Philippine stock bulls unfazed amid sharpest drop in 6 weeks

July 17, 2019 | 12:02 am

THE bull run for Philippine stocks still has legs amid tailwinds of stronger corporate earnings, cooling inflation and continued monetary stimulus.

The benchmark Philippine Stock Exchange index entered the bull market on Monday after climbing more than 22% from a November low. The gauge is now the best performer in Southeast Asia and one of the top gainers in Asia this year. The surge was also propelled by a stronger peso, which has been among the best performing currencies in the region. The equities index shed 1.2% at the close Tuesday, the biggest loss in six weeks.

“This is a healthy pullback considering the backdrop of favorable fundamentals from slowing inflation and prospect of further monetary easing,” says Cristina Ulang, head of research at First Metro Investment Corp. “It’s a good opportunity to add names that have earnings growth visibility.”

Foreign investors have returned to the market — which was among the worst performing last year, pouring more than $455 million into equity funds this year. That improvement was partly due to fund inflow after investors finished adjusting allocation on the back of MSCI, Inc.’s expansion of China weighting in some of its benchmarks.

“After building momentum in the last two months, the market has convincingly broken the ceiling at 8,100 and it looks like there’s still enough gas in the tank for it to move higher,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. “Some of those who were hesitating jumped in for fear of getting left behind.”

The nation’s market was roiled by the US-China trade war, escalating inflation and a weakening peso last year. Foreign investors pulled over $1 billion out of the nation’s stocks in 2018 — their biggest withdrawal in three years, according to data compiled by Bloomberg.

A double-digit growth in second-quarter earnings at SM Prime Holdings, Inc., the nation’s largest shopping mall operator, supports expectations that household spending has recovered and corporate results will be better than the first quarter, according to Mr. Ravelas. SM Prime fell 0.6% Tuesday, after soaring 3.1% on Monday.

Stronger corporate earnings combined with falling inflation and a less tighter monetary condition will help propel the index to 8,500 in the near term, he said.

All but three of the PSEi’s 30 components have gained since the low in November with JG Summit Holdings, Inc. and First Gen Corp. surging more than 60%. About half of the gauge lagged the index’s 21% gain from the November-low through Tuesday, including SM Investments Corp. and Jollibee Foods Corp.

While the bull market will be well supported with valuation still at “reasonable“ level, “investors should rotate money from the winners to the laggards as the round of portfolio adjustments that will come with changes in the MSCI in August will provide headwinds and temper gains,” said Miguel Ong, analyst at AP Securities Inc. — Bloomberg

Leòn holding its 12th online auction

July 17, 2019 | 12:02 am

THE Leòn Exchange Online Auction Edition 12, under the Leonexchange platform, will be held on July 20 and 21 starting at 11 a.m. All bidding will be purely online at www.leonexchange.com.

Among the paintings in the auction are a large 6 X 5 feet oil painting by Andres Barrioquinto entitled 100 Flowers Bloom, an untitled Macario Vitalis oil painting, Diosdado Lorenzo’s Barrio Scene from 1978, Romulo Galicano’s Old House from 1982, Elias Laxa’s Binondo Church from 1967, Romeo Tabuena’s Three Villagers from 1960, Fernando Zobel’s oil on paper Botijo from 1964, Jose Joya’s pastel on paper Mother and Child from 1989, Jason Montinola’s untitled oil on canvas painted in 2009, Dicher Alarcon’s untitled rendition of the Mona Lisa, and Iya Consorio’s resin sculpture.

Also included in the sale are pieces of crystal and silver, Chinoiserie, early Filipino furniture, China, books, and photographs.

“One can indulge his or her taste for the beautiful items at various price points at the upcoming online auction and all that from one’s armchair or boudoir. The online auction gives clients the convenience of bidding through their mobiles, tablets or laptops, without having to trek all the way to where physical auctions happen,” Leòn Gallery Director Jaime Ponce de Leon was quoted as saying in a press release.

The exhibit of items to be auctioned is open to the public daily from 10 a.m. to 6 p.m. at Leòn Gallery in Warehouse 14 La Fuerza Plaza, 2241 Chino Roces Ave. and at the G/F Eurovilla 1 Legazpi corner Herrera St., Legazpi Village, Makati City.

To join the auction, got to www.leonexchange.com and registering as a buyer. For more information, visit www.leon-gallery.com or contact info@leon-gallery.com or call 856-2781.

Toyota replaces airbag computers in some Rush units

July 17, 2019 | 12:01 am

TOYOTA Motor Philippines is launching a “special service campaign” to replace the curtain shield airbag computer on some Toyota Rush units.

In a letter to the Department of Trade and Industry Consumer Protection and Advocacy Bureau Director Domingo R. Tolentino, Jr., Toyota Philippines First Vice-President Rommel R. Gutierrez said the service campaign covers 12,124 units of Toyota Rush sold in the Philippines. The units were produced from April 2, 2018 to Feb. 7, 2019.

“Due to inappropriate airbag computer programming of the involved units, the Curtain Shield Airbags may deploy upon impact on the rear wheel,” he said in the letter dated June 27.

Mr. Gutierrez said the company will inform the concerned customers through official notification letters.

“As safety is Toyota’s number one priority, we strongly urge our customers to bring the unit to their preferred dealership immediately upon receipt of our notice. While servicing of the unit is pending, we urge our customers to take extra precautions when driving on uneven roads,” the company said in a separate statement.

Customers can bring their Toyota Rush units at any authorized Toyota dealer nationwide for replacement of the airbag computer at no cost.

The Toyota Rush is an entry-level sport utility vehicle, with five-seater 1.5E and seven-seater 1.5G variants.

PNB completes P12-B stock rights offering

July 17, 2019 | 12:01 am

PHILIPPINE National Bank (PNB) completed its P12-billion stock rights offer (SRO) on Monday, with the raised funds allotted to grow its assets.

The Tan-owned PNB said in a disclosure to the local bourse on Tuesday that its pre-emptive rights offering of 276.63 million common shares priced at P43.38 apiece was completed on July 15.

The bank did not provide other details.

PNB said in a previous disclosure it is set to raise about P12 billion via SRO with an offer period from July 3 to 12.

Eligible shareholders were entitled to subscribe to a share for every 4.516 common shares as of the June 21 record date. Ex-date was yesterday.

PNB said proceeds of the fundraising activity will be used to fund the asset growth of the bank.

Apart from the rights offering, PNB also set a euro medium-term note (MTN) program amounting to $2 billion, double than the initial $1 billion announced.

The lender established its euro note program in April last year. During that month, it allocated $300 million in proceeds from the program to support its dollar lending.

In May, the lender said it wants to draw another $300 million in fresh funds from the MTN program.

PNB booked a net profit of P1.9 billion in the first quarter, up 30% from the same period last year.

Shares in the bank stood at P55 apiece on Tuesday, up P1 or 1.85% from the previous close. — K.A.N. Vidal

Instituto Cervantes holds exhibit on literary legacy of Miguel Hernández

July 17, 2019 | 12:01 am

FROM July 25 to Sept. 16, the Instituto Cervantes de Manila will be holding the exhibition, Miguel Hernández, a plena luz, in its center in Intramuros.

Organized by the Provincial Government of Jaén, this exhibit is one of the projects done in commemoration of the 75^th anniversary of the death of the poet Miguel Hernández, who hails from Orihuela, Alicante. Its purpose is to make people aware of his literary legacy, which is safeguarded by Jaén’s provincial government through the Instituto de Estudios Giennenses (IEG).

Curated by Juan José Téllez, the Director of the Centro Andaluz de las Letras, Miguel Hernández, a plena luz was first opened in Jaén in December 2017.

In 2018, the exhibit went on an international tour, taking the poet to three continents. The exhibit has been seen in Instituto Cervantes branches in London, Manchester, New York, Chicago and Dublin. After Manila, the only Asian city in the international tour, the exhibit will be heading to Toulouse and Paris.

During the planning of its international tour, Instituto Cervantes Manila had already been marked as an obligatory destination since the center’s library is named after Miguel Hernández. For more than a decade the Manila center of Instituto Cervantes had been programming cultural events to commemorate the poet.

Considered as one of the most authentic figures in 20^th century Spanish literature, the literary beginnings of Miguel Hernández were marked by religiosity, which was predominant during that period, and a self-taught literary education based on the classics of the Spanish Golden Age.

His book, El rayo que no cesa (1936,) made him famous in the poetry circles of Madrid, where he had decided to move in order to try his luck as a poet.

The Spanish Civil War did not disrupt his literary career and in fact, during this time, he published Viento del pueblo (1937) and El hombre acecha (1938).

After the war, he was arrested and imprisoned, where he had died in subhuman conditions in 1942.

Centering on Miguel Hernández as an icon of poetry and enlightenment, the exhibition offers viewers a glimpse of his life through photos and interactive devices which display digital copies of his works and various documents.

The exhibition also contains original pieces, such as manuscripts, letters, book editions, photographs, and other personal objects. These were acquired by the Provincial Government of Jaén through the writer’s heirs.

The Exhibit Room of Instituto Cervantes de Manila is located in San Luis Complex, Intramuros, Manila. Entrance to the exhibit is free.

For details, visit the website of Instituto Cervantes at http://manila.cervantes.es and its Facebook page at www.facebook.com/InstitutoCervantesManila.

How PSEi member stocks performed — July 16, 2019

July 17, 2019 | 12:00 am

Here’s a quick glance at how PSEi stocks fared on Tuesday, July 16, 2019.

How resilient is the Philippines’ business environment compared to those of other economies?

July 17, 2019 | 12:00 am

NEDA sees upper-middle income threshold by Q4 2020

July 16, 2019 | 9:33 pm

THE GOVERNMENT is positive that the Philippines will achieve upper-middle-income status by the fourth quarter of next year, according to the National Economic and Development Authority (NEDA).

“Yes, next year positive,” NEDA Secretary Ernesto M. Pernia said in a text message to BusinessWorld when asked if NEDA believes the Philippines will achieve the milestone next year.

Asked what quarter of 2020, Mr. Pernia replied, “last quarter.”

The World Bank norm for an upper-middle-income economy is a per capita income ranging between $3,896 and $12,055.

The NEDA earlier projected the milestone to be reached this year but moved it back after gross domestic product (GDP) growth slowed to 5.6% in the first quarter due to the delay in passage of the 2019 General Appropriations Act (GAA).

The government intends to spend P2.996 trillion from the second to the fourth quarters of this year, to catch up with its targeted growth rate of 6-7%.

The Department of Finance (DoF), meanwhile, said it also has a positive outlook for the economy due to its confidence in upcoming reforms.

In a separate text message, Finance Assistant Secretary Antonio Joselito G. Lambino II said, “We are certainly one with NEDA and Sec. Pernia in working toward graduating to upper-middle-income status at the soonest possible time, while at the same time helping one million Filipinos lift themselves from poverty every year.”

“The following will help achieve this: continue investing in infrastructure; pass the remaining packages of the comprehensive tax reform program; improve the investment climate by passing priority legislation; fully implement socioeconomic reforms such as the national ID, ease of doing business, rice liberalization, universal health care; and improve agricultural productivity,” Mr. Lambino added.

Last month, the World Bank approved a $300 million loan for additional funding of the Philippines’ conditional cash transfer program for two years.

The Philippines has an annual budget of $1.7 billion for the CCT known as Pantawid Pamilyang Pilipino Program (4Ps), which benefits 4.2 million families including 8.7 million children.

The additional funding from the World Bank is meant to cover 9% of the 4Ps budget until June 2022.

In an e-mail to BusinessWorld, Mara K. Warwick, World Bank Country Director for Brunei, Malaysia, the Philippines and Thailand, said, “Investing on solid and impactful social safety nets is a norm for upper middle-income economies to make sure that no one is left behind while at the same time continuing to invest in the human capital of future generations. Social protection programs help to move people out of poverty, improve human capital, which contributes to economic growth. This helps the country achieve higher income status.”

The 4Ps are active in 145 cities and 1,483 municipalities, and has been credited with a quarter of the poverty reduction in the Philippines, according to the World Bank 2018 Poverty Assessment.

Asked how the additional funding from the World Bank can help the country achieve upper-middle-income status, NEDA Undersecretary Adoracion M. Navarro said in an e-mail, “This World Bank loan is part of the government’s external financing program for 2020-2022. It is more directly relevant to our goal of reaching for the demographic dividend and raising the country’s human development index, than increasing income. The program loan will help the government in expanding poor children’s access to health and education services through the 4Ps.”

“It will also help in systems improvements in the implementation of the 4Ps. Overall, it is expected to translate to higher human development condition in the country’s poor areas; it will help regions which are lagging in terms of human development indicators to catch up. There is no indicative regional breakdown of the program implementation yet, but I understand that in the past 4Ps implementation, BARRM (Bangsamoro Autonomous Administrative Region) had the highest number of beneficiaries among regions,” Ms. Navarro added.

In May, Ms. Navarro said in a briefing that the regional disparities or inequality in per capita income has widened over time, noting the need for the government to improve transportation and connectivity especially in rural areas to reduce gaps.

“As widening disparities may be more a result of high rate of population growth in some regions than poor economic performance per se, stakeholders especially local government units must also support the government’s planning and reproductive health program,” Ms. Navarro said.

“We have to integrate small farmers and fisherfolk into larger business enterprises. This is apart from other strategies like farm diversification which will help farmers venture into commodities with higher value and market potential,” she said. — Reicelene Joy N. Ignacio

Mindanao Railway project specs altered to hurry implementation

July 16, 2019 | 9:32 pm

THE Department of Transportation (DoTr) said costs were adjusted upward for the Mindanao Railway Project Phase 1 due to the need to traverse rolling terrain, while the rail line was downgraded to single track and non-electric to speed up implementation.

Transportation Undersecretary for Railways Timothy John R. Batan told reporters Tuesday that the approved project cost more than doubled to P82.9 billion from P35.9 billion previously because earlier studies had assumed that the rail line would cross flat terrain.

“Feasibility study from 2015 to 2017 assumed (the route to be) flat. But if you look at the alignment of Tagum-Davao-Digos, it’s not flat, it’s rolling… we need some infrastructure adjustments, some civil works adjustments such as elevated viaducts and deep cuts, which is the primary driver of our increase in cost,” he said.

A National Economic and Development Authority (NEDA) subcommittee approved the increased cost estimate last week.

“Ang configuration natin ngayon [Our configuration now]… is single track, non-electrified. The reason why the interagency ICC (Investment Coordination Committee) decided [to do that] is to optimize the investment,” he added.

The NEDA ICC Cabinet Committee said Monday it approved the increased budget for the China-funded Tagum-Davao-Digos segment of the Mindanao Railway Project to cover changes in its structural and construction works and the inclusion of a Davao Satellite Depot.

Transportation Secretary Arthur P. Tugade said the downgrade in the railway’s configuration was meant to get the project rolling.

“[G]usto ko double track hindi single track. Gusto ko electrified, hindi diesel. Ngayon sabi nila, para maumpisahan na ‘yan, ‘yung engineering design, baguhin natin. Gawin nating single track, diesel,.. (pero) sa umpisa lang ‘yan [I wanted it to be double track and electrified. But they said to start the project, the engineering design must be changed to single track, diesel. But that’s just for now],” he said.

“Tandaan mo, by phases ‘yan. Pwede naman ‘yan baguhin in the future. Para maumpisahan na lang [Remember, that project would come in phases. That could still be changed in the future. This is only to get the project started],” he added.

With the approval from NEDA, the DoTr now hopes to sign the loan agreement for the Tagum-Davao-Digos segment with the government of China within the first half of next year. Construction is also eyed to begin in parallel with the loan signing.

“First, second quarter, matagal na ‘yun [at the latest]… We’re planning to get a commitment from the Chinese government, para ‘pag na-award natin ‘yung kontrata within this year, in parallel with the negotiations for the Chinese loan agreement, nagtatrabaho na sila [that when we award the contract this year, they’ll start working in parallel with the negotiations for the loan agreement],” Mr. Batan said.

“With the decision of the ICC last week, we are already sending this week our request for the shortlist,” he added, referring to the shortlist of contractors that China will provide to the Philippines as the recipient of the ODA. The DoTr will choose from the shortlist, through a limited competitive bid, the Chinese contractor to undertake the project.

“The commitment of China to finance the project has not changed from the time that they made that commitment in 2018.”

Mr. Batan said based on the general terms, China is expected to finance up to 80-85% of the Tagum-Davao-Digos railway’s total project cost. — Denise A. Valdez

PHL, US sign education, tech agreements

July 16, 2019 | 9:31 pm

THE PHILIPPINES and the United States signed two agreements strengthening cooperation in higher education and science and technology during the Eighth Bilateral Strategic Dialogue held in Manila from July 15-16.

At the dialogue, the United States said it supported Philippine efforts to build up its infrastructure and expressed its willingness to deepen defense cooperation.

US Ambassador to the Philippines Sung Y. Kim said the two-day dialogue concluded with the signing of a Joint Statement on Higher Education Cooperation and Science and Technology Agreement.

“This will give us a way forward of expanding our educational ties. We also signed a science and technology agreement,” Mr. Kim said at a briefing Tuesday.

The two sides also agreed to an Alliance Fellowship, under which the US Embassy will be sending two Filipino scholars to the US every year to study national security and international relations.

“We intend to mold the alliance into one that gets ahead of the issues presented by the global environment. This way we ensure the alliance is proactive rather than reactive to sheer concerns,” Philippine Ambassador to the US Jose Manuel G. Romualdez said in the briefing.

“Some of this concern include tampering violent extremism including mitigating issues resulting from the return of foreign terrorist fighters, countering transnational crimes, defense modernization, humanitarian assistance and disaster response, US participation of the ‘Build, Build, Build’ program in the development of the New Clark City.” — Charmaine A. Tadalan

Foreign-worker crackdown backed by chambers

July 16, 2019 | 9:30 pm

FOREIGN business chambers said they support the government’s proposed controls on the entry of foreign workers, saying that Chinese investors in the online gaming industry have provided limited employment opportunities to Filipino workers.

In a text message to BusinessWorld, American Chamber of Commerce (AmCham) Advisor John Forbes said that the recent Joint Memorandum Circular (JMC) No. 001 series of 2019, issued by various government agencies, will help ensure more jobs for locals, especially in the Philippine Offshore Gaming Operator (POGO) industry.

“These controls on foreign workers are needed in light of the influx of young Chinese working in online gambling. We thought PRC (People’s Republic of China) investors were coming to employ Filipinos but so far many of them have only given jobs to Chinese and not to Filipinos,” Mr. Forbes said.

On July 11, the Department of Labor and Employment (DoLE) signed the JMC together with the Department of Environment and Natural Resources (DENR), Department of Finance (DoF), Department of Foreign Affairs (DFA), Department of Justice (DoJ), Bureau of Immigration (BI), Bureau of Internal Revenue (BIR), National Intelligence Coordinating Agency (NICA) and Professional Regulation Commission (PRC). The JMC outlines and harmonizes procedures governing on the issuance of work permits to foreign nationals.

Also during the same period, DoLE’s Bureau of Local Employment (BLE) reported that it has identified more than 7,000 Chinese nationals working in POGOs who will be deported for not securing work permits, particularly the Alien Employment Permit (AEP) which is only issued by the DoLE.

European Chamber of Commerce of the Philippines (ECCP) President Nabil Francis said that the JMC will lead to the better enforcement of rules governing the issuance of work permits and strengthen the monitoring of foreign workers entering the country.

“This is a step in the right direction towards the effective implementation of existing legislation and exploring further avenues for improvement. We are glad to see the government agencies involved closely cooperating on this,” Mr. Francis said in an e-mail to BusinessWorld.

The JMC requires all foreigners seeking work to have a Tax Identification Number (TIN) before they obtain a permit to work in the Philippines. NICA is also tasked with issuing a “no deregatory information” finding before foreign nationals apply for a work visa. — Gilian M. Cortez

DTI to file bill funding MSME lending at P4 billion a year

July 16, 2019 | 9:29 pm

THE TRADE DEPARTMENT said it hopes to make a lending scheme known as Pondo sa Pagbabago at Pag-asenso (P3) more permanent via legislation, Trade Secretary Ramon M. Lopez said during the 2019 National MSME Summit on Tuesday.

“We’re proposing a P3 bill so that we can institutionalize the P3 allocation. We could still go through the budget but at least there’s more certainty (of a) budget allocation every year,” Mr. Lopez said.

The P3 lends to micro, small and medium enterprises (MSMEs) in the wake of President Rodrigo R. Duterte’s directive to eliminate the “5-6” system of usurious informal lending. P3 started in 2017 and has about 83,000 registered borrowers.

Mr. Lopez said that the plan is to have an allocation of P4 billion per year over four years.

The DTI said the market for 5-6 loans is estimated at about P30 billion nationwide.

“We want to kill 5-6 and put it aside. Kailangan may kapalit (there needs to be a replacement). So ang kapalit mo dapat medyo close to that amount. (The replacement needs to be close to that amount),” he told reporters.

An additional P1.5 billion to fund P3 will also be put in place with the new budget, he said in his speech during the summit. — Katrina T. Mina