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AHC launches new brightening line

THE Unilever-owned Korean beauty brand AHC has launched a new line targeted for those who want brighter skin — the line can “improve skin pigmentation and reduce [dark] spots in just four weeks,” it promises in a release.

The new products join the previously available lines from AHC: the anti-aging line 365 and the hydrating Aqualuronic line.

Called Peony Bright, it includes five products — a foam cleanser (P1,699 for 40 ml), a toner (P1,799 for 150 ml), a serum (P2,099 for 140 ml), a spot corrector (P1,700 for 20 ml), and toning up cream (P2,449 for 50 ml).

The latter is a cream that is used at the end of one’s skin care routine (after moisturizers, if you use them) and is meant to brighten and even out one’s skin tone before applying makeup.

The line caters to people with oily or combination skin with a focus on problematic skin because of the spot corrector.

AHC — a brand that has gained popularity due to its availability in high-end aesthetic clinics in South Korea — uses pink peony flowers from Gangwon province, “the cleanest region in Korea that is famed for its pristine beauty,” according to the release.

The flowers are picked, aged, and fermented before the extraction of the active ingredients meant to brighten the skin.

AHC is available in several online stores nationwide. The prices stated are from Watsons.com.ph.

How to stay healthy according to Watsons

THE COVID-19 pandemic has changed how the world views health, and now, more than ever, it is important to keep healthy — and health and beauty chain Watsons Philippines has a few suggestions on how to do this.

“Our global health situation has affected us critically, and required us all to make well-being a top priority,” the company said in a release.

At the top of the list is to keep being active — even when indoors — for at least 30 minutes to an hour four times a week as regular exercise can “improve mood, help boost health of the internal organs, and strengthen the immune system.”

Eating healthy is also important and Watsons recommends eating more vegetables and incorporating immunity-boosting spices like garlic and ginger into dishes. Tea works too and Watsons is recommending the Nutrabliss tea line. According to its website, it currently has two variants: the Green Tea blend and the Green Tea and Cherry Blend. Both are priced at P279 for 16 tea bags per box.

Getting enough sleep also improves one’s heath, so does taking vitamins and supplements. Watsons is recommending its Watsons Generics Ascorbic Acid (P2.25 per tablet) alongside multivitamins like Conzace Soft Gel capsules (P12.50 each) which contains zinc and vitamins A, C, and E to “help boost immunity and promote healthy hair and skin,” according to the release. Meanwhile, Myra E 400IU (P12.25 per capsule) has vitamin E to “help fight cell damage.”

Kids can also take Growee Syrup (P171 for 120 ml) and Cherifer PGM (P191 for 120 ml).

One can also opt to use supplements to top up their health but consult your doctor first to see if you need supplements and which supplements to use.

The products can be bought online via Watsons.com.ph

Q1 farm, fishery sales rise by 12%, buck overall export dip

EXPORTS of agricultural and fisheries products rose 12% to $1.31 billion in the first quarter, the Department of Agriculture (DA) said, citing data from the Philippine Statistics Authority.

“This is a complete opposite of the total Philippine exports during the period, which dropped by 5.16% to $25.73 billion,” Agriculture Secretary William D. Dar said.

The largest agri-fishery export earners were banana, coconut oil, canned tuna, fresh or dried pineapples, desiccated coconut, other prepared fruits such as banana chips, carrageenan, prepared or preserved pineapples, and other cigarettes containing tobacco.

Banana was the top farm export commodity in terms of value, at over $489 million shipped out during the first quarter, followed by coconut oil, which rose 5.4% year on year to $232 million.

“Banana shipments bounced back from pre-enhanced community quarantine (ECQ) levels, although with minimal growth at 1.74%, due to the increase in buying prices of the fruit bound for China,” the DA said.

Exports of shrimp and prawn fell 17.2% to $77 million.

The DA said the agri-fishery sector was unaffected by the outbreak of coronavirus disease 2019 (COVID-19) during the period, as the enhanced community quarantine was only enforced during the last two weeks of the first quarter.

“The country’s major trading partners like Japan, China, South Korea and the European Union had not yet imposed import restriction policies at that time,” the DA said.

The DA said that it will push agriculture exports in the following months as it views the sector as a vital foreign exchange earner with the ability to provide employment to a large portion of the population.

“Agri-fishery exports will continue to play a major part as the country progresses to the “new normal” on the heels of the COVID-19 pandemic,” Mr. Dar said. — Revin Mikhael D. Ochave

Pangilinan sets sights on agriculture sector

BUSINESSMAN Manuel V. Pangilinan is exploring opportunities in agriculture as he expects the sector to play a bigger role in the country’s food supply chain.

In Friday night’s episode of The Chiefs, Mr. Pangilinan, who leads the so-called MVP Group of Companies, said he is looking to engage this week with an Israeli group that operates greenhouse facilities.

“Apparently there is an existing greenhouse operation run by Israelis, an Israeli group. So I’m meeting them next week. We should get into that situation,” he said Friday.

He noted he has been talking with Indonesian businessman Anthoni Salim about the latter’s greenhouse property in Batam Island, Indonesia. Mr. Pangilinan said Mr. Salim’s greenhouse operations in Batam Island is being used for planting vegetables that are exported to countries like Singapore.

Sabi ko [I said], ‘That’s a very intriguing thought, because why can’t we do it here?’… I called him back, ‘Can we see the template of what you do? Because we want to replicate it here.’ Sabi niya [He said], ‘Sure’,” Mr. Pangilinan recalled from his talks with Mr. Salim.

Mr. Salim is the chairman of Hong Kong-based First Pacific Co. Ltd., which controls the three Philippine firms in the MVP Group: Metro Pacific Investments Corp., PLDT Inc., and Philex Mining Corp.

Mr. Pangilinan noted his group owns a 20-hectare property in Cavite and a 27-hectare property in Bulacan, which may be used for the agriculture venture.

The Filipino businessman said he wants to have a clearer picture of what the country’s supply chain looks like and where raw materials are sourced. He mentioned talking to economists from the University of the Philippines to draw up a supply chain blueprint of the country.

“We need to understand where these raw materials, including pharmacy, are coming from. So in a situation like this, we can identify where we can substitute the current supply chain that we have from abroad,” Mr. Pangilinan said.

He said he is taking cues from Socioeconomic Planning Acting Secretary Karl Kendrick T. Chua on which industries would thrive in the new normal. Some of these are agriculture, food production, pharmaceuticals, telemedicine, tele-learning, e-government, e-work, e-commerce and smart cities.

“It’s a whole range of possibilities that are emerging from this crisis,” Mr. Pangilinan said, noting these opportunities are attractive to the MVP Group.

The MVP Group currently has businesses in water, power, telecommunications, healthcare, tollways, rail operations, entertainment and media. It recently took interest in logistics and hospitality as well.

Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., maintains interest in BusinessWorld through the Philippine Star Group, which it controls. — Denise A. Valdez

Power cooperatives donate P12M to customers as lockdown subsidy

AN association of electric cooperatives pledged to donate P12.1 million to power utilities operating in the countryside for their electricity subsidies program in aid of poor customers affected by lockdown measures to fight the coronavirus disease 2019 (COVID-19) pandemic.

In a statement over the weekend, One EC Network Foundation, the foundation arm of the Philippine Rural Electric Cooperatives Association (Philreca), said its board of trustees passed in April a resolution donating P100,000 to each electric cooperative across the country.

Lately, all 121 rural cooperatives committed to cover the cost of electricity of their poor customers with at least 20 kilowatt-hours (kWh) of consumption, or the so-called lifeline consumers.

They said, however, that they may have different parameters in implementing the subsidies program.

The Pantawid Liwanag is a corporate social responsibility initiative led by Philreca to support over 3 million poor customers affected by the government’s quarantine measures.

To fund this program, the cooperatives have realigned their budgets from canceled activities, such as annual general membership assemblies and district election of directors.

An total of P365 million has already been allocated to implement the program, the group said, which is higher than its estimated P250 million budget.

The electric cooperatives said earlier that they plan to waive their qualified customers’ electricity bills falling from March 26 to April 25. — Adam J. Ang

Hip-hop singer LIRAH releases new love song

FILIPINO hip-hop singer LIRAH has released her newest single, “Bakit Hindi,” today. The song is about facing one’s budding romantic feelings for a friend.

Written during the ongoing COVID-19 quarantine, the song’s official music video, directed and edited by Sean Daniel Pollisco, was shot purely on mobile phone by Pollisco and Andreah Bermudez.

Lirah Bermudez, who goes by the stage name LIRAH, got her start in the industry at the tender age of 13 when she was named runner-up in GMA’s reality singing contest Protégé in 2011.

She also collaborated with rap singer Gloc-9 on the song “Asintado,” in 2014. It was the theme song for the Cinemalaya film entry of the same name, directed by Luisito Ignacio.

Her debut single “Sahod” earned her a Best New Artist nomination from Wave 89.1’s Year-End Awards 2019. “Sahod” was followed by a collaboration with Ex Battalion’s Bosx1ne and Flow G titled “Mahal Mo Rin Ba Ako?” this year. The song has been featured in several playlists including Apple Music’s Absolute OPM.

Bakit Hindi” tells the story of a girl who is uncertain about the feelings her male friend has for her, and she begins to question her own feelings. The track was composed by Lester Vano, who also composed the viral hit “Nadarang” (2017), sung by rapper Shanti Dope. “Bakit Hindi” was produced and arranged by Samuel Mopal of Sandiwa.

LIRAH’s “Bakit Hindi” is available in all digital music stores starting May 8. — ZBC

Gov’t missed irrigation targets despite higher funding — think tank

THE Philippine Institute for Development Studies (PIDS) said that irrigation development targets set by the National Irrigation Authority (NIA) were not accomplished even after recent increases in national budget funding.

Arlene B. Inocencio and Roehlano M. Briones, authors of the study, Irrigation investments: Some recurrent and emerging issues, said that the increase in the budget allocation to P41.7 million in 2018 did not result in the achievement of the irrigation development targets under the Philippine Development Plan (PDP) 2017-2022.

“Despite the increase in allocation, the NIA has (not) met its annual physical targets for new area development,” the authors said.

The PDP 2017-2022 calls for an increase in irrigated land of 7.74% by 2022, thereby facilitating increased production and higher farm incomes.

The PDP 2017-2022 also tasked NIA with investing P71.8 billion for small reservoir irrigation projects and P31.3 billion for the repair and rehabilitation of communal irrigation systems.

The authors concluded that the failure to meet the PDP targets was due to the decline in the capacity of various NIA units due to a rationalization plan which did away with certain capabilities within the agency.

The study also cited typhoons and the rainy seasons, which limited the window for NIA project implementation.

“The trends in actual versus target irrigated areas have been generally below 100%. This means that NIA never got to realize its new target area, except in 1997. Its accomplishment was even 50% or less in 16 years of the 29 year-period data,” the authors said.

They added that the rapid conversion of irrigated land into non-agricultural uses that wasted the irrigation investment allocated to those areas.

Central Luzon saw the most such land conversions of about 12,000 hectares in 2017.

The study noted that while conversions account for only 3% of the total service area since 2010, these might have cost the government about P14 billion.

“With this conversion, the public investment is effectively wasted,” the authors said.

The study also found that while Republic Act 11203 or the Rice Tariffication Law lowered rice prices for consumers, “the Rice Road Map 2030 projects that more farms will no longer be viable and will be getting out of rice production.”

This could result in an increase in investment in non-rice irrigation and crop diversification. However, the authors said that between 2014 and 2017, irrigation for non-rice areas was largely unchanged and remained negligible relative to the total irrigated rice area. — Revin Mikhael D. Ochave

Treasury bills, bonds may fetch lower rates on strong demand

RATES OF government securities to be auctioned off this week will likely decline on strong demand as investors continue to flock to safe-haven assets.

The Bureau of the Treasury (BTr) is planning to borrow P20 billion via Treasury bills (T-bills) on Monday, broken down into P5 billion each in 91- and 182-day papers and P10 billion in 364-day instruments.

On Tuesday, the BTr will offer P30 billion worth of reissued seven-year T-bonds with a remaining life of two years and 11 months.

A bond trader interviewed Friday said rates of T-bills could drop by 10-20 basis points (bps) or more from the previous auction.

The Treasury increased to P24 billion the volume of T-bills it awarded last week from the P20-billion offer as rates declined across-the-board.

Broken down, it raised P7 billion each from the three- and six-month papers, higher than the programmed P5 billion, at lower average rates of 2.479% and 2.625%, respectively.

The government, meanwhile, made a full award of the P10-billion one-year T-bills it offered at an average rate of 2.945%.

For the seven-year bonds, Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort said yields could decline to 3.1-3.2%, while the bond trader sees it ranging from 3.15% to 3.3%.

On Jan. 21, the BTr raised P27.2 billion in seven-year papers out of the P30-billion program as the offer was almost twice oversubscribed. The papers fetched an average rate of 4.732%.

At the secondary market on Friday, the 91-, 182- and 364-day T-bills fetched rates of 2.699%, 2.773% and 2.879%, respectively, while the yield on the seven-year IOUs was at 3.249%.

Mr. Ricafort expects strong demand for safe-haven assets like government securities to continue this week, as observed in previous auctions, which could pull rates down.

“Major catalysts/leads [also] include…stronger peso exchange rate among the best in more than two years that help lower inflation and interest rates [and] recent signals about a possible pause in monetary easing measures for now,” he said in an e-mail over the weekend.

Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno earlier signaled a pause in monetary easing, citing “manageable inflation environment and stable inflation expectations.”

The Monetary Board has aggressively slashed benchmark interest rates delivering a total of 125 bps in reductions to help cushion the blow of coronavirus disease 2019 pandemic on the economy.

The latest reduction was a 50-bp off-cycle cut on April 16, following the 50-bp cut in March and the 25-bp cut in February.

This brought key policy rates to record lows of 2.75% for the overnight reverse repurchase facility and 3.25% and 2.25% for the overnight lending and deposit facilities, respectively.

Mr. Ricafort added that “improvement in market sentiment” recently could help drive yields lower on expectations of easing enhanced community quarantine to a less strict general enhanced community quarantine in some parts of the country as well as the gradual relaxation of lockdown restrictions overseas.

Metro Manila and some high-risk areas have been under strict lockdown for nearly two months as the enhanced community quarantine status was extended until May 15, while some parts of the country have slowly transitioned to relaxed quarantine protocols.

The government is planning to borrow P170 billion from the local market this month, P110 billion via its weekly T-bill auctions and the remaining P60 billion via T-bonds to be offered fortnightly. — Beatrice M. Laforga

PLDT expects opportunities in e-learning, BPOs

TELECOMMUNICATIONS company PLDT Inc. is working to build a “new normal” ecology for the education sector, which is expected to become an “essential” part of its business, company officials said.

It also expects opportunities in the business process outsourcing (BPO) industry, which has been implementing a work-from-home arrangement for its employees since the start of the coronavirus lockdown.

PLDT Chairman, President and Chief Executive Officer Manuel V. Pangilinan said the company is working with the Department of Education (DepEd) and the Commission on Higher Education (CHEd) to address the needs of the education sector in the new setup, which requires connectivity, e-learning platforms, and even cybersecurity.

“[The challenge is to] implement [this] as quickly as we can, not a hundred percent but at least a portion of the students who will have to go digital,” Mr. Pangilinan told reporters in a recent virtual briefing, noting that basic education classes will reopen on Aug. 24.

PLDT Chief Revenue Officer Alfredo S. Panlilio said the company was looking at both online and offline learning systems and the possible involvement of Cignal TV, Inc. in the initiative as it has its own educational program.

“So we are really building up an ecosystem for that. We have been talking about this for the past couple of weeks already,” he said.

PLDT Senior Vice-President and Head of Enterprise Business Groups Juan Victor I. Hernandez noted that there are schools whose learning management systems are housed outside of the Philippines.

“That’s now going to be a challenge because when we implement e-learning, it is now going to be a question whether the students can really access the contents effectively, and that’s where our data center business comes into play,” he added.

Mr. Panlilio said that aside from PLDT’s possible partnership with DepEd on the provision of connectivity, content, and solutions, cybersecurity is also going to be “a very important aspect” of the entire platform that the company will offer to schools.

“That’s something we are developing now, and it is going to be an important part of our business,” he added.

Mr. Hernandez noted that there are about 1.2 million teachers, 80,000 schools, and 32 million students that PLDT needs to help shift.

“Our primary goal is for our kids to study effectively. I mean any revenue opportunities, moving forward, later na ‘yun,” he added.

HOME-BASED BPO EMPLOYEES
Mr. Hernandez said the demand for high-speed internet has been rising since the start of the enhanced community quarantine (ECQ).

“During the first two weeks of the ECQ, the surge in demand happened first because the BPOs were grappling with the fact that they had to enable their work-from-home employees,” he said.

PLDT, according to Mr. Hernandez, has been working closely with BPO companies.

“If we look at the workflows that a BPO company has to do, for them to be able to enable a work-from-home arrangement, maybe wireless internet is not the more dependable [connection]. We are now working with them to look at the fiber connections,” he said.

“From a demand perspective, we’ve seen a surge in demand for fiber. We are very excited when the ECQ will be lifted so we can install all of these lines. If you are going to take a look at the magnitude, we are talking about 1.2 million FTEs (full time employees) nationwide. And if the BPOs will implement that 50% of their workforce will be at home, then you could see the magnitude of the demand that we will be working on,” Mr. Hernandez added. — Arjay L. Balinbin

How will the post-lockdown showroom look like?

IF YOU’VE been paying close attention to the recent deluge of auto news online, beyond the heartening work that many brands are doing amid the quarantine — this clichéd “new normal” that’s anything but — you would have noticed that a number of marques are bracing to open shop as soon as the government gives the thumbs-up. It has indeed happened in a number of areas now under the less severe, so-called “general community quarantine (GCQ).”

For the rest of us still under lock and key, the light at the end of the tunnel is appearing once more. Though the chance for a renewed extension remains very real, business surely can’t wait to get in gear.

As we’ve discussed in this section over the course of the past weeks under lockdown, the auto sector (just like other industries) has been hemorrhaging. Once bustling showrooms and service centers have been rendered into ghost towns, minus the tumbleweed. And really, did we even have the opportunity to rejoice and savor pump prices in free fall because, well, when was the last time you even got behind the wheel — much less had the need to gas up?

But there’s no time to get down on ourselves. Rather, we need to use the time that we’ve got plenty of these days to engage in positivity and apply ourselves on what we can change and improve. That COVID-19 virus is not going away soon, or even next year. So, in the absence of a vaccine, we have to work around it, and apply ourselves toward making sense of that much-ballyhooed “new normal.” Thumbing our noses at the virus and going in denial is not going to help in any way — unless we want more of us to get sick and die.

Last Tuesday, automotive portals Carmudi Philippines and Zigwheels Philippines presented a webinar predicated on the findings of third-party business analytics, research, and advisory firm Praxis Global Alliance. “Preparing for a Post-COVID Future: Impact on Car Buyers” attempted to divine the future of the Philippine automotive scene by looking at the effects of the pandemic, considered by many to be a “black swan” event. The theory developed by essayist, scholar, and statistician Nassim Nicholas Taleb refers to a high-profile yet improbable occurrence — and pandemics obviously fit this description. The webinar ascertained the “economic shock” on the business environment, and looked at the business indicators in China to reckon what lessons or similar trajectory we can expect here. Praxis also interviewed close to half-a-thousand Filipinos looking at buying a vehicle, whether brand-new or used.

Among the findings is that people are now, more than ever, keen on doing digital transactions — from browsing and even buying vehicles. To be clear, this does not sound a death knell for brick-and-mortar dealerships, but this new reality does ask them to take a long hard look at how they should conduct business in this time of COVID-19.

I posed a number of questions to dealer principal Vincent Licup, who is involved with the following brands (in alphabetical order): Chery, Chevy, Foton, MG, and Nissan. He expressed confidence in the industry being able to bounce back. Interestingly, Mr. Licup reported that, contrary to logical assumptions, there were vehicle sales completed during the lockdown period utilizing online channels. Yes, not all has been gloom and doom. “One dealer group even reported almost 4,000 applications online for 50 days,” he shared.

Here’s our exchange with Mr. Licup.

TALK BOX: How will the showroom experience change in dealerships?

Vincent Licup: Showroom visits will be by appointment. Norms like temperature checking, disinfecting, and the wearing of face masks will be strictly followed.

Will there still be room for sales associates?

We are looking at one group on duty per day. Those who are not on duty will work from home online.

Aside from the obvious option to browse online or digitally, how can potential customers choose or examine vehicles?

We recently pioneered a demo through Facebook live featuring one of our dealerships. It garnered 30,000 views in five hours, with 600 inquiries.

What if they want to test-drive?

This will also be for appointment, and with social distancing. We recommend a maximum of three people in the vehicle, including our representative.

How will a typical customer lounge look like?

It’s going to be the same, but there will be disinfectants/sanitizers in every corner. We obviously have to limit the number of people there as well.

Do you see a change in the layout of a typical dealership?

In the future, yes. I think boutique dealerships will be the norm.

How are you aiming to redefine traditional car displays in places like malls?

This is a bitter pill we have to swallow. There will no longer be mall displays until the antivirus or vaccine is developed. We’re looking at rolling out FB live features and YouTube channel demos, at least for our dealer group.

How will vehicle marketing evolve in this new normal?

One hundred percent of it will be done online.

When people go for their PMS or any service for that matter, what changes can they expect — aside from having to schedule an appointment in advance to manage traffic?

We’re even anticipating payments to be done online — through PayPal, GCash, and other gateways. And while we’re promoting physical distancing, customers don’t have to feel like they’re out of touch. We will be installing a CCTV camera in each repair bay so they can monitor the work done on their car from the comforts of their home via an app. Speaking of repair bays, the Philippine Automotive Dealers Association is also suggesting to keep adjacent repair bays vacant for proper distancing of our technicians. There will be one technician per bay as well.

As far as staffing goes, we see that under GCQ, government is mandating that industries or establishments work on skeleton force or even 50% complement. What does that mean for the dealership work force?

As much as possible, we want to keep our existing work force intact. We look at it as another CSR (corporate social responsibility) effort. One idea is to have a three- or even four-tier dismissal time: 3 p.m., 4 p.m., 5 p.m. and 6 p.m.

Palay farmgate price rises 0.71% in third week of April

THE farmgate price of palay, or unmilled rice, rose 0.71% week on week to P18.54 per kilogram in the third week of April, with prices up 0.32% year on year, according to the Philippine Statistics Authority (PSA).

In its weekly update on palay, rice, and corn prices, the PSA said that the average wholesale price of well-milled rice rose 0.08% to P39.10 while the retail price rose 0.5% to P42.33.

The average wholesale price of regular-milled rice rose 0.52% to P35 while the retail price rose 0.48% to P37.58.

The farmgate price of yellow corn grain rose 2.46% to P12.50.

The average wholesale price of yellow corn grain fell 24.27% to P19.13 while the retail price fell 11.71% to P23.29.

The farmgate price of white corn grain rose 1% week on week to P15.10. The average wholesale price of white corn grain fell 24.48% to P18.88 while the retail price fell 11.91% to P27.60. — Revin Mikhael D. Ochave

Yields on gov’t debt drop on inflation, GDP data

YIELDS ON government securities (GS) fell last week following lower April inflation as well as the contraction of the Philippine economy in the first quarter to its worst performance in more than 20 years.

Debt yields, which move opposite to prices, declined 15 basis points (bps) on average week on week, according to the PHP Bloomberg Valuation Service Reference Rates of May 8 published on the Philippine Dealing System’s website.

At the secondary market last Friday, yields were lower than week-ago levels across all tenors, except for 25-year papers which inched up 9 bps to 4.555%.

The 91-day Treasury bill went down 27.5 bps to yield 2.699%. The 182- and 364-day papers likewise declined 29.1 bps and 13.1 bps, respectively, to fetch 2.773% and 2.879%.

At the belly, rates of two-, three-, and four-year bonds went down 15.8 bps (2.919%), 17.9 bps (2.980%), and 19.1 bps (3.045%), respectively. Yields on the five- and seven-year papers likewise dropped 19.3 bps (3.112%) and 16.4 bps (3.249%).

At the long end of the yield curve, rates on the 10- and 20-year notes decreased 14 bps and 2.1 bps, respectively, to 3.350% and 4.300%.

“Local yields fell due to some safe-haven demand ahead of the Philippine inflation and economic growth reports. Later [last] week, these data turned out to be weaker readings which pulled yields further,” a bond trader said in an e-mail last week.

In a separate e-mail interview, Security Bank Corp. First Vice-President and Head of Institutional Sales Carlyn Therese X. Dulay said GS yields continued to move lower last week on “strong buying interest from clients and market participants and on expectations of more rate cuts by the Bangko Sentral ng Pilipinas (BSP).”

She also added that the first-quarter gross domestic product (GDP) results “put a slight damper on the rally” last week.

On March 5, the Philippine Statistics Authority (PSA) reported April inflation eased to a five-month low of 2.2%, slower than 2.5% annual rate in March, and three percent in April 2019.

The April reading was slower than the 2.1% median estimate in a BusinessWorld poll of 13 economists conducted last week but still within the 1.9%-2.7% forecast range given by the BSP Department of Economic Research for the month.

Year to date, inflation settled at 2.6%, still within the central bank’s 2%-4% target band and above the revised two-percent forecast for the entire 2020.

The central bank already cut benchmark rates thrice this year — a 25-bp cut in February followed by 50-bp reductions in March and April — now ranging from 2.25% to 3.25%.

Last Thursday, BSP Governor Benjamin E. Diokno said this 125-bp cumulative cut to interest rates is “appropriate” to cushion the country’s growth momentum and boost market confidence to weather strong headwinds.

The central bank chief has said they will assess banks’ response to the policy moves as well as regulatory relief measures at the Monetary Board’s (MB) next meeting on June 25.

The MB has called off its May 21 meeting following the off-cycle 50-bp cut on April 16.

The PSA reported last Thursday the Philippine economy snapped its 84 quarters of uninterrupted growth after the gross domestic product (GDP) contracted 0.2% during the first three months of the year.

The last time GDP fell into negative territory was in the fourth quarter of 1998, when the economy shrank three percent at the height of the Asian financial crisis.

The first-quarter result was a reversal from the 6.7% and 5.7% growth recorded in the previous quarter and in the first three months of 2019, respectively. This also came unexpectedly lower than BusinessWorld median consensus of 2.9% growth for that period.

However, this was still within the Cabinet-level Development Budget Coordination Committee’s projection last month that the economy could contract by 0.8% or post zero growth this year.

“The weak economic imprint for the first quarter of 2020 might increase expectations of easing actions from the BSP either in the lowering of the policy rate or the reserve requirement ratio, both of which will cause local yields to drop,” the bond trader said.

Moreover, the bond trader expects that there could be some “safe-haven demand” amid uncertainty over possible government quarantine policies beyond May 15.

Meanwhile, Ms. Dulay said the recent outlook downgrade from Fitch Ratings may cause yields to move sideways to slightly higher this week.

Less than three months since it gave a “positive” outlook, debt watcher Fitch downgraded last Thursday the country’s sovereign rating outlook to “stable” as the economy faces a recession due to coronavirus disease 2019 pandemic.

Meanwhile, it maintained the country’s credit rating at “BBB” – a notch above the minimum investment grade which it gave in December 2017.

“The latest move by Fitch Ratings essentially minimized our prospects of a near-term credit upgrade to an ‘A’ level,” the bond trader said, adding that this development “might put some upward pressure on local yields, however, broad market expectations of monetary easing from the BSP in the future might offset this bias.” — Jobo E. Hernandez