Philippines Market Insights 2017.1.10
News Highlights: Globe Telecom (GLO) board approve the SEC filing of a 3-year shelf registration of up to P20bn worth of debt securities, to be offered in one or more tranches and Bank of the Philippine Islands (BPI) has announced that its trust division, BPI Asset Management and Trust Group (BPI AMTG), has been granted by the BSP a license to operate as a standalone trust corporation. Meanwhile, in a bid to ease the entry of more foreign lenders, the BSP is looking to forge deals with Indonesia’s Otoritas Jasa Keuangan and Bank of Thailand this 1H17.
5-day winning streak, PSEi @7,276: Local equities managed to eke out gains following US non-farm payrolls data report from Friday night. PSEi inched 28 points up to 7,276 (+0.39% day-on-day), with all sectors in the green territory, saved for holdings (-0.06%). Among actively traded shares were: SMPH (+P0.60 at P30); ALI (- P0.55 at P33.95); and SECB (-P2.20 at P216.20), on P5.25bn turnover. Winners outnumbered losers, 104-88, while net foreign inflows reached P202mn.
Might trade lower: The market might snap its winning streak today over Wall Street’s overnight descent on the back of the slump in oil prices. Investors might also see this as an opportunity to take profits, given the fact that no major catalysts might lure the market to trade higher. With Donald Trump, scheduling his news conference in the US on Wednesday, investors might also opt to wait on the sidelines for his pronouncements to get a clearer view on what he would adhere for the US and foreign policies once he assumes office. Immediate support is 7,170, resistance at 7,320.
Mixed on US payrolls data: Markets drew mixed sentiment over the latest US nonfarm payroll report. Singapore, however managed to lead its regional peers, and headed its 5th session of gains.
Oil slump took a toll on equities: Shares took a downturn, primed by the energy sector, amid slump in oil prices. Albeit Nasdaq Comp. bucked yesterday’s trend, to end 10 points higher at 5,531.
Oil slumped over glut concerns: Crude futures posted heavy losses over renewed concerns about the oil supply glut. West Texas Intermediate (WTI) dropped to $51.96/barrel (-3.76%), the biggest daily drop since November.
GLO plans P20bn bond offer: Globe Telecom (GLO) board approve the SEC filing of a 3-year shelf registration of up to P20bn worth of debt securities, to be offered in one or more tranches. This would allow GLO to offer retail bonds to the market, but no decision has been made as to when the offer will take place. Recall that GLO earmarked over $1bn in capex for 2016 for its expansion programs.
BPI obtains BSP’s approval to spin off trust operations: Bank of the Philippine Islands (BPI) has announced that its trust division, BPI Asset Management and Trust Group (BPI AMTG), has been granted by the BSP a license to operate as a standalone trust corporation. It will soon be called ‘BPI Asset Management and Trust Corporation (BPI AMTGC)’, a 100%- owned subsidiary by BPI. Operations will commence on Feb 1. Moreover, BPI assured its clients that there will be no change in processes and they will continue to provide the same quality to their respective clients.
UCPB plans to expand client base by 150,000 this 2017: United Coconut Planters Bank (UCPB) is looking to expand client base by 150,000 this year to reach more of the consumer and middle classes. The bank has already migrated to the EMV-enabled debit card. UCPB also looks to attract prospective clients through their personal and proactive service. As of 2016, UCPB has over one million clients, encompassing corporate and individual accounts.
2GO secures gov't. approval to buyout China firm: 2Go Group (2GO)'s parent Negros Holdings & Management (NHMC) gets the approval of the Philippine Competition Commission to buy out the entire stake of China-ASEAN Cooperatief U.A. in China-Asean Marine B.V. (CAMBV) for $275mn. China-ASEAN Cooperatief is a China fund established to invest in infrastructure, energy and natural resources in Asean member countries. NHMC, upon completion of the transaction, shall own 100% stake in CAMBV, which owns 39.88% interest in Nenaco whose subsidiaries include 2GO.
BSP looking to forge deals with Indonesian & Thai counterparts: In a bid to ease the entry of more foreign lenders, the BSP is looking to forge deals with Indonesia’s Otoritas Jasa Keuangan and Bank of Thailand this 1H17. This move forms part of the move to integrate more closely economies of the Association of Southeast Asian Nations (ASEAN).
Economic zone investment pledges fell 26% to P218bn: Philippine Economic Zone Authority (PEZA)-approved investment pledges dropped 26% to P218.2bn from P295bn in 2015. The slump was due to the uncertainties of the presidential election, coupled with the pronouncements of US President-elect Donald Trump regarding BPOs and other American companies.
Gov't borrowings reached P24bn in November: Borrowings of the national government reached P24.2bn in November from P3.34bn same period in 2015. Domestic debt expanded nine times to P23.4bn. Despite the surge, the Jan-Nov borrowings reached only P452.28bn, below the P695.4bn planned for 2016. In accordance with its plan to boost infra spending, the current administration widened the deficit cap to 3% of GDP from the previous 2%, hence the larger planned borrowings for 2016.
Financial assistance provided by ADB reached $31.5bn: Asian Development Bank (ADB) has provided $31.5bn in financial assistance, an increase of 17% from 2015. ADB reaffirms its strong commitment to reduce poverty and improve lives in the Asia Pacific region. Approval of loans and grants reached $17.5bn, with non-concessional loans amounted to $14.4bn. Technical assistance increased by 21% to $170mn.
Universal and commercial banks' NPLs lower as of end-October: According to the data from the Bangko Sentral ng Pilipinas (BSP), nonperforming loans (NPLs) held by universal and commercial banks were lower at 1.56% in October, compared to the 1.77% NPLs in October 2015. Total NPLs increased by 4.1% to P98.43bn, while loans rose by 17.6% to hit P6.29tn. Provision for credit losses were at P133.06bn, while NPL cover is at 135.18% of total NPLs.
ERC granted FiT rates to 16 solar plants: The Energy Regulatory Commission (ERC) granted P8.69/kWh feed-in-tariff (FiT) rate to 16 solar plants as endorsed by the Department of Energy (DOE). The ERC said that it has already completed the issuance of certificate of compliance (CoCs) on 5-8 December 2016 for the solar plants covered by the 2nd round of FiT rate. Some of the solar projects endorsed by DOE are the following: 23MW solar plant of San Carlos Solar Energy; 13.14MW Pampanga solar project II of Raslag Corp.; 2.66MW Burgos solar project II of Energy Development Corp. (EDC), 50.07MW Tarlac solar project of PetroSolar Corp.