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QC to ensure supermarket meat is free of ASF

QUEZON CITY Mayor Maria Josefina G. Belmonte announced on Friday that she will be issuing an executive order to ensure that meat being sold by supermarkets in her city are free from African Swine Fever (ASF).

In a news conference in Quezon City on Friday afternoon, Ms. Belmonte said that she had met with the officials of the supermarkets operating in the city to discuss measures to prevent the sale of ASF-contaminated meat products.

“Napag-usapan namin na ako ay maglalabas ng isang (We agreed that I will be issuing an) executive order as to how to address this issue and prevent this from occurring again,” Ms. Belmonte told reporters.

To recall, the Department of Agriculture (DA) confirmed on Jan. 3 that there hd been a case of ASF in a Quezon City meat dealer’s produce chiller.

The DA identified the dealer as North Star Meat Merchants, Inc., which has operations at the Cherry Congressional grocery in Quezon City.

The DA also said the Bulacan-based meat company has since been sanctioned and the Quezon City government has seized all the pork displayed in the chiller.

“We already agreed that number one, the supermarkets will submit to us the list of protocols na kanila pong ipu-put (that they will put) in place, internal control systems kumbaga para ma-self-police nila ang kanilang mga sarili (for them to police themselves), at ma-identify on their own kung mayroon silang, o may lumusot na ASF-infected meat sa kanilng inventory (if they have or if any ASF-infected meat made its way into their inventories),” Ms. Belmonte also said during the briefing.

She said the city government will review these points prior to their inclusion in the draft EO.

The supermarkets, the mayor said, were given a week to submit their other recommendations. The mayor expects to receive additional recommendations from them on Friday next week.

“The legal team will come up with a draft executive order by Wednesday of the following week — week after next — we will have a draft executive order,” she said.

Ms. Belmonte said further that she will be inviting the supermarket operators again for consultation once the draft is ready.

“Kapag okay na sa kanila ang nakasulat doon sa draft executive order, in front of them, pipirmahan ko na,” she added. (I will sign the draft EO in front of them once they are okay with the content.)

Among the companies that attended the meeting were SM Supermarket, Robinsons Supermarket, Landers Superstore, North Star Meat Merchants, S&R Membership Shopping, and Puregold. — Arjay L. Balinbin

Bongbong says he will run in 2020 elections

FORMER senator and defeated vice-presidential candidate, Ferdinand R. Marcos, Jr. said on Friday that he will run in the 2022 national elections.

“My plan is I will be a candidate next election. For what? We’ll still have to decide. Pero… hindi ko makalimutan ang payo ni Senator Manny Villar (Manual B. Villar, Jr.) na pagkatapos ng kanyang election, sabi niya, ‘wag mo na gawin yung pagkakamali ko na nag-announce ako nang masayadong maaga (But… I cannot forget the advice of Senator Manny Villar, after his election he said, do not make my mistake and announce your run too early),’” Mr. Marcos said during a briefing at the National Press Club which was streamed on Facebook.

Mr. Villar ran in the 2010 presidential election, which was won by Benigno Aquino III.

Mr. Marcos is currently questioning his defeat in 2016, accusing Vice-President Maria Leonor G. Robredo of committing fraud to secure her win. Ms. Robredo beat the former senator by more than 260,000 votes. After a recount requested by Mr. Marcos, Ms. Robredo widened her lead by over 15,000 votes according to the report of the Presidential Electoral Tribunal released last October.

The son of the late dictator Ferdinand E. Marcos, Sr. asked the Supreme Court to review the results of the recount, while Ms. Robredo urged the Court to immediately dismiss his petition. — Genshen L. Espedido

No need to suspend excise tax on fuel despite US-Iran tensions

THE HOUSE Committee on Ways and Means “sees no need” to suspend the fuel excise taxes under the Tax Reform for Acceleration and Inclusion (TRAIN) Law despite the ongoing tensions between the United States and Iran, according to its chairman.

“The Committee on Ways and Means will continue to monitor oil prices, and currently sees no need to suspend fuel excise taxes under the TRAIN law, but would be best equipped to entertain proposals to suspend these taxes if other fiscal measures such as the taxes on Philippine Offshore Gaming Operations (POGOs) are passed to provide a fiscal breathing space for revenue-negative measures” Committee Chairman Jose Maria Clemente S. Salceda said in his aide memoire to the President, House Speaker, and House Majority Leader.

Mr. Salceda said that for the Committee to be able to entertain proposals to suspend or reduce fuel excise taxes, “the members should be convinced that such proposals will not adversely impact both the immediate and the long-term fiscal standing of the country”.

The committee chairman also said Congress should prioritize tax measures that do not directly impact Filipinos, such as the POGO tax regime, and improve the efficiency of revenue collection so that there is “adequate legroom” in case of adjustments in fuel excise taxes.

Mr. Salceda also noted that the timely passage of the 2020 budget and the extension of the 2019 budget will give the Philippine economy “some cover” amidst the ongoing global tensions.

“The situation’s impact on inflation and the economy can be overwhelmed by the government’s efforts as long as food supply is kept adequate, prices are closely monitored to prevent opportunistic behavior and key economic reforms such as CITIRA (Corporate Income Tax and Incentives Rationalization Act) and the rest of the tax reform are passed” Mr. Salceda said.

According to the committee chair, the “real threat” to the Philippine economy can come from the possibility of other Persian Gulf states, such as Oman, Qatar, Bahrain, UAE, and Kuwait, becoming directly involved in a military conflict.

“Remittances from the said small Persian Gulf countries represent $3.9 billion or 60% of total remittances from the Middle East… Involvement in a state of war by these countries would be a more alarming development for the country’s economy” Mr. Salceda said.

According to data from the Bangko Sentral ng Pilipinas, remittances from Iran and Iraq in 2018 represent 0.007% of inflows from the Middle East and 0.002% from abroad.

“Unless a state of elevated regional war emerges in the Middle East, the country’s economy should be able to absorb whatever loss in remittances could result from total repatriation of Filipinos in both Iran and Iraq” the official said.

Mr. Salceda said that although a full-scale regional war between the US and Iran “remains unlikely,” the House of Representatives should be prepared to accommodate a request for a standby fund for repatriating overseas Filipino workers in the Middle East.

He also recommended that the government should intensify its efforts in ensuring that the country maintains an adequate food supply.

“The government should also keep watch for potential opportunistic behavior among oil marketeers. It is proposed that the President request the Department of Energy and the Department of Trade and Industry to come up with concrete plans to ensure that the conflict is not taken advantage of as an excuse for undue pricing practices” Mr. Salceda said.

In view of the long term, Mr. Salceda recommended that the country should “seriously consider” the nuclear option and the exploration of new energy sources, especially in the West Philippine Sea. The Committee Chairman also said that the lower chamber is “prepared to champion” the President’s agenda for energy independence.

Moreover, Mr. Salceda also highlighted the need for the immediate passage of the Department of Overseas Filipino Workers.

“While voices were not discordant, the US-Iran conflict clearly distinctly magnified the need for an institution clearly invested with a primary mandate to manage such concerns, provide continuous policy advice to the President and the national leadership including Congress while leading the application of the whole-of-nation approach and other convergence strategies” Mr. Salceda said. — Genshen L. Espedido

Rice tariff collections breach target

NINE MONTHS into implementation of Rice Tariffication Law, tariff collections stood at P12.3 billion as of December last year, breaching the P10-billion target that will be allotted for agriculture development programs, according to the Department of Finance (DoF).

Finance Secretary Carlos G. Dominguez III said the excess of the P10-billion earmarked for the Rice Competitiveness Enhancement Fund (RCEF) will be used to finance the government’s cash assistance programs for farmers badly hit by the plummeting farmgate price of palay or unmilled rice.

“[The law should be viewed as an] opportunity to revolutionize the agriculture sector and help farmers become more competitive in the global economy,” Mr. Dominguez was quoted as saying in a statement on Friday.

He said with RCEF in place, the country can catch up on the “long-delayed modernization of the agriculture sector” and help lift small farmers from rural poverty.

RCEF will be used to fund the modernization programs for the sector and directly provide farmers access to cheap credit, high-quality seeds, agricultural machinery and training on farm mechanization.

Aside from the zero-interest credit program and other low-interest loans, the Department of Agriculture (DA) launched the Rice Farmer Financial Assistance (RFFA) Program to aid 600,000 affected rice farmers with one-time cash grants of P5,000.

Last year’s easing inflation rate, which averaged at 2.5% against the 5.2% print in 2018, was largely attributed to falling rice prices due to the influx of supply when the law lifted the quantitative restrictions on imports and replaced with a 35%-tariff.

Large volumes of imported rice flooded the local market, causing farmgate prices of locally produced palay to plummet to an eight-year low in October and has even reached single-digit levels in some areas. However, the statistics agency reported that a gradual recovery was observed in December.

Prior to the implementation of law, the DoF said the National Food Authority (NFA) was the agency tasked to regulate private rice imports.

From 2005 to 2015 alone, the NFA had a total of P187 billion in tax subsidies or an annual subsidy of P19 billion during the ten-year period as it was the top importer of the staple back then, it said. — B.M. Laforga

Price controls on medicine to hinder innovation in the sector

FITCH SOLUTIONS Macro Research flagged the Maximum Drug Retail Price (MDRP) scheme that aims to impose price controls on commonly-used drugs as a possible risk that will hinder pharmaceutical innovations in the future.

In a commentary sent to journalists Friday, Fitch Solutions said the proposed price cuts will likely hit large drugmakers in Europe and US, which are “most exposed to the initiative,” as well as affect local distributors, pharmacies and even private hospitals.

It said majority of the drugs under the proposed MDRP scheme are newly-introduced products, many of which are considered “complex biologicals” or drugs produced through living organisms or biologicals.

“We believe that the scheme may not deliver the intended benefits and could hinder the introduction of future pharmaceutical innovations,” the report read.

Further, it noted that “price controls will diminish attractiveness of the Philippines pharmaceutical market to foreign drugmakers.”

The Department of Health (DoH) released last September the proposed list of 120 drugs under the MDRP scheme where price will be regulated and “are expected to have a mean price reduction of 56% from the prevailing market.”

Those included in the list are drugs addressing common diseases in the country such as hypertension, diabetes, cardiovascular disease, chronic lung diseases, neonatal diseases and major cancers, as well as those that have high cost of treatments, including chronic renal disease, psoriasis, and rheumatoid arthritis.

However, the scheme will only be implemented once President Rodrigo R. Duterte issues an executive order.

The DoH hopes to lower prices of some expensive medicines through the scheme but a group of pharmaceutical firms said the government can reduce prices by buying in bulk and selling them through state hospitals, instead.

The Health department had said they are targeting to have the list to be approved before 2019 ends but as of writing, the executive order that will effectively implement it is yet to be approved.

2020 BUDGET TO BOOST HEALTHCARE
Despite the perceived risks from the proposed price regulation, Fitch Solutions said the recently-signed 2020 budget will likely improve the country’s healthcare sector mainly due to the higher budget allocation for health-related programs.

It said the country’s healthcare spending likely contributed around 4.5% of last year’s overall gross domestic product and is seen to “grow steadily” until 2029, “rising from P897.4 billion to P3.111 trillion.”

“The 2020 budget for the Philippines will enhance healthcare access and with it, the commercial opportunities for pharmaceutical companies and healthcare provider,” it said in its report.

With higher budget, it said the DoH can hire more health personnel and build and upgrade medical infrastructures across the country, including those in hard to reach areas.

“To this end, the Philippines healthcare and pharmaceutical market will experience robust growth driven by the country’s concerted effort to improve the health and well-being of its population,” it said.

The P4.1-trillion budget for this year, signed on Monday, allocated 38% of the total for education, healthcare, housing and social welfare, where P164.7 billion is earmarked for the health sector.

Of this amount, P67.4 billion will go to the Philippine Health Insurance Corp. which aims to reach 15.4 million indigent families and around 5.4 million senior citizens this year.

“As such, health insurance coverage in the Philippines will expand, alleviating the reliance consumers have on out-of-pocket spending to finance healthcare expenditure in the country — a financial barrier to medical services,” it explained.

The remaining P59.6 billion will be used for hospital services while P34.2 billion will go to public health services

Meanwhile, the health department has allocated funding for other programs as well, including the national immunization program, programs that will prevent and eliminate infectious diseases, the health facilities operations program, the health facilities enhancement program and the medical assistance program, which aims to provide financial assistance to one million indigent patients.

Some funds will also be used to prevent and control non-communicable diseases through services and medicine, for purchase of drugs, vaccines and supplies for state health facilities and for hiring of needed health personnel. — Beatrice M. Laforga

FDC eyes up to P15B via fixed-rate bonds

FILINVEST Development Corp. (FDC) is planning to raise up to P15 billion through the issuance of fixed-rate retail bonds.

In a disclosure to the stock exchange Friday, the Gotianun-led firm said its board of directors has given the company’s management the authority to apply for the issuance in a special meeting that day.

The fixed-rate retail bonds will have an aggregate principal amount of P8 billion and an oversubscription option of up to P7 billion. But FDC noted the final terms and conditions of the offer are yet to be finalized by the management of the company.

FDC will now apply for the registration and licensing of the bonds with the Securities and Exchange Commission (SEC). Once approved and sold, the bonds will be listed at the Philippine Dealing & Exchange Corp. (PDEx).

No other details were disclosed.

FDC has P8.8 billion in outstanding bonds that the Philippine Rating Services Corp. (PhilRatings) previously awarded the top credit rating of “PRS Aaa.” The 10-year bonds were issued in January 2014.

FDC is the listed holding firm of the Gotianun family which controls Filinvest Land, Inc.; East West Banking Corp.; Filinvest Hospitality Corp.; FDC Utilities, Inc. and Pacific Sugar Holdings Corp., among others.

In the first nine months of 2019, the company posted an attributable net income of P8.98 billion to grow 16% from the year prior, as its revenues expanded 17% to P55.26 billion.

FDC shares closed 6 centavos or 0.46% up to P13.16 apiece on Friday. — Denise A. Valdez

CPG aims to double commercial leasing portfolio

CENTURY Properties Group, Inc. (CPG) is targeting to more than double its commercial leasing portfolio this year.

The Antonio-led property developer listed 30 million preferred shares on the Philippine Stock Exchange (PSE) on Friday, raising P3 billion from the follow-on offering that was twice oversubscribed.

After the listing ceremony at the PSE Tower, CPG President and Chief Executive Officer Jose Marco R. Antonio told reporters that the proceeds from the offering will be used for the expansion of its commercial leasing portfolio.

“The (preferred shares) are going to be primarily used for… both development and capex (capital expenditure) requirements of our expanded commercial leasing portfolio,” he said.

Mr. Antonio noted that this year he expects the commercial leasing portfolio to more than double, which will help boost revenues.

Among the projects that CPG plans to complete this year are the 95,000-sq.m. Century Diamond Tower in Century City, Makati and 39,000-sq.m. Novotel Suites Manila at Acqua Private Residences, Mandaluyong.

“This year, it will be around P2 billion in terms of revenues. In terms of leasable space, that should probably more than double,” he said.

CPG’s revenues from its commercial leasing business grew 41.67% to P404.07 in the nine months ending September, recording the biggest growth among its business segments.

The company currently has 120,000 square meters (sq.m.) of leasable space, mainly from the Asian Century Center (co-owned by Columbian Group of Companies) in Fort Bonifacio, Century City Mall in Makati, 160 medical suites in Centuria Medical Makati, and the Pacific Star Low Rise Building, where it owns 50%.

Mr. Antonio said there is strong demand for office space, which will provide a source of recurring income, predictable cash flows and longer-term tenants.

“It will (also) allow the company to have a balanced contribution not just from pre-sales but also recurring income assets,” he said.

The company is targeting to raise the consolidated net income contribution of its commercial leasing business to 30% in three years from 5% at present.

This is part of transforming its revenue mix in three to five years to 40% from residential condominiums (from 85% at present), 30% from affordable housing (from 10%); and 30% from commercial leasing (from 5%).

“This year, we still expect our main revenue drivers to be our condo projects. We currently have around P26 billion unbooked revenue and around P16-18 billion of unsold for our condo markets,” Mr. Antonio said.

“The contribution of affordable housing is accelerating; what was once coming from very negligible numbers is up to 10-11%. That should further rise to mid-double digits. Then leasing, coming from 5% now, should be closer to more than 10% this year,” he added, referring to revenue prospects for 2020.

CPG is allocating P30 billion for capital expenditures through 2022 to finance its expansion plans across business segments.

Shares in CPG closed at P0.56 each, up 2 centavos or 3.7%. — Denise A.Valdez

AEV raises $400M from dollar-denominated bond offering

ABOITIZ Equity Ventures, Inc. (AEV) was able to raise $400 million from its maiden dollar-denominated bond offering, it told the stock exchange Friday.

Following its announcement last week that it plans to issue senior unsecured notes, the listed conglomerate said in a disclosure yesterday it has agreed on a coupon rate of 4.2% per annum and a tenor of 10 years for the offering.

The company’s wholly-owned subsidiary AEV International Pte. Ltd. (AEVI) will issue the notes, which will be listed at the Singapore Exchange. Settlement is expected on Jan. 16.

Proceeds will be used to reimburse the funding given to AEVI when it bought Singapore-based Gold Coin Management Holdings, Inc. last year. It will also finance other proposed offshore investments of the company and general corporate needs.

AEV said the notes are unrated and will be payable semi-annually. These are unconditionally and irrevocably guaranteed with AEV as the guarantor.

“This bond issuance reflects our optimism in the strength of our fundamentals and the healthy appetite among foreign investors today. We look forward to availing of the international market to fund further growth and enable us to advance business and communities,” AEV President and Chief Executive Officer Sabin M. Aboitiz was quoted in the statement as saying.

The company said it was able to record a demand of more than $1 billion from more than 80 investors for the offering, which is equivalent to an oversubscription of more than two times from its issue amount.

More than 50% of the investors came from Asia excluding the Philippines, about one third came from onshore accounts, and more than 10% came from Europe, Middle East and Africa.

AEV has tapped Hongkong and Shanghai Banking Corp. Ltd. (Singapore Branch), Standard Chartered Bank, DBS Bank Ltd., Mizuho Securities (Singapore) Pte. Ltd. and MUFG Securities Asia Ltd. (Singapore Branch) as joint lead managers for the issuance.

Acting as joint global coordinators are the Hongkong and Shanghai Banking Corp. Ltd. and Standard Chartered Bank, while co-managers are BDO Capital & Investment Corp., BPI Capital Corp. and China Bank Capital Corp.

Earnings of AEV in the nine months ending September fell 9% to P15.7 billion after it took non-recurring losses amounting to P155 million.

Shares in AEV gained 20 centavos or 0.39% to close at P52 each on Friday. — Denise A. Valdez

Rediscount loans rise in 2019

LENDERS did not tap the central bank’s rediscount facility for the second consecutive month in December, with an analyst saying banks likely have enough liquidity due to the reserve requirement reductions implemented in 2019.

Peso rediscount loans totalled P122.167 billion for the the whole of 2019, unchanged for two months since its end-October period “due to non-availment from rediscounting banks in December 2019,” the central bank said on Friday.

However, total availments climbed 70% compared to the P71.524 billion seen in 2018.

The BSP allows lenders to tap additional money supply by posting their collectibles from clients as collateral through the rediscount window.

This gives banks the chance to use fresh cash — which could be in peso, dollar, or yen — to disburse more loans for corporate or retail clients and service unexpected withdrawals.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said banks may have opted to not tap the rediscount facilities for two consecutive months due to the added liquidity coming from the reserve requirement ratio (RRR) cuts the central bank imposed in 2019.

“Thus, banks have additional peso funds worth more than P200 billion after the RRR cuts took effect for both months,” he said in an email.

To recall, the BSP announced RRR cuts worth 100 basis points (bp) each in September and October which took effect on November and December, respectively.

Last year, reserve requirements were slashed by a total of 400 bps, bringing the RRR of universal and commercial banks to 14%, while that of thrift and rural lenders went down to five and three percent, respectively.

BSP Governor Benjamin E. Diokno has vowed to reduce RRR of lenders to the single-digit level by the end of his term in mid-2023.

Aside from the RRR cuts, the tweaks in the definition for deposit substitutes may have also affected banks’ decision to not tap the rediscounting facilities of the BSP.

“The redefinition of deposit substitutes to exclude interbank borrowings (effectively exempting them from RRR) would have also encouraged banks to get more peso funding through interbank borrowings, as an alternative to tapping the BSP rediscounting facilities,” Mr. Ricafort said.

The Monetary Board in November adopted the new definition of deposit substitutes as amended by the New Central Bank Act which was signed into law in February.

Mr. Diokno has said the tweak in the definition of deposit substitutes may released some P28 billion into the financial system.

According to the statement from the central bank, the bulk of the loans in the past year were utilized for other credits which comprise 65.13% of the total rediscounting loans. Included in this chunk are those that went to capital asset expenditures (38.75%), commercial credits (34.86%), loans to other services (19.62%), permanent working capital (6.72%), as well as housing loans (0.04%).

More than a third (34.86%) of the total borrowings went to commercial credit. Banks utilized this to disburse loans related to importation (24.93%), trading (9.92%), and export (0.01%) of goods or products.

Meanwhile, production credits or those used for agricultural production only made up 0.01% of the total rediscounting loans.

REDISCOUNT RATE REVAMPS
In a circular letter, Mr. Diokno said the Monetary Board has approved revisions to the computation of the rediscount rates for peso, dollar, and yen loans.

Mr. Diokno said that applicable peso rediscount rates will be the overnight lending rate of the central bank which currently stands at four percent plus “a spread depending on the term of the loan” determined by the BSP.

“The spread between these two may change periodically to complement changes in the Bangko Sentral’s monetary policy goals,” he said.

Meanwhile, rates for the dollar or yen-denominated loans will be based on the 90-day London Inter-Bank Offered Rate (LIBOR). If there is no LIBOR, “an applicable benchmark rate, plus an appropriate spread depending on the term of the loan as may be determined by the Bangko Sentral.”

Mr. Diokno said the spread between the rates for dollar and yen rediscount loans may be indicative of the changes in the market interest rates “and to achieve monetary policy objectives.”

For this month, rediscount rates are at 4.5625% for peso loans with a tenor of 90 days or less, while those with a 91- to 180-day term are priced at 4.625%.

These are based on the latest available BSP overnight lending rate plus a premium.

On the other hand, the Exporters Dollar and Yen Rediscount Facility for the dollar credit lines are placed with rates of 3.90838% for loans maturing from one to 90 days; 3.97088% for those with a tenor within a 91- to 180-day time frame; and 4.0338% for those with a term of 181 to 360 days.

Meanwhile, yen loans in January are placed at a rate of 1.95267% for one to 90-day loans; 2.01517% for 91- to 180-day loans; and 2.07767% for loans maturing within a 181- to 360-day period.

These are based on the 90-day LIBOR as of end-December plus 200 basis points, plus term premia. — Luz Wendy T. Noble

Peso inches down on cautious trading ahead of US-China deal

THE PESO moved sideways on Friday as the market was on wait-and-see mode a week before the anticipated signing of the phase one deal between the world’s two biggest economies.

The local unit finished trading at P50.66 a dollar on Friday, shedding less than a centavo from its P50.651 trading close on Thursday, according to data from the website of the Bankers’ Association of the Philippines.

The peso opened at P50.67 against the dollar. Its weakest point for the day was at P50.76, while its best showing against the greenback was at P50.63.

Dollars traded went down to $1.152 billion from $1.582 billion on Thursday.

An analyst said the slight depreciation in the peso may have been due to news on the findings about the aircraft crash in Tehran.

“The peso weakened anew as market worries rekindled after the Boeing aircraft from Tehran heading to Ukraine was reportedly struck by Iranian military operations this week,” the analyst said in an email.

Reuters reported that Canadian Prime Minister Justin Trudeau cited their country’s intelligence findings that point out that the Ukranian airliner crash which killed 176 aboard in Tehran was likely brought down by an Iranian missile.

“We have intelligence from multiple sources, including our allies and our own intelligence. The evidence indicates that the plane was shot down by an Iranian surface-to-air missile,” Mr. Trudeau said.

The US National Transportation Safety Board is set to take part in the investigation of the plane crash.

Meanwhile, Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said the sideways trading may be an indication of the market waiting on the sidelines for the phase one trade deal between Washington and Beijing.

“The financial markets are now anticipating the scheduled signing of the phase one deal amid continued easing of US-Iran tensions,” he said in a text message.

On Thursday, US President Donald J. Trump said in an interview with the ABC TV affiliate in Ohio that the deal with China will be signed on Jan. 15.

“We’re going to be signing on January 15th — I think it will be January 15th, but shortly thereafter, but I think January 15th — a big deal with China,” Mr. Trump said, as reported by Reuters.

Chinese Vice Premier Liu He, who leads Beijng’s negotiation team in trade talks, will sign the deal in Washington next week. — L.W.T. Noble

Stocks close lower as investors await US-China trade deal

By Denise A. Valdez, Reporter

THE main index ended lower at the close of the week as investors decided to hold off in anticipation of the signing of the trade pact between United States and China next week.

The Philippine Stock Exchange index (PSEi) tumbled 20.87 points or 0.27% to end at 7,776.77 on Friday, while the broader all shares index dipped 7.66 points or 0.17% to 4,605.17.

“Philippine shares traded weaker as some key events are keeping investors on the sidelines,” Regina Capital Development Corp. Head of Sales Luis A. Limlingan said in a mobile message Friday.

He said investors are waiting for the signing of the first phase of the US-China trade deal on Jan. 15, now that China has confirmed the attendance of Vice Premier Liu He, Central Bank Governor Yi Gang and Commerce Minister Zhong Shan at the signing ceremony in Washington D.C.

Investors are also keeping a close watch on the relationship of US and Iran, now that US has agreed to take part in the investigation of the Ukrainian airplane that crashed Tehran, killing all 176 passengers.

Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan agreed that the global events have led to the market’s decline on Friday. But he noted the lack of clarity over the fate of water concessionaires Manila Water Co., Inc. (MWC) and Maynilad Water Services, Inc. also affected the market’s weak performance.

“The market has been battered by these uncertainties coming from the geopolitical tensions abroad and the uncertainties coming from the water concessionaires which can have a negative sentiment on the business confidence,” he said in a text message.

The share price of listed investors of the water concessionaires kept slipping on Friday. Shares in MWC lost 2.30% to close at P10.20 each, while shares in Maynilad investor Metro Pacific Investments Corp. dipped 1.58% to end at P3.74 apiece.

Five out of six sectoral indices ended in red territory. Mining and oil slumped 142.41 points or 1.73% to 8,107.64; industrial gave up 54.07 points or 0.57% to 9,364.48; holding firms shaved 31.13 points or 0.41% to 7,635.45; property erased 27.36 points or 0.66% to 4,112.34; and services fell 5.11 points or 0.33% to 1,555.66.

Financials was the sole gainer with an increase of 16.61 points or 0.92% to 1,827.52.

Value turnover on Friday stood at P6.8 billion with 1.11 billion issues changing hands. Foreign investors turned bullish to record a net buying of P465.66 million, putting an end to seven consecutive days of net selling.

Trade deficit narrows in November

The country’s trade-in-goods deficit narrowed in November as both imports and exports declined, the Philippine Statistics Authority reported this morning.

Payments of import goods amounted to $8.94 billion in November, eight percent less than the $9.71 billion in the same month last year. This was lower than the 10.8% decline seen in October, albeit a reversal from the 9.6% growth in November 2018.

The latest reading marked the eighth consecutive month of decline for imports.

Meanwhile, the value of merchandise exports edged down 0.7% annually to $5.60 billion in November from $5.64 billion a year ago. This marked a turnaround from the revised 0.3% uptick recorded in October and the one-percent growth last year.

The decline in both imports and exports led to a narrower trade deficit of $3.34 billion in November, compared to a $4.07-billion gap in the same month in 2018.

To date, the merchandise import bill declined by 4.6% to $99.15 billion from $103.94 billion in 2018’s comparable 11 months, below the two-percent growth target set by the Development Budget Coordination Committee (DBCC) for 2019.

Meanwhile, export receipts decreased by 0.02% to $64.56 billion on a cumulative basis against the DBCC’s one-percent growth target set for the year.

That brought the year-to-date trade balance to a $34.59-billion deficit, smaller than the $39.36-billion shortfall in January-November 2018.

In November, Japan was the Philippines’ top export market with a 16.6% market share at $930.79 million, followed by the United States’ 15.9% ($890.06 million) and Hong Kong’s 13.9% ($776.57 million) market shares.

Meanwhile, China was the country’s top source of imports that month with a 22.9% share in November ($2.05 billion), followed by the 10% and 7.5% market shares of Japan ($894.42 million) and the US ($668.81 million), respectively. – Mark T. Amoguis

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