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Citadines Amigo Iloilo opens

CAPITALAND and subsidiary The Ascott Limited is bringing the serviced residence concept to Iloilo City with the opening of the Citadines Amigo.

Citadines Amigo Iloilo, the first international serviced residence in the city, is hoping to attract travellers and long-staying businessmen. It has 121 rooms, a fitness center, function rooms, swimming pool, and all- day dining restaurant.

“We are on track to achieve Ascott’s target of 6,000 units in the Philippines by 2020, as we continue to expand through management contracts, franchises, investments and strategic alliances,” Daniel Wee, country general manager of The Ascott Limited Philippines, said in a statement.

Ascott currently has 25 properties in the Philippines, nine of which are operation and the rest set to open soon.

Mr. Wee said Ascott has an average occupancy rate of close to 80% under its brands, namely, Ascott, Citadines, and Somerset.

Citadines Amigo Iloilo is the second Citadines property outside of Manila, and the fifth overall in the Philippines after Citadines Salcedo Makati, Citadines Millennium Ortigas Manila, Citadines Bay City Manila and Citadines Cebu City.

Won’s revival challenges baht’s strength

THE THAI BAHT’S reign as Asia’s best-performing currency is coming under threat from an unlikely source: South Korea’s won.

The baht has slumped into the bottom half of the regional rankings this quarter after heading the table for three consecutive three-month periods. The won meanwhile has shrugged off its chronic underperformance and rocketed to the top.

The main reason behind the Korean currency’s revival has been the sea-change in sentiment surrounding US-China trade tensions. After the dispute between the world’s two-largest economies heightened through the early part of year, recent rhetoric suggests a phase-one deal is getting closer.

This has been a big fillip to the won as the two countries are by far the largest buyers of South Korea exports. The won has strengthened 2.5% against the dollar this quarter after sliding 6.7% during the first nine months of the year.

The won is also being supported by a brace of domestic factors. Industrial production growth for September was four times the median estimate of economists, while semiconductor inventories for the same month dropped the most in two years, suggesting a prolonged slump in tech demand may be easing. The won may get a further boost if trade data on Thursday backs up these green shoots.

BAHT FALTERS
The baht has tumbled down the regional rankings after Bank of Thailand stepped up measures to cap the currency’s strength. Policy makers cut interest rates for the second time in three months on Nov. 6, lowering the benchmark to match an all-time low 1.25%. They also said they would ease rules on outflows to curb the surging currency.

Measures taking effect Nov. 8 included allowing exporters to keep a larger amount of money abroad, and scrapping most restrictions on outward transfers. The Bank of Thailand will review these policies every three months and take further steps if needed, Deputy Governor Mathee Supapongse said.

While still eking out a modest gain versus the greenback this quarter, the baht has dropped 0.4% from a six-year high set in late October. The currency may remain under pressure Monday as a report is forecast to show economic growth virtually stalled in the third quarter.

The baht-won cross — a synthetic exchange rate calculated from the level of the two currencies against the dollar — has dropped 3.4% from its August high. The pair has broken below an uptrend that has held since the start of the year and there’s every chance its recent losses may be just the start of longer decline. — Bloomberg

8990 Holdings sells P5 billion in receivables

LISTED property developer 8990 Holdings, Inc. has sold P5 billion worth of receivables to free up funds for new projects.

The company told the stock exchange yesterday it has unloaded contract-to-sell receivables to local financial holding firm Dearborne Resources and Holdings, Inc., the same company it sold P2.8-billion receivables to last year.

8990 said it was able to generate the full value of the contracts, as the price of the sale was based on the principal balance of the receivables.

The sale was also made on a non-recourse basis, meaning Dearborne will take the risk.

“This brings the company’s total receivables sold to P15 billion in the past two years,” 8990 said, noting it was able to liquidate P10 billion from selling contract-to-sell receivables last year.

8990 has been selling its receivables in recent years to raise money to fund its projects, as an alternative to taking on debt. The company said its net debt-to-equity has now fallen below its covenant ratio of 1.5x, standing at 0.94x as of end-September.

“[T]he company will spend P4 billion this year on its various projects nationwide. In 2020, the company plans to double its capital expenditure to support its goal of hitting P20 billion by the end of next year…,” it said.

The property developer had P20.9 billion in receivables as of the first nine months of the year, which will be reduced following the P5-billion sale to Dearborne and the completion of its P2.5-billion securitization deal before the year ends.

Securitization is the process of transforming an illiquid asset into a security through quantitative analysis.

8990 is expecting to start generating revenues from its Urban Deca Homes Ortigas project by next year. This is its largest development in Metro Manila with more than 19,000 condominium units.

In the first nine months of the year, 8990 posted a 23% increase in earnings to P4.21 billion, driven by a 21% jump in revenues to P10.51 billion.

Shares in 8990 at the stock exchange shed 0.50 point or 0.51% to close at P97.50 each on Monday. — Denise A. Valdez

Taylor Swift’s Carlyle plea showcases private equity’s reach

TAYLOR SWIFT’s feud with her record label reveals a little-known fact about the entertainment business: the outsized role private equity plays in funding its biggest stars.

Swift asked Carlyle Group in a tweet on Thursday to help her as she battles to secure ownership of albums she recorded with her previous label. The Washington-based buyout firm helped finance celebrity manager Scooter Braun’s acquisition of Big Machine Label Group LLC.

Carlyle found itself in the middle of the spat because, along with alternative asset managers including TPG and Blackstone Group Inc., it has extended its reach into show business in recent years. The industry, known for acquiring staid corporations, has been taking stakes in everything from record producers to major talent agencies.

There’s a lot for buyout firms to do in music as the industry recovers from decades of decline. The value of song libraries has jumped in recent years, buoyed by major labels making acquisitions and private investors buying in, and spending on music has increased thanks to subscription streaming services like Spotify Technology SA.

Blackstone owns Sesac Holding and The Harry Fox Agency Inc., two groups that disburse royalties, while TPG was an investor in Spotify.

One of the biggest deals last year was Sony Corp.’s purchase of EMI Music Publishing for $2 billion. The seller was a consortium led by Abu Dhabi’s Mubadala Investment Co. The deal allowed Sony to get its hands on a catalog of 2.1 million songs from Beyoncé, Carole King and other artists.

And firms are interested in entertainment far beyond music.

TPG owns a large stake in Creative Artists Agency LLC, the talent agency and show business packaging firm whose clients include Will Smith and Jennifer Aniston, and has also invested in Vice Media Inc. and STX Entertainment, the studio behind Hustlers. Silver Lake owns part of Endeavor Group Holdings, the parent company of talent agency WME and operator of the Ultimate Fighting Championship.

Blackstone, the world’s biggest alternative asset manager, bought into the TV network YES, as well as Merlin Entertainment, the owner of Legoland. The latter deals point to the firm’s interest in the events business.

“We’re also a big fan around live entertainment because even though many things are moving online, people still need physical activities, things they want to do,” Blackstone President Jon Gray said on an earnings call last month. Endeavor called off a planned initial public offering in September.

Carlyle has been involved with Braun since at least 2017, when it bought a minority stake in his Ithaca Holdings. Carlyle then helped finance Braun’s acquisition of Big Machine in June with an additional equity investment. The firm has no operational control. A representative for Carlyle declined to comment.

Carlyle also owns an array of entertainment-related companies. They include Content Partners LLC, an asset management firm and investment fund that helps finance film, television and music companies by purchasing their cash flows, and Apex Parks Group, the operator of U.S. amusement parks.

The pop star didn’t criticize Carlyle, only appealing for its help. But her conspicuous mention of the company put a spotlight on an industry her legions of young fans normally wouldn’t have reason to pay attention to. Google searches for Carlyle Group surged after her tweet.

And critics of private equity — among them Representative Alexandria Ocasio-Cortez, the New York Democrat — seized on the tweet as further evidence of the industry’s harm to society.

Her tweet reads: “Private equity groups’ predatory practices actively hurt millions of Americans. Their leveraged buyouts have destroyed the lives of retail workers across the country, scrapping 1+ million jobs. Now they’re holding @taylorswift13’s own music hostage. They need to be reigned in.”

It also drew the ire of Senator Elizabeth Warren, a Democratic candidate for president, who responded on Saturday and said she has a plan to rein in private equity firms.

Her tweet read: “Unfortunately, @TaylorSwift13 is one of many whose work has been threatened by a private equity firm. They’re gobbling up more and more of our economy, costing jobs and crushing entire industries. It’s time to rein in private equity firms — and I’ve got a plan for that.” — Bloomberg

RedDoorz appoints new CFO, marketing exec

AS it prepares for significant growth in 2020, RedDoorz announced the appointment of Jupe Tsui as chief financial officer and Liviu Nedef as senior vice president of marketing.

Mr. Tsui was the regional CFO of tech firm Oriente and regional finance director for booking.com, while Mr. Nedef is the former head of marketing at HOOQ.

“RedDoorz has grown five-times in size in the last 12 months and we intend to continue to drive significant growth in 2020,” Amit Saberwal, CEO and founder of RedDoorz, was quoted as saying in a statement.

“Creating more robust commercialization strategies, taking greater control of our operational costs, developing impactful brand campaigns, and enhancing end-user experiences enriched with emerging technologies requires an experienced team with a depth of experience in their respective fields to ensure we are solving for both the current and future needs of our business.”

RedDoorz operates a network of over 1,500 properties in 120 cities spanning Indonesia, Singapore, Philippines, and Vietnam. It targets to enter Thailand next year.

China central bank cuts short-term funding rate for the first time since 2015

SHANGHAI — China’s central bank unexpectedly trimmed a closely watched lending rate on Monday, the first such cut in more than four years and a signal to markets that policy makers are ready to act to prop up slowing growth.

The People’s Bank of China (PBoC) said on its website that it was lowering the seven-day reverse repurchase rate to 2.50% from 2.55%.

The move cheered China’s bond market and comes just two weeks after the PBoC cut the borrowing cost on its medium-term lending facility (MLF), used by banks for longer-dated funding needs, by the same margin.

Both cuts raise the likelihood that the PBoC will trim its new benchmark loan prime rate (LPR), off of which many lenders base their mortgage rates, this week in a bid to free up funds to credit-starved parts of the economy.

Analysts say the unexpected cut on Monday also shows the central bank is keen to ease investor worries that higher retail inflation would prevent it from delivering fresh stimulus.

Zhou Hao, economist at Commerzbank in Singapore said the reverse repo rate cut indicates a policy change in coming months, including “some fine-tuning to prioritize the pro-growth policy for the time being.”

Growth in the world’s second-largest economy has eased to its slowest in nearly three decades and recent data such as credit growth and industrial output have continued to show a cooling economy.

Driven by soaring pork prices due to the spread of African Swine Fever, China’s consumer inflation rose past the government’s target of around 3% in October to its fastest pace in almost eight years.

That had raised some concerns the PBoC may be constrained in its efforts to ease policy. In a report released Saturday, the PBoC said it would maintain prudent monetary policy to prevent inflation from spreading.

However, market participants believe the two recent market rate cuts suggest a similar adjustment in the LPR this week.

Yan Se, chief economist at Founder Securities in Beijing, said the reverse repo rate cut showed authorities were open to using open market operations, typically used to meet the financial system’s daily funding needs, to stimulate longer term growth in the real economy.

“Commercial banks comprehensively evaluate financing costs to decide the LPR, so lowering reverse repo rates could maintain monetary policy stability,” Yan said.

“Against the backdrop of such a situation, a five basis point reduction in LPR is a high probability event.” A cut to banks’ reserve requirement ratio (RRR) is also possible, he added.

Similarly, Commerzbank’s Zhou expects a targeted RRR cut before the end of this year.

The PBoC announce its monthly LPR fixing on Wednesday. The rate on the one-year fixing now stands at 4.2% while the five-year is at 4.85%.

Monday’s repo rate cut bolstered the bond market, with China’s benchmark 10-year treasury futures for December delivery gaining more than 0.4% in the morning session.

Julian Evans-Pritchard, senior China economist at Capital Economics, said Monday’s reverse repo rate cut is a step to lowering marginal funding costs for banks, which rely heavily on repos as a source of short-term liquidity.

“With economic growth still slowing and unlikely to bottom out in the near-term, we think the PBoC will take further steps to shore up lending, which has weakened recently,” he said in a note, anticipating another 70-basis-point cut to the seven-day reverse repo rate by the middle of next year.

The PBoC had skipped reverse repo operations for 15 straight trading days before its injection of 180 billion yuan ($25.74 billion) into the interbank market on Monday. — Reuters

Asian airlines slash flights to Hong Kong

SYDNEY — Several Asian airlines have cut flights to Hong Kong over the coming weeks, according to industry scheduling publication Routes Online, as anti-government protests in the city grow increasingly violent and disrupt daily life.

Routes online said latest schedules showed cancellations from PT Garuda Indonesia (Persero) Tbk, India’s SpiceJet Ltd., Malaysia’s AirAsia Group Bhd, and the Philippines’ PAL Holdings, Inc. and Cebu Air, Inc.

The cuts come as Hong Kong police on Monday fired tear gas at protesters trying to escape a besieged university, while others armed with petrol bombs awaited an expected operation to oust them.

The unrest, raging for almost six months, and an escalating Sino-US trade war has pushed the Asian financial hub into recession for the first time in a decade.

On Monday, Routes Online showed Garuda has reduced weekly flights to Hong Kong to four from 21 through mid-December, SpiceJet has suspended its Mumbai-Hong Kong route through Jan. 15 and AirAsia has cut flights from Kuala Lumpur and Kota Kinabalu in December and January.

Garuda and SpiceJet did not respond to Reuters’ requests for comment. AirAsia said passenger numbers have been lower over the past few months and that it is adjusting capacity accordingly.

A spokeswoman for PAL Holdings’ Philippine Airlines said the carrier was using smaller planes than usual for Hong Kong as passengers were postponing travel due to safety concerns. It has also cut daily flights from Manila to four from five, she said.

A spokeswoman for Cebu Air’s Cebu Pacific said the budget carrier has cut flights from Cebu and Clark through December and January respectively due to softened demand. She said the airline nevertheless launched its Puerto Princesa-Hong Kong route on Sunday as scheduled.

A Jeju Air spokesman said the low-cost carrier has reduced daily flights from Seoul to Hong Kong to one from two through Dec. 17 due to weak demand. A spokesman for rival Jin Air said the budget airline had suspended Seoul-Hong Kong flights through Dec. 24.

Airport Authority Hong Kong on Sunday reported an October decline of 13% in passengers and 6.1% in the number of inbound and outbound flights — the steepest falls since the unrest began. It said a growing proportion of travelers were using Hong Kong as a transit point rather than a destination.

Last week, Cathay Pacific Airways Ltd. said its business outlook was “challenging and uncertain” and that it has cut capacity and delayed four plane deliveries due to falling demand.

Major mainland Chinese carriers also reported double-digit declines in demand on so-called regional routes in September and October as protests in Hong Kong and travel restrictions to Taiwan took their toll, monthly traffic reports showed.

Routes Online said several Chinese carriers, including Air China Ltd., China Eastern Airlines Corp. Ltd. and China Southern Airlines Co. Ltd. had filed for fresh capacity reductions to Hong Kong since late October.

China Eastern declined to comment when contacted by Reuters. Air China and China Southern did not respond to requests for comment. — Reuters

A solid remaster

Super Monkey Ball: Banana Blitz HD
Nintendo Switch

NOT A few eyebrows were raised when Sega decided to release Super Monkey Ball on the GameCube. Timing was, of course, critical to the decision. The success of Monkey Ball in coin-op machines at the turn of the millennium prompted moves to port it over to a home platform, and its programming for the Japanese videogame company’s New Arcade Operation Machine Idea cabinet made the Dreamcast an obvious choice. Unfortunately, the pioneering 6th-generation console floundered off the gates, leading to its status as a launch title for Nintendo’s own piece of gaming hardware.

In retrospect, Sega was right to shun the Dreamcast for Super Monkey Ball despite the console’s chipset coming off as NAOMI lite. Certainly, the wacky premise and controls were right up Nintendo’s alley; it was a party offering that fit the senses and sensibilities of would-be GameCube owners. Gamers were tasked with directing monkeys AiAi, MeeMee, and Baby (from the arcade version), as well as GonGon (a new addition to allow for four-player setups), in transparent balls (hence the title) through platforms laced with obstacles within a specific timeframe without falling off.

As things turned out, the unlikely marriage was a hit. In fact, Super Monkey Ball became one of the best-selling among the GameCube’s initial forays, so much so that Super Monkey Ball 2 — a direct sequel featuring more of the same absurd fun via a story mode and enhanced multiplayer options — followed not long after. Monkey Tennis, Monkey Baseball, Monkey Soccer, Monkey Boat Race, Monkey Shot, and Monkey Dogfight augmented Monkey Race, Monkey Fight, Monkey Target, Monkey Billiards, Monkey Bowling, and Monkey Golf to amp up its appeal as a party game.

To Sega’s credit, Super Monkey Ball 2 was no simple cash grab. Even as it capitalized on the strides made by its predecessor, it established its bona fides by being named Best Puzzle/Trivia/Parlor Game at the E3 2002 Game Critics Awards and then claiming solid reviews. (Parenthetically, it even found purpose as a tool for maintaining sharpness among medical practitioners about to perform surgery.) Just as significantly, it flew off store shelves, prompting its re-release as a Player’s Choice title and subsequently spawning a franchise.

Fast forward to the present, and it’s clear that Super Monkey Ball has seen better days. Super Monkey Ball Bounce, its pachinko-like Peggle-derivative foray into mobile devices in 2014, lasted all of two years. And two years before that, Super Monkey Ball: Banana Splitz, its last console contribution containing familiar base mechanics, debuted on the PlayStation Vita to disappointing results; reviews were mixed, and it failed to catch the fancy of owners of the handheld more predisposed to edgy fare.

That said, Sega continues to hold high regard for the Super Monkey Ball franchise. In partnership with Yakuza series caretaker Ryu Ga Gotoku Studio, it has released Super Monkey Ball: Banana Blitz HD on all 8th-generation consoles, with a version for the personal computer slated by the end of the year. A remake of the 2006 offering on the Wii, it makes full use of the Unity game engine to sport industrial enhancements, carry contemporary design aesthetics and, most importantly, eschew motion controls in favor of analog support.

For gamers, the good news is that Super Monkey Ball: Banana Blitz HD lives up to promise. On the Switch, it runs on solid 1080p resolution and renders enhanced graphical fidelity at 60 frames per second with nary a glitch. The audio presentation is equally stunning, boasting of a finely tuned blend of voices and music, the absence of a few original tracks due to licensing issues notwithstanding. Controls are responsive and apt for quick moves, with the addition of the jump button a marked but requisite departure from the norm. In other words, it aims to deliver the goods from a technical standpoint.

In this regard, Super Monkey Ball: Banana Blitz HD likewise tries to fix the waggly camera movements exhibited by the original on the Wii by instead fixing the vantage point so that gamers are, in theory, able to see in advance the mazes and obstacles in store, and act accordingly. In practice, however, Ryu Ga Gotoku Studio’s design choices don’t go far enough to address handicaps in depth perception. Jumps can and will still be mistimed, leading to untimely deaths off wrongly judged platforms and projectiles thrown by bosses in battles at the end of levels (new to the series and potentially adding heft to the content). Changes in perspective via the otherwise-useless right analog stick would have been a welcome addition.

Thankfully, Super Monkey Ball: Banana Blitz HD provides significant quality-of-life improvements that help ease the burden on gamers to do better the next time around. There are unlimited continues to tap, and death effects a reset to the start of the level and not the world — definitely welcome features considering the 100 stages on offer, the uneven progression of difficulty degrees, and the sheer challenges posed by the boss fights. Make no mistake; frustration will set in no matter what. However, the veritable lifelines are a boon to keeping hope afloat and preventing interest from waning.

Super Monkey Ball: Banana Blitz HD manages to retain just 10 of the 50 mini-games on the source material. No doubt, the development stems mostly from the chucking of motion controls, which would have been required to play the 40 that ended up on the cutting room floor. Those that have wound up being part of the remaster are touted as the most popular of the lot, in any case, albeit with no single-player-versus-bots option. Online leaderboards and features, among them Time Attack, serve to jack up replay value. Ditto with unlockable characters, of whom Sonic the Hedgehog is invariably the most desired. (Choosing Sega’s resident mascot revises the theme of the game; collectible bananas turn into the ubiquitous rings.)

Overall, Sega earns props for publishing a solid remaster from a highly regarded franchise. Whether it would have done better by choosing Super Monkey Ball or Super Monkey Ball 2 to port over is subject to speculation. What isn’t: the painstaking care it and Ryu Ga Gotoku Studio handled Super Monkey Ball: Banana Blitz HD. While far from perfect, the release marks an auspicious beginning and should serve as a blueprint for more remakes — and, needless to say, original work — to come.

THE GOOD:

• Enhanced graphics and sounds

• Quality of Life improvements

• Motion controls eschewed

• Online leaderboards

THE BAD:

• No camera controls

• Uneven difficulty progression

• Mini-games reduced in number

• Change in soundtrack due to licensing issues

RATING: 8/10

POSTSCRIPT: SEGA AGES Ichidant-R finally makes its way to Western audiences 25 years after it was first released in Japanese arcades and on the Sega Mega Drive, and gamers won’t need much time to wonder why. It’s a series of timed puzzle mini-games that, for all its wackiness, holds universal appeal. Both iterations are on offer, although the home console version (which has Quest and Competitive Modes apart from Free Play) is absent any English support; the lack of localization is mitigated somewhat by the inclusion of a digital manual that effectively serves as a walkthrough.

Nonetheless, SEGA AGES Ichidant-R earns its $7.99 price tag. In proving that quantity and quality can mix even in the absence of depth, it throws in shades of its publisher’s own Panic! and Nintendo’s immensely popular WarioWare series to come up with 20 “tests” all told, divvied up within an amusing, if paper-thin, story about a knight needing to go through four castles, in which puzzles abound, to ultimately save the princess in distress from the evil king. En route, themed challenges have the would-be hero besting obstacles through the use of either brains or brawn, or both, but in spurts.

The original Ichidant-R was designed to gobble up coins, so the puzzles can be difficult, if not borderline impossible, to solve. SEGA AGES Ichidant-R on the Switch, however, has a Helper setting that lowers the bar for completion of a level, not to mention adds lives. Still, there can be no discounting the fun factor it provides. For gamers on the lookout for retro goodness in spurts, there’s no better choice than developer M2’s excellent port. (8/10)

THE LAST WORD: Arc of Alchemist, a tactical role-playing game developed and published by Compile Heart, is slated to be released in the West on the Switch and the Sony PlayStation 4 early next year (although physical copies for the latter are exclusive to Europe). The localized version will include the new update rolled out in Japan that allows gamers to control any of the playable cast members during battle. Anyone in the party can be a leader and, therefore, wield the Lunagear, a special device assembled with ancient technology and, when equipped with the four orbs of fire, water, wind, and earth, seen to unlock the Great Power destined to save humanity.

Tagaytay hotel is no. 1 in Calabarzon — Tripadvisor

SUMMIT RIDGE Tagaytay is the number one hotel out of 54 the Calabarzon area, according to users of travel website TripAdvisor.

Summit Ridge Tagaytay’s ranking was determined based on thousands of reviews and opinions made on TripAdvisor.

“Both the quality and quantity of reviews were taken into account for and surely, Summit Ridge Tagaytay delivered a remarkable service, quality, and value to be recognized by the site,” the hotel said in a statement.

Sitting at the highest point of a ridge, the hotel offers stunning sunset and sunrise views. Rooms have balconies that give guests a view of Taal Volcano and Taal Lake.

Summit Ridge Tagaytay also has health and recreation facilities, infinity pool, gym, indoor courts, function rooms, a ballroom and Cafe Summit.

Big bets in Asia on Fed have traders guessing who’s paying

FUTURES show close to zero easing by the US Federal Reserve priced in for this year. — REUTERS

THE EURODOLLAR options market, where investors bet on US interest rates, is typically quiet during Asian trading hours. The lack of liquidity hasn’t stopped the building of huge positions in recent weeks.

A series of block trades, similar in size and structure, has led to speculation that at least one investor is betting big that the Federal Reserve will cut rates only once more, at most, in this cycle. The hedge for just one transaction last week was equivalent to more than four times the average daily volume for September contracts in the region.

With Federal Reserve Chairman Jerome Powell sticking to his view Wednesday that interest rates are probably on hold after three straight reductions, investors have dialed back expectations. Futures show close to zero easing priced in for the remainder of this year, and a quarter-point cut in 2020.

“The Fed shows no signs of hurrying to cut rates,” said Jun Kato, chief market analyst at Shinkin Asset Management in Tokyo. “With Powell repeating that the US economy is in a good shape, speculation that there won’t be any more cuts is gaining momentum.”

That view appears to underlie the eurodollar positions constructed during Asian hours over a period of three weeks, based on an analysis of the options purchased and sold and open interest changes.

The trades started drawing attention from Oct. 24 after a series of large block transactions. From then, they have proceeded like clockwork every few days, with the latest showing a build up of 98.00 puts and 98.75 calls.

In total, there are around 280,000 short positions in calls targeting a strike equivalent to 1.25% for the September 2020 and March 2021 Eurodollars contracts. That means if markets start to price more than two Fed rate cuts by this time, someone holding that position would stand to wear heavy losses.

On the flip side, not all economists agree that the Fed will cut rates even once. Morgan Stanley predicts the central bank will remain on hold through 2020 in its global strategy outlook.

The trades stand out not only for their size, but also their timing, during less liquid Asian hours.

LESS LIQUID
“Simply believing a Fed on hold in 2020 brings us closer” to the 98 strike, at least through the end of this year, said Albert Marquez, who covers interest rates at Chicago Capital Markets.

Alternatively, the trade might be to take advantage of elevated call skew, he said. Executing during Asian hours is strange, though, as “the amount of edge given up at that time is exaggerated,” he said.

Pricing has probably been expensive as dealers who take the other side of the bet need extra compensation for the risks of hedging positions in thin markets, according to traders in London and Chicago who asked not to be named as they aren’t authorized to speak publicly.

For example, the risk-reversal trade on Nov. 12 was for 80,000 options. Market pricing at that time meant a dealer accepting it would have to sell around 32,000 equivalent Eurodollar futures to hedge it. So far this month, the average daily trading volume during Asia hours for September 2020 contracts is just a little over 7,000, according to data compiled by Bloomberg.

Eurodollar futures are the most-traded interest-rate derivatives. They are standardized, exchange-traded instruments that allow traders to bet on the direction of short-term interest rates and are priced off three-month Libor fixing at expiry. — Bloomberg

How PSEi member stocks performed — November 18, 2019

Here’s a quick glance at how PSEi stocks fared on Monday, November 18, 2019.

 

Palace says no order yet to suspend rice imports

THE President’s spokesman Monday said that no order has been officially issued to suspend rice imports, contrary to reports.

Salvador S. Panelo said in a message to reporters Monday that no directive has been issued by President Rodrigo R. Duterte, following a report by GMA News on Sunday claiming an exclusive with the President.

“As of this time there is no order to stop rice importation given to Secretary (William D.) Dar of the Department of Agriculture,” Mr. Panelo said.

GMA online cited the source of the report as its own 24-Oras Weekend program on Sunday, which claimed to have spoken exclusively with the President on Friday.

The GMA report said the suspension is intended to help farmers currently experiencing difficulty due to the low prices of palay, or unmilled rice, due to competition from imported rice.

The Rice Tariffication Law took effect in March, liberalizing rice imports and introducing more competition for domestic farmers, pressuring the prices they can command for palay, the form in which they sell their crop to traders.

In a July speech, Mr. Duterte expressed his interest in suspending rice imports to protect farmers, particularly during the harvest when supply is typically plentiful with many farmers trying to sell their crop. — Gillian M. Cortez