Philippines Market Insights 2017.1.19


News Highlights: The Common Station that will link Metro Manila’s 3 urban rail systems (LRT 1, LRT 3, MRT 7) is expected to be completed by 2019. Meanwhile, Bureau of Treasury (BTr) announced the $2bn global bond sale to aid in funding the 2017 gov’t. budget and repayment of foreign debt.





Mart rebound ahead of Trump inauguration, PSEi@7,156: Local mart snapped its five-day decline as investors searched for relatively undervalued stocks ahead of the inauguration of Donald J. Trump. PSEi gained 33 points to close at 7,156 (+0.46% day-on-day), as all sectors gained, save for industrial (-0.37%). Among actively-traded shares were: GTCAP (+P11.00 at P1,340.00); SMPH (+P0.30 at P29.90); and BPI (unch. at P89.00), on P5.0bn turnover. Gainers slightly edged losers at 86-85, with net foreign buying at P27.5mn.

Might trade higher: Mart might trade slightly higher, amid Fed chair Janet Yellen’s speech that the US economy has come closer to full employment and stable prices. Meanwhile, investors wait further for the inauguration of President-elect Donald J. Trump and how he enforces his policies. Immediate support, 7,110, resistance at 7,200.


Marts higher on a weaker dollar: Bourses across the region were mostly higher as the greenback retreated on President-elect Donald Trump’s remarks.

China approves foreign firms’ IPOs: China signaled approval to launch IPOs on its stock exchanges and issuance of corporate bonds to support the widening of foreign companies’ financing channels. The pronouncement was contrary to US President-elect Donald Trump’s views on protectionism, with China pledging to continue its plans to liberalize its markets.


Equities mixed after Yellen’s speech: Shares closed mixed after Fed Chair Janet Yellen spoke about the US economy. She said that the economy right now is near the Fed’s goals of full employment and stable prices. The Fed chair also hinted of raising interest rates gradually, depending on how the economy evolves over the coming months.


Oil down amid speculation of rising US shale production: Oil prices declined as energy firms in the US boost drilling of shale. On the other hand, OPEC reported a decreasing oil surplus for 2017 as the group’s output further decreases due to the agreement to cut output. West Texas Intermediate dipped $1.40 to settle at $51.08/barrel.


MRT-LRT common station to be completed by 2019: The Common Station that will link Metro Manila’s 3 urban rail systems (LRT 1, LRT 3, MRT 7) is expected to be completed by 2019. A memorandum of agreement (MoA) is finally signed by the government and some of the country’s largest companies. The 13,700sqm station will be located in the middle of the original site in front of SM Annex and Ayala’s Trinoma in Quezon City. The government will spend P2.8bn for the construction of Area A, which will start by December this year. Area B will be financed, built and operated by NTDCC of Ayala Land (ALI) while Area C will be under SM Investments (SM).

McDonald's Phil. lines up expansion plans: McDonald’s Philippines would spend P3.5bn on expansion as it targets to open 45 stores in 2017 and to put up a second meat plant. The firm's president, Kenneth Young, added that the firm is focused to expedite its plans in the Visayas and Mindanao region. With the additional 45 stores in 2017, system-wide stores will increase to 565 outlets by yearend. McDonald’s Philippines is 51% owned by the Young family via Golden Arches Development Corp. and 49% by Alliance Global Group Inc. (AGI) of Andrew Tan.

MPI earmarks P60bn for 2017: Metro Pacific Investments Corp. (MPI) would be spending around P60bn for 2017 to support growth in its core businesses. MPI earmarked P15bn for power distribution unit, Manila Electric Co. (MER); P15bn for water utility unit, Maynilad Water Services Inc.; P10bn-P12bn for toll road unit, Metro Pacific Tollways Corp.; P5bn-P6bn for its railways unit; P3bn-P4bn for hospital business and P4bn for its logistics business. The P60bn would be on top of the budget for acquisitions and new projects, should MPI undertake via public bidding. The capex program would be funded through borrowings and internally generated cash.


Gov’t to launch global bond sale: Bureau of Treasury (BTr) announced the $2bn global bond sale to aid in funding the government’s 2017 budget and repayment of foreign debt. The 25-year bonds would be dollar-denominated. The coupon rate has yet to be announced, but price guideline is pegged at 3.95%, to mature by2042. Moreover, the government plans to raise P126.3bn by selling global bonds and loans from official development assistance, while P505.03bn through treasury bills and bonds.

Term deposit auction undersubscribed: The central bank (BSP) auction for term deposits were undersubscribed on Wednesday amid uncertainties over the incoming US President-elect Donald Trump. The month-term received P146.885bn tenders at 3.41%, while the week-term offer fetched P54.29bn at 3.0431%.

Property consultancy firm Knight Frank, positive on real estate: Knight Frank, Inc., a global property consultancy firm represented by its Chairman and CEO Rick Santos, expects the Philippine real estate sector to continue to expand on the back of growing BPOs, OFW remittances, infrastructure developments, sustained investment inflows and favorable demographics. The firm believes that the residential and industrial segments will boost as the Philippines strengthens its relations with other countries, particularly China and Russia, leading to availability of more funding sources.

First tax reform package bill filed: The proposed ‘Tax Reform for Acceleration and Inclusion Act’ is now in the House of Representatives. The House Bill No. 4774 includes tax administration measures like mandatory fuel marking, issuance of electronic receipts, linkages between point of sale machines & the BIR’s accounting system and use of global positioning system when transporting cargo. It also seeks to ease the bank secrecy law. The personal income tax brackets and rates are to be revised as well and implemented by July. VAT base will be expanded, excise tax rates on petroleum products raised and excise tax on automobiles restructured.

DENR cancels 6 firms’ ECCs: Dep’t. of Environment and Natural Resources (DENR) cancelled the environmental compliance certificates (ECC) of 6 projects, including 4 mining firms after failing to operate within their certificates’ validity period. These projects, having expired ECCs were: Intex Resources Philippines, Inc., with $2.5bn nickel project in Occidental Mindoro scheduled for operations next year; Mejore Wood Works, Inc.’s project in Surigao del Sur; Forum Cebu Coal Corp.’s coal mining project in Cebu; CEKAS Development Corp.’s mining projects in Misamis Oriental; and Eagelerock Mining Corp.’s gold mining and processing project in Zamboanga del Sur. Alltech Contractors, Inc.’s Coastal Bay Land Reclamation Project Land in Parañaque City got its ECC canceled as it interferes with DENR’s plan on massive mangrove planting.









Philippines Market Insights 2017.1.18


Philippines Market Insights 2017.1.23