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Yields on government debt decline on BSP’s rate move

By Christine J.S. Castañeda
Senior Researcher

YIELDS ON government securities (GS) fell across-the-board last week following the central bank’s decision to cut benchmark interest rates by a quarter of a percentage point.

On average, debt yields — which move opposite to prices — went down by 35 basis points (bps) week on week, the PHP Bloomberg Valuation (BVAL) Service Reference Rates as of Aug. 9 published on the Philippine Dealing System’s website showed.

“The bigger week-on-week declines in local interest rate benchmarks (PHP BVAL yields) was largely brought about by the widely expected [25 basis point]-cut in local policy rates on August 8 after GDP (gross domestic product) growth eased to 5.5%…and after inflation further eased to 2.4% in July,” Rizal Commercial Banking Corp. (RCBC) economist Michael L. Ricafort said in an e-mail.

“PHP BVAL yields further eased towards the end of the week after BSP (Bangko Sentral ng Pilipinas) Governor [Benjamin E.] Diokno signalled another possible 0.25-bp cut in local policy rates and another possible one percentage point-cut in RRR (reserve requirement ratio) of banks as early as the next monetary policy-setting meeting on September 26,” he added.

Meanwhile, in a separate e-mail, a bond trader said: “Yields continued to fetch lower after the People’s Bank of China fixed the yuan significantly lower [last] week, signalling to markets that China will utilize the yuan against any untoward actions from the United States.”

“Consequently, the said action prompted the US Treasury Department to label China as a ‘currency manipulator.’ Both retaliatory actions had resulted in further escalation of current tensions between the two major economies,” the bond trader added.

On the local front, the bond trader said: “[M]arket participants remained anchored on expectations of a 25-basis-point BSP policy rate cut, which the local central bank delivered despite some expectations of a stronger cut following the release of weaker-than-expected second-quarter Philippine GDP growth report.”

The BSP Monetary Board decided in its fifth review for the year to cut key policy rates by 25 bps, bringing the overnight reverse repurchase rate to 4.25% and the overnight deposit and lending rates to 3.75% and 4.75%, respectively.

The Monetary Board also decided to cut its inflation forecast for the year to 2.6% from the downward-revised 2.7% adopted in its June 20 review. Next year’s forecast was also revised to 2.9% from three percent previously.

The BSP’s policy-setting body also gave its first forecast for 2021: 2.9% with a tilt “somewhat to the downside” due to prospects of slowing global growth.

Meanwhile, in an interview aired over ABS-CBN News Channel on Friday, BSP Governor Benjamin E. Diokno said another cut in banks’ RRR “can take place some time next month.”

The BSP chief said he is committed to paring the RRR down to “single-digit level” before he ends his term in July 2023.

Hours before the Monetary Board’s policy meeting for the year, the Philippine Statistics Authority (PSA) reported that the economy expanded at its slowest pace in 17 quarters in the April-June period due lower private investments and tempered household consumption and government spending.

GDP grew by 5.5% in the second quarter, slower than the first quarter’s 5.6% and the 6.2% logged in the same period last year. The second-quarter turnout was the slowest expansion since the 5.1% recorded in the first quarter of 2015 and was also lower than the 5.9% median estimate in BusinessWorld’s poll of 15 economists and institutions.

GDP growth averaged 5.5% last semester, slower than the 6.3% in 2018’s first half and the 6-7% target set by the government for 2019.

Separate PSA data showed headline inflation slowing to 2.4% last month, down from 2.7% in June and 5.7% in July 2018. The latest result matched the 2.4% reading in July 2017 and was also the slowest since the 2.2% logged in December 2016.

The July headline figure fell within the Bangko Sentral ng Pilipinas (BSP) Department of Economic Research’s 2-2.8% estimate for the month and matched the median in BusinessWorld’s poll of 18 institutions.

The latest reading brought year-to-date inflation to 3.3%, past the midpoint of the BSP’s 2-4% target range for the year and above the 2.7% full-year forecast average for 2019.

At the secondary market last Friday, yields were lower than week-ago levels across-the-board. The 91-day Treasury bill went down by 44.3 bps to yield 3.375%. The 182- and 364-day debt papers likewise declined by 44.3 bps and 43.2 bps, respectively, to fetch 3.603% and 3.719%.

Rates of the two-, three- and four-year bonds also went down by 45.5 bps (3.857%), 46.3 bps (3.960%) and 41.8 bps (4.063%), respectively. Yields on the five- and seven-year debt papers likewise dropped 34.4 bps (4.159%) and 22.3 bps (4.303%).

Yields on the 10-, 20- and 25-year notes also went down by 20.8 bps, 21 bps and 21.2 bps, respectively, to end at 4.372%, 4.7% and 4.697%.

For this week, RCBC’s Mr. Ricafort said: “The underlying easing trend in Philippine interest rate benchmarks that have been ongoing for most weeks for more than three months already or since May 2019 could still continue especially if the long-term interest rate/bond yield benchmarks in the US and other developed countries continue to ease, largely brought about by the escalation of the US-China trade war.”

For the bond trader: “Local yields might move with a downward bias [this] week, as bets of weaker data on Eurozone GDP and Chinese retail sales might further ignite concerns on slowing global growth and fuel views of more easing moves from local and major foreign central bank.”

“Yields might also fall following the recent BSP policy rate cut and continued safe-haven buying amid escalating US-China trade tension,” the bond trader added.

Experts call for ‘qualified,’ ‘motivated’ officials at DA

AGRICULTURE EXPERTS said the sector needs “qualified” and “motivated” officials to carry out productivity enhancements that will help the sector generate surpluses that will at least keep up with population growth.

Ang masasabi ko lang (What I can say is, the new Agriculture Secretary) has to look at ‘yung mga taong nasa posisyon (the officials in place)… achieving his targets requires qualified people,” Rolando T. Dy, executive director of Center for Food and Agribusiness of University of Asia and the Pacific, told BusinessWorld in a phone interview.

Acting Agriculture Secretary William D. Dar said that he intends to grow the sector by as much as 4% within three years.

“We have to grow beyond that population growth rate. Let’s start with 2%. After one year, go to 3% [and] by the end of the third year, 4%,” he told reporters in a briefing last week. He also warned underperforming officials that if they do not measure up to the demands of their position, he will remove them.

Mr. Dy noted that there is a need for motivated people in order to achieve Mr. Dar’s targets.

May mga appointees diyan (There are appointees), sorry to say, hindi (are not) qualified….kasi nasa implementation tayo eh (because implementation is key)… Alam ni Secretary Dar ‘yan na (Secretary Dar knows that) in order to achieve his targets, he needs very good and motivated people,” he explained.

Mr. Dar replaced former Secretary Emmanuel F. Piñol last week, days before the government announced the second quarter agriculture output data.

On Thursday, second quarter agricultural output fell 1.27% year-on-year in the second quarter, the biggest drop in three years.

Philippine Institute for Development Studies Research Fellow Roehlano M. Briones said the sector must change how it does business.

“Mr. Dar has set) a very good target and it will take time in order to bring that about…. but what we really should be after are structural changes in the way business is being done in our agriculture sector and that where I have high hopes under this new secretary,” he said in a separate interview.

Samahang Industriya ng Agrikultura (SINAG) Chairman Rosendo O. So said that the group will be meeting with Mr. Dar on Wednesday in order to discuss its request to reorganize the DA. He said that the organization does not have confidence in current officials’ ability to help the farm sector.

“We all can see our agriculture output result is down. We need a new team to (achieve) better agricultural production,” he said in a text message. — Vincent Mariel P. Galang

Here comes the bride

FILIPINOS are famously a romantic people, and so the wedding becomes the highlight of the lives of many people, taking years to plan, incorporating fantasies fermenting in the soul since childhood.

The wedding fair Marry Me at Marriott, held on July 30, did it again by showing off its various culinary skills and amazing setups: from a fried rice bowl that can comfortable sit five people to Chinese lanterns that could nest a whole person, to a grand table setting replete with roses and the like.

But we didn’t come for the food: we came for the clothes. Marry Me at Marriott always has a fashion show displaying the talents of top designers to show a prospective bride what she might look like in the 3,000-seater Marriott Grand Ballroom.

The show opened with a presentation by Leo Almodal, which takes inspiration from fairy tales and happy endings. Mr. Almodal used a lot of silver and sheen on intricately draped dresses, as if to show the sparks showered by a fairy godmother. The silhouettes ranged from sleek serpentinas to grand ballgowns, but really, the devil is in the details, with beading and crystals that reflect light and make the bride even more radiant.

Next up was Albert Andrada, who opened his show with a male model in beaded underwear and the wings of an angel descending from one of the escalators. Angels and the ethereal was the theme for this collection, showing off soft flounces and such in gowns, with pleated fabric forming the shapes of wings on the skirt and bodice. Socialite Tessa Prieto-Valdes also walked the runway, in a shimmering dress with a plunging neckline and an elaborate headdress. Top model from days past Marina Benipayo, meanwhile, appeared in a long veil and an immaculate dress with a raised pattern that called to mind Catholic imagery.

Ella Fitzgerald’s rendition of “Night and Day” opened the next show by designer Jun Escario. It seemed to go back to the more quiet days and quiet weddings of the 1950s, with a tea-length skirt in tulle, a simple belted blouse, and a short veil being the first dress down the runway. Cole Porter’s songs transported the audience to a time when dresses could be snapped up off the runway by front row patrons, and everyone gabbed like old friends as dresses with feathers, trailing scarves, and delicate lace brought us back to simpler times and old-fashioned glamour.

The collection by Veluz, meanwhile, showed softly romantic dresses with tiered skirts, high necklines, and soft fabrics.

Summarizing the looks, a bride for the coming years must have beads, crystals, flexibility in skirt choices, and lots of imagination. Apparently, little accent belts made of grosgrain ribbon aren’t a bad idea.

Michael Leyva, known for his flamboyant dresses, did not disappoint for the bride who likes it big. Flounces on ballgown skirts and magnificent trains accompanied brides with pearl-studded halos, and actress Nadine Lustre walked the runway in a huge panelled and crystal-studded silver dress. — Joseph L. Garcia

Fresh funding round eyed for Voyager this year

PLDT, Inc.’s digital arm Voyager Innovations, Inc. is looking to secure fresh funding towards the end of 2019 to sustain its expansion in the coming year.

While there are no plans to sell more shares in Voyager after the entry of four foreign investors last year, PLDT Chairman, President and Chief Executive Officer Manuel V. Pangilinan told reporters there may be a need to infuse cash into the company heading into the second half.

“I think it’s fair to state that most likely there will be a new round of funding that Voyager will see…towards the end of this year. That will be up for discussion,” he said last week.

He did not elaborate on the amount or the form of fund-raising the company plans to take on, but he said he wants to “prepare them for the next round of funding beyond 2019, and beyond, say, the first half of 2020.”

“We just want management to be comfortable that they’re funded for the next phase of expansion,” Mr. Pangilinan added.

Last year, PLDT sold a more than 50% stake in Voyager for $215 million to China’s Tencent Holdings Ltd.; US-based Kohlberg Kravis Roberts & Co. (KKR); International Finance Corp. (IFC) and IFC Emerging Asia Fund. PLDT remains the single largest shareholder in Voyager.

Voyager’s portfolio includes financial technology firm PayMaya Philippines, Inc. and PLDT’s mobile remittance brand Smart Padala.

PLDT’s share in Voyager recorded a loss of P600 million in the first half, narrowing from a loss of P1.3 billion in the same period last year.

Last week, Shailesh Baidwan, a former Visa and American Express executive, was named the new president of Voyager and PayMaya,

“I think we have a good (president) here,” Mr. Pangilinan said, referring to Mr. Baidwan.

“I explained the three major businesses (of Voyager): the digital wallet, the Smart Padala, which is doing very well, and the merchant business which he is very familiar with when he worked for Visa and American Express. I’m starting to get optimistic that in due time, as to when that’s going to be, we could see the light of day,” he added.

NEW PARTNERSHIP
Meanwhile, PayMaya said in a statement Sunday it has forged a partnership with the Junior Chamber International (JCI)-Manila to offer its cashless payment services.

The company will provide JCI-Manila its PayMaya One product: a payment device that accepts payments using any card and QR codes from PayMaya and WeChat.

“We want to ensure that associations like JCI-Manila can accept any forms of payments for all their initiatives, whether it is for donations or sponsorships to their organization or fees from members. This way they can maximize all possible sources of funds that may support their nation-building projects,” PayMaya Vice-President and Head of Growth and Marketing Raymund Villanueva said in the statement.

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

FOTON showcases F-Jeepney Modern PUV in DoTr-LTFRB Caravan

STRENGTHENING its support in the government’s PUV modernization program, the Department of Transportation and (DoTr) and the Land Transportation Franchising and Regulatory Board (LTFRB) recently launched a nationwide Caravan dubbed “Pagbabago Tungo sa Kaunlaran.”

“The caravan launch today is a strong manifestation of the collaborative effort of private and public partners in the implementation of the PUV Modernization Program. We intend to push this program as far and as fast as possible, and that won’t happen without the support of all the stakeholders,” said LTFRB Chairman Martin Delgra III in his speech.

The Caravan launch at SM Clark Pampanga coincided with the simultaneous nationwide launching by the LTFRB of the new routes for the Modern PUV. The schedule will be broken down into four phases and will cover the period from July 2019 to January 2020.

FOTON Philippines showcased its modern PUV entry, the F-Jeepney, throughout the various legs of the caravan. This Euro 4 Cummins-powered vehicle is designed to comply with the guidelines set by the Philippine National Standards.

“FOTON Philippines understands the importance of being able to move a large number of people reliably, safely, as well as with care for the environment. And from this, we see the role of the F-Jeepney as a workhorse and multi-functional partner for the growing number of PUV operators in the country,” said Rommel Sytin, president of FOTON Philippines.

The F-Jeepney sports 21st-century additions such as GPS navigation software, a CCTV camera, dashcam, Wi-Fi connectivity, and an entertainment system. The Beep card is also integrated into the vehicle’s payment scheme, truly modernizing almost all aspects of this version of public transport. Seating is also important, and the F-Jeepney is kitted out with stainless fixed bench seats that can hold up to 24 passengers, with 16 sitting down and eight standing up.

Since its launch this year, FOTON has already turned over its modern PUVs to transport cooperatives in provinces like Cainta, Rizal and Pampanga. The Modern PUV units in the Caravan are equipped with the required gadgets such as the automated fare collection system and are exhibited nationwide for one day each in some 32 cities in Luzon, Visayas and Mindanao.

“It’s time to make a step forward with our entries for the PUV modernization. The F-Jeepney will not just provide a comfortable riding experience for the commuters. We also aim to promote the capabilities of the national icon of Philippine transportation,” added Sytin.

LANDBANK extends P30-M loan facility to BCS Credit Cooperative

By Carmelito Q. Francisco
Correspondent

DAVAO CITY — Land Bank of the Philippines (LANDBANK) is extending a P30-million loan facility to BCS Credit Cooperative to help expand its financing program to its members, particularly the small farmers and microentrepreneurs.

Christian Harvey N. Wong, LANDBANK’s Davao Lending Center account officer, said they recently signed the contract with the Davao del Sur-based cooperative that has 17 branches within the regions of Davao and SOCCSKSARGEN (South Cotabato-Cotabato-Sultan Kudarat-Sarangani-General Santos City).

“Meaning, the existing loans of the cooperative’s members may be replenished by the bank to allow the cooperative to maintain its liquidity, therefore, enable them to accommodate more loans from small farmers and microentrepreneurs,” Mr. Wong told BusinessWorld in an online interview.

Rolando B. Abadia, chair of BCS Credit Cooperative, said they are aiming to have about 50% of their 55,000 members avail of the fresh fund.

“We will be able to help our members who are into farming and livestock-raising by providing them funding to ensure that they can expand their farms as well as have fund for fertilizers and other farm implements,” he said in a telephone interview with BusinessWorld.

Mr. Abadia, also the chair of the Provincial Credit Union, said they expect to have the P30-million credit line to be distributed within three months.

The cooperative also assists its farmer members in marketing their goods, including rice, banana, and other high-value crops like cacao.

“The good thing is that we have planned how we can also market the produce at higher prices,” he said.

Aside from various loans, BCS Credit Cooperative also offers savings programs, insurance, and financial management packages for overseas Filipino workers and their families.

Mr. Wong said the organization has a capacity to borrow about P2 billion based on LANDBANK’s assessment.

“Per our lending guidelines, they can borrow up to P2 billion as their computed net borrowing capacity. Maybe in the future, when the cooperative so desires, they can borrow as much as P2 billion,” he said.

The cooperative, formally organized in 2002, became a LANDBANK client six years ago.

“(S)ince last year, I have been luring them for us to finance their lending to agri-related undertakings and activities, which is our mandate,” Mr. Wong said.

Banana smallholders to start using drones for aerial spraying

By Maya M. Padillo
Correspondent

DAVAO CITY — Two agricultural companies in Davao have purchased 30 drones for renting out to small banana farms to spray fungicide.

Federation of Cooperatives in Mindanao (FEDCO) Chief Executive Officer Ireneo D. Dalayon said Sagrex Foods, Inc., controlled by Ferdinand Y. Marañon and Dolphin Agri Ventures run by Domingo Ang are waiting for the delivery of the drones from China, at a cost of about P500,000 per unit.

“Some (big) farms use drones in aerial spraying. In terms of cost, it’s lower compared to a plane and it is good for small land holding and better than manual spraying,” Mr. Dalayon told Businessworld in a text message.

Aside from cutting costs, Mr. Dalayon said the use of drones is expected to improve production as well as banana quality with a more precise spraying operation targeting leaves.

Fungicides control diseases such as black leaf streak, sigatoka leaf spot, and post-harvest diseases.

“At present, we are doing manual spraying to control sigatoka. Drones are more efficient compared to manual spraying,” he said.

He said using drones would lessen toxic pesticide drift in surrounding communities, which is a risk in spraying with aircraft. Meanwhile, manual spraying poses health risks to workers.

“Turbo planes fly so high and fast that some of the chemicals do not hit the leaves, unlike drones, which you can fly at an ideal height so the mist directly hits the leaves. Also, manual spraying has an effect on humans because a worker who does manual spraying has direct contact with chemicals,” he said.

The drones on order can carry 20 to 30 liters of pesticide.

“If your bananas are of good quality, the price is good. ‘Pag maraming sira ang saging, syempre mura lang din ang bili (If the bananas have a lot of defects, of course it will be bought cheap),” he said.

Mr. Dalayon said FEDCO is also planning to tap Land Bank of the Philippines for a loan to purchase more drones.

“If government, through LANDBANK, can extend to small farmers and co-ops loans to purchase drones, we can have our drones,” he said.

At the same time, the cooperative is looking at alternative livelihood or employment for the manual spraying workers who will be displaced.

FEDCO counts as its members small banana farmers’ cooperatives that export as well as supply to corporate growers and exporters. In recent years, it has also ventured into cacao.

For the wrist of the adventurous

AS TIMEPIECES adapt to people’s changing lifestyles and developing technology, being fashionable remains a constant even among the adventurous.

Even since the first Breitling Superocean models were launched in 1957, they were distinguished for their diving prowess. This year, Breitling releases a new collection which retains its deep-water DNA, and features clean and sporty designs for men and women with active lifestyles.

“With the new Superocean Collection, we have created watches for people who want to explore the oceans, whether they are active in water sports or in clean-up initiatives. And, of course, they will excite any fan of Breitling’s design values,” the company said in a press release.

Breitling’s Superocean 42

Travis Gan, Regional Retail Manager for Breitling Southeast Asia Importance, noted that precision is crucial for divers.

“[There’s a] lot of assurance for divers because of the capacity of the diving depth, as well as, the precision of the timing of the watch… For diving itself, you need to check the timing and the amount of oxygen that can last for the entire dive,” Mr. Gan told BusinessWorld during the collection’s launch at the Podium on Aug. 7.

THE COLLECTION
Every new Superocean Collection watch features the Breitling Caliber 17, a movement that offers a power reserve of up to 38 hours. It comes in five different sizes.

The Superocean 36 is designed for women who want a compact-sized sport watch — it has a 36-millimeter stainless-steel case and a ratcheted unidirectional bezel. The Superocean 48 has an oversized 48-millimeter DLC-coated titanium case and blue ceramic bezel and soft-iron inner case for protection against the effects of magnetic fields. The Superocean 46 has a 46-millimeter case in black steel (DLC-coated stainless steel) and is built with a ratcheted unidirectional bezel. The Superocean 44 has a 44-millimeter stainless-steel case and a ratcheted unidirectional bezel. The Superocean 42 is crafted with a 42-milli-meter stainless-steel case with a choice of a black, white, or orange dial, It also has a ratcheted unidirectional bezel. The watches are water-resis-tant up to 20 bar (200 meters); 30 bar (300 meters); 200 bar (2,000 meters); 100 bar (1,000 meters; and 50 bar (500 meters), respectively.

Non-divers may also wear it as a fashion statement.

“This is a versatile watch for anybody,” Mr. Gan said. “It’s not just necessary for divers. It can also be an everyday or even a weekend watch.”

For information, visit www.breitling.com.Michelle Anne P. Soliman

Outsourcing industry adjusting goals amid unmet targets

THE Information Technology and Business Process Association of the Philippines (IBPAP) said it will soon release a revised version of its medium-term industry plan after targets were not met in 2017 and 2018, though it remains hopeful about 2019.

IBPAP, which refers to its industry as the information technology and business process management sector (IT-BPM), said the revised plan is due to be issued in September.

Speaking to reporters Thursday, IBPAP Chairman Lito T. Tayag said that the medium-term plan is currently being revised “right now… By around September we shall come up with a re-calibration of the road map,” he said.

Launched in 2016, Roadmap 2022 outlines the goals and projections IBPAP aims to meet in various sub-sectors of the IT-BPM industry. The blueprint also serves as a guide for the industry to increase its capabilities.

The original targets laid out in Roadmap 2022 included direct and indirect employment of 7.6 million and $40 billion in revenue.

He did not provide details of the planned revisions, but said: “2017 was not a good year. 2018… was also lower than our projections. We’re very hopeful about 2019 but we have yet to see.”

In May, IBPAP President Rey E. Untal told reporters the sector’s revenue grew 4%-5% to as much as $24.8 billion. At the time, IBPAP said it plans to lower its Roadmap 2022 annual revenue projections.

Mr. Tayag added that research company Everest Consulting Group Inc. is responsible for preparing a final report.

Investment in the outsourcing industry has been dented by US government policy encouraging repatriation of outsourced operations as well as uncertainty over Philippine tax reform. Earlier this year the Philippine government also announced a freeze in new economic zone proclamations for the IT industry in the National Capital Region. — Gillian M. Cortez

Kepwealth raises P385 million in initial public offering

KEPWEALTH Property Phils, Inc. (KPPI) raised P384.77 million during its initial public offering (IPO), after its offer period ended last Friday.

BDO Capital & Investment Corp., which served as the transaction’s sole issue manager, underwriter, and sole bookrunner, said the company’s offering was well-received by investors.

“(The offering) went well. It was a small IPO so we didn’t even need to market. TP (trading participant) and LSI (local small investors) tranches were fully subscribed,” BDO Capital President Eduardo V. Francisco said in a text message over the weekend.

The property leasing and asset management company offered 67.032 million shares priced at P5.74 per share from Aug. 5 to 9. The shares will be listed at the Philippine Stock Exchange’s Small, Medium, and Emerging Board on Aug. 19 under the ticker “KPPI.”

Upon listing, the company will have a public float of 33.34% and a market capitalization of about P1.154 billion.

KPPI will use IPO proceeds to acquire about 3,500 square meters (sq.m.) of leasable office space. About P245 million will be spent for office spaces in Quezon City, Pasig City, and Makati City within the first half of 2020, while the rest will be for the purchase of office spaces in Davao.

Incorporated in 2005, the company currently owns 77 units with 98 leasable spaces of Kepwealth Center in the Cebu Business Park. The 15-storey building has been accredited by the Philippine Economic Zone Authority and has both domestic and multinational companies as its tenants.

The company also manages 459 units in different buildings in Metro Manila such as Oxford Suites, Medical Plaza Ortigas, Burgundy Corporate Tower, Burgundy West Bay Tower, Atrium Mall, Icon Macapagal, and Vivaldi Residences-Cubao Commercial Space.

Its asset management agreements have a standard term of five years, where it will be tasked to maximize the property’s value through market research, data analysis, and revenue forecasting.

KPPI’s net income grew 12% to P8.69 million in the first quarter of 2019, following a 13% uptick in revenues to P22.65 million.

In 2018, its net income stood at P34.3 million, flat from a year ago, while revenues rose 8% to P81.85 million.

KPPI is the first company to go public in 2019, amid market volatility seen over the latter half of 2018 extending until the first half of the year. Companies with IPO applications pending at the Securities and Exchange Commission include coconut product manufacturer Axelum Resources Corp. at P7.7 billion and Villar-led All Home Corp. at P20.7 billion. — Arra B. Francia

NPI starts construction on Valenzuela’s first Nissan dealership

NISSAN PHILIPPINES, Inc. (NPI) together with Prospercars, Inc., started construction of Valenzuela City’s very first Nissan dealership in Malinta, Valenzuela City last July 29.

“This milestone highlights Nissan’s commitment to make Nissan cars easily accessible to more people in the country. Our Valenzuela dealership is one of the many dealerships set to open in the coming years as part of our nationwide expansion plans,” says NPI President and Managing Director Atsushi Najima. The 1,000 sq.m. dealership will feature two storeys, consisting of a showroom on the first floor and a service workshop on the second.

China ex-central bankers see US currency war risks

FORMER China central bankers warned Saturday of currency-war risks with the US after an abrupt escalation of trade tensions between the world’s two biggest economies last week.

The US’ labeling of China as a currency manipulator “signifies the trade war is evolving into a financial war and a currency war,” and policy makers must prepare for long-term conflicts, Chen Yuan, former deputy governor of the People’s Bank of China (PBoC), said at a China Finance 40 meeting in Yichun, Heilongjiang.

Former PBoC Governor Zhou Xiaochuan said at the gathering that conflicts with the US could expand from the trade front into other areas, including politics, military and technology. He called for efforts to improve the yuan’s global role to deal with the challenges of a dollar-denominated financial system.

The PBoC allowed the yuan to weaken below seven to the dollar last week, prompting the US to accuse China of currency manipulation. President Donald Trump said talks with China planned for next month could be called off. Domestically, the conflicts added a new dimension to China’s balancing act: how to support the economy while avoiding an exchange rate that widens its rift with the US.

The US currency-manipulation charge is part of its trade-war strategy, and it’ll impact China “more deeply and extensively” than the trade differences, Chen said Saturday. While China should try to avoid further expanding the disputes, policy makers must be prepared for long-lasting conflict with the US over the currency.

“The US believes, in a geopolitical point of view, it’s being contained by China with China’s holding of its sovereign bonds,” Chen said. “That means the US is not completely without weakness.”

China should work to increase the use of the yuan in global trade such as the purchase of commodities, he said.

One of the PBoC officials at the meeting signaled that tensions with the US could increase. Zhu Jun, director of the PBoC’s international department, said “more ensuing measures are likely coming.” She didn’t elaborate.

The US’s move is an “appalling” act to gain an advantage during trade negotiations and is doomed to fail, the Communist Party’s flagship newspaper People’s Daily said in a commentary Saturday.

While markets haven’t reacted too strongly to the weakening yuan last week, it is possible that “the yuan could weaken further on unexpected shocks in the future,” Yu Yongding, a researcher at the Chinese Academy of Social Sciences, said in Yichun.

With policy makers seemingly determined to make the yuan more flexible, the PBoC “should be patient and not adjust policies in haste because of short-term market volatility,” Yu said. “It won’t benefit the PBoC’s credibility and won’t benefit forex reform.” — Bloomberg