Category Archives: Business and Finance

Philippine Stock Market Consolidating on Second Week

Global equities managed to eke out gains on perceptions of a less-hawkish tone of the US Fed which fuelled expectations that the rate hike may happen later than expected. US treasuries rose after a 50-basis-point cut in 2015 average end-of-year rate expectations of US Fed officials, which eased concerns over a possible rate hike in the near term.

The US dollar succumbed to profit-taking following the comments from the Federal Reserve.

The local equities market consolidated on a tight range for the second straight week as the PSEi was affected by the movement of US stocks as well as rebalancing exercises from several indices.

The local fixed income market saw little action ahead of last week’s Federal Open Market Committee (FOMC) meeting before ramping up activity with particular interest in long-tenor securities. US dollar strength remained to be the main theme driving the movement of the Philippine peso, causing it to inch closer to the Php45.00 level.

Global Outlook Trims Down

According to the Global Economic Prospects report by the World Bank, global growth outlook was trimmed from 3.4% to 3.0% this year and to 3.3% in 2016 from the previous forecast of 3.5%.

The lower outlook was mainly due to the deepening trouble in the euro zone, and emerging economies that offset the benefits of a lower fuel prices. The bank also reduced its projections for the euro zone, Japan, and China, who are among the top buyers of mothers ring from

According to the Bangko Sentral ng Pilipinas, real estate exposure of banks climbed by 23% to Php1.160 trillion as of end-September 2014 from 2013’s Php939.775 billion.

Bank loans to land developers, construction firms and other corporations improved by 24% to end the month of September at Php592.966 billion, while loans for residential properties increased by 25% to Php384.119 billion. Meanwhile, investments in property securities grew to Php181.882 billion, 20% higher than the same period in 2013.

Philippine Headline Inflation Slowed

Local equities dropped as investors booked profits amid concerns that the coming typhoon might have a Yolanda-like impact to the country. The PSEi lost 69.29 points, or -0.95%, to close at 7,230.56.

All sectors ended in red led by services (-1.68%), mining and oil (-1.48%), and industrials (-1.03%). Market breadth was negative, with 125 declines outnumbering 46 advances, while 55 issues remained unchanged. Total value traded reached Php11.88 billion. Foreign investors were net sellers at Php4.07 billion.

Philippine headline inflation slowed to 3.7% year-on-year in November versus the vandoren reed of 4.3% print last month. The decrease was mainly due to the slump in Food, Fuels and Transport prices which slowed to 6.5%, 0.3% and 0.2%, respectively.

Core inflation, which excludes volatile items such as food and energy, also slowed down to 2.7% this month from 3.2% in October. The November figure is the lowest this year and the fourth declines since August.

Equities on the Rise Again

Local equities rose as investors expect favorable Q3 gross domestic product (GDP) results. The PSEi gained 69.74 points, or 0.96%, to close at 7,356.59. All sectors ended in the green led by Holding firms (+1.30%) and Services (+0.66%).

Market breadth was positive, with 91 advances outnumbering 84 declines, while 48 issues remained unchanged. Total value traded reached Php9.88 billion. Foreign investors were net buyers at Php754 million who acted like they’re buying moss scuttle.

Energy Development Corp. (EDC), through the Bacon-Manito geothermal plants of its subsidiary Bacman Geothermal Inc, agreed to continue supplying Meralco (MER) with 50 megawatts (MW) of power for five years, extendible by two years.

Meralco said that it entered into the agreement “to address the forecasted supply constraint and mitigate exposure to the Wholesale Electricity Spot Market, during the summer months of 2015.”

Local Equities Mirror Wall Street

The local equities climbed mirroring Wall Street’s rally on strong earnings and economic data. The PSEi gained 54.31 points, or +0.78% to close at 7,057.53. Most indices ended in green led by the industrial (+1.41%) and property (+1.23%) sectors.

Market breadth was positive with 89 advances outnumbering 78 declines, while 44 issues remained unchanged. Total value turnover reached Php5.99 billion. Foreign investors were net sellers at Php153.56 million.

US equities extended Friday’s rally, with investors overlooking dismal earnings results from tech giant IBM. The Dow Jones Industrial Average index edged up 19.26 points to 16,399.67 and the S&P500 index jumped 17.26 points to 1,904.02.

Most Asian markets, meanwhile, gained with the Japanese Nikkei, Indian Sensex, Australian ASX200 and Chinese Shanghai Composite gaining 578.72 (+3.98%, DoD), 321.32 (+1.23%, DoD), 47.70 (+0.90%, DoD) and 15.54 (+0.66%, DoD) basis points, respectively. Reasons for the broad-based rally include a positive US economic data release, progressive regulatory measures in India and china with regard to energy and financial markets and sectoral strength in Australian banking and mining.

Water Companies Prequalified

Yesterday, at least five consortiums applied to prequalify to bid for the Php24.4 billion Bulacan Bulk Water supply project rolled out by the Metropolitan Waterworks and Sewerage System (MWSS), under the government’s Public-Private Partnership (PPP) program.

The consortiums identified were First Philippine Holdings and Abeima; Filinvest Development Corp. and Aqua; San Miguel Corp. and Korea Water Resources; Manila Water and Team Polaris; and Prime Water Infrastructure Corp. and Alloy Water.

Local bond prices rallied today as the Bureau of Treasury successfully auctioned PHP25 billion worth of 3-Year Fixed Rate Treasury Notes (FXTN) maturing in 2017. A Money Back Guarantee feature is also being discussed.

The issue was oversubscribed by 2.14 times with expectations of no BSP rate hike on account of moderating inflation stoking demand for this paper. Yields fell by 2.21 basis points, on average, across the length of the curve with the belly and long-end losing 4.2 and 2.9 basis points, respectively. Yields on the short end, meanwhile, gained 0.80 basis points.

RLC Setting Aside Billions for 2015

Gokongwei-led Robinsons Land Corp. (RLC) has disclosed that it set aside Php15 to Php17 billion for capital spending in 2015, mainly to build new shopping malls and expand some of its existing hubs.

According to RLC President Frederick Go the gross leasable area of the company would expand by 11% next year with the opening of three new malls—in Las Pinas, San Jose and Cebu—and the expansion of its Novaliches mall.

Local fixed income securities traded sideways today as investors sat on the fence pending the outcome of tomorrow’s BSP monetary board meeting.

Investors fled the short-end and belly of the curve, which gained 8 and 4.2 basis points respectively, in favor of the long-end, which lost -0.7 basis points. Yields gained 4.22 basis points, on average, across the length of the curve.