creation vision in Asia,” he added.

He said that the Philippines and Japan can also partner in food security and agriculture, particularly in developing Philippine agriculture to complement Japan’s own food security program.

“With the country’s proximity to Japan and through our strong collaboration, we can upgrade our JPEPA to include not just enhanced market access but clear, more transparent, and simplified sanitary and phytosanitary standards,” he said.

This will allow the two countries to trade agricultural products with ease, which may encourage more investment in agriculture.

The Philippines supplies agricultural products like bananas and other tropical fruits that are part of the basic diet of most Japanese.

Philippine exports of bananas to Japan currently enjoy tariff reductions in Japan of 8% and 18%, depending on the season.

“We want to reduce it to zero. We want to negotiate for its reduction. So that is what we are working on,” he said. — Justine Irish D. Tabile

‘Significant progress’ in Philippine road to nuclear energy

December 8, 2024 | 8:41 pm

REUTERS

THE PHILIPPINES has made significant progress in its pursuit of nuclear energy, though further work is needed on its strategy, according to an assessment issued by the International Atomic Energy Agency (IAEA).

The IAEA concluded its Follow-Up Integrated Nuclear Infrastructure Review (INIR) on Dec. 6 at the request of the government.

In a statement last week, the IAEA said that the INIR mission team noted that the Philippines has made “significant progress to address most of the recommendations and suggestions and has adopted a national position for a nuclear energy program.”

In 2022, an executive order outlined the government’s support for the inclusion of nuclear energy in the power mix.

In September, the Department of Energy (DoE) unveiled a nuclear energy roadmap, which calls for commercially operational nuclear power plants by 2032, with at least 1,200 megawatts (MW) of capacity, gradually increasing to 4,800 MW by 2050.

The mission also noted the drafting of a comprehensive law, and strengthened capacities in human resource development, regulatory frameworks, radiation protection, radioactive waste management, and emergency preparedness and response.

“I thank the IAEA for its invaluable partnership and for conducting this objective and professional review, which underscores the Philippines’ commitment to adhering to global standards and best practices in nuclear infrastructure development,” Energy Secretary Raphael P.M. Lotilla said in a statement on Sunday.

“This collaboration strengthens our ability to adopt nuclear energy responsibly alongside renewable energy sources, driving us closer to our goal of inclusive and sustainable economic growth,” he added.

The mission team indicated, however, that further work is needed to complete necessary studies for future activities related to the electrical grid, industrial involvement, and national legislation.

In a separate statement on Sunday, the DoE said that the Philippines and the US have finalized the Guiding Document, which establishes a framework for regular and structured engagement in the energy sector.

“This document is designed to facilitate meaningful collaboration and ensure the effective development and implementation of joint programs,” the DoE said.

The two countries convened their second Energy Policy Dialogue last week, reinforcing their shared commitment to advancing energy security, expanding access, and accelerating the clean energy transition.

“At the core of these discussions is a shared focus on advancing the deployment of renewable energy technologies to reduce carbon emissions, modernizing and expanding energy transmission infrastructure to meet growing demand, and exploring nuclear energy as a potential option for electricity generation,” the DoE said.

The dialogue also tackled the need for access to financing, innovative technology, and resilient infrastructure to support a “just energy transition.” — Sheldeen Joy Talavera

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