Philipines Market Insights 2018.5.30


News Highlights: Political turmoil in Italy rocked Wall Street (DJIA -391pts, Nasdaq -37pts), while Asian marts also lost ground on plunging oil prices. At the local front, higher TDF float from the BSP is seen to siphon-off liquidity. Local conglomerates also lead headlines: TPLEX extension proposed by SMC; MPI’s NLEX-Harbor Link seen to open by Oct2018; P1.8bn and P1.2bn capital to be injected to RB by JGS and RRHI, respectively; 10yr plan for Clark Green City mapped by UDevCo.





Bourse scored lower, PSEi @7,602. Profit-taking dominated Tuesday’s trades, with a dearth of fresh news abroad & uncertainties on deliberations over the wage boards’ review on regional wage rate. The PSEi fell 40 points at 7,602 (-0.53%) primed by declines in holdings (-1.2%) & industrials (-0.53%). NOW (-P2.28 at P9.36); ALI (-P0.20 at P41); SMPH (-P0.50 at P37.50) led actively-traded shares lower. Turnover reached P5.9bn, with losers outpacing gainers, 101-89.

Cautious waters. A repeat of Italy’s political election is bound to lead headlines in Asia’s markets, as concerns mount on stability of the euro zone. This would likely add increased volatility on currencies, with questions hanging on whether or not the ECB would intervene in their markets. At home, focus will be on the PSEi’s staying power above 7,500, with secondary support pegged at 7,370-7,400. Stay alert for possible buying from contrarian players.


In the red. Asian marts pulled lower Tuesday, as players eyed political tension in Italy and plunging crude-oil prices; slump in financials, tech, and steelmakers shares weighed across the region.


Italy concerns rocked Wall Street. US banking shares tumbled, as Italy’s political turmoil created uncertainty on the euro zone’s stability. Italy might hold a repeat election after prime minister-designate, Carlo Cottarelli, failed to obtain support from major political parties, even for a stop-gap gov’t. DJIA -391 points, 24,361 (-1.6%), Nasdaq Comp. - 37pts, 7,396 (-0.5%).


Slightly up. Oil prices were only slightly up Tuesday, as easing of output cap by OPEC continued to hurt upward pricing. Pressure continues to mount amid concerns over ‘Quitaly’ and possible decline in European oil demand. West Texas Intermediate (WTI) rose $0.11 to $66.84/barrel.


TPLEx extension to Ilocos Sur proposed:

San Miguel Corp. (SMC) submitted an unsolicited proposal to DPWH for the extension of Tarlac-Pangasinan-La Union Expressway (TPLEx) to Ilocos Sur. SMC is also looking at the costing.

NLEx-Harbor Link opening this Oct:

Metro Pacific Investments Corp. (MPI) NLEx Corp. sees to open North Luzon Expressway Harbor Link Segment 10 by Oct. 2018 that would reduce travel time from Manila Port to NLEx to only 10mins. This 8.25-km, P11bn project will traverse NLEx from Valenzuela City, passing through Malabon, Caloocan & extending to R10 in Navotas.

Capitalization boost for RB underway:

JG Summit Holdings, Inc. (JGS) will inject P1.8bn into Robinsons Bank (RB) this July, while RRHI will provide P1.2bn. This would allow RB to meet the P15bn minimum capital required by BSP to operate a network of over 100 branches. RB is 60%-owned by JGS, 40% by RRHI.

RRHI prepares share issuance for Dairy Farm’s buy-in:

Apart from the sale of Gokongwei family’s share in Robinsons Retail Holdings, Inc. (RRHI), RRHI
will issue approx. 191.5mn common shares from its unissued capital stock to Mulgrave Corp. BV (MCBV) as payment for MCBV’s 100%-owned Rustan Supercenters (RSCI). RSCI was valued at approx. P18bn. Dairy Farm will own 18.25% of RRHI, Gokongwei Group at 51%, post-transaction, subject to PCC & SEC’s review.

UDevCo maps out 10-year plan for Clark Global City:

Udenna Dev’t. (UDevCo) plans to spend $5bn over the next 10 years for Clark Global City’s horizontal projects such as road networks. UDevCo already spent $1bn for the rights to the long-term lease of the 177ha. lot in 2017 & plans to set up hotel, casino, office & retail complexes, transport terminal, among others. The hotel & casino is slated to open by 2022 covering 10ha.

MER eyes new segments, lower volume growth seen for Apr-May:

Manila Electric Company (MER) sees capex of P18bn/year for the next 4-year regulatory period starting mid-2019 to 2023. MER chief Oscar Reyes said MER is looking at 6 new business segments that includes electric vehicles, micrograms & smart cities. Meanwhile, MER said April-May sales volume trended lower at 3.6% from 1Q18’s +9.2% due to relatively cooler temperature. May’s volume might close in at +4.5%.

CLI-LPU Davao campus opening seen June 2019:

Cebu Landmasters, Inc. (CLI) & Lyceum of the Phils. Univ. (LPU) aims to open the school component in Davao City by June 2019. Aside from the campus, the 17ha. project will cover residential towers, office building, hotel & convention center.


Higher TDF float seen:

BSP is siphoning off liquidity in the system by offering term deposit auction facility (TDF) next week. The cut in reserve rqmt. from 19% to 18% will start 01 June.

Local airlines seen to launch more overseas flights:

Center for Asia-Pacific Aviation (CAPA) said PAL’s new 6 units of Airbus A321neos will be used to expand flights in Australia & launch flights to India while 4 units of A350- 900s will be used for North America. Meanwhile, CEB is growing its A320 fleet by 7 more this year.









Philipines Market Insights 2018.5.29


Philipines Market Insights 2018.6.1