MACROECONOMICS WEEKLY UPDATE

The Philippines have sufficient power supply until Dec-22, but the outlook for next year needs to be reviewed amid volatility in fuel prices. Aside from fuel prices, DOE emphasised issues on generation, transmission, and distribution which cause power outages in the country.

Philippines President Ferdinand Marcos Jr. secured US$7bn worth of investment for unsolicited public-private partnership projects in Indonesia. Investments secured include US$822m for textiles, garments, renewable energy and agrifood, and additional US$662m for coal. Discussions on the Regional Comprehensive Economic Partnership (RCEP) have also begun but yet to be ratified.

The standoff between the Philippine Economic Zone Authority (PEZA) and the Fiscal Incentives Review Board (FIRB) continues the work-from-home (WFH)/hybrid setup for registered IT-BPM firms. PEZA earlier approved in principle the arrangement that allows ITBPM companies to have 30% of its employees WFH until 12 Sept 2022 only.

The governor of Bangko Sentral ng Pilipinas (BSP) has signaled the possibility of more policy rate hikes. Governor Felipe Medalla cited inflation rates that are still higher than BSP’s 2-4% target below the inflation forecast of 5.4%. The market expects the US Federal Reserve to also raise its policy rates even further. BSP also issued new regulations on licensing for unit investment trust funds (UITFs). BSP Governor-in-Charge Deputy Governor Eduardo G. Bobier signed the BSP Circular No. 1152 on 5 September 2022 that addressed the licensing framework for the creation of UITFs.

The Philippine peso finished at a record low for the fourth day in a row as the US dollar strengthened due to tightening policies. The local currency fell by 13.5 centavos from Tuesday’s close of P57 to P57.135. The peso has lost 12.02% of its value YTD (P6.135) from its closing rate of P51 last 31 Dec 2021.

The Philippine Statistics Authority (PSA) has reported the country’s preliminary labour force participation rate in Jul-22 at 65.2%, translating to 50.0m Filipinos who were either employed or unemployed. Unemployment rate fell compared to the prior month at 5.2%, while employment rate increased to 94.8% totalling to 47.39m employed individuals.

Proposed changes to the rules and regulations of the Build-Operate-Transfer (BOT) Law have been published by the government. The National Economic and Development Authority (NEDA) has proposed modifications to the law, which was criticised by some business groups as “anti-market”. It is up to the government to think of recommendations that will suit the public.

Electric tricycle and floating energy projects topped the deals signed by President Ferdinand Marcos during his state visit to Singapore. Electric tricycle and floating solar power plants were valued at $5bn and $1.2bn, respectively. Various projects were also included in the agreements.

The National Grid Corp. of the Philippine National Power Corporation (NGCP) raised a red alert on the Luzon grid yesterday due to the outstrip of electricity demand. Power outages were experienced in parts of the Philippines due to the shutdown of seven power plants which reduced overall supply by at least 3,627 megawatts.

The continued weakness of the Philippine peso against the US dollar is becoming a worry to local retailers and supermarkets. For food products alone, an industry association is seeing a minimum increase of 10% to an exceptional high of 40%.

The House of Representatives is considering proposals to increase sin taxes. Sin products include alcohol, cigarettes, vape products, and sweetened beverages. The Department of Health has proposed increasing sin taxes as part of its strategy to tackle increasing lifestyle-related health risks like obesity.

INDUSTRY NEWS

  Globe Telecom Inc. (GLO) targets to raise as much as P17bn from its stock rights offering (SRO) which will help fund the repayment of certain debts and complete its network upgrades on 08 Sept 2022. Principal shareholders Singapore Telecom International Pte. Ltd. and Ayala Corp. indicated their support for the SRO.

 Advanced Media Broadcasting System (AMBS) channel ALLTV will air its primary news show alongside CNN Philippines starting on 13 Sept 2022. The program will be simultaneously broadcast by both programs and on 12 Radio Philippines Network (RPN) stations located in important national cities.

 Jollibee Foods Corporation (JFC) is looking to start franchising in North America by 2023. The company targets to open more stores in California, Pennsylvania, and Florida in the US. JFC also plans to strengthen its digital infrastructure to enable consumers to order food products online if there are no branches near them.

Megawide Construction Corp. (MWIDE) announced that the company would participate in the bidding for Contract Package (CP) 105 of the P488.48bn Metro Manila Subway Project (MMSP). This includes the stations from Shaw Boulevard in Mandaluyong City to Bonifacio Global City (BGC) in Taguig City. 

   2GO Group, Inc. announced that it has launched its Asinan in SM Warehouse complex, Parañaque City. The company noted that the site’s proximity to the Skyway, SLEX, and Cavitex enables them to integrate their operations for Mega Manila and South Luzon which will make 2GO shipments convenient.

 Medilines Distributors, Inc. (MEDIC) disclosed its plans to expand its consumables business to boost its earnings performance. This year, MEDIC inaugurated its new warehouse equipped with cold storage for delicate consumables. The company also intends to tap its existing suppliers to generate revenues of up to P2bn this year.

HOLDINGS NEWS

 Macay Holdings is acquiring 100% of RC Global Beverages, Inc. (RCGBI), which owns the rights to the RC Cola brand globally. RCGBI has the ability to grant bottling and distribution licenses to bottlers in the continents of Asia, Europe, Africa, Middle East and North and South America, except for the US.

POWER AND UTILITIES NEWS

 FGEN LNG Corp. said that it expects to complete the construction of an interim offshore liquefied natural gas (LNG) receiving terminal in Batangas by 1Q23. According to the Department of Energy (DOE), the facility is expected to cost around P13.28bn and has a capacity of 5.26 million tons/year.

 The Securities and Exchange Commission (SEC) approved the shelf registration of ACEN Corp. for ASEAN green bonds worth P30bn. ACEN may offer the bonds in tranches within three years, beginning with an initial package consisting of up to P10bn due 2027. Proceeds will be used to fund three solar projects in Pampanga, Cagayan and Zambales.

 Solar Philippines Nueva Ecija Corp. (SPNEC) announced that its P2.81bn stock rights offering (SRO) was fully subscribed by the company’s public shareholders. The proceeds from the SRO are intended to help SPNEC complete the development of its 10 gigawatts (GW) of projects.

 Manila Electric Company (MER) customers will be seeing higher energy bills for the month of September. This was brought about by the Peso’s depreciation and ongoing Malampaya gas supply restrictions. There may be further hikes if the peso continues to weaken.

REAL ESTATE AND PROPERTIES 

  Megaworld Corp. (MEG) will be launching its third Belmont Hotel property in the country by 4Q22. The hotel with 20 floors and 550 rooms is located inside MEG’s 30-hectare Mactan Newtow township in Lapu-Lapu City, Cebu, strategically located 15 minutes away from the Mactan-Cebu International Airport.

 FINANCE

 The Department of Trade and Industry (DTI) has partnered with UnionBank of the Philippines (UBP) and Global Learning Solutions (GLS) to build a research center for artificial intelligence. The three partners plan to establish and operate the Center for Artificial Intelligence Research (CAIR) and Industry 4.0 Pilot Factory (I4PF).

OIL AND MINING

 Lepanto Consolidated Mining Co. (LC) has reduced the price, but raised the number of shares for its planned stock rights offering (SRO) from P0.14 to P0.12 apiece. Proceeds from the SRO will be used to fund exploration drilling for gold and copper deposits and for debt management.

PHILIPPINE STOCK MARKET UPDATE

 The PSE index lost 13.94 pts (down 0.21%) to close at 6,701.81 as investors remain cautious ahead of the US CPI report for August to come out tonight. Trading ended mixed for the sectoral indices as advances by

Trading ended mixed for the sectoral indices where Industrials (down 0.68%), Property (down 0.70%) and Mining & Oil (down 0.31%) saw a decline while Financials, Holdings, and Services ended mostly flat. Value turnover improved to P4.7B while net inflows persisted at P438M.

Among index movers were ALI (down 2.23%), BDO (up 1.48%), and MONDE (down 2.88%).