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Gov’t says COVID-19 spending has reached P352.7 billion

THE GOVERNMENT has spent P352.7 billion so far in responding to the coronavirus disease 2019 (COVID-19) pandemic and has used up much of the readily-accessible funding from this year’s budget.

In a taped Palace address aired on Friday, Department of Budget and Management (DBM) Secretary Wendel E. Avisado said the government has spent P352.7 billion so far for its COVID-19 response, or 88.84% of the P397 billion in capital outlays it can tap from this year’s budget.

“Ang pwede lang natin galawin (The budget items we can tap around), which we have done, is P397 billion more or less. Ito yung capital outlay ng mga departments at saka yung Congress-initiated. Sa ngayon, ang nagagamit na natin ay P352 billion na. So konting konti na lang ang natitira (These are capital outlays of departments and Congress-initiated items. We have used P352 billion so far, so there’s little left),” Mr. Avisado said.

Out of the approved P4.1-trillion spending plan for this year, Mr. Avisado said P1.249 trillion cannot be touched as these were already automatically appropriated to agencies, to local government units for their internal revenue allotment and for the government’s debt servicing bill.

This leaves the national government P2.8 trillion in “new appropriations,” which are used for expenditures on personnel services, maintenance and other operating expenses, financial expenses and capital outlay, he said. Of this, the government can only redirect funds from capital outlays labeled as “for later release,” which Mr. Avisado said is at around P397 billion.

Finance Secretary Carlos G. Dominguez III said the P352.7 billion spent were partly financed by the government’s tax collections — which he flagged to be declining — savings, and loans from multilateral lenders, including the World Bank and the Asian Development Bank.

Mr. Dominguez however assured the government has “sufficient” cash, but noted the government is restricted to expenditures authorized under the P4.1 trillion spending plan, he said in the same address.

With this, the government will have to ask the Congress for a higher 2020 budget when lawmakers resume hearings on May 4. The P4.1-trillion spending plan for this year was approved in December, before the virus outbreak hit the country.

To plug the funding gap, President Rodrigo R. Duterte again floated the possibility of selling state-owned properties if needed.

However, Mr. Dominguez said via Viber that the government has “not reached the point at which we are considering sale of major government assets.”

DBM’s Mr. Avisado said the administration’s economic development cluster, which includes the Budget and Finance departments and the National Economic and Development Authority (NEDA), have been meeting for “forward planning” which he said will again require “a lot of funding.”

He said the plan will help the country transition to “the new normal” to avoid a second wave of infections and would also provide more jobs in the near term.

Earlier, the Budget department said it will no longer release 35% of the budget of state agencies and asked them to adopt cost-cutting measures to shore up funds for the government’s response to the pandemic.

State agencies were ordered to defer non-essential purchases and activities such as buying new vehicles, celebrations, construction or renovations of government buildings as well as unnecessary foreign and local travels, among others.

The government is sourcing funds for COVID-19-related spending from tax collections, savings, dividends from state-owned firms and other contributions. The Department of Finance is also negotiating loans from multilateral lenders to partially fund its emergency measures, and is also looking to tap commercial markets for more funding.

So far, the Asian Development Bank has approved a $1.5-billion loan to aid the government’s response to the pandemic and assistance for affected sectors. The World Bank, meanwhile, approved $100 million recently on top of the $500 million okayed earlier this month for the Third Risk Management Development Policy Loan. — B.M. Laforga

Fitch Solutions sees slower construction industry growth

THE GROWTH of the construction industry is expected to slow to 3.6% as most activity is concentrated in areas affected by the enhanced community quarantine (ECQ), a report said.

Fitch Solutions Country Risk and Industry Research said in a report released on Friday that year-on-year growth in the sector for 2020 is expected to slow from the initial projection of 5.8%.

Most business operations, including construction, have halted throughout the enhanced community quarantine implemented since March 17.

Fitch Solutions said the majority of the total value of projects approved in previous years were concentrated in Luzon, including the National Capital Region.

“With strict ECQ measures imposed on Luzon, a large proportion of projects would have experienced stop work orders, leading to our bearish outlook for the Philippine buildings sector for 2020.”

The report said construction activity will still face challenges even after the ECQ is lifted and work in the sector resumes.

“Certain projects will face supply chain challenges, as the flow of construction materials and equipment will be disrupted, especially if sourced from foreign markets. Projects will encounter delays in delivery due to logistical challenges and shortages in supply due to disrupted business activity.”

The industry’s growth, the report said, will likely be dragged by less construction activity in the buildings sector as growth is expected to be at 2.8% year-on-year.

The value of 2019 building projects fell four percent compared to the previous year, but grew 37.2% compared to 2017.

“Although these figures remain healthy, and the construction activity generated by these projects will feed into our 2020 forecasts, we expect investment in residential, commercial and industrial real estate to take a hit in 2020, due to a deteriorating business and consumer sentiment not just within the Philippines, but around the world,” the report said.

Fitch Solutions said private developers could delay new projects until consumer sentiment improves. Travel bans, the report said, could have also created a drop in demand for residential real estate as foreigners are unable to enter the country to buy properties.

However, the infrastructure sector is expected to exceed overall growth, rising by 5.4% due to a possible 5.1% growth in transport and 5.6% growth in energy and utilities.

This growth is still lower than the 10.6% seen in 2019 after Luzon infrastructure projects halted.

“The approval of the Department of Transportation’s request to lift restrictions on certain projects, including utility relocation works, works across 13 rail projects, as well as rail replacement works on MRT-3 in Metro Manila, will provide a small boost to growth, but not enough for it to match 2019 levels.”

The timing of the resumption of government infrastructure projects under Build, Build, Build is uncertain, the report said, expecting more funds to be reallocated after P30 billion out of P534 billion had been diverted.

But there may be some healthcare infrastructure investment in the short and medium term, it said.

“The pandemic has exposed deficiencies in the existing healthcare system, as seen from the country’s relatively high death per confirmed case ratio. This means that the country (is) vulnerable to future episodes of healthcare crises,” the report said.

“We believe more focus will be placed on enhancing existing healthcare facilities, and building new ones, including new hospitals, community care facilities and nursing homes.”

Some areas, including Metro Manila, Region III and Region IVA, will continue to be under enhanced community quarantine up to May 15.

Fitch Solutions Country Risk and Industry Research is a unit of Fitch Group, a division distinct from Fitch Ratings. — Jenina P. Ibañez

PPA defers collection of rent, concession fees

THE PHILIPPINE Ports Authority (PPA) is deferring the collection of rental and concession payments for lessees and port operators by 30 days.

PPA said in a press release on Friday it released a memorandum circular signed on April 23 granting a 30-day payment extension from the last due date within the enhanced community quarantine.

Once the grace period has expired, the 12% interest and 25% penalty charges per year will be imposed on late payments of rental and concession fees.

The memorandum covers all PPA lessees and port terminal operators required to pay rental and concession fees in their lease contracts, agreements, and guidelines.

“This initiative is also part of the ‘Bayanihan sa Pantalan’ as it aims to give the port users and other stakeholders the much-needed relief while the country continues with its struggle from the clutches of COVID-19,” PPA General Manager Jay Daniel R. Santiago said.

Bayanihan sa Pantalan is PPA’s program offering relief goods to port workers, as well as security guards and public transport workers close to the ports, amid the coronavirus disease 2019 (COVID-19) pandemic.

Mr. Santiago said the measure will not affect PPA’s revenue generation as it is only a deferment.

“We will calibrate this measure as we go along with our fight with the dreaded disease,” he said.

PPA on Tuesday turned over the Eva Macapagal Super Terminal Bayanihan We Heal as One COVID-19 Treatment Center to the Philippine Coast Guard to treat patients infected with COVID-19.

Fourteen business groups on Thursday asked government to cut logistics costs by implementing “a moratorium on demurrage/detention fees, port congestion surcharges, and other penalties imposed on cargoes/ shipments stuck at the port due to slow DO issuances/bank processing/customs clearance and apply this retroactively to all shipments affected.”

The business groups also asked the government to extend the free storage period at the ports to 10 days from five days and asked to remove PPA’s share in cargo handling revenues. — Jenina P. Ibañez

Farmers, fishers to receive aid as gov’t extends lockdown

AGRICULTURE Secretary William D. Dar said qualified farmers and fishers will also receive social amelioration from the government amid the extension of the enhanced community quarantine.

The Department of Agriculture (DA) has distributed P5,000 each to rice farmers listed in the Registry System for Basic Sectors in Agriculture.

The aid is under the Financial Subsidy for Rice Farmers (FSRF) program, which is the DA’s existing social amelioration program (SAP), funded under the General Appropriations Act of 2020.

“This is a one-time payment, hence the recipients of FSRF can still receive cash assistance from the Department of Social Welfare and Development (DSWD) during its second tranche of distribution,” Mr. Dar said.

Mr. Dar said only rice farmers in selected provinces are included based on the criteria originally set under the Rice Competitiveness Enhancement Fund.

This means farmers who are not beneficiaries under the FSRF will receive the regular SAP from the DSWD.

The FSRF is the second tranche of the Rice Farmer Financial Assistance program that was rolled out last year for farmers tilling 0.5 to 2 hectares.

“The DA’s SAP focuses on the affected agricultural sector of the country. We are trying to maximize our resources while ensuring no one is left behind. We have been continuously coordinating with the DSWD to ensure that those not covered under the FSRF will still be given assistance,” Mr. Dar said.

FSRF aims to assist rice farmers most affected by the sudden price drop of palay, or unmilled rice, in rice producing provinces.

The DA said there have been 234,586 beneficiaries since the implementation of the FSRF in early April.

Another 591,000 beneficiaries are still expected to benefit from the program.

“We do not want to discriminate against other farmers, and also fishermen, from the financial assistance being given by the government to the marginalized sector of our society. It just so happened that the fund and implementing guidelines of the FSRF has already been finalized and approved early this year, even before the coronavirus disease 2019 pandemic,” Mr. Dar said. — Revin Mikhael D. Ochave

Ayala maps out post-ECQ plan

AYALA CORP. (AC) is mapping out a “much more short-term” approach to business, focusing on employee management and business resiliency amid the coronavirus pandemic.

AC Chairman and Chief Executive Officer Jaime Augusto Zobel de Ayala unveiled the company’s three-phased approach to the evolving COVID-19 situation at the annual meeting held online on Friday.

“We’ve always thought long-term, we’ve always focused on the future, but you get a crisis of this nature… (with) no existing playbook… we had to shorten our cycle of planning…,” he said.

The plan, which runs until the fourth quarter of 2020, has three phases — workforce re-entry, market re-evaluation and business repositioning.

Phase 1 involves preparations for the continuation of work once the enhanced community quarantine (ECQ) is lifted. As the government announced the extension of ECQ in the Metro Manila and other regions until mid-May, Mr. Zobel said this period will be spent planning for the post-ECQ work environment of Ayala units.

“We’re worrying a great deal and thinking through how do we get our employee force back to be productive, but at the same time, healthy and safe in this new environment,” he said.

Mr. Zobel noted part of AC’s workforce continues to work in the frontlines, particularly those working in its banking, telecommunications, water utility and healthcare units.

Phase 2 would cover covers the months until June after the ECQ is expected to be lifted. Mr. Zobel said AC intends to spend this time studying consumer behavior, market behavior, industry regulatory issues, and basically “how the world has changed for us.”

“Technology is really a hugely transformational issue in this next period, and we will have to see over the next two months after the ECQ how things evolve,” he said.

Mr. Zobel said the conglomerate wants to focus on how it can strengthen its digital infrastructure to support the renewed role of technology. He cited the overwhelming take-up of its digital platforms, like the mobile application of Bank of the Philippine Islands (BPI) and mobile wallet GCash of Globe Telecom, Inc. as the ECQ forced consumers to turn to electronic payment platforms.

“Maybe just one statistic: our BPI online banking had more online users in just one month than all the online users we’ve had for the full year last year… We’re very happy about the infrastructure that we’ve built up to support this over many years. It’s taken some pain in the past but we’re sure glad that we took the time to do that in the past,” Mr. Zobel said.

For Phase 3, which will cover the second half of 2020, AC may start planning for the “new normal.”

“As we start to understand the situation a little better, (we) then adjust our work force and our market tactics to this new reality that we’ve engaged,” Mr. Zobel said.

The company aims to balance well-being and productivity for employees,

retaining customers, and ensuring operational and financial sustainability.

While the plan is very short-term in nature, Mr. Zobel believes this is the best way to “really tackle this new environment in a productive, innovative and intelligent way as we move on.”

Meanwhile, AC’s healthcare unit Ayala Healthcare Holdings, Inc. (AC Health) is eyeing to play a bigger role in helping the country’s healthcare system address the COVID-19 situation, and support whatever will be the post-pandemic environment.

AC Health President and Chief Executive Officer Paolo Maximo F. Borromeo said the company is looking to strengthen its clinical network through FamilyDOC and Healthway clinics to accommodate non-COVID-19 patients while triaging COVID-19-related cases.

It is also planning to revamp clinics to accommodate other patients, like converting its Healthway Greenbelt clinic into a chemo facility for cancer patients.

The company likewise plans to boost its health technology platforms AIDE and MedGrocer, which give customers remote access to at-home services and online medicine delivery.

Its pharmacy distribution and retailing business is also primed for expansion in capacity, as Mr. Borromeo said he expects reliable access to medicines and vitamins to be essential.

Following AC Health’s partnership with QualiMed to convert its Sta. Rosa facility into a COVID-19 hospital, Mr. Borromeo said the companies are in talks to explore more enhancements in other QualiMed hospitals.

AC is the parent company of Ayala Land, Inc.; Globe; BPI; AC Energy, Inc.; Manila Water Co., Inc.; AC Industrials; and AC Health, among others. The conglomerate booked a net income of P35.28 billion in 2019, up 11% year-on-year.

Shares in AC at the stock exchange lost P13 or 2.31% to P550 each on Friday. — D.A.Valdez

PHL airlines extend flight suspensions

A Cebu Pacific passenger jet taxis past a Philippine Airlines passenger jet on the tarmac of Terminal 3 at the Ninoy Aquino International aiport in Pasay city. — REUTERS

THE country’s major airlines on Friday said all domestic and international flights will remain suspended until May 15, after the government extended the lockdown measures in the National Capital Region and key areas around the country.

In separate statements, Philippine Airlines (PAL), Cebu Pacific and Philippines AirAsia said they will not yet resume passenger flights in view of the extension of the enhanced community quarantine (ECQ) aimed at containing the coronavirus outbreak.

“All domestic and international Cebu Pacific and Cebgo flights remain cancelled from May 1 to 15, 2020. This is in line with the extension of ECQ imposed over much of Luzon, and implementation of general community quarantine (GCQ) over other provinces. Restrictions are also implemented by local governments across the Philippines,” Cebu Pacific said in its statement.

Should the ECQ be lifted by May 15, PAL said it will have a “gradual and calibrated” resumption of operations starting May 16.

“The complete list of flights to be operated once the ECQ is lifted will be released as soon as possible. In the meantime, our domestic sweeper flights and special flights — arranged by several foreign embassies to ferry stranded nationals out of the country — will continue,” PAL said.

The government has extended the ECQ, which was scheduled to end on April 30, by another two weeks in Metro Manila, Central Luzon (Region III), Calabarzon (Region IV-A — Cavite, Laguna, Batangas, Rizal, and Quezon), as well as other provinces that continue to face high risk of coronavirus disease infections.

Other areas facing low-risk of the coronavirus will be placed under GCQ starting May 1. Under a GCQ, the government said airports and ports can continue to operate but only for goods. — AJA

Coronavirus-related online scams on the rise

By Adam J. Ang

CYBERTHREATS, including malware, phishing attempts and spam messages, related to the coronavirus disease (COVID-19) are on the rise, according to Google.

In a virtual briefing on Friday, Mark Risher, senior director for Account Security, Identity, and Abuse at Google, said new online attacks use COVID-19 messaging, making it easy for scammers to scale these attacks globally.

“Now, they [attackers] know that anywhere around the planet COVID-19 will be recognizable and will stimulate actions from the victims, and so we’re seeing them applied pretty consistently globally, [and] just translated maybe to local markets,” he said.

Google’s machine-learning classifiers have detected about 18 million coronavirus-related malware and phishing attempts, as well as 240 million spam messages every day in the last month.

Mr. Risher noted that the present cyberthreat situation amid the pandemic crisis is “unique,” compared to past public health crisis events, as digital attackers and their victims can be from any part of the globe.

Perpetrators of online scams and malware “may already have a language in which they communicate, like they know that they can mention coronavirus, COVID-19, selling masks or selling hand sanitizers, [as] these are such common terms,” he said.

Google did not identify which countries are prone to such online attacks.

Mr. Risher pointed out “a lot of these coronavirus and COVID-19 attacks began in Southeast Asia.” He said there are more online cyber threats detected earlier in the Asia-Pacific region than in any other area across the world.

Perpetrators are said to use fear and financial incentives to bait people.

The most common form of cyberthreat uses the World Health Organization to solicit fraudulent donations or distribute malware.

Other common types of COVID-19-related scams include posing as government institutions providing information on stimulus packages to lure small businesses; sending links to shady websites selling fakes of in-demand products such as masks and hand sanitizers; and sending notices supposedly from charities, organizations, and even healthcare providers dealing with the coronavirus disease.

“The overall volume of attacks that are facing Google and [its] users has not really changed that much. What we’ve seen instead is a tremendous concentration on using these terms, these agencies as part of the targeting practice,” Mr. Risher said in the briefing.

“The attackers have moved from generic messages to much more targeted, much more precisely crafted attacks,” he added.

Google is protecting its users from such threats through its built-in security features in its products, machine learning models in Gmail which detect and block almost all spam, phishing, and malware, among other mechanisms.

With video-conferencing becoming a common practice for conducting events lately, Mr. Risher stressed that users must ensure they understand the security features that are incorporated into the platforms they are using. Google has its own virtual meeting platform called Google Meet.

“For people who are working from home, we recommend you use official work-issued e-mail accounts at your laptops and the configuration they have given you,” he added.

Banks keep lending standards unchanged in Q1

MOST BANKS kept their lending criteria for businesses and households unchanged in the first quarter, according to the Bangko Sentral ng Pilipinas (BSP).

The latest Senior Bank Loan Officers’ Survey conducted from Feb. 28 to April 7 released on Friday showed this marked the 44th successive quarter of broadly unchanged credit standards from respondent banks.

The survey seeks to gauge banks’ lending decisions. The central bank said 37 out of the 65 banks tapped for the study sent their responses. The survey was conducted among universal, commercial and thrift banks.

More than half (66.7%) of the respondent banks said they maintained their lending criteria for loans to businesses during the first three months of the year, lower than the 84.8% seen the fourth quarter of 2019, based on results of the modal approach.

On the other hand, the diffusion index (DI) approach showed there was a net tightening in overall credit criteria, with banks citing stricter regulations, deterioration of borrowers’ profiles. Respondent banks also noted a deterioration in profitability and liquidity, as well as reduced tolerance for risk.

A positive DI result means more banks tightened lending rules compared with those that eased, while a negative DI indicates the opposite.

The net tightening showed in the DI approach was seen in “reduced credit line sizes, stricter collateral requirements and loan agreements, and the increased use of interest rate floors.”

Meanwhile, 69.6% of banks surveyed said they maintained their credit criteria for household loans in the first quarter, lower than the 89.7% in October to December 2019, based on the modal approach.

However, the DI approach indicated banks’ credit standards were more strict for personal loans as lenders factored in an “uncertain economic outlook and reduced tolerance for risk.”

“The overall net tightening of credit standards for loans to households also reflected stricter collateral requirements and loan covenants as well as increased use of interest rate floors by respondent banks for the said type of loan,” the BSP said.

The net tightening in standards applied to all types of consumer loans, including those related to housing, credit card, auto and personal salary loans.

For this quarter, respondent banks said they expect credit standards for businesses to be steady based on the modal approach, while the DI approach indicates expectations of tighter criteria due to “less favorable economic outlook, expected deterioration in borrowers’ profiles as well as in the profitability and liquidity of banks’ portfolios, and lower tolerance for risk.”

Likewise, banks also see unchanged credit standards for those securing personal loans in the second quarter of the year based on the modal approach, according to the central bank. However, DI-based results showed lenders see net tighter credit standards, with banks expecting a dimmer economic outlook and weakening profitability, as well as reduced risk tolerance. — L.W.T. Noble

BDO books lower net income in Q1

BDO Unibank Inc. saw its net profit decline to P8.8 billion in the first quarter, as weak capital markets hit the bank’s investment portfolio.

The Sy-led lender’s net income fell 10.2% to P8.8 billion in the first three months of the year from the P9.8 billion logged in the same period in 2019, BDO said in a statement on Friday.

“[W]eak capital market conditions impacted on BDO’s investment portfolio and dragged the bottom line,” the bank said.

During the period, the lender’s net interest income totalled P33 billion, which BDO attributed to stable margins.

On the other hand, non-interest income amounted to P9 billion, buoyed by contributions from fee-based income worth P8.1 billion and insurance premiums amounting to P3.9 billion.

“Weak capital market conditions resulted in unrealized mark-to-market (MTM) losses in BDO Life’s equities and unit-linked portfolios, leading to consolidated trading and forex losses,” BDO said.

The bank’s gross operating income settled at P42 billion, down by 1.4% from the P42.6 billion seen in the first quarter of 2019.

Meanwhile, customer loans grew 11% to P2.2 trillion, supported by continued growth across all segments.

“The core lending and deposit-taking businesses sustained their growth despite the imposition of the enhanced community quarantine (ECQ) in mid-March,” BDO said.

Operating expenses declined 5.3% to P26.8 billion from P28.3 billion a year ago due to a reduction in volume-related expenses and lower policy reserves related to unit-linked funds.

With its non-performing loan (NPL) ratio remaining stable at 1.3%, BDO’s loan provisions stood at P2.3 billion. Meanwhile, NPL cover was at 151.4%.

“To safeguard asset quality, the bank has undertaken initiatives which include rapid portfolio reviews of clients and sectors highly affected by the impact of the ECQ, as well as reassessment of existing provisioning guidelines,” the bank said.

The bank’s total capital base stood at P372.2 billion. Its capital adequacy ratio was at 13.8%, while common equity tier 1 ratio was at 12.7%, which are both well above regulatory levels and “deemed sufficient to withstand near-term shocks.”

Amid risks to its business environment due to the coronavirus disease 2019 pandemic, BDO said its “strong business franchise and solid balance sheet” will help it weather the crisis.

The bank’s shares closed at P100 apiece, unchanged from its Thursday close. — Luz Wendy T. Noble

COVID-19 concerns to fuel rise in insurance demand — Pru Life

INSURANCE POLICIES may see higher demand, with people becoming more health conscious due to the coronavirus disease 2019 (COVID-19), according to Pru Life UK Philippines.

“I think it may stimulate our complimentary need for protection even more,” Allan M. Tumbaga, senior vice president and chief marketing officer at Pru Life, said in an online press briefing on Friday.

Given the current lockdown, buying online has been the trend, which also works for insurance products, he added.

“I think people are now more open to exploring getting insurance by means of digital channels,” Mr. Tumbaga said.

Pru Life UK Philippines President and Chief Executive Officer Antonio G. De Rosas said the firm has been gearing up for the “new normal” caused by the outbreak, including equipping their sales agents to offer products digitally.

“We are now living in a new normal where digital is placed upfront. Before we started this [lockdown], our work from home capability was at 30% and now it’s at about 90%,” Mr. De Rosas said.

He noted that they have unveiled online tools for their policy sellers so they can offer products without personal contact, given the new norm of social distancing.

“I expect that, after this [pandemic], the reception will be warmer to get insurance — health or basic protection,” Mr. Tumbaga added.

Amid the health threats due to COVID-19, the insurer offered free COVID-19 protection and personal accident (PA) coverage for the first 500,000 users to register their profile on their app called Pulse from April 13 to May 13. The app, which was launched on February, offers health management features for both policy holders and non-policy holders.

So far, 100,000 app users have already received the free plan, which entitles them to a death benefit of P100,000 to be disbursed to family members in case of COVID-19 or accident-linked death. Meanwhile, health care workers are entitled to a death benefit of P200,000.

Pru Life is the country’s fourth biggest insurer in 2018 based on premium income, with P22.03 billion, according to data from the Insurance Commission. — L.W.T. Noble

Peso weakens as gov’t extends lockdown

THE PESO weakened on Friday as the market opted for safe haven assets after the announcement of the extension of the lockdown to contain the spread of coronavirus disease 2019 (COVID-19).

The local unit closed at P50.80 versus the dollar on Friday, depreciating by four centavos from its P50.76 finish on Thursday, according to data from the Bankers Association of the Philippines.

On the other hand, the local currency strengthened by 10 centavos from its P50.90 close last week.

The peso started the session at P50.68 per dollar. Its weakest showing was at P50.85, while its intraday best was at P50.68 versus the greenback.

Dollars traded climbed to $391.68 million on Friday from the $290 million seen on Thursday.

The extension of the lockdown in the capital as well as in some hot spots triggered risk-off sentiment, according to a trader.

“The peso depreciated from safe-haven demand after the enhanced community quarantine (ECQ) was officially extended further until May 15,” the trader said in an email.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort also attributed the weakness in the local unit to the said announcement from Malacañang.

“The peso exchange rate closed weaker after the two-week extension of the lockdown in Metro Manila and other high-risk areas which could further reduce economic activities,” Mr. Ricafort said in a text message.

On Friday, Presidential Spokesperson Harry L. Roque announced the interagency task force’s recommendation for another two-week extension of the ECQ was approved by President Rodrigo R. Duterte.

The extended lockdown will be observed in Metro Manila, Central Luzon, Calabarzon, as well as other provinces to prevent the further spread of the virus.

Some areas in Visayas and Mindanao will also be assessed to see if they need to be locked down as well.

Aside from the lockdown, Mr. Ricafort said the peso also weakened after a slight correction in global oil prices.

Reuters reported that oil prices inched up on Friday after producers including Kuwait decided to cut output and as the United States approved a fiscal package to cope with the pandemic.

Brent crude rose by 24 centavos or 1.1% to $21.57 by 0622 GMT following the uptick of more than $1 earlier and the 5% rise seen on Thursday. US oil also inched up by 38 centavos or 2.3% to $16.88 per barrel, following the 20% surge in the previous session. — LWTN with Reuters

Stocks drop on extension of ECQ

LOCAL SHARES closed the trading week in red territory as investors were cautious due to the extension of the enhanced community quarantine (ECQ) in Metro Manila and select regions.

The 30-member Philippine Stock Exchange index (PSEi) gave up 134.57 points or 2.4% to 5,464.98 on Friday. The broader all shares index also lost 58.08 points or 1.7% to 3,350.73.

“The local market declined as investors expect deeper economic losses following the extension of the ECQ in most parts of Luzon, including our economy’s top 3 regional contributors namely the National Capital Region, IV-A Calabarzon, and Central Luzon,” Philstocks Financial, Inc. Senior Research Analyst Japhet Louis O. Tantiangco said in a text message.

In a televised speech Friday morning, Presidential Spokesperson Harry L. Roque said the government is extending the ECQ until May 15 for Metro Manila, Central Luzon, Calabarzon (Region IV-A — Cavite, Laguna, Batangas, Rizal, and Quezon) and other provinces covering the whole country.

Specifically, the other areas are Bataan, Bulacan, Nueva Ecija, Tarlac, Zambales, Pampanga, Batangas, Oriental Mindoro, Occidental Mindoro, Albay, Catanduanes, Benguet and Pangasinan for Luzon; Antique, Iloilo, Aklan, Capiz, Cebu province and Cebu City for Visayas; and Davao del Norte, Davao City and Davao de Oro for Mindanao.

Other locations tagged as low and moderate risk may be downgraded to a general community quarantine after April 30.

The two-week extension of the ECQ — making the set lockdown run a total of two months for these areas — spooked investors.

“From 2014 to 2018, these regions (National Capital Region, Calabarzon and Central Luzon) have been contributing an average of 36.4%, 17.0%, and 9.5% of the Philippine economy,” Mr. Tantiangco said.

“The optimism we saw in the four weeks prior to this one is waning as economic burdens become heavier due to the quarantine period extensions, and ultimately due to the coronavirus,” he added.

Aside from the extended ECQ, Regina Capital Development Corp. Head of Sales Luis A. Limlingan said investors also took note of reports that the antiviral drug being developed by United States-based Gilead Sciences, Inc. to fight the coronavirus disease 2019 (COVID-19) has flopped.

“Shares ended lower…amid reports globally that suggested that a closely followed experimental drug intended to be used to treat coronavirus delivered disappointing results in an ‘inconclusive’ trial,” Mr. Limlingan said in a mobile message.

Five of six sectoral indices closed lower at the end of trading. Property dropped 124.13 points or 4.37% to 2,715.46; holding firms shed 180.14 points or 3.25% to 5,361.78; industrials shaved off 57.59 points or 0.79% to 7,209.48; financials cut 6.44 points or 0.53% to 1,188.69; and mining and oil slid 16.99 points or 0.36% to 4,592.45.

The only sector that gained was services, which added 2.26 points or 0.17% to 1,300.57.

Value turnover improved to P5.24 billion on Friday from P4.37 billion on Thursday. Total volume also increased to 829.26 million from 697.1 million issues.

Decliners beat advancers, 105 against 76, while 48 names ended unchanged.

Net foreign selling swelled to P1.02 billion from P440.43 million the previous session.

“Foreign transactions are already on a 28-day net selling streak averaging P907 million worth of outflows per day,” Philstocks Financial’s Mr. Tantiangco noted. — Denise A. Valdez

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