MACROECONOMICS WEEKLY UPDATE

President Ferdinand Marcos Jr. signed Sugar Order (SO) No. 1 which classifies all locally produced sugar for the crop year 2022-2023 (or from 1 September 2022 to 31 August 2023) as “B” sugar, or for the domestic sugar market. SO No. 1 implies that no sugar produced domestically has been set aside for export to the United States as the Sugar Regulatory Administration (SRA) prioritises domestic need.

Sugar prices may soon drop as 150,000 metric tons (MT) of refined sugar imports are due to arrive by Nov-22. This came after the Sugar Regulatory Administration (SRA) authorised Sugar Order (SO) No. 2, which aimed to secure domestic supply and stabilise prices. Under SO No. 2, the imports are expected to be equally allocated to both consumers and industrial users. 

In a joint report made by the Chamber of Automotive Manufacturers of the Philippines, Inc. (CAMPI) and the Truck Manufacturers Association (TMA), total automotive sales in Aug-22 rose by 90.5% y-o-y to 30,185 units driven by increased demand for commercial vehicles as Congress considers a measure removing the excise tax exemption for pickup trucks. 

According to the Independent Electricity Market Operator of the Philippines (IEMOP), the average electricity spot market prices increased by around P2 per kilowatt-hour (kWh) from a month ago to early September amid the resumption of face-to-face classes in the Philippines. 

Social Security System (SSS) intends to invest some of its resources for infrastructure projects in line with the Department of Finance (DOF) Secretary Benjamin Diokno’s call to invest in the Build Better More infrastructure program of the Marcos administration. 

Bangko Sentral ng Pilipinas (BSP) reported a 2.3% y-o-y increase in the Jul-22 personal remittances to US$3.24bn, bringing the cumulative remittances to US$20.33bn (+2.7% y-o-y). For Jul-22, remittances sent home by long-/shortterm contract workers overseas grew by 2.4%/1.4% y-o-y respectively. In peso terms, cash remittances grew to P163.1bn in Jul-22 (+14.4% y-o-y; Jun-22: +16.2% y-o-y), bringing the cumulative cash remittances in peso terms to P962.57bn (+11.7% y-o-y).

According to the Department of Energy (DOE), the total committed power projects that have secured financing amounted to 8,864.29 megawatts (MW) as of Jul-22. Of which, coal-fired power plants accounted for over half with 4,488.40 MW (50.63%), followed by natural gas with 3,500 MW (38.48%), renewable energy with 834.14 MW (9.41%), and oil -fired power plants with 41.75 MW (0.47%).

Finance Secretary Benjamin Diokno said that business process outsourcing firms can continue to work-from-home (WFH) while still availing fiscal incentives if their registration is transferred to the Board of Investments (BoI). Currently, the Fiscal Incentives Review Board (FIRB) has agreed that IT-BPM enterprises can continue the 30% WFH arrangement until end-Dec 2022 upon the end of the extension of the nationwide state of calamity.

After two years of discussions with the Fiscal Incentives Review Board (FIRB), the Information Technology and Business Process Association of the Philippines (IBPAP) welcomed the government agency’s move to facilitate the smooth paper transfer of the registration of IT-BPM firms from the Philippine Economic Zone Authority (PEZA) to the Board of Investments (BOI). In its board meeting last week, the FIRB resolved to allow firms in economic zones to adopt up to 100% WFH and still enjoy tax incentives if they shift their registration from PEZA to BOI.

Bureau of Animal Industry’s (BAI) data showed that meat imports grew 7% y-o-y to 851.84m kg from January to August 2022. Pork imports grew 20.56% y-o-y during the period, and it accounted for more than half of the country’s meat imports at 54% or 464.84m kg. The top sources of imported pork are Spain, Canada, and Brazil, while the country’s imported chicken mostly came from Brazil, US, and Canada.

INDUSTRY NEWS

Globe Telecom Inc’s (GLO) fintech venture, GCash will start allowing subscribers of its mobile payments platform to invest directly in the Philippine stock market by Nov-22 through its partnership with the local bourse. According to the Philippine Stock Exchange (PSE) President and CEO Ramon Monzon, the PSE and GCash have already worked out commercial terms and are now tackling the technical issues. Mr. Monzon also noted that GCash is projecting over nine million new investors within the next five years.

    Globe Telecom, Inc. (GLO) and its digital entertainment division, Kroma Entertainment, will keep working with Asia Video Industry Association (AVIA) to combat the illegal streaming and downloading of pirated content in the Philippines. The Ayala-led telco claimed that the country needs to tighten and update the intellectual property code to fight content piracy

 The consortium led by House of Investment, Inc. (HI), MacroAsia Corp.(MAC), and Cavitex Holdings, Inc. (CHI), was awarded the US$11bn contract to develop the Sangley International Airport (SPIA). The consortium is backed by Samsung C&T Corp., Munich Airport International GmbH, and Ove Arup & Partners Hong Kong Ltd. 

 The MVP Group has urged the government to fast-track its decision on whether the P94bn highway connecting the north and south parts of Cebu would be offered to the private sector. CCLEX Corp. (CCLEX) said that if offered, it would bid for the public-private partnership (PPP) contract for the 73-kilometer Metro Cebu Expressway (MCE) that seeks to link Naga City in the south of Cebu to Danao City in the north. 

 Philcement, a 60% owned subsidiary of Phinma Corporation (PHN), has availed of a P1bn loan from the proceeds of the parent company’s bond issuance to expand and improve its facility in Bataan. Philcement availed of the loan on 16-Sept-22 for 1.5 years at current market rates.

HOLDINGS NEWS

    Abbotsford Holdings, Inc. (Abbotsford), International Container Terminal Services, Inc.’s unit (ICT), is selling 162,500 or 65% shares in Davao-based port operator Hijo International Port Services, Inc. (HIPSI) to Hijo Resources Corp. (HRC) for P325m. ICT said Abbotsford divested its shares because the expected market failed to materialise.

The proposal of San Miguel Holdings Corp., the holding firm of San Miguel Corp (SMC), was accepted and granted the original proponent status (OPS) to build, operate and maintain the 27-kilometer Cavite-Batangas Expressway (CBEX) project which seeks to ease travel in Southern Tagalog. CBEX crosses the municipalities of Silang, Amadeo, Tagaytay, Indang, Mendez and Alfonso in Cavite, and ends in Nasugbu, Batangas.

 Metro Pacific Tollways Corp. (MPTC), a subsidiary of Metro Pacific Investments Corp. (MPI), is planning to conduct an initial public offering (IPO) to raise US$500m (OR ROUGHLY P28.5bn) from the Philippine Stock Exchange (PSE) in late 2023 or 2024. According to MPTC President and Chief Executive Officer Rodrigo Franco, proceeds from the planned IPO will be used for its domestic and international expansions.

  The Keepers Holdings Inc (KEEPR) has acquired 50% interest in Bodegas Williams & Humbert for EUR 88.75m (roughly P5bn). Through the acquisition of the Spain-based winery firm, KEEPR seeks to strategically expand its business to include liquor manufacturing, on top of import and distribution. This will also allow KEEPR to secure its supply of the “Alfonso” brandy, Bodegas Williams & Humbert’s flagship brand.

POWER AND UTILITIES NEWS

  The Manila Electric Company (MER) is set to enhance edotco Towers, Inc.’s internet connectivity services, through automatic payment arrangements, enrollment to the peak/off-peak program, online and power quality services, and contract right-sizing. MER is also expecting to support 50 more edotco common towers by end 2022. Meanwhile, edotco will be relocating around 700 telco assets that it obtained from PLDT, Inc. to MER franchise area.

   Manila Water Company, Inc. (MWC) announced that it has signed a P15bn loan facility with a 10-year term to finance its capital expenditure (CAPEX) projects. In a disclosure, MWC said that it will continue its expansion in Rizal province with 50 pipe-laying mainline extension and individualisation projects. These projects lined up for 2021 and 2022 are expected to benefit around 17,000 families in Rizal province.

ACEN Corporation (ACEN) urges the Energy Regulatory Commission (ERC) to provide fair and consistent treatment upon the jointly filed petition of Manila Electric Company (MER) and San Miguel Corporation’s (SMC) power unit, SMC Global Power Holdings Corporation. If approved, SMC will be able to recover about P5.2bn in losses. 

 PetroEnergy Resources Corp.’s (PERC) board of directors had approved to sell 25% of its shareholdings in PetroGreen Energy Corp. (PetroGreen) to Kyuden International Corp. Kyushu Electric is the exclusive power provider and distributor in Kyushu island and operates 18.32 gigawatts of power facilities using thermal, geothermal, hydro, and nuclear with 154,434 kilometers of high- and low voltage transmission systems

REAL ESTATE AND PROPERTIES 

   Eton Properties Philippines, the real-estate arm of LT Group, Inc. (LTG), has seen recovery in demand for its office developments beginning 2H22 on the back of resurgence in Philippine Offshore Gaming Operators (POGOs). The company said that it has sealed a deal with “one of the biggest POGO companies from Southeast Asia” to lease more than 6,000 sqm of office space in eWestPod located in its Eton WestEnd Square near the Makati central business district (CBD).

 FINANCE

Maya Bank Inc. garnered P5bn in deposits, making it the fastest-growing digital bank in the country. As of end-July, the digital bank has over 650,000 users. The bank launched working capital loans for MSMEs and an instant credit of up to P15,000 for qualifying clients.

The Philippine Stock Exchange (PSE) is targeting 20 new company listings in 2023. The PSE expects 11 companies to go public in 2022, up from eight in 2021. PSE President Ramon Monzon says there is no reason why the bourse cannot target 20 IPOs next year.

 GCash, the mobile wallet business of GLO, announced that it has exceeded the P3tn mark in gross transaction value in the first half of this year. The business anticipates ending the year with a P6bn gross transaction value.

REAL ESTATE INVESTMENT TRUSTS

Premiere Island Power REIT Corp. filed a registration statement with the Securities and Exchange Commission (SEC) for an initial public offering (IPO) to be slated on Nov-22. Currently, PremiereREIT’s property portfolio is composed of land, land rights, key power plant assets and other ancillary infrastructure.

PHILIPPINE STOCK MARKET UPDATE

The PSE index fell 239.47 points (down 3.83%) to close at 6,020.07. This is the lowest level of the year amid the depreciation of the Peso and inflation fears. Composite stock price index and industry index also ended lower. Value turnover climbed upto P9B, above last week’s average of P5.2B, and net international sales he reached P11B. Among the index moves were SM (down 5.57%), SMPH (down 5.29%) and BPI (down 4.67%). Only one one index progressed – GLO (up 0.18%).