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Treasury raises P15B from 35-day papers

THE GOVERNMENT fully awarded the 35-day Treasury bills (T-bills) it auctioned off on Tuesday as rates moved sideways.

The Bureau of the Treasury (BTr) raised P15 billion as planned via 35-day T-bills yesterday out of total tenders worth P34.39 billion or more than two times the amount on offer.

The 35-day papers fetched an average rate of 2.065%, up by 4.1 basis points (bps) from the 2.024% yield in the previous auction on May 19.

National Treasurer Rosalia V. de Leon said rates of government securities have gone down to settle within the area of the headline inflation rate as seen in previous auctions, with investors starting to look at the “intermediate part of the curve.”

“Rates to be within vicinity of inflation. We see now appetite for intermediate part of curve,” Ms. De Leon told reporters via Viber.

A bond trader said lower demand during yesterday’s auction compared to bids for longer tenors was expected as market participants are in search of higher yields.

On Monday, total bids for the offer of three-month, six-month and one-year T-bills hit P83.995 billion, making it more than four times oversubscribed.

The bond trader added that demand for the 35-day papers are lower since rates have started settling within the projected headline inflation rate.

“As we expected, the demand for this is lower compared to its longer counterparts first because of the yield, then second is the yield compared to the expected inflation number,” the trader said via Viber.

The Bangko Sentral ng Pilipinas (BSP) last week forecasted that headline inflation in May likely settled between 1.9% and 2.7%, giving a point projection of 2.3%.

The estimate range is still well within the BSP’s 2-4% target for 2020.

If realized, a 2.3% projection for May will be faster than the 2.2% logged the month prior but slower than the 3.2% recorded in the same month last year.

Latest inflation data will be reported on June 5.

On Monday, the BTr raised P26 billion in T-bills and another P10 billion in one-year securities via the tap facility.

The government plans to borrow P170 billion from the local market in June: P110 billion via weekly T-bill auctions and the remaining P60 billion in Treasury bonds to be offered fortnightly. — B.M. Laforga

Philippines slips in business environment resilience ranking

Philippines slips in business environment resilience ranking

How PSEi member stocks performed — June 2, 2020

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


Retreat from global trade seen after pandemic — WB

THE World Bank (WB) said the less immediately obvious consequences of the pandemic include the erosion of human capital as millions lose their jobs as well as the contraction of supply chains as troubled firms withdraw from participating in the global economy.

In a chapter of its Global Economic Prospects report called Lasting Scars of the COVID-19 Pandemic, the World Bank said emerging market and developing economies (EMDEs) will likely experience “deep recessions.”

“Beyond its short-term impact, deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment; erosion of the human capital of the unemployed; and a retreat from global trade and supply linkages,” according to part of the report published Wednesday.

The World Bank said EMDEs falling into recession this year while also experiencing financial crises will likely experience “larger long-term potential output losses” than recessions that are not experiencing financial crises.

Citing previous cases, the World Bank said, “Five years after a recession-cum-crisis, potential output in EMDEs remained almost 8% below baseline — more than the 6% potential output loss following the average recession,” it said.

The full report is due for release on June 8, during which the World Bank will also update its forecast for the global economy.

The World Bank also expects severe impacts on energy exporters because of plunging oil prices.

“The likely long-term consequences of the pandemic highlight the need to forcefully undertake comprehensive reform programs to improve the fundamental drivers of economic growth,” it said.

It said EMDEs that have wide current account or budget deficits, or heavy debt burdens are “particularly vulnerable” to a sharp rise in borrowing costs or may have limited access to financing.

This kind of “financial vulnerability” could constrain the economy’s capacity to deliver effective monetary and fiscal stimulus.

World Bank Lead Economist and Program Leader for Brunei, Malaysia, the Philippines and Thailand Souleymane Coulibaly last month said they are currently revising the economic forecast for the Philippines for 2020.

“It will not be the six percent growth. Maybe it will be zero this year, or even minus one or two this year. But next year, we will see resumption in the economy,” Mr. Coulibaly said during the BUSINESSWORLD INSIGHTS online forum.

In its Regional Economic Update report published in April, the World Bank downgraded its earlier 6.1% growth forecast for the Philippine economy and gave a growth forecast range of 3% to -0.5%, depending on the extent of the impact of the COVID-19 outbreak and the enhanced community quarantine (ECQ) in Luzon. — B.M. Laforga

Peso weakens on US-China trade war

peso
PESO ended trading at P50.34 per dollar on Tuesday. — BW FILE PHOTO

THE PESO depreciated against the greenback yesterday as trade tensions between Washington and Beijing continued to escalate.

The local unit ended trading at P50.34 per dollar on Tuesday, shedding two centavos from its P50.32 close on Monday, according to data from the Bankers Association of the Philippines.

The peso opened the session at P50.31 per dollar. Its weakest was at P50.41 while its strongest was at P50.28 against the greenback.

Dollars traded rose to $877.1 million from the $699.75 million on Tuesday.

A trader said the local unit’s depreciation came after continued trade tensions between the US and China.

“The peso weakened slightly on news that China might consider halting purchases of US agricultural products,” the trader said in an e-mail.

Some sources said that China is ready to suspend imports of American agricultural products if the US pushes for further actions related to what is happening in Hong Kong, according to Reuters.

However, at least three cargoes totaling 180,000 tons of US soybeans were purchased by state-owned Chinese firms on Monday.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the slightly weaker peso came after the latest data on the country’s balance of payments (BoP) position.

“The peso exchange rate closed slightly weaker after the lower BoP surplus data,” Mr. Ricafort said in a text message.

Data from the central bank showed the country’s BoP position settled at a surplus for the second straight month at $448 million in March. This was, however, smaller than the $627-million surfeit seen a year ago and the $839 million recorded in February.

“The BoP surplus in March 2020 reflected mainly the inflows arising from the BSP’s foreign exchange operations as well as income from its investments abroad, and the national government’s foreign currency deposits with the BSP,” the central bank said on Tuesday.

The trader expects the peso to move between the P50.30 to P50.50 band this Wednesday, while Mr. Ricafort sees the local unit playing around the P50.15 to P50.40 levels. — L.W.T. Noble with Reuters

PSEi back at 6,000 level on positive sentiment

By Denise A. Valdez, Reporter

THE MAIN INDEX returned to the 6,000 level on Tuesday as investors sustained their optimism over the Philippine economy’s revival.

The benchmark Philippine Stock Exchange index (PSEi) closed yesterday’s trading session at 6,025.17, up 95 points or 1.60% from a day ago. The broader all shares index gained 41.50 points or 1.18% to close at 3,551.72.

“The PSEi broke through the 6,000 level after retracing modest losses earlier in the session, as the potential for an economic rebound overshadowed strife in regional economies that has sparked chaos and curfews especially in the United States,” Luis A. Limlingan, head of sales at Regina Capital Development Corp., said in a mobile message.

The PSEi’s finish yesterday is its best since March when the world was at the height of announcing lockdowns due to the coronavirus disease 2019 (COVID-19) pandemic. From ending at 6,353.26 on March 11, the main index fell to 5,736.27 on March 12 and hit a historic low of 4,623.42 on March 19.

With the Philippine government continuing to favor a relaxed lockdown to support the economy’s recovery, investors flocked to the local bourse with optimism, opposite of the distress in other countries amid the lingering effects of the pandemic.

“Investors also monitored Sino-American trade tensions and efforts in the US, and much of the world, to overcome the COVID-19 pandemic… The (Chinese) government told major state-run agricultural companies to pause purchases of some goods including soybeans as it evaluates the escalation of tensions with the US over Hong Kong,” Mr. Limlingan said.

Diversified Securities, Inc. Equity Trader Aniceto K. Pangan noted the same push from foreign investors. After nearly 50 days of recording net outflows, foreign investors have been net buyers for the third straight day on Tuesday, increasing net inflows to P1.13 billion from P268.58 million a day ago.

“With the Philippines’ fundamentals intact, it’s expected to be among the economies around the world to be resilient under these circumstances and make an economic rebound thereafter,” Mr. Pangan said via text.

All sectoral indices closed the session with gains: holding firms rose 141.38 points or 2.34% to 6,161.15; property improved 49.95 points or 1.68% to 3,022.73; industrials picked up 94.31 points or 1.25% to 7,590.34; financials added 13.18 points or 1.1% to 1,205.48; mining and oil increased 29.14 points or 0.65% to 4,466.71; and services climbed 6.53 points or 0.48% to 1,359.64.

Value turnover grew to P7.29 billion on Tuesday from P6.98 billion the previous day. Some 1.01 billion issues switched hands.

Advancers outnumbered decliners, 117 against 61, while 43 names ended unchanged.

Domestic flights allowed under eased lockdown

By Gillian M. Cortez and Jenina P. Ibanez, Reporters

DOMESTIC flights between Philippine provinces under a relaxed lockdown may resume, the government said on Tuesday as airlines prepare to fly again after a global coronavirus pandemic halted their operations more than two months ago.

An inter-agency task force made up of Cabinet secretaries approved commercial flights between regions under a general community quarantine with conditions, Transportation Secretary Arthur Tugade told a news briefing.

“Flights for leisure are prohibited,” he said in Filipino. The flights must also be approved by local governments, he added.

Meanwhile, flag carrier Philippine Airlines (PAL) and rival Cebu Pacific will resume operations with limited capacity on Wednesday. AirAsia in a statement said it would resume flights on June 5.

PAL would offer limited domestic flights, spokeswoman Cielo C. Villaluna said at a separate briefing.

“The Inter-Agency Task Force yesterday allowed us to fly to Cebu, Davao, Dumaguete and Cagayan de Oro,” she said in Filipino.

Cebu Pacific spokeswoman Charo L. Logamon urged travelers to arrive at airports earlier because health checks mean it would take longer to process passengers.

“Because we have physical distancing, check-in and boarding will take longer so passengers must come earlier,” she said at the same briefing. Domestic travelers should be at the airport at least three hours before their flights, she added.

The Department of Health reported 359 new infections yesterday, bringing the total to 18,997.

Of the new cases, 176 involved test results released in the past three days, while 184 were released four days ago or more, it said in a bulletin.

The death toll rose to 966 after six more patients died. Eighty-four more patients have gotten well, bringing the total recoveries to 4,063.

Meanwhile, the Department of Tourism (DoT) said it would prioritize promotion of domestic land travel as it tries to recover losses from a 62% decline in foreign tourist arrivals.

International arrivals plunged to 1.3 million from January to April from 3.4 million a year earlier, Tourism Secretary Bernadette Romulo-Puyat said at a separate online news briefing yesterday.

Tourist shops with a certification from the agency may operate in places under a general community quarantine. Hotels and in-house food and take-out operations must get the permit.

Mr. Puyat said local governments were not yet ready to accept tourists. “Some local government units are still hesitant to open,” she said. “We still have to restore the confidence of the tourists.”

The Tourism department said it was in talks with local governments in La Union, Baler, Pampanga and Batangas to boost land travel.

DoT and the Trade department have adopted the so-called Safe Pass digital solution that helps businesses plan spaces for physical distancing, enforce health protocols and manage contact tracing.

The Tourism department has helped almost 37,000 stranded foreign and domestic tourists with sweeper and commercial flights and accommodations, it said.

President Rodrigo R. Duterte locked down the entire Luzon island in mid-March, suspending work, classes and public transportation to contain the pandemic. People should stay home except to buy food and other basic goods, he said.

He extended the lockdown for the island twice and thrice for Manila and nearby cities where COVID-19 infections have been mostly concentrated. The lockdown in the capital region was relaxed starting June 1. — with Vann Marlo M. Villegas

Philippines rethinks military break-off with of US

PHILIPPINE President Rodrigo R. Duterte has suspended the termination of a military agreement with the United States on the deployment of troops for war games “in light of political and other developments in the region,” according to its Department of Foreign Affairs (DFA).

The suspension of the 21-year-old visiting forces agreement (VFA) is effective for half a year and may be extended by another six months, DFA told the US Embassy in a letter dated June 1.

The agency said it “avails itself of this opportunity to renew to the embassy of the United States of America the assurance of its highest consideration,” according to the letter.

“The United States welcomes the Philippine government’s decision,” the US Embassy said in an e-mailed statement. “Our long-standing alliance has benefited both countries, and we look forward to continued close security and defense cooperation with the Philippines.”

The country’s diplomats earlier advised Mr. Duterte about the risks of ending the military pact. The tough-talking Philippine leader on Feb. 11 announced his decision to end the deal after the US visa of Senator Ronald M. de la Rosa, his former police chief, was canceled.

Lawmakers earlier asked the Supreme Court to issue jurisprudence on whether the President can end a treaty without Senate concurrence.

Mr. Duterte’s decision, sparked by the revocation of a US visa held by a former police chief who led his bloody war on drugs, was supposed to take effect in August.

Mr. Duterte’s decision could have complicated US military interests in the broader Asia-Pacific region as China’s ambitions rise.

Some Filipino senators have sought to block the move, arguing Mr. Duterte had no right to unilaterally scrap international pacts the country’s Senate had ratified.

The VFA is important to the overall US-Philippine alliance and sets out rules for US soldiers operating in the Philippines, a former US colony.

Washington has called the relationship “ironclad,” despite Duterte’s complaints that include allegations of US hypocrisy and ill treatment.

Ending the VFA complicates Washington’s efforts to maintain an Asia-Pacific troop presence amid friction over the presence of US personnel in Japan and South Korea and security concerns about China and North Korea.

Some lawmakers in the Philippines are concerned that without the VFA, two other pacts that make up the long-standing US alliance with Manila would be irrelevant, namely the 2014 Enhanced Defense Cooperation Agreement made under the Obama administration, and a 1951 Mutual Defence Treaty.

Salvador S. Panelo, Mr. Duterte’s former spokesman, had called the VFA a one-sided deal that only benefits the US. — Norman P. Aquino and Charmaine A. Tadalan

OFWs coming home fewer than originally estimated — DoLE

MORE than 16,000 overseas Filipino workers (OFW) are expected to come home this month amid a coronavirus pandemic, less than half of the original estimate after many of them failed to get cleared, according to the Labor department.

Labor Secretary Silvestre H. Bello III on Friday said 42,000 Filipino workers from overseas were expected to return. But many of these Filipino workers had not completed their exit requirements and clearances, he told a news briefing on Tuesday.

Mr. Bello called on the Transportation and Tourism departments to help provide vehicles and lodging for the 16,679 returning Filipino workers.

Returning workers must be tested for the COVID-19 virus and undergo a 14-day quarantine.

More than 300,000 overseas Filipino workers have been displaced by a coronavirus pandemic that has sickened 6.4 million and killed about 378,000 people globally, Mr. Bello said.

He said 343,551 people have been affected by the global health crisis, with 2,390 of them testing positive for the virus. Seventy-two overseas Filipino have died from the virus so far, he added.

More than 200,000 mostly in the US and Europe don’t want to come home, Mr. Bello said. — Gillian M. Cortez

High tribunal asked to void Luzon lockdown

A LAWYER has asked the Supreme Court to annul a law giving President Rodrigo R. Duterte special powers to fight a coronavirus pandemic, and a couple of proclamations declaring a public health emergency and imposing a lockdown on the entire Luzon island.

In a nine-page pleading, lawyer Jaime O. Ibañez said the law, which took effect on March 24, gave the President excessive powers in responding to the health crisis.

He also accused Mr. Duterte of usurping legislative power when he locked down Luzon in mid-March by suspending work, classes and public transportation to contain the pandemic.

The lockdown in much of the country including Manila, the capital and nearby cities has since been relaxed, with some businesses allowed to reopen with limited workforce.

“The President is merely tasked to execute the law,” Mr. Ibañez said. “Hence it is an undue delegation of legislative power and usurpation of the same when the President issued Proclamation Nos. 929 and 922,” he added.

Proclamation 929 placed the country under state of calamity and locked down Luzon, while Proclamation 922 declared a state of public health emergency.

The plaintiff also asked the tribunal to stop an inter-agency task made up of Cabinet secretaries from enforcing community quarantines “for being invalid delegated legislative authority.”

Mr. Ibañez said the enhanced community quarantine had “wrought havoc on the socioeconomic equilibrium,” forcing millions of Filipinos to starve and lose their jobs.

He also said that the guidelines violated the equal protection clause when everybody was quarantined, including healthy people. The quarantine violated people’s right to liberty and property, he added.

“Putting this country into community quarantine poses a continuing threat to one’s right to life (including the right to work), to liberty and to property,” according to a copy of the petition. — Vann Marlo M. Villegas

Senate says anti-terror bill ‘good as passed’ but House still deliberating

THE proposed law that expands the definition of terrorist acts is as good as passed after President Rodrigo R. Duterte certified the bill as an urgent measure, senators said on Tuesday.

The bill was approved by the Senate in February and is pending second reading at the House of Representatives.

“It’s as good as passed,” Senate President Vicente C. Sotto III told reporters over phone message on Tuesday.

The President’s certification will allow the House to dispense with the three-day interval in passing bills on second and third reading.

House representatives, however, were still steeped in plenary debate as of Tuesday evening for the second reading.

Congress’ first regular session closes on June 3. It will reopen on July 27, with the President delivering his 5th State of the Nation Address.

“Once the House of Representatives approves the adopted Senate version of the Anti-Terror bill on third and final reading, they will transmit it to us for enrollment and subsequent submission to the President,” Senator Panfilo M. Lacson said in a statement.

OPPOSITION
Albay Rep. Edcel C. Lagman warned that the expanded definition of terrorism encompasses perceived and suspected terror acts, which may include political dissent.

“Redefining the crime of terrorism by removing the inculpatory purpose of terrorism ‘to coerce the government to give in to an unlawful demand,’ thus making prosecution and conviction easier,” he said in a statement.

The proposed law will also allow the military to access data and information as well as intercept private communications of suspects under surveillance and detain them for 14 days without warrant.

The National Union of Peoples’ Lawyers also reiterated its opposition and called on lawmakers to stop the bill’s passage saying it will serve only the “climate of impunity,” validate attacks against activists and ordinary citizens.

In a statement, the lawyers’ group said the bill “unduly expands” the definition of terrorism,” and potentially criminalizes as “terrorist” the exercises of free speech.

“This proposed law, we pointed out, would undermine our democracy and either threaten, restrain or discourage the people’s right to organize, criticize the government, protest and demand for a redress of their grievances,” the group said.

“The bill, should it become law, will only serve to worsen the climate of impunity that has made the Philippines fertile ground for extra-judicial killings, illegal arrests, and crackdowns against activists and progressive organizations and even ordinary citizens,” they said.

The Concerned Lawyers for Civil Liberties also said the bill will be used by the administration “to eliminate dissent and opposition, at whatever cost and manner,” adding that it contains unconstitutional provisions.

Mr. Lacson, on the other hand, said the bill has enough safeguards for human rights.

The bill, as passed by the Senate, expands the coverage of terror acts to include attacks that cause death or serious injury, extensive damage to property and manufacture, possession, acquisition, transport and supply of weapons or explosives.

The law only penalizes the commission of the actual terrorism, conspiracy to commit terrorism, being an accomplice and accessory to the crime.

The presidential palace also defended the bill saying it is “not draconian” and is patterned after legislation in other countries.

Wala naman draconian na provision diyan, lahat po ng provision diyan ay ibinase rin natin sa mga batas na mga iba’t ibang bansa na mas epektibo po ang kanilang pagtrato dito sa mga terorista (There are no draconian provisions there, all the provisions there are based on laws in various countries with more effective ways of dealing with terrorists),” Palace Spokesperson Harry L. Roque said in a briefing on Tuesday.

He also said the administration won’t intervene with lawmakers on the bill’s passage.–Charmaine A. Tadalan, Genshen L. Espedido, Vann Marlo M. Villegas and Gillian M. Cortez

#COVID-19 Regional Updates (06/02/20)

Senators demand clearer public transport plan as lockdown eases

SENATORS on Tuesday asked the Department of Transportation (DoTr) to provide clearer plans for the public after the easing of quarantine restrictions on June 1 left commuters in the capital in a crisis. Senator Ma. Lourdes Nancy S. Binay slammed the DoTr for failing to plan accordingly for the expected number of people reporting back to work. “DoTr knew that Metro Manila and the rest of the regions will soon be transitioning to the new normal. They knew that 30% of those in NCR (National Capital Region) will start going to work by June 1,” she said in a statement. She also hit the department for deploying a truck as free transport for commuters stuck on the road, which compromised health and distancing protocols. Senator Risa N. Hontiveros-Baraquel, for her part, recommended that the government adopt a service contracting program in partnership with the private transportation sector. “Wala ring magagawa ang pag-limit sa pasahero sa mga tren at bus, kung sa kalsada pa lang ay exposed na sila sa health risks habang sila ay nasa mahaba, dikit-dikit at matao na pila (Limiting passengers in trains and buses would be pointless if people are exposed to the risks while waiting on the road, or in line),” Ms. Baraquel pointed out. Under the service contracting scheme, the government will pay operators and drivers per kilometer of their routes to transport people. — Charmaine A. Tadalan

Davao Oriental hospital doctor positive for COVID-19; 58 nurses, medical staff quarantined

A DOCTOR at the Davao Oriental Provincial Medical Center is the latest coronavirus case in the province, and 58 of the hospital staff, mostly nurses, have been identified among his direct contacts and been placed under quarantine. In a statement, the provincial government said the 32-year old doctor for internal medicine was also rendering duty at a dialysis facility in Davao City. He has previously tested negative for the coronavirus disease 2019 (COVID-19) based on a May 14 result, but was subsequently subjected to another round of testing following protocols set by the province for all frontline workers. Apart from the medical staff under quarantine, seven patients who have received direct care from the doctor have also been isolated at the hospital. Contact tracing is ongoing for another seven of his patients who have been discharged. “(T)he contacts of the COVID-19 positive case will be swab tested between June 2-4, 2020, given that the seventh to tenth day from the last exposure is the ideal time to get more accurate results. However, those who are already exhibiting symptoms have to be swabbed immediately,” the provincial government said. The hospital has also undergone disinfection measures. Davao Oriental had three cases, all of whom recovered, until May 28. It recorded 12 new cases on May 29, with eight returning overseas workers and four locally-stranded residents.

BAGUIO
Baguio, meanwhile, reported on Tuesday that a nurse at the Baguio General Hospital and Medical Center tested positive for the disease, the city’s 35th active case. The 38-year old nurse is now at the hospital’s isolation facility and contact tracing as well as disinfection protocols are being undertaken, according to the city officials. Of the total confirmed cases, 29 have recovered. — MSJ