Philipines Market Insights 2018.7.27


News Highlights: US equities were mixed as DJIA-members gained on US-EU trade relations improving, but tech-heavy Nasdaq was dragged by Facebook’s -18%. At home, the BSP pauses on RR cut, to resume in 2019; AP tapped remaining bond for fund-raising; MWIDE went through proper approval protocol onguaranty to unit; TBGI readied China office, plus unit for nationwide tower sites.





Bourse trounced past 7,600. Optimists ruled Thursday’s session, as buyers gathered to build momentum since gauges moved past 7,500. The PSEi zoomed 151 points up at 7,665 (+2%), led by holdings (+2.7%) & property (+2%). Among the lead actively-traded gainers were: ALI (+P0.35 at P40.85); SM (+P36 at P969); BDO (+P2.50 at P137.50); MBT (+P0.50 at P74); & SMPH (+P1.20 at P37.50). Turnover reached P6.2bn, with gainerslosers at 125-79. Net foreign buying was maintained at P645mn.

Lure to position or take profits: Selective buying is seen, although some might seize on the recent ascent to sell. Participants are likely to be on their wait-and-see mode, pending release of 1H results. Attention could revert to the forex mart, given BSP’s indication further cuts in reserve requirement would only be considered in 2019 & support expectations towards adjustment in interest rates. Aim for stocks supported by solid fundamentals. Immediate support is 7,620, resistance 7,700-7,750.


Marts mixed, EMs led: Asian marts ended mixed Thursday, although gainers were mostly EMs lent support by post strong Wall Street gains, while Chinese marts were dragged by steel & tech shares.


US equities mixed: Facebook’s decline (-18%) due to costs to improve privacy safeguards weighed on other tech shares & pulled Nasdaq lower. Meanwhile, shares in DJIA rose after US-EU agreed to negotiate on trade. DJIA +112 points, 25,527 (+0.44%), Nasdaq Comp. -80pts, 7,852 (-1%).


Oil on winning streak: Oil prices notched gains Thursday as Saudi Arabia halted crude shipments through a Red Sea waterway on worries of Iranian attacks, while U.S. crude inventories’ sudden drop continued to support sentiment. West Texas Intermediate (WTI) inched up $0.19 to 69.55/barrel.


AP taps remaining bond to raise funds:

Aboitiz Power Corp. (AP)’s board approved the issuance in one or more tranches of the remaining P27bn fixedrate retail bonds registered in 2017 with SEC. The notes will be listed in PDEx & offer might be set 3Q or 4Q18.

EW updates officer movement:

East West Banking Corp. (EW) advised the resignations of Rhodora Lugay (EVP & CFO), Abigail Tina del Rosario (SVP & Wealth Management Head); & Domingo Guano (SVP & CIO Head) effective 29, 22 & 31 July 2018, respectively. The reason cited was ‘personal’. EW also announced the appointment of Cecilio Frederick Pusay as its new SVP & CIO, IT Head.

MWIDE went through proper approval protocol on guaranty to unit:

Megawide Construction Corp. (MWIDE) notified the Exchange that the corporate guaranty provided to unit Major Homes, would provide higher construction profit margin of 20%-22%, versus MWIDE’s prevailing 15%. The firm assured the move went through proper approval process.

CLI-Ascott alliance signed:

Cebu Landmasters, Inc. (CLI) signed MoU for strategic alliance with The Ascott Limited to build more serviced-residences in the region. The tie-up would double CLI’s apartment units under Ascott’s brand from 804 to 1,600 by 2022. CLI sites for the new Ascott properties will include Mactan, Cebu& cities of CDO, Iloilo & Dumaguete.

HLCM on track with capacity expansion plan:

Holcim Philippines, Inc. (HLCM) said ongoing projects to boost the firm’s cement capacity to 12mn MT (from 10mn MT), shall be completed 1H19.

ATI plans overseas expansion too:

Armed with P8bn capex for 2018, Asian Terminals, Inc. (ATI) chief Eusebio Tanco said they’re expanding overseas aside from operations at the Manila South Harbor & Batangas port. By 2019, ATI sees capacity in Manila South Harbor to rise to 1.4mn TEUs, with 1H18 already at 560,000 TEUs.

Fate of PXP unit’s service contracts depend on DoE:

PXP Energy Corp. (PXP), via 78.98%-owned Forum Pacific Ltd., will take its guidance from the Phil. government on SC72 & SC75. PXP remains hopeful that the force majeure imposed on the said service contracts will be lifted by the Energy bureau (DoE) soon to resume exploration works.

TBGI sets China office, plus unit for nationwide tower sites:

Transpacific Broadband Group Int`l. Inc. (TBGI)’s board approved the renewal of its telco franchise for another 25 years from 2023-2048, & will participate in ‘Common Tower Investment Corp.’ that would establish 50,000 tower sites nationwide. TBGI will also set up a representative office in China that will be involved in Artificial Intelligence (AI), block chain tech, asset-backed initial coin offering & internet of things technology. This China representative office will complement the PEZA ecozone of ATN Group.


BSP pauses on RR cut:

BSP chief Espenilla said further cuts in reserve requirement (RR) would resume in 2019. BSP believes inflation would ease within 2%-4% target. The present RR is at 18% from 20%.

Fully foreign-owned telcos may enter Philippines with caveat:

Socioeconomic Planning chief Pernia said 100% foreign-owned telcos may soon operate in the Phils. once the Public Service Act or Commonwealth Act No 146 is amended in Congress, after Pres. Duterte signs the 11th Foreign Investment Negative List (FINL). Once this happens, Pernia sees ‘doubling’ of foreign direct investment (FDI) inflows.

Revolution Precrafted sealed accord with Neinor of Spain:

The Antonio’s Revolution Precrafted (RP) sealed an ‘exploratory agreement’ with Neinor Homes, a listed firm in Madrid Stock Exchange. Neinor Homes aims to offer 3,500-4,000 modular homes annually by 2020. RP was founded by Robbie Antonio, whose family owns CPG. The firm already bagged $8bn worth of bigticket projects that include Seven Tide for ‘The World Islands’ in Dubai, among others.

Foreign firms interested to invest in CEZA:

Cagayan Economic & Freeport Zone Authority (CEZA) said 4 gaming & entertainment firms are looking at investing at least $800mn within the 10,000ha. Fuga Island area. These are from Hong Kong, Japan, Korea & Malaysia. CEZA Administrator Raul Lambino said they are not covered by the moratorium on construction of new among facilities issued by Pagcor & they have authority to issue operation licenses, including gaming firms. CEZA has 55,000ha. idle land inventory.









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