Philipines Market Insights 2018.09.18


News Highlights: Rout in tech shares caused major US benchmarks to close lower Monday (DJIA -92pts, Nasdaq -114pts). At the local front, BSP hinted of 'Strong monetary action' ahead of Sep 27 policy meeting, while remittances in July improved by 5.2%. Power companies led headlines: Power savings seen with FGEN’s offer on PNOC’s banked gas; EDC may extend tender offer period; Solar rooftop unit of AP expands in Mindanao.





PSEi flat at 7,413: After moving within 7,399-7,434, the local gauge was barely unchanged as participants heeded for the release of fresh catalysts. The PSEi finished less than a notch higher at 7,413 (+0.01%) as gains in industrials (+1%) & property (+0.9%) were offset by financials (-1%). SMPH (+P0.60 at P37); AC (+P7.50 at P905.50); & GLO (+P28 at P2,220) rose, while BDO (-P2 at P115); SM (-P13 at P922); & DNL (-P0.14 at P10) fell. Turnover was slower at P3.5bn, with net foreign selling at P251mn. Gainers-losers settled 95-99.

Heedful watch: Another subdued yet volatile session is seen, as fund managers heed for the market’s response to BSP’s hint for 'stronger monetary action' ahead of its policy meeting next week. Such may be taken into light on the peso’s movement against the greenback. The spotlight might be on financials, given its recent slide. Overall volume turnout might also be at work, given yesterday’s pale trend. Spot for good trading windows. Immediate support is 7,380-7,400, resistance 7,450.


Marts rebounded: Most Asian markets dropped on Monday as fears heightened on the escalating trade war after reports that U.S. President Donald Trump would unveil new tariffs on $200 billion of imported Chinese goods this week, putting the possibility of a renewed trade talks with China hang in balance.


US equities lower: Tech shares slumped following a downgrade on semi-conductor industry, dousing hopes on resumed trade talks between US & China. DJIA -92 points, 26,062 (-0.35%), Nasdaq Comp. -114pts, 7,895 (-1.43%).


Crude slightly weakened: Speculation that major oil producers will discuss production increases in the coming weeks plus further eroding trade relation between US & China caused some selling in crude Monday, though movement was limited due to concerns with Iranian sanctions. West Texas Intermediate (WTI) dipped $0.09 to $68.71/barrel.


Power savings seen with FGEN’s offer on PNOC’s banked gas:

Electricity users stand to save P0.60/kWh with First Gen Corp. (FGEN)’s $3.48/gigajoules offer for PNOC’s 97.67 petajoules banked gas. This translates to a total of P10bn starting Oct. 2018 & early 2024 when Malampaya’s gas-to-power contract ends. PNOC chief Reuben Lista meanwhile, said questions might be raised later after FGEN previously offered $4.50/ vs. the $3.48/gigajoules.

EDC may extend tender offer period:

SEC allowed Energy Development Corp. (EDC) to extend its tender offer by 20 more business days from 22 Oct. 2018, if necessary or desirable. In recap, EDC offered P7.25/share for 2bn common shares he’d by the public in preparation for its delisting plan.

Solar rooftop unit of AP expands in Mindanao:

Aboitiz Power Corp. (AP) rooftop solar power unit, Aboitiz Power Distributed Energy (APDEI), is prepared to provide renewable energy options in Mindanao, after starting out in Luzon & Visayas last April. From its 3,000MW capacity nationwide that includes 1,272MW under Cleanergy brand, the operation of Hedcor’s 68.8MW plant in Bukidnon would complement capacity.

P2P bus service available in RLC malls:

Robinsons Land Corp. (RLC) grew its tie-up with premium airport bus service provider UBE Express of Air21 with a new point-to-point (P2P) bus route to NAIA. Starting today, UBE Express will offer P2P service from Robinsons Galleria to 4 terminals of NAIA at P70/head. The service will also be available for Robinsons Sta. Roma, Laguna.

MBT LTNCTDs rate at 5.375%:

Metropolitan Bank & Trust Company (MBT) is selling long-term negotiable cert. of time deposits (LTNCTDs) at 5.375% per annum, carrying a tenor of 5 years & 6 months. Offer run is 17-28 Sept., & will be sold in denominations of P50k with increments of P10k thereafter.

ANI signed MoA with Vietnamese firm on rice supply:

AgriNurture, Inc. (ANI) entered a MoA with state-owned Vietnam Southern Food Corp. (Vinafood II), for the export of rice. Based on the MoA, Vinafood agrees to exclusively supply ANI up to 2mn MT of long grain rice per year for importation to the Phils. Terms & condition will be finalised based on the proposed rice tariffication bill, among others.


'Strong monetary action' hint from BSP:

BSP chief Espenilla hinted of ‘strong monetary action’ ahead of its meeting on the 27th of Sept. The BSP head also cited supply factors, specifically from damages of the typhoon. Meanwhile, BSP is also studying a tool to curb speculative activity at the forex mart, esp. for non-deliverable forward contracts.

July remittances improved:

BSP said remittances in July stood at $2.4bn (+5.2%) vs. June’s -4.5%. This brought the 7-month remittance to $16.6bn (+3%).