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Korea’s Zishel Group enters Philippine market

DAVAO CITY — The South Korean Zishel Group is entering the Philippine market, starting in Davao City with the launch on Tuesday of its cosmetic and medical lines.

Zishel Chief Executive Officer Jimmy Jong Woo Kim said aside from product distribution, they are already working on registering a Philippine subsidiary and possibly a manufacturing plant.

“We will also create an online store to attract the customers,” he said during Monday’s Kapehan sa Dabaw media forum.

James Min Kim, Zishel Group owner and chief medical officer, said, “We are looking forward to register our business here and we already had a meeting with the city council of Davao and the Davao City Investment Promotion Center. We are currently studying how much and how we are going to invest in Davao.”

Mr. Kim said they also plan to establish their aesthetic reconstruction and dermatology services in the city.

“We are not only focusing on investing to providing products but also provide an educational institute platform for clients who have the right to know and have the right message,” the company owner said.

Zishel has set up a team in the city to connect with local investors and the business community for possible partnerships.

“We always try to bring in something unique and innovative, mostly in aesthetics. We are also looking forward to be pro-active in the community so we have a wide spectrum of products from premium to medium to low-end products. We have the expertise,” Mr. Kim said. — Maya M. Padillo

BSP digitization initiatives to benefit banks, consumers

THE GOVERNMENT’S initiatives geared towards digitalization of payment transactions will foster opportunities for “coopetition,” according to Rizal Commercial Banking Corp. (RCBC) Executive Vice-President and Chief Innovation and Inclusion Officer Angelito “Lito” M. Villanueva.

Mr. Villanueva said the recent initiatives spearheaded by the Bangko Sentral ng Pilipinas (BSP), such as the EGovPay Facility and QR PH will benefit not only consumers but service providers as well.

“The good thing here is that what we call the “coopetition” — cooperation and competition — amongst players in this industry to really work together towards achieving that particular goal because no single entity or company would be able to address those gaps,” Mr. Villanueva told BusinessWorld in an interview on the sidelines of the launch of the EGovPay facility and QR PH held at the BSP last week.

The EGov Pay Facility, which had its pilot run in August that initially offered online tax payments for the Bureau of Internal Revenue, has on-boarded more government agencies. This includes allowing digital payments for the Department of Trade and Industry, Philippine National Police, and the city governments of General Santos, Manila, Valenzuela, San Pedro, Laguna, Baler, and Quezon City.

Vicente T. de Villa III, managing director at the BSP’s Financial Technology Sub-Sector, said the central bank is eyeing to include more agencies in the facility.

“We would like to have other government agencies to be included. Perhaps, LTO (Land Transportation Office), DFA (Department of Foreign Affairs), and all those other agencies that have frontline licensing and front line payments made by the public,” he told reporters on the sidelines of the Financial Inclusion Forum for the labor sector held at BSP last week.

Meanwhile, QR PH’s maiden launch will have six pilot payment providers including Asia United Bank Corp., China Banking Corp., Land Bank of the Philippines, PayMaya, UnionBank of the Philippines, Inc., and RCBC.

These digital initiatives will not only help consumers but also financial players themselves that will be developing these facilities, Mr. Villanueva said.

“This is not just about the convenience that we do that consumers will experience. But in fact, it also relates to us, to the operators and the players themselves, who will definitely be benefiting from this because of operational efficiency and cost reduction,” Mr. Villanueva said.

The BSP has required payment service providers to adopt the Europay, Mastercard, Visa or EMV QR code as a national standard by June 2020.

Amid these digitalization initiatives, BSP Governor Benjamin E. Diokno said they are targeting a higher share of digital payments in total transactions in the country by 2020.

“The original goal is 20% by 2020, the new goal is 30% by 2020,” he told reporters at the briefing before the launch of the EGov Pay Facility and QR PH.

Mr. Diokno noted that with the introduction of these new digital initiatives, he is positive that the Philippines will be a cash-lite economy by 2023 or when his term ends.

“Not cashless, but cash-lite… Right now we are cash heavy. I think cashless society will be in a matter of 10 years and not within the next five years,” he said.

BAYAD CENTER INTEGRATION TO GO LIVE BY 2020
Meanwhile, aside from being part of the pilot payment providers participating in the QR PH, Mr. Villanueva also shared other digital initiatives that RCBC is embarking on.

“There’s an ongoing integration with [CIS] Bayad Center, [Inc.], so we hope to launch the partnership or meeting the actual line for implementation by the first quarter next year,” Mr. Villanueva said.

RCBC’s partnership with Bayad Center will hook up the bank’s digital basic account, lending and Malayan’s insurance products into the mobile app of Bayad Center. The tie-up will also launch the Bankard-Bayad Center utility credit card which is the first of its kind that can be used for enrolment and automatic payment of customer’s monthly bills.

Mr. Villanueva added that RCBC’s mobile app has some of the “many firsts” features of mobile banking in the country, including a facility for foreign exchange — for buying and selling ten currencies — and an online time deposit placement of up to P10 million or $200,000.

The Yuchengo-led bank booked a 41% surge in its net earnings to P4.5 billion as of end-September, compared to the P3.2 billion seen in the same period in 2018.

The bank’s shares closed at P24.80 apiece on Tuesday, down by 0.20% or five centavos from the previous day’s finish. — Luz Wendy T. Noble

Backstage entry: How a Filipina makes it in NY’s theater scene

By Gerard de la Peña, News5

FILIPINOS have made quite an impression globally as performers, having conquered Broadway and the West End’s stages.

But one has entered the New York theater scene not onstage as a performer, but literally through the back entry — the backstage.

Sheryl Polancos had spent more than a decade working on the production and stage management side of theater in the Philippines. After finishing her AB Communication Arts degree from the University of Sto. Tomas, she worked for the Cultural Center of the Philippines-Tanghalang Pilipino and Atlantis Productions, among other theater groups, where she worked on the stagings of Himala, The Musicale, Piaf, Avenue Q, Shrek The Musical, and Next To Normal, to name a few. Now based in New York, Ms. Polancos is part of the stage management team of the critically acclaimed The Jersey Boys and Soho Repertory Theatre’s production of Samara.

After stints in off-Broadway productions, her goal is to be part of shows with bigger audiences on Broadway.

News5/BusinessWorld was able to talk to Ms. Polancos to discover her journey through the road less travelled.

What brought you to the US?

I’ve always wanted to work in Broadway. I wanted to be in the middle of the melting pot of arts and theater so that solidified my decision to move to New York and pursue my dreams even if I had to start from scratch again.

What is so exciting in New York?

I feel like New York is the leader when it comes to pushing boundaries in art. It is unapologetic that’s why I love it. New York is such a diverse city — the people, the culture, the food, they’re all fascinating. New York opens your eyes to new things and experiences. It is the birthplace of some of the great works in theater and to witness it — or be in it — first hand is very exciting.

Most Pinoys would probably take performing seriously in order to land a job in New York or the West End.

In your case, why enter through the backstage?

My first love really was dancing but I got injured when I was about to start my freshman year in the university. So in the meantime I told myself I will try my hand in theater as an actor and once I’m healed, I’m going back to dancing. But like most people, I caught the theater bug and never left. After graduation, I applied at the Cultural Center of the Philippines as assistant production manager. I liked my job but I didn’t particularly love it. Then I found out I wanted to be a stage manager. Now why backstage, particularly stage management? I’ve always had great respect for stage managers. I feel like they are the magicians and unsung heroes of theater. It gave me a different sense of fulfilment when I’m on the other side to see all the hard work finally come together. The stage manager is the glue that holds the show together. And so I told myself, my aim is to become the best stage manager I can be. For me to get that training and experience, I told myself I want to penetrate New York.

How would you differentiate working for Philippine productions vs. New York productions?

I don’t see a big difference as far as the rehearsal process or running shows is concerned. The difference is managing people. In the Philippines, our productions have short runs while they have long-running shows in New York. In the Philippines, we’re done after a three-week run. Same with off-Broadway productions that run for a couple of months. It’s a whole different beast when you’re maintaining a long-running show. So the difference really is maintaining the show and managing the company for years, and keeping the show’s integrity intact. I’d say that’s the training that I didn’t get from running shows in the Philippines. Now I am still learning all these things.

How would you differentiate the working conditions in Philippine theater compared to those in New York?

In the Philippines, stage managers don’t have a union but here in New York, we have what we call Equity (An American labor union representing live theater performance — Ed.) so we are protected by rules once we step in a rehearsal space or theater. For example, as an assistant stage manager, we’re not allowed to touch a prop or move a set piece because the deck crew does that. And they are also bound by their union rules. So there is no overstepping of jobs.

But I see my experience in the Philippines as an advantage because stage managers here are not necessarily trained on deck tracks. When presented with a complicated production that we have to do a full deck track while doing stage management, I feel like I have an edge over them. Since we don’t have a union in the Philippines, I’ve been trained to be a stage manager and also as a crew person. So when I’m running a show here, my brain and body can multitask and function not only as a stage manager but also as crew. I have to thank Philippine theater for that.

How was it working with the big names in New York theater scene?

Working with Tony Award-winning directors, choreographers, actors, legends, and even lighting designers was pretty intimidating. But then you get to know them and you realize they are just regular people having the same goal as you do, which is to create or maintain a wonderful show. It’s so fascinating to be able to work with them closely and be a witness to their process. Even just hearing these award-winning directors give notes to the actors is already a privilege and an honor.

What are your dream productions in New York?

When I came to New York for a visit, I planned on watching The Curious Incident of the Dog in the Night-Time because I have read the book and really loved it. So when I saw it on Broadway, I told myself I want to be a part of this show some day. They are currently on tour. Also, everyone close to me knows I’m a Harry Potter fan so to be in Harry Potter and the Cursed Child would be a dream come true.

Who do you dream of working with?

To be honest, more than the dream of working with actors or celebrities, I really want to be able to work with stage managers of big Broadway shows and pick their brain and learn from them. I think I geek out more on stage managers, directors, and choreographers than actors.

Gerard de la Peña , a former reporter at BusinessWorld, is now a senior corresponded at TV5 and One News and an achor at Radyo Singko 92.3 NewsFM.

La Alegre and the Waray zarzuela Lunop Han Dughan

By Victor N. Sugbo

Theater Review
Lunop Han Dughan
Written by Samlito Abueva
Directed by Joycie Dorado Alegre
UP Visayas, Tacloban City
Nov. 7 and 9

LUNOP HAN DUGHAN, shown in Tacloban City on Nov. 7 and 9, brought a new whiff of dramatic energy to the traditional Waray zarzuela and community theater after two decades of moribund theater activity in Tacloban. Previous presentations of Waray zarzuelas were mostly nostalgic revivals, notably the plays of Iluminado Lucente whose works still lend well to staging. Held for the 6th Commemoration of the Supertyphoon Yolanda Disaster, Lunop was not the usual zarzuela. While it carried the trappings of the form — music, songs, dances, and dialogue — Lunop underwent a kind of reinvention. Surreal, metonymic and folksy, its new configuration seemed designed to test the waters of social acceptance with its new audience.

A complex narrative consisting of local myth, realistic events, minimal realia, old folk and new pop songs, surrealism, and the return of an old love, Lunop unpacks surprises and a certain realization. The first surprise was that the original music played during the deluge scene and the Magna Mater’s lamentation scene were compositions of National Artist for Music and UP Professor Emeritus Ramon Santos, who also conducted the performance of his original compositions, played by the rondalla musicians of the Leyte Kalipayan Dance Company and Leyte National High School Special Program for the Arts.

The second surprise was the appearance of UP soprano and voice professor Alegria Ferrer as Magna Mater (earth mother) whose theatrical presence and vocal prowess, essaying the sung prophecies and lamentation, electrified the stage.

Despite their exposure to vibrant K-pop, J-pop, variety shows, and cinema, the young audience were no different from their great-grandparents who watched an Iluminado Lucente zarzuela in Plaza Rizal sometime in the late 1940s and ’50s. Like past habitués of Lucente zarzuelas, they participated in Lunop by applauding every time an actor or set of actors sang. In their seats, they would occasionally hum the song along with the actors. They would also burst into waves of muffled giggles and guffaws whenever the star-crossed lovers, Urbano and Maribel, met looking at each other intensely, singing their plaintive sad songs.

The revival of folksongs that may have been forgotten by Tacloban lightened sad and heavy moments in Lunop. It made the older audience nostalgic. It also provided the younger audience a taste of melodic Waray compositions written by the almost forgotten Pablo Rebadulla of Calbayog and A. Jaro of Tacloban, along with the new bouncy tunes written and composed by Samlito Abueva.

Lunop is a directorial oeuvre of Joycie Dorado Alegre. For her, theater performance is not an inert object. She views it as a fluid fabric. For this reason, the sensorial texture of the play undergoes regular assessment, modification, reinvention or revision. Theater directing, in this case, becomes an active orchestration of elements that transmutes from acting to blocking, from singing to dancing, a jagged search for the appropriate theater syntax. As such, acting undergoes frequent modification. Only the text is left untouched. Depending on exigencies, however, it too gets altered. In this regard, the play’s text is never final, and is in transit.

As though these are not enough, Alegre treats her actors like clay whose acting and singing she must keep shaping and reshaping. In this way, each stage presentation becomes a perilous auditory and visual adventure, as changes introduced into each performance of the play could break into a vulgarity. This approach to theater resonates from her past theater work, where she envisioned and still envisions the play’s performance as an unremitting search for the figurative theater morpheme that would bring out what she thinks the audience should feel and believe in the end.

In Lunop, Alegre boldly juxtaposes the hyperbolic time of Dang and Mulay (in the Mount Danglay myth) with the realistic narrative time of Urbano and Maribel. In both stories, Dang and Mulay and Urbano and Maribel meet tragic deaths; Dang and Mulay, in the deadly embrace of a giant crab that strangles them; Urbano and Maribel, in the whirling flood waters of a super typhoon. This juxtaposition implicitly paints Urbano and Maribel as likely incarnations whose ill-fated lives were already written in the stars.

The story of Lunop is a simple narrative about a married couple, Maribel and Turing, who by force of circumstances, are compelled to marry. Turing is a dynamite fisher, a womanizer, and a drinking sot. Maribel marries him because her father owes a large debt to Turing’s father. The union is blessed with three children but it is not a happy marriage. The arrival of Urbano in the coastal village where Turing and Maribel live complicates matter. A mariner on vacation, Urbano gets to talk to Maribel during a fiesta celebration in Turing’s house. In this brief time they have, Urbano and Maribel profess love for each other, but they both know their love can never be fulfilled. Turing catches Urbano and Maribel talking intently and commands Urbano to leave his wife.

The occurrence of a violent storm turns the coastal village of Turing and Maribel in disarray. This is further aggravated by the rising flood waters driving people to higher grounds. Caught in the flood waters, Urbano finds Maribel and her children on an elevated area, but even this is claimed by the flood. Maribel slips into the rising water and Urbano tries to save her, and in their flurry to save each other they are seen by Turing who is also struggling to save himself. Unaware of impending danger, Urbano and Maribel are overrun by an unmanned cargo ship which the violent storm winds and the surging swollen sea drive in the direction of Turing’s coastal community. Now alone, Turing redeems himself from his guilt by assuring his children of his love and care.

How Alegre unravels the simple narrative of Urbano and Maribel and the ill fate of Turing is in itself interesting. With actors who undertook nights and nights of grueling acting, she mounts the play on a layered circular stage. Designed by UP Architect Jose Danilo Silvestre, it became the tight but fragile cosmos where nature defined human fate and where lives rose and fell. With the minimal use of realia, Lunop opened for Alegre the opportunity to play with metonyms. The placement of two seats in a spot on the stage, for instance, turned the space into a metonym for a living room. Interestingly, the predominantly red mats of Basey, Samar in the hands of strange-looking sea harpies (dancers) became a wall in one scene, and frightening sea waves in another scene — dance sequences co-designed with choreographer Eulogio Plameran. The lighting of candles at the penultimate scene stood for the tapos, a ritual marking the end of prayers for the dead. Moreover, the reappearance of Dang and Mulay towards the end of the play animated the emotional low point of the audience in that Urbano and Maribel appeared like resurrected souls in the afterlife. In our cosmos, there are really no finalities. There are just passages. The use of metonymy and myth, the presence of Magna Mater and the gossamer Mount Danglay backdrop created by painter Archie Zabala, provided a surreal feel to the play’s performance.

The realistic plot and dialogue and the surreal atmosphere inherent in the stage presentation comprised a paradox that Alegre had to contend with. She, however, transcended these by putting actors under intensive training so they could enact their roles with a finely tuned devotion to create believable stage selves outside of their own. Notable here was the acting of Pierre Dan Ampo, who literally absorbed his loud-mouthed and menacing Turing persona. Equally noteworthy were the laudable performances of Urbano (Gabriel Asanza) and Maribel (Lina Fe Simoy) as the ill-fated lovers whose meetings were at times humorous, many times poignant and sad. Turing and Maribel’s children Aliya (Elizabeth Zamora), Makoy (Jay Cris Juyad), and Egay (Melanie Ladica); the comic characters of Sayong, (Danica Ybañez), Tiyong (Mark Joseph Daduya), Doming (Ivan Ray Pontoy), and Dulce (Rosary Jasmine Padilla); the Theater Arts students who acted as strange-looking sea harpies — all turned in credible performances. Despite the brevity of their appearances, they contributed to the successful staging of Lunop as written by Samlito Abueva. Once more Alegre proved her worth as theater director cum auteur. The enthusiastic public reception of her work in Lunop was an attestation.

The presentation of Lunop Han Dughan was made possible by the UP Visayas Tacloban College, the UP Office of the Vice-President for Academic Affairs (Enhanced Creative Work and Research Grant) in partnership with Silhag Cultural Association in the Philippines and the National Commission for Culture and the Arts. The An Waray Party List likewise served as sponsor.

Dr. Victor Sugbo is a multi-awarded poet, professorial lecturer of Literature and Communication in UP Visayas Tacloban College.

Strong fundamentals to lift financial markets; gov’t spending to support economic growth

LOCAL financial markets performed well for the most part in the third quarter, buoyed by positive developments at home amid a slew of uncertainties abroad.

That period saw the peso appreciate against the US dollar by 3.37% on a year-on-year basis to average P51.74-per-dollar relative to the P53.54-per-dollar average in the third quarter of 2018. Traders that time attributed the peso’s appreciation largely to expectations of an interest rate cut by the US Federal Reserve.

“In the third quarter of 2019, favorable developments supported the positive performance of financial markets in the country such as the 1) benign inflation environment; 2) dovish outlook from the US Federal Reserve and the BSP; and 3) the easing trade tensions between the US and China,” said Bangko Sentral ng Pilipinas (BSP) Deputy Governor Francisco G. Dakila, Jr. in an e-mail to BusinessWorld.

These developments, he said, were able to offset the impact of the decelerating domestic GDP (gross domestic product) growth in the second quarter and “external headwinds” brought by the absence of a Brexit deal.

The US Fed cut interest rates for the first time in more than a decade in July and did so again at its subsequent policy meeting in September in what US Fed Chair Jerome Powell and some others have characterized as “insurance” against risks to the economy.

US job growth increased moderately in September and the unemployment rate dropped to near a 50-year low, the US Labor department reported on Oct. 4, allaying concerns the economy is nearing recession.

Meanwhile, at home, the debt paper auctions conducted in the third quarter indicated strong demand. For instance, the Treasury-bill (T-bill) auctions conducted in July to September saw total subscription for the quarter amounting to around P333.04 billion, which is around 3.7 times the P90-billion aggregate offered amount.

Similarly, Treasury-bond (T-bond) auctions during the period had a total subscription amount of P370.5 billion, 2.6 times more than the offered amount of P140 billion.

In the secondary bond market, domestic yields on the benchmark 91-day T-bills and 10-year T-bonds were down by 135.8 bps and 27.1 bps, respectively, in end-September compared to end-June levels. Yields were down across the board, lower by 70.39 bps on average during the reference period, according to the PHP Bloomberg Valuation (BVAL) Service Reference Rates published on the Philippine Dealing System’s website.

“[T]he sustained deceleration of inflation as well as dovish pronouncements of the BSP helped drive the rally of the domestic GS market. RRP (reverse repurchase) cuts as well as reductions to the reserve requirement ratio (RRR) helped push yields lower while additional liquidity freed up by RRR infusions simply found their way to the fixed income market given the lack of any better alternatives,” ING Bank Senior Economist Nicholas Antonio T. Mapa.

For equities, the Philippine Stock Exchange index (PSEi) closed the July–September period at 7779.07, down by 2.8% compared to second quarter’s a mere one percent rise.

DOMESTIC ECONOMY REBOUNDS
Amid uncertainties abroad, positive developments at home had helped lift investor sentiment.

One such development, BSP’s Mr. Dakila pointed out, is the slowing inflation in the domestic economy. In the third quarter, inflation further decelerated to 1.7% from 3% in the second quarter. This brought the year-to-date average inflation to 2.8%, which is still within the government’s target of 2-4%.

In October, inflation eased to 0.9%, its slowest clip since the 0.7% observed in April 2016 amid lower food and electricity prices paired with base effects coming from last year’s nine-year high 6.7% inflation logged in September and October 2018.

“The latest inflation outturn is consistent with the BSP’s overall assessment that inflation has likely bottomed out in October and could start to pick up slightly in the remaining months of 2019 as base effects from 2018 will turn positive,” Mr. Dakila said.

Nevertheless, Mr. Dakila said the project gradual uptrend is “still consistent” with the central bank’s overall assessment of a “benign” outlook of inflation settling within the target range of 2-4% for 2019-2021.

“The country’s continued favorable macroeconomic performance is likely to support investor sentiment in financial markets for the remainder of 2019,” Mr. Dakila said, adding that higher government spending is “expected to provide support” to economic growth as well as contribute to positive investor sentiment.

The low inflation environment, coupled with disappointing economic growth figures in the first-half supported the BSP’s move to dial back last year’s rate hikes in the face of successive multi-year-high inflation rates. So far, the BSP has cut these rates by a cumulative 75 bps, two of them in the third quarter with reductions of 25 bps each on Aug. 8 and Sept. 26.

The next day, the BSP announced a 100-basis point reduction in RRR for universal and commercial banks to 15%, five percent for thrift and rural banks, and three percent for rural banks, respectively, to take effect “on the first day of the first reserve week of November.”

The quarter also saw the government catching up on spending. Budget department data showed the government having spent about 17% more at P1.04 trillion in the third quarter from P886.2 billion a year earlier, which is a marked improvement from the 2.3% contraction in the second quarter and 0.8% in the first quarter.

Moreover, infrastructure spending reached P234.8 billion in the third quarter, 7.7% more than the P218.1 billion recorded in July–September last year. A closer look at the data showed infrastructure and other capital outlays reaching P100.3 billion in September, picking up from August’s P59.3 billion and the P65.2 billion spent in September last year.

OUTLOOK
Economists expect the economy to fare better in the second half, and even more so considering its performance in the third quarter.

“On the domestic front, the speedbumps that caused the slowdown in growth are largely behind us with the government spending accelerating rapidly to chase their spending targets. Meanwhile, successive easing from the BSP may finally help resuscitate lending and capital formation going forward with GDP expected to recover,” said ING Bank’s Mr. Mapa.

“Meanwhile, other developments, such as decelerating inflation will likely reverse in the coming months as base effects wash out, limiting the potential rally for the GS market further,” he added.

For UnionBank of the Philippines, Inc. Chief Economist Ruben Carlo O. Asuncion, domestic markets will improve due to lower inflation, but noted “downside risks” to this outlook such as the ongoing US-China trade war and the oil price movements.

Security Bank Corp. chief economist Robert Dan J. Roces said that the driving factors in the third quarter such as the US Fed rate movements, developments in the US-China trade negotiations, Brexit, the BSP monetary easing, below-target inflation, and the rebound in GDP growth would continue to sway financial markets in the fourth quarter with “special emphases” on the possible phase one agreement between the US and China that would potentially lead to normalization of trade relations and the government’s timely release of the 2020 budget schedule.

Below are the outlooks for each of the key markets:

EQUITIES MARKET
BSP’s Mr. Dakila: “Encouraging reports on third-quarter domestic corporate earnings and better-than-expected third-quarter Philippine economic growth are likely to positively influence market sentiment. The improved outlook on the Philippine economy and low inflation environment can help buoy the equities market amid continued external headwinds.”

“For one, while import growth is set to recover as infrastructure spending picks up, export growth will likely remain lackluster as global growth continues to slow down. In addition, US-China trade reports, combined with the evolving path for Brexit, can contribute to market fluctuations in the short term.”

Rizal Commercial Banking Corp. (RCBC) Chief Economist Michael L. Ricafort: “Local equities could continue to gain in the fourth quarter of 2019 as relatively lower inflation and local interest rates (lower borrowing costs), as well as faster GDP growth, could further support faster growth in both sales and net income of Philippine companies, thereby justifying improvements in equity valuations and prices.”

“On external factors, improved global market risk appetite amid the possible partial trade deal between the US and China in November 2019–December 2019 and less uncertainties related to Brexit drove US stock markets to new record highs in November this year, thereby could support sentiment on the global stock markets and local as well.”

UnionBank’s Mr. Asuncion: “As the inflation continues to ease, a recovery in equities market is expected. The market will be advanced by the strong earnings of domestic companies and the strength of foreign corporations.”

ING Bank’s Mr. Mapa: “Equity market could benefit from reallocation as well as stronger growth figures to close out the year.”

Security Bank’s Mr. Roces: “Upward. Easing inflation, rate cut, lingering trade tension, after mostly consolidation in 2019.”

FIXED-INCOME MARKET
BSP’s Mr. Dakila: “Philippine bond market activity is expected to be influenced mainly by National Government issuance of government securities as part of its borrowing program. Meanwhile, corporations are likely to continue to tap the debt securities market to support their funding requirements. Corporate bond issuances from the first three quarters of 2019 stood at P376.3 trillion, 23% higher than total corporate bond issuances in 2018.”

“Bond market activity will also be supported by continuing efforts to further develop the Philippine capital markets. For example, the BSP issued Circular 983 that set a zero-percent reserve requirement ratio on repo transactions to encourage more players and enhance price discovery and liquidity in the market. This complements the decision of the Bureau of Internal Revenue to exempt repo transactions under the program from documentary stamp tax. These initiatives will reduce transaction costs for the repo market and encourage debt issuances by corporations.”

“Recent ratings and outlook upgrades are likewise expected to translate to lower borrowing costs from the international market for both the government and private corporations. In turn, this could translate further to cheaper financing options for the domestic market that could improve the country’s external position.”

RCBC’s Mr. Ricafort: “Philippine BVAL yields could remain steady/relatively low (some local bond yields still among two-year lows) amid relatively benign inflation environment and after the series of policy rate cuts that lowered borrowing costs and cuts on banks’ RRR that infused a total of about P440 billion in additional liquidity into the financial system that could support relatively low local borrowing costs, faster increase loan growth, faster growth in capital formation, and increased economic activities.”

“However, increased global market risk appetite could lead to some upward correction in benchmark bond yields in the US and other developed countries that could indirectly affect local bond yield benchmarks (partly reversing the risk aversion in the earlier part of the third quarter that resulted in new lows in the benchmark bond yields in the US and other developed countries).”

UnionBank’s Mr. Asuncion: “Lower interest rates tend to discourage investors to invest them in fixed-income securities like bonds. Yields might continue to move downward due to the recent RRP cut and the effectivity of RRR cut on December.”

ING Bank’s Mr. Mapa: “Likely correction to close out the year if liquidity conditions tighten and inflation accelerates.”

Security Bank’s Mr. Roces: “Upward. We think that downside to yields will be subdued as it seems that BSP has already carried out all planned easing measures for the years and as US yields continue to rise following risk-on sentiment. Will offer attractive yields against developed market and regional peers.”

FOREIGN EXCHANGE MARKET
BSP’s Mr. Dakila: “The peso’s movements in the near term will continue to reflect fundamental (long term) factors alongside temporary or short term factors that may affect local market sentiment. For its part, the BSP continues to adhere to its policy of allowing market forces to determine the level of the peso, which provides the following benefits: (i) a flexible peso is consistent with the BSP’s inflation targeting framework; and (ii) a flexible peso acts as an automatic stabilizer to restore macroeconomic balance for a small open economy like the Philippines.”

RCBC’s Mr. Ricafort: “Seasonal increase in OFW (overseas Filipino worker) remittances and conversion to pesos in the fourth quarter of 2019 partly due to some tuition payments and for Christmas-related spending could still support further gains in the peso exchange rate versus the US dollar as seen recently, with the peso among the strongest levels in 22 months at 50.00 levels recently.”

“On external factors, improved global market risk appetite amid positive developments on the US-China trade talks for a possible partial trade deal in November 2019-December 2019 could help improve sentiment on Emerging Market financial markets, including the Philippine financial markets.”

UnionBank’s Mr. Asuncion: “The peso will continue to depreciate as the market expects more positive signs from the US. Seasonal and intermittent strengthening periods are anticipated due to the inflows of personal remittances from overseas Filipinos, and service sectors (BPO and Tourism).”

ING Bank’s Mr. Mapa: “[The peso is] seen to enjoy short term strength, but eventually see marginal weakness on profit taking after carry trade thins out.”

Security Bank’s Mr. Roces: “Steady. Easing done by the US Fed may be the last for the year, offset by US-China trade jitters where a phase one agreement may happen late in the year or early next year. Also, slight depreciation expected due to upcoming (pre-announced) rate cuts and inflation rising back to 2-4% range. — Lourdes O. Pilar

Taiwanese firm launches $1M-gold processing facility in Camarines Norte

XIN YE Precious Metal Technology Co. Ltd. on Monday launched its first $1-million gold processing facility in Jose Panganiban, Camarines Norte.

In a statement, the company said it partnered with local mining company Johnson Gold Mining Corp. for he facility, which can process 11.5 metric tons (MT) of concentrate per day. The potential gold yield is around 50 grams per ton, or 550 grams of gold per day.

Xin Ye, through local unit Philippine Xin Ye Industry Ltd. Inc., is also hoping to get an endorsement from the Environment department for its “eco-friendly, cyanide-free ore stripping technology for small-scale gold mining in the country.”

Xin Ye wants to work with the Mines and Geosciences Bureau (MGB) to promote the use of the technology to operators in 29 Minahang Bayan areas around the country.

“We are committed to the protection of our environment and natural resources by responsible mining,” Xin Ye President Michael Yao said in a statement.

Mr. Yao said its locally patented Green Power-860 (GP-860) solution offers small-scale miners the option to use a safer way of stripping gold without the use of dangerous chemicals. The solution does not contain cyanide and mercury.

“GP-860 gold stripping technology aims to replace traditional extraction process, which usually involves the use of the banned chemical mercury that remains popular and widely used by small-scale miners in the Philippines,” the company said in a statement.

This technology can also shorten ore-to-gold extraction to six to eight hours, from two to eight days through the traditional method.

At the same time, Xin Ye said it is talking to eight mining companies in Baguio and Bicol who are keen on the technology. The company targets to close the deals in 2020. — V.M.P.Galang

PHL catastrophe bonds attract strong demand

THE CATASTROPHE-LINKED bonds (CAT) the government launched on Monday through the World Bank was met with strong interest from investors as it served as a diversifier to the pool of such securities in the market, top officials said.

“The successful float of the Philippines’ first ever ILS (insurance-linked security) or Cat bonds is one more proof of the strong investor support of the international business community for the Philippines amid the sweeping reforms being implemented by the Duterte administration to sustain the growth momentum while climate-proofing the country,” Finance Secretary Carlos G. Dominguez III was quoted in a statement released yesterday.

The Bureau of the Treasury (BTr) said aside from being the Philippines’ first CAT bonds, this issue was also the first CAT bonds to be listed in the Singapore Exchange and in any Asian exchange.

Last October, the government announced its plans to approach international financial markets to provide protection against earthquake and tropical cyclone risks. The BTr said that in partnership with the World Bank, the securities were planned to be coursed through the multilateral lender through the issuance of the ILS.

National Treasurer Rosalia V. de Leon said even though it took the government years to finalize the securities, it is high time for them to guard the fiscal health of the country against natural disasters given the country’s exposure to calamities.

“This instrument was years in the making, and we are grateful to the World Bank and our structuring agents for ensuring a successful deal. With our exposure to natural disasters, we cannot just sit idly by and do nothing,” Ms. De Leon was quoted as saying.

“We would also like to thank the Monetary Authority of Singapore (MAS) for their invaluable support of this endeavor and for the grant that they gave the Philippines to defray some of the expenses of this transaction,” she added.

The CAT bonds have two tranches, with a $75-million allotment for losses from earthquakes and $150 million for losses from tropical cyclones. Both tranches have a settlement date of Nov. 22 and maturity date of Dec. 2, 2022.

The bonds were under the International Bank for Reconstruction and Development’s capital-at-risk notes program designed to transfer risks related to natural disasters to capital markets.

To trigger payouts, an earthquake or a tropical cyclone will need to meet the criteria set under bond terms. — Beatrice M. Laforga

Art & Culture (11/27/19)

CCP launches art book for 50th year

THE Cultural Center of the Philippines launched an exhibition book entitled POSTER/ITY: 50 Years of Art and Culture at the CCP yesterday. The book features the posters that are currently exhibited at the CCP in line with the celebration of its 50th anniversary. The CCP’s timeline is also featured and it shows the significance of the posters and how they portrayed the artistic directions of Filipino aesthetics that evolved from the 1970s towards the search of a new identity in the present. For details regarding the book, check the CCP Intertextual Division Facebook page or contact the Intertextual Division at ccpintertextualdivision@gmail.com, 8551-5959 or 0919-317-5708. For more information on the Posterity exhibit, contact the CCP Visual Arts and Museum Division, Production and Exhibition Department at loc. 1504/1505 and (632) 8832-3702, mobile (0917-603-3809), e-mail (ccp.exhibits@gmail.com).

León Gallery’s Kingly Treasures Auction 2019

LEÓN GALLERY’s yearend The Kingly Treasures Auction 2019 featuring Philippine fine art, antiques, and furniture from the Luis Ma. Araneta y Zaragoza Collection on Nov. 30, 2 p.m., at Eurovilla 1, Legaspi St. corner Rufino St., Legazpi Village, Makati City. An architect, Mr. Araneta (1916–1984) designed the Makati Medical Center, Manila Doctors Hospital, the Immaculate Concepcion Church in Cubao, and the Times Theater in Quiapo. Among the items for sale are Fabian de la Rosa’s Landscape (Mariquina); two pieces by National Artist Fernando Amorsolo, the early work River (1927, 18” x 12”) and a later Under the Mango Tree (1962, 24” x 33”); a rare “late Neoclassical” stained golden narra armchair with original mother of pearl inlays; a pair of batikuling wood archangels with their original polychromy and gilding from turn of the 19th century; and a letter signed by Katipunan Founder and Supremo Andres Bonifacio in 1892 on the organization’s desire to expand its reach to Mindanao. Other historical documents are a Katipunan blood oath, one of only two extant known today; a battle map of the first three days of the Cry of Pugad Lawin; several cedulas personales; and a “dramatic eyewitness portrayal” by Jorge Pineda of the execution of Jose Rizal at the Luneta. The preview of The Kingly Treasures Auction 2019 is ongoing until Nov. 29 at León Gallery. For details visit www.leon-gallery.com, call 8856-2781 or e-mail info@leon-gallery.com.

Gateway Gallery exhibit on Andres Bonifacio

IN CELEBRATION of Bonifacio Day on Nov. 30, 10 a.m. to noon, the Gateway Gallery in Araneta City, Cubao, QC presents Bonifacio Redux¸ a project of the culture and heritage advocacy group Proyekto that aims to revisit the life and heroism of Andres Bonifacio. Professor Xiao Chua of De La Salle University will give a talk on “Andres Bonifacio: Comparing Old and New Biographical Dara and their Sources,” while John Ray Ramos of Ateneo de Manila University will give a talk on “Heroism for Kids: History and Heroes in Children’s Literature.” Registration is P300, inclusive of a certificate and a copy of the book Bayani Biographies: Andres Bonifacio, authored by Xiao Chua and John Ray Ramos, and published by Kahel Press. To register, text or call Proyekto at 0920-222-8889. Pre-registration is required for the certificate of attendance. Gateway Gallery is located at the 5f Gateway Tower, Araneta City, QC.

Tickets to Matilda the Musical are out

TICKETS to the international tour of the award-winning show Matilda the Musical are now available on TicketWorld. Matilda opens at The Theatre at Solaire on March 5, 2020. The stage adaptation of the Roald Dahl classic was originally produced for the stage by the Royal Shakespeare Company. The producers are launching the Tuesday Special: one price across all orchestra seats, and one price across all balcony seats. With book by Dennis Kelly and original songs by Tim Minchin, Matilda The Musical is the story of a little girl who, armed with a vivid imagination and a sharp mind, dares to take a stand and change her own destiny. Winner of over 85 international awards, including 16 for Best Musical, Matilda The Musical is now in its 7th year in London.

Bank stocks back on menu on strong earnings


AMID strong earnings results for banks and market expectations on lower borrowing costs, analysts are once again warming up to bank stocks.

The barometer Philippine Stock Exchange index (PSEi) lost 2.8% in the third quarter, a reversal from the one-percent increase in the second quarter and 1.2% in the third quarter of 2018.

On the other hand, the financial sub-index — which included the banks — gained 4.9% in the July-September period versus the 2.4% and 8.9% declines in the second quarter and last year’s third quarter, respectively.

This uptrend was reflected on the listed banks’ share prices during the July–September period with six of the 14 listed banks posting quarter-on-quarter gains. The Bank of the Philippine Islands (ticker symbol: BPI) saw the biggest rally among lenders with an 18.5% increase in its stock price, followed by Security Bank Corp. (SECB, 15.9%), Philippine Trust Co. (PTC, 12.2%), Philippine Savings Bank (PSB, 4.7%), East West Banking Corp. (EW, 2.8%), and BDO Unibank, Inc. (BDO, 2.1%).

At the same time, the Philippine National Bank (PNB) saw the biggest drop in share price at 11.5%, followed by that of China Banking Corp. (CHIB, -8.9%), Rizal Commercial Banking Corp. (RCB, -5.7%), Asia United Bank (AUB, -4.1%), Metropolitan Bank & Trust Co. (MBT, -4%), UnionBank of the Philippines (UBP, -3.5%), Philippine Bank of Communications (PBC, -2.8%), and the Philippine Business Bank (PBB, -2%).

“Banks generally outperformed the market… The positive sentiment for banking stocks was brought about by the multiple cuts in banks’ reserve requirement ratios (RRR) which is expected to lower funding cost, especially for smaller banks,” said COL Financial Group, Inc.’s senior research analyst John Martin L. Luciano in an e-mail.

For Senior Research Associate at China Bank Securities Corp. Rastine Mackie D. Mercado: “[B]anks reported double-digit growth in net income in the quarter (compared to the third quarter of 2018) as trading grains recovered from last year’s slump.”

“We note that most banking stocks were depressed in the first half of the year likely due to the yield curve inversion. As such, the recent normalization of the yield curve has been positive for the bank stocks,” Mr. Mercado said in a separate e-mail.

The third quarter saw the BSP cutting policy rates by 50 basis points (bps) as expected following the inflation downtrend and the pronouncements of BSP Governor Benjamin E. Diokno.

It also saw another 100-bp cut in banks’ RRR on September 27, effective in November, following the decision on May 23 that saw the reserve requirements slashed by 200 bps in the three phases or until July 28. It was cut again by another 100 bps in its October 24 meeting — for a total of 400 bps so far this year.

Banks also managed to perform well during the quarter as BSP data showed the bottom line of the country’s universal and commercial banks (U/KBs) grew by 34.19% to P155.76 billion from the P116.1-billion accumulated earnings at the end of the third quarter last year.

Net interest margin (NIM), the ratio that measures banks’ efficiency in investing their funds by dividing the annualized net interest income to average earning assets, improved to 3.43% in the third quarter from 3.38% in the second quarter and 3.15% posted a year ago.

“The [nine-month/three-months-to-September] earnings performance of the banking sector exceeded expectations as me and many analysts are selective on banking stocks at the start of the year,” Philstocks Financial, Inc. Research Associate Piper Chaucer E. Tan told BusinessWorld.

“It turned out that the trend has changed, but this is also in line with our expectations on what the growth for the banking sector will be… in the second-quarter banking report,” he added.

Mr. Tan also attributed “consumer confidence” as one of the “domestic catalysts” for the banks’ bottom line performance for the quarter.

“This also affects not just the consumer companies, but also banks since more people spending means more consumer credit demand will take place. This should also boost the loan growth since spending will also increase demand for credit,” he explained.

The listed bank stocks that stood out, Mr. Tan said, include BPI, BDO, MBT, and SECB owing to their “high double-digit” earnings growth coming mostly from their core businesses.

PNB Vice President and Head of Equity Research Division Alvin Joseph A. Arogo noted BDO and SECB’s high NIM year-on-year expansion in the third quarter at 50 bps and 46 bps, respectively.

“Consequently, the net interest income of both banks also outperformed,” Mr. Arogo said.

For Mandarin Securities Corp. Research Analyst Zoren Philip A. Musngi: “The three big banks (BDO, BPI, and MBT) surprised as they reported strong third quarter figures, with net income growth averaging 43% year on year…”

“In the past quarter (Q2), there was some uncertainty on whether the banks will be able to sustain their strong earnings, but they managed to pull through,” he added.

This assessment was shared by First Resources Management and Securities Corp. Officer-in-Charge of Trading and Research Charlene Ericka P. Reyes: “The third quarter earnings results… were mainly driven by the significant improvements in their non-core businesses, primarily in net trading gains. However, in contrast to the other banks that we cover, what stood out for me was BDO, which surprisingly did not heavily rely on trading gains to boost its non-interest income for the covered period…,” she explained.

“[I]nstead, recurring income from fees and commissions and insurance premiums mainly contributed to the growth in its non-core business,” she noted, citing BDO’s 32.3% decline in trading gains for the third quarter “versus the 200%-500% surge from BPI, MBT, and EW.”

Ms. Reyes also mentioned EW’s “notable” 13.2% loan growth during the quarter, which outpaced the eight-percent average loan growth from the big banks “driven by their high concentration in consumer loans at 72%.”

“[L]astly, MBT was also seen to take advantage of the low interest rate environment this year as reflected by their shift of funds in the bond market, with their total bonds for the first nine months of the year increasing to P62.68 billion from P2.91 billion during the same period in 2018,” she said.

Abacus Securities Corp. Investment Analyst Elizabeth T. Santiago noted MBT’s and EW’s “low current market valuation, which makes them cheap compared to their peers.”

Apart from valuation, Ms. Santiago said that MBT and EW also stood out with the former having the largest trading gains among the listed banks and the latter with its “compelling recovery story as it was disproportionately hit by funding costs earlier in the year.”

“[EW] managed to grow its net income during the quarter… as the other major listed banks despite not having much by way of trading gains…,” she added.

RECOMMENDATIONS AND OUTLOOK
All things considered, many of the analysts being interviewed continued to be optimistic on the prospects of bank stocks going into the fourth quarter.

Joylin F. Telagen, research head at IB Gimenez Securities, Inc., noted that the ongoing US-China trade war “will still continue” to affect stock prices in the last three months of the year.

“Other than that, I’m looking at… the US Federal Reserve’s and BSP’s policy meetings (on December 10–11 and December 12, respectively) that might possibly cause market volatility before the effect of a possible Santa Claus rally,” Ms. Telagen said, referring to the tendency of stock prices to rise over the last weeks of December into the new year.

“We like to focus more on the stable big banks like BDO, MBT, BPI, and the leader in digital transformation UBP as they will stably continue to post strong earnings and capture the larger percentage of the rising market demand,” she added.

For First Resources’ Ms. Reyes: “We are maintaining our recommendation to overweight selected banking stocks as valuations continue to be attractive versus the other sectors.”

“Despite the slowdown in loan and deposit growth, we believe that banks will continue to record improvements in net interest margin driven by the normalization in funding cost amid the reduction in reserve requirement ratio and the decline in bond yields,” she added.

China Bank Securities’ Mr. Mercado was likewise upbeat: “[We are] generally bullish for the sector in light of the recent easing policies from the BSP, as these should translate into higher loan book growth and, at the same time, lower funding costs — which could lead to higher NIMs, especially for those with portfolios tilted towards consumer loans,” he said.

Also hopeful was Abacus Securities’ Ms. Santiago: “We are still bullish for the sector, especially going into next year, as government catch-up spending may finally spur private investment and loan growth through expected multiplier effects.”

“The brunt of this year’s rate cuts would also be felt in 2020, but liquidity may start to ease in the fourth quarter. We also expect margin expansion to continue as easing liquidity would continue to drive funding costs down, while the industry expands efforts to grow its retail and SME lending components (where yields are higher),” she said.

Mandarin Securities’ Mr. Musngi has maintained the positive outlook on the listed banks.

“Even though loan growth has been tempered for the most of 2019, bank profits are benefitting from the [interest] rate and RRR cuts [as well as] solid growth in fee income and recovery in trading gains. We expect the stable market environment and easing policy of the central bank to continue for the most part of 2020,” he said.

Philstocks’ Mr. Tan shared this assessment, but said that they are “still selective” on banks “due to the high competition in the industry” and that they are also looking into “global uncertainties.” — J.E. Hernandez

US SEC proposes new rules on use of derivatives in ETFs

WASHINGTON — The US securities regulator on Monday proposed new regulations for the use of derivatives by investment funds to introduce some safeguards for more risky products and increase competition.

The proposal from the Securities and Exchange Commission (SEC), which is subject to public consultation, would address concerns over the risks posed by so-called inverse and leveraged exchange traded funds (ETF), after some products experienced heavy losses during a spike in volatility in February 2018 subsequently dubbed “volmageddon.”

Critics of the products blamed the magnified losses on their complexity, which many investors did not understand.

Monday’s proposal partly reissues an earlier 2015 proposal meant to replace the current ad hoc product approvals system, which has allowed firms such as ProShares and Direxion to gain approval for their leveraged and inverse products.

Industry players have long complained that a lack of consistent rules has effectively barred new players in these products from entering the market to compete.

“By standardizing the framework for funds’ derivatives risk management, the proposal would benefit investors, funds and our markets,” said SEC Chairman Jay Clayton.

ETFs track baskets of stocks and have become popular due to their lower fees, but some have grown to include derivatives to amplify returns.

Leveraged ETFs seek to magnify the performance of the indexes they track, like the Standard & Poor’s 500-stock index, for a single day. Inverse ETFs try to achieve the opposite performance, which allow investors to make money when the market or the underlying index declines.

If adopted, the new rules would require funds to limit leverage to 150% based on value-at-risk, the SEC said in its proposal, while it would allow leveraged and inverse products to limit their investment results to 300% of the return — or inverse of the return — of the underlying index.

The rules would also require all funds and advisers to determine upfront whether a customer is capable of evaluating the risk of these instruments before allowing investors to trade in leveraged or inverse ETFs.

Firms would have to implement a risk management program that includes spelling out in their prospectus whether they are subject to a proposed limit on fund leverage risk.

The agency said it would afford exemptions to firms that limit derivatives exposure to 10% of net assets or use derivatives only to hedge certain currency risks. — Reuters

Grab PHL says it did not overcharge riders; any increase was ‘within fare matrix’

GRAB Philippines on Tuesday said there is no basis for Puwersa ng Bayaning Atleta (PBA Partylist) Rep. Jericho B. Nograles’ assertion that it “should be liable for P15 billion worth of fines” for overcharging customers.

“Grab did not overcharge its riders and has no liability to pay any fine, contrary to a claim by (Mr. Nograles),” the ride-hailing firm said in a statement.

Grab argued that its fares “were well within the fare matrix” of the regulator Land Transportation Franchising and Regulatory Board (LTFRB).

The Philippine Competition Commission (PCC) earlier this month slapped a fine of P23.45 million on Grab for breaching its initial pricing commitments. The fine includes a P5 million refund to its Grab riders who used the service between February and May.

“We complied with our regulator but in the interest of showing good faith, we will comply with the PCC although clearly we could have filed a motion for reconsideration or appealed to a higher authority, which we did not since we want to focus on our business instead,” Grab country manager Brian P. Cu was quoted as saying in the statement.

He said Mr. Nograles’s claim that Grab Philippines should face bigger fines has “no basis,” adding this is “incorrect, misleading, irresponsible and will only hurt the morale of drivers who only want to make a decent living by serving the riding public.”

Grab also maintained that it “has not made any form of admission of allegedly 3-million offenses of ‘overcharging’.”

“What Grab said in the press conference last November 22 was there is no overcharging, and that there are around 3 million passengers that would receive the payment of P5.05 million in total fines as ordered by the PCC,” it explained.

Grab has said that it respects PCC’s mandate to protect Philippine consumers, and has worked with the authority to form and finalize its voluntary commitments.

Grab has until Dec. 14 to pay its first and second quarter fines amounting to P11.3 million and P7.1 million respectively. — A.L.Balinbin

How PSEi member stocks performed — November 26, 2019

Here’s a quick glance at how PSEi stocks fared on Tuesday, November 26, 2019.

 

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