Philippines Market Insights 2017.2.6
News Highlights: San Miguel Corporation (SMC) is further expanding its packaging business overseas by acquiring 100% of Portavin Holdings Pte Ltd of Australia through unit San Miguel Yamamura Packaging International Ltd’s (SMYPIL). BDO Unibank, Inc. (BDO) reached a new milestone as its trust assets under management (AUM) broke the P1tn mark as of year-end 2016. The bank increased its threshold to P1.028 tn, 12% increase from the P917bn set in 2015. Meanwhile, based on a survey done by Business World, the country’s inflation for January 2017 likely picked up to 2.8% from prior month’s 2.6% and January 2016’s 1.3% due to higher oil prices and ‘sin’ taxes.
Mart marginally up on mild foreign buying, PSEi @7,226: Local benchmark ended relatively flat buoyed by mild net foreign buying. PSEi closed 0.79 points higher at 7,226 (0.01% day-on-day), with sectors ending mixed. Among actively-traded shares were: MPI (-P0.18 at P6.62); SMPH (-P0.10 at P30.00); and SCC (P1.50 at P133.50), on P5.67bn turnover. Losers outnumbered gainers at 103-81, with net foreign buying at P53mn.
Might track Wall Street’s gains: Mart might sway with Wall Street’s gains last Friday as sentiment is seen to be on an upbeat mode today following the stronger-than-expected US jobs data. Also, financial sector is expected to move higher today amid the banks deregulation executive order signed by the US President Trump last Friday. Immediate support 7,160, resistance 7,300.
Bourses flat amid China’s decision to tighten policy: Marts ended relatively flat across the region after China decided to raise its interest rates dampened sentiment.
Equities rose on upbeat sentiment: Shares rallied, with Dow Jones surging past the 20,000 mark. Stronger-than-expected jobs data at 227,000 in January and signed executive order on deregulation of banks contributed to the upbeat sentiment.
Crude up on optimism over output-cut deal: Oil prices closed with tepid gains on expectations that major oil producers are adhering to the output-cap deal. West Texas Intermediate for March edged $0.29 higher at $53.83/barrel.
SMC acquires Australia’s Portavin: San Miguel Corporation (SMC) is further expanding its packaging business overseas by acquiring 100% of Portavin Holdings Pte Ltd of Australia through unit San Miguel Yamamura Packaging International Ltd’s (SMYPIL).
BDO's AUM breached P1tn mark: BDO Unibank, Inc. (BDO) reached a new milestone as its trust assets under management (AUM) broke the P1tn mark as of year-end 2016. The bank increased its threshold to P1.028 tn, 12% increase from the P917bn set in 2015. BDO splits its AUM between Trust and Investments Group (TIG) with P755bn and handles retail accounts, while P273bn is managed under Wealth Advisory and Trust Group (WATG) of subsidiary BDO Private Bank, which caters to high net worth individuals.
26 BDO branches could face closure amid permit issues: The Cebu City Government might order closure of 26 branches of BDO Unibank, Inc. (BDO) as the branches are currently operating even without business permits. Mayor Tomas Osmeña has yet to determine the date of closure.
UBP to spend P3bn in capex for 2017: Union Bank of the Philippines (UBP) is set to triple its capex to P3bn for the year, where P2.9bn will be allotted for information technology. The bank will embark on digitizing its organization and is currently partnering with fintechs.
PNB to exercise call option on P3.5bn notes: The Philippine National Bank (PNB) is set to redeem early its P3.5bn unsecured debt that would have matured in 2022. PNB has secured approval from the Monetary Board to redeem its notes five years early under its call option. The notes were initially issued on May 2012 to raise PNB's Tier 2 capital and the notes carried 5.875% rate.
CHIB raises capital of investment unit: China Banking Capital Corp. (CHIB) approved the increase in capital of its investment unit, China Bank Capital Corp. to boost the capability to handle bigger deals. The Board approved the increase in the authorized capital stock of CBCC to P2bn from P500mn previously, plus the additional capital infusion of P500mn into CBCC within the 1Q17. The capital infusion will bring CBCC equity to P1.23bn.
Inflation consensus higher but unlikely to cause policy rate hike: Based on a survey done by Business World, the country’s inflation for January 2017 likely picked up to 2.8% from prior month’s 2.6% and January 2016’s 1.3% due to higher oil prices and ‘sin’ taxes. This would be the fastest, if ever, in about 2 years but still within the 2.3%-3.2% estimate by the BSP for the month alone and 2-4% for full year 2017. Nevertheless, this is unlikely to cause BSP to adjust the policy rates. Inflation data will be out 07 Feb while the BSP’s first rate-setting meeting for the year is scheduled on 09 Feb.
PCC, open to modify rules on M&As: The Philippine Competition Commission (PCC) is open to adjust the rules for mergers and acquisitions (M&A). Currently, it requires notification of M&As worth more than P1bn but there are comments received that the threshold is low and may have been hampering the M&A activity in the Philippines. To add, there are concerns that the notification process itself may have been another hurdle to business growth. The PCC is also working on the National Competition Policy Review, which is to determine policies that will curb anti-competitive practices across industries.
DTI to push for P1mn floor on car tax: The Department of Trade and Industry (DTI) seeks to adjust the floor price of vehicles that will incur higher taxes to P1mn as compared to the P0.6mn proposal of the Department of Finance (DoF). The said adjustment would spur local production of small body vehicles, consistent with the Comprehensive Automotive Resurgence Strategy (CARS) program, Secretary Ramon Lopez said. Thereafter, the cars priced above P1mn shall be taxed progressively according to the matrix.
COMP questions mining audit: Chamber of Mines of the Philippines (COMP) questioned the mining audit report of the Dep’t. of Environment and Natural Resources (DENR), leading to the closure of 23 mines and 5 suspension orders. COMP said that mining firms were invited by the government to invest and signed contract with them, to serve as partners in mineral resource development, which translates that the DENR cannot just shut down mines without due process. COMP also reiterated that the inclusion of anti-mining activists merely tainted the process the conduct of the audit. The organization has expressed their sentiment on how the latest findings were first made known through a press conference, instead of filing appropriate cases or invoked the arbitration clause of the mining agreements. If the audit found violations, the law has then provided for a procedure.