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South Korea’s Big Hit market debut tempered by reliance on K-pop group BTS

SEOUL — Big Hit Entertainment, the management label of South Korean superstar K-pop group BTS, hit the stock market with a 9.6 trillion won ($8.38 billion) valuation on Thursday before worries over its narrow revenue stream pulled shares below the debut price.

Big Hit, which relies heavily on the boy band for revenue, opened at 270,000 won—double its initial public offering (IPO) price—and surged by as much as 30% in early trade before dropping back to just under the list price.

Interest in South Korea’s third largest IPO of the year was high, with almost half of Big Hit’s 10 million tradable shares changing hands on Thursday morning amid a weaker wider market, according to the Korea Exchange website.

Analysts say the company has proved itself online savvy, using YouTube and social media for market infiltration since in-person performances were cancelled because of the coronavirus pandemic.

But there are some concerns about Big Hit’s reliance on its star artists. The Billboard Chart-topping BTS, which has a huge global following, accounted for 87.7% of the label’s revenue in the first half of 2020, according to a regulatory filing.

It’s a scenario common among South Korean entertainment companies and one investors are familiar with, but it makes revenue especially vulnerable to any disruptions in output from key talent.

“The industry is booming, but it’s also very cyclical, and undergoes a lot of fluctuations,” said Kim Hyun-yong, analyst at Hyundai Motor Securities, citing potential obstacles such as the country’s mandatory military service.

That service is looming for BTS, with the eldest member of the band currently required to sign up by the end of next year and the remaining six members over the following five years.

Calls have been mounting for the band to be granted an exemption from or postponement of the two-year commitment, with some lawmakers and fans arguing they are doing plenty for their country without wearing a soldier’s uniform.

Earlier this week, BTS faced a barrage of criticism in China after the band’s lead member made remarks about the 1950-53 Korean War pitting the United States and South Korea against China and North Korea. BTS-related social media posts relating to big-name brands, including Samsung, FILA, and Hyundair, subsequently disappeared from Chinese e-commerce platforms.

Thursday’s float made the band members instant multimillionaires, with each granted shares worth 18.5 billion won ($16 million) at the debut price, but BTS’ official Twitter account did not reference the listing, focusing instead on the group’s win at the coinciding US Billboard Music Awards for Top Social Artist.

NEW ARTISTS?
Analysts said BTS’ successful online concerts have partly made up for performances canceled due to COVID-19. Additionally, Big Hit’s unprecedented level of control over its revenue streams via its Weverse fandom platform that distributes BTS content and sells merchandise, differentiate the label.

“Although offline concerts are impossible for the time being, Big Hit’s results in the first half of this year show that the content and merchandise made profits; it was hardly affected on-year,” said KTB Investment & Securities analyst Nam Hyo-ji.

Big Hit founder and co-CEO Bang Si-hyuk said the company planned to create “new value chains.”

“We will continue to research, challenge, discover innovative business models, and apply them to continue to grow in the global market,” he said at the listing ceremony.

The listing added to heightened IPO activity in South Korea, with volumes rising 51% to $2.9 billion so far this year, compared with the same period last year, according to Refinitiv data.

The pipeline looks solid after government stimulus to boost the economy amid the coronavirus pandemic flooded markets with cash, analysts said. Online game developer Krafton, and chat app operator Kakao’s mobile banking unit KakaoBank have both begun preliminary processes for listing. — Joyce Lee/Reuters

US Treasury chief urges IMF, World Bank to be prudent fighting pandemic

WASHINGTON — US Treasury Secretary Steven Mnuchin on Wednesday urged the International Monetary Fund (IMF) and World Bank to work judiciously within their existing resources to fight the coronavirus pandemic and urged G20 countries to endorse a proposed debt restructuring framework.

In a statement to the two institutions’ steering committees, Mr. Mnuchin said they needed to continue to provide financing, advice, and capacity development to aid countries hurt by the COVID-19 pandemic. But as they disburse billions of dollars in emergency funds, they need to plan for transitions to normal financing arrangements, he added.

“It is critical that the World Bank manage financial resources judiciously and transparently, with clear justifications for allocations to countries with robust access to other financing sources, so as not to burden shareholders with premature calls for new financing,” Mr. Mnuchin said.

Mr. Mnuchin’s statement, which comes as the IMF and World Bank hold annual meetings this week, made no mention of calls from other countries for the Fund to issue a new allocation of Special Drawing Rights. The Treasury opposed that move, which is akin to a central bank creating hundreds of billions of dollars in new currency reserves for IMF countries.

The World Bank, which raised $13 billion in new capital from members in 2018, should target its resources where needs are highest and no additional shareholding adjustments are needed, Mr. Mnuchin said.

The Treasury chief, who oversees the dominant US shareholdings in both institutions, said the IMF should fully use its existing financing tools but it may need to be more flexible in conditions it imposes on borrowing countries, including for those that need to restructure external debts.

He urged IMF leaders to keep the board updated on the adequacy of the Fund’s $1 trillion in lending capacity and to execute an expansion of its crisis lending fund.

Mr. Mnuchin said that the IMF should encourage countries with particularly difficult circumstances to move from emergency financing to traditional IMF financing programs that require structural reforms to boost growth.

“Even as the IMF deploys its resources towards crisis response, it must also remain focused on delivering on its core mandate of global economic and financial stability. In this context, we look forward to the prompt resumption of bilateral surveillance to provide much-needed policy advice,” Mr. Mnuchin said

Mr. Mnuchin also said that a new debt framework that would help low-income countries restructure debts, should be quickly endorsed by G20 countries. He said the plan, agreed in principle by G20 finance leaders, would “provide debt relief on common parameters, with equitable burden sharing that covers all private and official bilateral creditors.” — Andrea Shalal and David Lawder/Reuters

‘Long COVID’ may affect multiple parts of body and mind, doctors say

LONDON — Ongoing illness after infection with COVID-19, sometimes called “long COVID,” may not be one syndrome but possibly up to four causing a rollercoaster of symptoms affecting all parts of the body and mind, doctors said on Thursday.

In an initial report about long-term COVID-19, Britain’s National Institute for Health Research (NIHR) said one common theme among ongoing COVID patients—some of whom are seven months or more into their illness—is that symptoms appear in one physiological area, such as the heart or lungs, only to abate and then arise again in a different area.

“This review highlights the detrimental physical and psychological impact that ongoing COVID is having on many people’s lives,” said Dr. Elaine Maxwell, who led the report.

Many thousands of people worldwide have linked up on social media platforms and online forums to share their experiences of ongoing COVID-19 symptoms. Some call themselves “long haulers” while others have named their condition “long COVID.”

According to UK-based patient group LongCovidSOS, data from a King’s College London-devised symptom tracker app shows that 10% of COVID-19 patients remain unwell after three weeks, and up to 5% may continue to be sick for months.

Ms. Maxwell, who presented the findings of the “Living with COVID” report in an online media briefing, said health services are already struggling “to manage these new and fluctuating patterns of symptoms and problems.”

She and her co-authors urged patients and doctors to log and track symptoms so that health researchers can learn more about the condition and how to ease it as swiftly as possible.

“Despite the uncertainties, people need help now,” she said. “We need to collect more data.”

For this initial report, Ms. Maxwell’s team held a focus group with 14 members of a Facebook group called Long COVID.

Their testimony suggested ongoing COVID can be cyclical, Ms. Maxwell said, with symptoms fluctuating in severity and moving around the body including around the respiratory system, the brain, cardiovascular system and heart, the kidneys, the gut, the liver and the skin.

“There are powerful stories that ongoing COVID symptoms are experienced by people of all ages, and people from all backgrounds,” the report said.

Ms. Maxwell said an urgent priority is to establish a working diagnosis recognized by healthcare services, employers and government agencies to help patients get support.

“While this is a new disease and we are learning more about its impact…, services will need to be better equipped to support people with ongoing COVID, as emerging evidence is showing there are significant psychological and social impacts that will have long-term consequences,” the report said. — Kate Kelland/Reuters

How walkable is your city? London, Hong Kong put pedestrians first

BANGKOK — Urban planners and local authorities must improve walkability in cities to tackle poor health and social inequality, researchers said on Thursday, after the coronavirus pandemic highlighted the importance of being able to walk easily and safely.

The cities of Paris, London, Bogota, and Hong Kong are among the most walkable in the world, according to a new study of nearly 1,000 cities by New York-based non-profit Institute for Transportation and Development Policy (ITDP).

Improving walkability is particularly important now, as safety concerns have led to a sharp drop in the use of public transport, posing greater risks for vulnerable residents, said Heather Thompson, chief executive of ITDP.

“COVID-19 has dramatically exposed our inequalities at every level, including options for travel. Those higher on the income scale tend to have access to both walkable neighborhoods and transport, while those who are lower have neither,” she said.

“It is essential to shift the balance of space in our cities away from cars. We have so much to gain—from cleaner air to better health to stronger local economies and deeper bonds within communities,” she said.

During lockdowns to contain the coronavirus, residents in cities across the world took to walking and exercising on streets that were closed to traffic.

As restrictions eased, however, traffic has increased. More cars on the road worsen air quality, increase toxic emissions, and pose greater risks to pedestrians, according to ITDP.

ITDP’s study ranked cities on measures such as density of urban blocks, residents’ proximity to car-free open spaces, and their access to services including healthcare and education.

Cities in the United States scored low on walkability, the study showed.

“Walkable cities don’t happen by accident,” D. Taylor Reich, a research associate at ITDP and the report’s lead author, said.

“Policymakers first have to understand the problems that car-oriented planning has caused. Then they can take specific steps: from planning dense, human-scale, mixed-use developments to equipping streets with benches, wide sidewalks, and shade.”

A walkable neighborhood is associated with better health for residents and fewer road fatalities. It also boosts local businesses, reduces social inequalities, and increases resilience to climate-change impacts and economic shocks, Reich said.

A separate study led by researchers at the University of Warwick showed that a more sustainable economic model could help the world recover financially from the pandemic, while also achieving goals to reduce carbon emissions.

During lockdowns, improvements in air quality may have saved more lives, while a reduction in environmental noise and traffic congestion led to an increase in the number of people exercising outside, said the study published this week.

In recent months, several cities have added bicycle lanes, widened pavements, and converted parking spaces.

Now, walkability must be at the core of city planning, and making streets car-free is “a quick, cost-effective way” of making cities more walkable, Ms. Thompson said.

“In our new normal, our worlds have become much smaller and walking is more essential than ever.” — Rina Chandran/Thomson Reuters Foundation

Philippines has funds for coronavirus vaccines — Duterte

The Philippines can buy vaccines against the coronavirus once they become available, President Rodrigo R. Duterte said on Wednesday night, noting that he had found the funds for these.

“I have the money already for the vaccine,” he told an online news briefing after meeting with some Cabinet members. He did not elaborate.

He said he would look for more funds so all Filipinos could be vaccinated. The President said he was okay with vaccines developed either by Russia or China.

Mr. Duterte said he had spoken with outgoing Russian Ambassador Igor A. Khovaev and was told that Russia intends to set up a pharmaceutical company in the Philippines that will make the vaccines available here.

He said soldiers and the police will be among the first ones to be vaccinated, along with poor Filipinos.

The Department of Health (DoH) last week said an inter-agency task force led by the Department of Science and Technology was preparing for COVID-19 vaccine phase clinical trials in November.

Russia’s Gamaleya Research Institute of Epidemiology and Microbiology, Janssen Pharmaceutical Companies of Johnson & Johnson and Sinovac Biotech Ltd. have applied for phase 3 clinical trials in the country. 

DoH reported 1,910 coronavirus infections on Wednesday, bringing the total to 346,536. The death toll climbed by 78 to 6,499, while recoveries increased by 579 to 293,860. — Vann Marlo M. Villegas

BSP sees bigger BoP surplus this year

THE Bangko Sentral ng Pilipinas (BSP) said it expects a larger balance of payments (BoP) surplus this year, with the current account seen to post a $6-billion surplus as the economy gradually recovers from the coronavirus crisis.

“Against a backdrop of a global economy showing signs of recovery but remaining susceptible to setbacks and a domestic economy slowly lifting its way out of containment measures, the BSP sees the overall BoP position to post a surplus of $8.1 billion in 2020,” the central bank said in a statement.

The BoP estimate is equivalent to 2.2% of the gross domestic product (GDP) and is a wider surplus than the $600 million (0.2% of GDP) outlook given in June. The BoP summarizes the country’s economic transactions with the rest of the world in a given period.

For next year, BoP is expected to reach a $3.4-billion surplus, which is equivalent to 0.9% of GDP.

The Monetary Board approved the new BoP projections in a meeting on Oct. 8.

The BSP said the higher BoP surplus stems from its revised forecast for the current account at a $6-billion surplus (equivalent to 1.6% of the GDP) this year, from the June forecast of a $1.9-billion deficit (equivalent to -0.5% of GDP).

The current account includes trade, remittances, profit from Philippine investments abroad, interest payments to foreign creditors, and grants to and from abroad.

“The significant upward revision in the current account is attributed mainly to the expected narrower trade-in-goods deficit driven by the foreseen broad-based contraction in both goods exports (-16%) and goods imports (-20%), with the latter declining at a faster rate due to weaker domestic demand,” the BSP said.

Cash remittances are expected to contract by 2% this year, lower than the 5% earlier forecast, before rising by 4% next year.  In the first seven months of the year, cash remittances reached $16.802 billion,  2.4% lower from the same period a year ago.

Export revenues from the business process outsourcing industry are still seen to grow by 2% this year, and by 4% in 2021.

Gross international reserves (GIR) are also seen to reach $100 billion, higher than the previous $90-billion projection. The dollar buffers are expected to reach $102 billion by end-2021.

As of end-August, GIR already stood at $98.95 billion, higher by 15% from a year earlier.

By 2021, the current account is projected to see a surplus of $3.1 billion or about 0.9% of the GDP.

“The external sector outlook for 2021 reflects more favorable growth prospects as the global economy proceeds from an earlier restart of economic activity in the second half of 2020,” the BSP said.

“Nonetheless, the balance of risks surrounding the outlook continues to lean toward the downside owing to possible resurgence in virus infections across countries as well as pandemic-induced structural changes in labor conditions (contact-intensive job losses) and trade patterns (heightened protectionism).”

At the same time, the BSP raised its projection for foreign direct investments (FDI) inflows to $5.6 billion this year from the $4.1 billion estimate given in June. FDI inflows are expected to reach $7 billion in 2021.

As of end-July, FDI inflows stood at $3.795 billion, down by 11% from a year ago.

The outlook for foreign portfolio investments remained at a net inflow of $2.4 billion this year, and $3.5 billion in 2021.

“While uncertainty continues to weigh down on business and investor confidence, factors such as expectations of a better-than-initially-anticipated global economic performance for the year; the reopening of advanced economies with investment interest in the Philippines; the country’s investment-grade credit standing; and its expected gradual economic recovery are also seen to support foreign investment inflows for the rest of the year,” the BSP said.

The BSP said the new projections are based on a gradual recovery in the near term, and warned that uncertainty remains over the extent of the pandemic’s impact on the economy. — L.W. T. Noble

Dominguez says no tax hike as economy recovers

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The government is not looking to introduce new taxes before the end of President Rodrigo R. Duterte’s term in June 2022. — REUTERS/ELOISA LOPEZ

THE government is unlikely to introduce any new taxes while the economy is recovering from the coronavirus pandemic, Finance Secretary Carlos G. Dominguez III said.

“We are not really seriously considering any taxes [because] taxing our citizens when their incomes are down is not a good idea,” Mr. Dominguez told Bloomberg TV on Wednesday when asked if there are plans to raise taxes before the Duterte administration ends its term in June 2022.

He also clarified the government is not looking to sell its assets to raise revenues.

“As to selling assets, we’re not that desperate. And besides, most of our assets are in real estate and in mining operations and quite frankly, the real estate market is uncertain at this point in time, although it has been holding quite well,” Mr. Dominguez said.

Last month, the Finance chief told the Senate that they are drafting proposals for additional revenue sources for 2021 and 2022 to pay for the debt incurred this year.

However, this was opposed by lawmakers, including Senator Franklin M. Drilon who said he will not support any new tax hikes next year as the country is still expected to recover from the economic crisis.

The Philippine economy contracted by nine percent in the first half and is expected to slump by 4.5-6.6% for the entire year.

Christian de Guzman, senior vice-president of sovereign risk group at Moody’s Investors Service, said the government has a “short window of about a year” to push for tax reform measures before the campaign period for the national elections in 2022 “detracts attention away from the reform.”

“Moreover, as long as the coronavirus outbreak remains unresolved, lawmakers will likely retain an emphasis on facilitating the near-term recovery from the pandemic shock at the expense of more lasting, structural reform,” he said in an e-mail on Tuesday.

The Finance department is waiting for Congress to approve the Corporate Recovery and Tax Incentives for Enterprises Act (CREATE) bill that will lower corporate income tax, as well as rationalize the current tax incentive scheme. Other tax bills pending in Congress are the proposed new tax regime for the mining industry and the measure streamlining the taxes on passive income and financial instruments.

“As the need for fiscal accommodation will likely persist beyond 2020, the ability of the government to raise resources to fund ongoing support to businesses and households will determine the extent to which deficits can be narrowed and the debt trajectory can be stabilized. Having said that, the Philippines was one of few emerging markets globally to demonstrate the ability to materially raise revenue through both administrative and legislative reform prior to the pandemic shock,” Mr. De Guzman said.

The economic team plans to slowly reduce its budget deficit from the projected 9.6% of gross domestic product (GDP) this year down to 8.5% next year and 7.2% in 2022. The trajectory, however, is still far from the 3.4% deficit level seen in 2019 and the 3.2% cap that the government has been targeting prior to the pandemic.

Debt-to-GDP ratio, meanwhile, is expected to rise to 53.9% this year from 39.6% in 2019, and further up to 58.3% in 2021 and 60% in 2022 as the country borrows more to plug the budget shortfall. This year’s gross borrowings hit P2.5 trillion as of end-August.

State revenues have been falling due to sluggish economic activity amid the pandemic. Taxes collected by the Bureaus of Internal Revenue (BIR) and Customs (BoC) were down 12.13% year on year to P1.821 trillion in the eight months to September.

Meanwhile, Mr. Dominguez also said on Wednesday the National Government may still borrow more from the Bangko Sentral ng Pilipinas (BSP) next year to plug some of its short-term funding requirements.

“As I said, we keep that in reserve, our first options are to go back into the commercial market, but, you know, if the economy doesn’t perform as we expect, we will go back to (BSP),” he told Bloomberg TV.

The BSP has lent the National Government a total of P840 billion so far this year to help fund its pandemic response. — B.M.Laforga

Monetary chiefs say it’s too early to stop virus spending

THE WORLD’S top central banks are urging governments to put concerns about mounting debt aside for now and keep spending until the economic recovery from the coronavirus is complete.

Their calls are being met with pushback in some countries, where the question of how to pay for rescue efforts is creeping up the agenda. But the International Monetary Fund (IMF), historically a champion of budget restraint, says they have a point.

The Fund is due later Wednesday to publish its most detailed study of the pandemic’s impact on public finances. Chief Economist Gita Gopinath warned Tuesday of a “long, uneven and uncertain ascent” ahead after the worst slump in generations, with poverty rising and unemployment still high — and said it’s too early for policy makers to withdraw support.

That case was made with growing urgency by central bankers heading into this week’s IMF annual meeting. European Central Bank chief Christine Lagarde kicked off the online-only event by saying her biggest concern is that fiscal aid to workers and businesses may get phased out too abruptly.

A parade of Federal Reserve officials led by Chair Jerome Powell lined up last week to make the same argument with regard to the US, where talks on the next dose of pandemic stimulus have been deadlocked for months in Congress. Fed officials said their own tools, such as another round of bond buying, won’t be as effective as government spending.

The message from the most powerful central banks is increasingly clear: there are limits to what monetary policy can do to help in the short run. Fiscal authorities — who can borrow at rock-bottom interest rates, and possess tools better-suited to deliver a rapid and targeted boost — will have to finish the job.

Mr. Powell and Ms. Lagarde are pushing back against the “myth of the omnipotent central bank” capable of fixing any problem in the economy, said Paul Donovan, global chief economist at UBS Wealth Management in London. “They can’t always solve it,” he said. “This is not a credit crunch. Cutting the cost of credit isn’t going to stimulate the economy.”

The backdrop is a global rebound that’s losing momentum — and a risk that politicians who already injected some $12 trillion of stimulus, according to IMF estimates, will balk at spending more as debt levels hit records. 

The fiscal rescue added 3.7 percentage points to global growth in 2020, according to JPMorgan Chase & Co. — preventing the coronavirus rout from being roughly twice as bad. But JPMorgan economists expect that boost to turn into a drag next year, as stimulus gets choked off in a repeat of “policy missteps” that hobbled recoveries after the 2008 crash.

Central banks have supported public spending by buying up swaths of the debt that governments issue. They typically insist bond purchases are aimed at pushing inflation up to target levels, and don’t amount to monetary financing of budget deficits.

Some warn that such policies could tie the hands of central banks when it’s time to raise interest rates — and undercut their autonomy in the longer run.

Excessive government debt could mean “a central bank is de facto forced into making its decisions dependent on their impact on public finances,” Swiss National Bank President Thomas Jordan said last week.

In the UK, where the government is starting to talk about raising taxes to plug the budget gap, at least one former policy maker has accused the Bank of England (BoE) of turning into an arm of the Treasury. But BoE Governor Andrew Bailey says fiscal spending is still appropriate, and its Chief Economist Andy Haldane points out that the UK economy has grown its way out of bigger debt burdens in the past.

Mr. Powell’s vocal engagement in the US debate has reportedly drawn objections from several Republican senators opposed to bigger government outlays. It’s gotten even some supporters worried.

“I’m a little uncomfortable with how explicit the Fed has been in talking so bluntly about fiscal policy, even though I completely agree with what they’ve been saying,” Adam Posen — a former BoE policy maker and now president of the Peterson Institute for International Economics — said on a recent conference call.

The worry is that central bankers, who’ve often had to beat back political encroachments into their own monetary policy turf, can put their independence at risk by straying outside it.

But Fed officials are driven by awareness that they’re short of ammunition, according to Bill Dudley, head of the New York Fed for a decade through 2018.

“They are reaching diminishing returns in terms of how their tools affect the economy,” said Mr. Dudley, now a scholar at Princeton. “It’s not that they can’t do more, but doing more wouldn’t do much. That’s precisely why they are talking about the need for fiscal policy.” — Bloomberg

Human capital development key to attracting US manufacturers

HUMAN CAPITAL development is a key factor for the Philippines to attract manufacturing firms that are planning to leave China, American trade and manufacturing experts said.

Computer-aided manufacturing requires engineers that are able to operate the machines, Dartmouth College Associate Professor of Business Administration Teresa Fort said in a Makati Business Club online event on Wednesday.

“Having that human capital is really important to be in the higher part of the value chain,” she said.

More manufacturing firms are looking to move their operations out of China in order to avoid US import tariffs on Chinese imports as a result of the trade war between China and the United States.

The Philippines has had trouble attracting these investments, with the local Japanese business chamber in April noting that the country is not a top destination for relocating Japanese firms due to problems in the supply chain and raw material production.

Ms. Fort noted human capital is important in technology-based industries, including semiconductor production.

“Are we going to move towards these workerless factories? I think you have to be more specific about what you mean by workers. If you mean the line guys who are assembling things that can be replaced by a machine, then yes, we’re moving towards that. But there’s still people who run the machines. You still need engineers who know how to do that,” she said.

US firms are also looking at a country’s infrastructure, rule of law, and contract enforcement before making an investment decision, Ms. Fort said.

“(These) make it predictable in terms of how to do business. I mean it’s easy to say what they’re looking for. I think it’s much harder to figure out how to create the right conditions for that,” she said.

Yale School of Management Professor Peter Schott in the same event also said human capital development is central among many factors that could attract investors, and referred to the English language ability of the Philippine population.

“I think there are certain sectors — call centers, etcetera — jobs that have sprouted out. That industry I think is relatively strong… An interesting question is how to leverage that, or the extent to which that is thought to be leverageable into other sectors,” Mr. Schott said.

Ms. Fort, as an example on human capital development, referred to partnerships between corporations and government.

In the US, a local government unit has worked with an aircraft manufacturing company to develop community college programs that train potential workers, she said.

The US Department of State recently said the investment climate in the Philippines has improved, noting progress in its credit rating and government efforts to address foreign ownership constraints. The report however notes that the Philippines still lags behind Southeast Asian peers, ranking fifth out of 10 Association of Southeast Asian Nations for total foreign direct investments in 2019.

“Poor infrastructure, high power costs, slow broadband connections, regulatory inconsistencies, and corruption are major disincentives to investment,” the report said.

The Board of Investments (BoI) had recently disclosed 14 leads on businesses that could possibly relocate to the Philippines.

BoI-approved pledges more than doubled to P645.3 billion in the first half of 2020, but foreign investment pledges plummeted by 73% to P18.6 billion.  — J.P.Ibañez

Corporate bonds more than doubled since 2016

BONDS issued by private companies jumped 126% to P1.48 trillion as of August from its level in 2016 according to the Philippine Dealing & Exchange Corp. (PDEx), indicating that the capital market has posted a steady growth, led by the financial sector.

In a press statement issued by the Finance department on Wednesday, PDEx President and Chief Executive Officer Antonino A. Nakpil said the increase represented an “active primary market” as the outstanding corporate bonds listed had steadily expanded from P645.6 billion in 2016, to P792.5 billion in 2017, P1.05 trillion in 2018, and P1.32 trillion in 2019.

“The primary market has been very active. We actually hit P1.53 trillion, but there were some maturities and the outstanding level as of the end of August was at P1.48 trillion,” Mr. Nakpil was quoted as saying in his report to the Capital Market Development Council (CMDC).

Since 2018, the financial sector has led the market which now accounts for 43% of the total, followed by the property sector with a 24% share, holding firms (15%), the industrial companies (13%) and consumer staples (2%).

Meanwhile, new corporate bond listings hit a record of P375.6 billion last year, up 46.5% from P256.4 billion in 2018. The amount of new bond listings have also steadily risen from P207.4 billion in 2017 and P136.5 billion in 2016.

“As of August this year, we are at P295 billion, so it is still quite positive. Although for this particular period, what is active are the one- to three-year short tenors,” Mr. Nakpil said.

The CMDC, a public-private initiative that recommends reforms aiming to develop the local capital market, is co-chaired by Finance Secretary Carlos G. Dominguez III, Benedicta Du-Baladad, former president of the Financial Executives Institute of the Philippines, and Securities and Exchange Commission Chairperson Emilio B. Aquino.

It also has members from top officials at the Bureau of the Treasury, Bangko Sentral ng Pilipinas, Insurance Commission, Philippine Dealing System Holdings Corp., Investment House Association of the Philippines, Philippine Association of Securities Brokers and Dealers, Inc., and Bankers Association of the Philippines.

The CMDC in August started studying the proposal to raise the funding requirement of retirement plans for private sector workers by requiring companies to make partial or full funding.

The move is aimed to address the “insufficient” retirement plans received by private sector employees and contribute to the development of the local capital market, at the same time. — Beatrice M. Laforga

8990 Holdings issues P1.3-B notes for loan refinancing

MASS HOUSING developer 8990 Holdings, Inc. has issued and listed P1.3-billion fixed rate notes at the Philippine Dealing & Exchange Corp. (PDEx).

The company marked its return to the local debt market on Wednesday through a listing ceremony held virtually. The notes have a fixed interest rate of 4.05% per annum and will mature on Oct. 14, 2022.

“[The proceeds from the offering will] partially finance the payment of existing indebtedness of the company,” 8990 Investor Relations Officer Patricia Victoria G. Ilagan told BusinessWorld via text message.

Prior to Wednesday’ listing, 8990 has three listed securities at the PDEx, which were all issued in 2015: P8.41-billion bonds due on Oct. 16, 2020; P375.5-million bonds due on July 16, 2022; and P218.91-million bonds due on July 16, 2025.

The company currently has 20 projects under construction, supported by a capital expenditure allocation of P5 billion to P6 billion.

“We are most delighted to welcome 8990 Holdings, Inc, back for this enrollment of P1.3-billion fixed rate notes. It has been five years since 8990’s debut in the local debt market, and we’re happy to celebrate its return today,” PDEx President and CEO Antonino A. Nakpil said during Wednesday’s program.

“Providing affordable housing has always been at the core of 8990’s operations. Despite the pandemic, our commitment to this remains strong. The company continues to deploy cash to operations and enroll this in key regions across the country,” 8990 Treasurer Richard L. Haosen added.

The listing of 8990’s fixed rate notes on Wednesday brings up the PDEx’s level of outstanding listed securities to P1.48 trillion, up 12% from the same period last year.

The year-to-date total of new listings at the debt market has reached P1.48 trillion, up 12% from end-2019’s P1.32 trillion.

“We do remain lucky that the interest rates asset class has been resilient through this public health crisis, and primary issuance activities have continued smoothly through months of community quarantine,” Mr. Nakpil said.

During the first six months of the year, earnings of 8990 dropped 47% to P1.48 billion, attributable to the ban on construction activities during the height of the coronavirus outbreak. This weighed on the company’s construction completions, and in turn, revenue recognition, which declined 30% to P4.91 billion.

The company hopes that its revenues and income will still reach last year’s levels by end-2020, which were P15.28 billion and P5.58 billion, respectively.

Shares in 8990 at the stock exchange increased nine centavos or 1.40% to close at P6.50 apiece on Wednesday. — Denise A. Valdez

Enderun Colleges brings its cooking school online

Learn how to make Italian breadsticks and more the Enderun way, at home

ENDERUN Colleges brings the cooking school to homes with a series of culinary instructional videos in a program called École Ducasse Online Culinary eXperience by Enderun. The online cooking classes are in partnership with its global culinary partner École Ducasse from France, and will be taught by Enderun instructors headed by See Cheong Yan, Culinary Head of École Ducasse Manila. Mr. See leads the team of virtual instructors of the program along with Executive Chef Marc Chalopin, and Executive Pastry Chef Laetitia Moreau.

BusinessWorld watched Ms. Moreau’s tutorial for making Italian grissini (breadsticks). Ms. Moreau diluted yeast in room-temperature water. She explained that anything cooler wouldn’t activate the yeast and anything warmer would kill it. She then formed a well using flour, olive oil, and salt and likened it to a “small volcano.”

She then gradually added the yeast and water mixture, mixing the flour in with her fingers. There’s a peaceful silence in the video, shot in the once-noisy Enderun kitchens, broken only by Ms. Moreau’s voice.

Everytime the dough had the consistency resembling mashed potatoes, she added more water until the dough achieved softness and elasticity. She kneaded dough with the remaining flour.

“After doing this dough, you no longer need to go to the gym,” joked Ms. Moreau.

The dough was proofed by keeping it on the oiled table for 30 minutes, then covered with a clean kitchen towel. After 30 minutes, she flattened the dough with a rolling pin to release gas from the fermentation process, then folded; then left again for a final proofing on a tray for another hour.

The dough was cut to achieve a perfect square and then cut into thin sticks, brushed with olive oil, and sprinkled with herbs. Then to the oven they go at 185 degrees Celsius for about 25 minutes.

The session also included a question and answer session where Ms. Moreau gave solutions to problems such as too sticky dough (mix it more and if that fails, add more flour), a too hard dough (add more water), and a too crumbly dough (also add more water).

“The quarantine imposed by the pandemic may have limited our movements but École Ducasse Online Culinary eXperience by Enderun will continue to nurture your passion for learning. Students have the option to receive the ingredients of the recipes as part of the package so all they have to do is access the platform and explore the recipes,” Mr. See said in a press release. Through the program’s learning management system, students are given access to virtual activities, discussion boards, and a live interaction with the chefs. Students who successfully finish the course will earn a digital badge issued by École Ducasse Manila.

The current recipes under the program include char siu pork bun, lamb tagine, Hainanese chicken, chicken fricassee, and crustaceans and salmon stew. It also includes pastry recipes such as Italian grissini, sourdough donuts, crepe suzette and creme brulee, New York cheesecake, Italian focaccia, and sacher torte.

Enrollment for École Ducasse Online Culinary eXperience by Enderun is currently ongoing.  For more information, visit www.enderunextension.com. You may also email meggie.salonga@thestudyph.com or call +639171301000. — Joseph L. Garcia

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