Philippines Microeconomic Weekly Update #29

MACROECONOMICS WEEKLY UPDATE

The country’s manufacturing activity eased to an eight-month low in April as the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) reading slowed to 51.4 from 52.5 in March. This marked the lowest PMI reading since 51.2 in August 2022. According to S&P Global, new orders and output grew at a much softer rate in 2Q23.

Department of Health (DOH) officer-in-charge Maria Rosario Vergeire said that mandatory wearing of face masks should not be reinstated, and people should adapt to the virus without fluctuating policies. She emphasized that individuals should know how to protect themselves and their families by wearing face masks especially if they are more vulnerable to catching the virus. Vergeire cited the nationwide vaccination that helped prevent increased hospitalizations and critical cases despite the recent spread of the virus. As of April 30, there are 5,875 active COVID-19 cases based on DOH’s tracker.

It is dangerous for the Philippine central bank to cut rates before the US Federal Reserve if US inflation is sticky and the cuts are slow, Bangko Sentral (BSP) governor Felipe M. Medalla said. He further explained that if the Philippines’ benchmark interest rate is lower than the US Fed, investors may flock to the dollar, putting more pressure on the peso. The BSP’s key policy rate currently stands at 6.25%, while the US Fed funds rate is at 4.75-5%.

INDUSTRY UPDATE

PROPERTY & CONSTRUCTION

SM Prime Holdings (SMPH) is planning to launch a mall REIT in 2H23. With an initial portfolio of 12 to 15 malls, the mall REIT would have a value of around USD3.5-4 bn. Management added that the malls that will be put into the REIT are fully mature malls to ensure sustainability of dividends. Out of the 82 malls nationwide, SMPH has around 30-35 mature malls, giving it a lot of options for the initial portfolio and future expansion. A large portion of the USD1 bn proceeds from the REIT listing would be used for its reclamation project in Pasay.

A 20% stake of EEI Corp. (EEI) was sold to the family of House Speaker Martin Romualdez through their private holding company RYM Business Management Corp. for Php1.25 bn. This values EEI at a 24% premium over its closing price the previous day. Following the transaction, the Yuchengo group’s stake in EEI will drop to 35.35% from 55.35%. According to the group, the proceeds from the sale will be used to reduce EEI’s debt and strengthen its balance sheet.

HOLDINGS 

Metro Pacific Inc (MPI) announced that a consortium comprising Metro Pacific Holdings, GT Capital Holdings, Mit-Pacific Infrastructure Holdings, and MIG Holdings, will conduct a tender offer for all outstanding shares (not owned by the consortium) at Php4.63/sh. The tender offer accounts for MPI’s entire 36.51% free float or 10.47 bn shares. The tender offer price represents an 8.7% premium to MPI’s last traded price of Php4.26/.sh and 22% premium to MPI’s volume weighted average price for the past 12 months.

A new consortium composed of six Philippine conglomerates and US-based Global Infrastructure Partners (GIP) submitted an unsolicited proposal to the government to upgrade the Ninoy Aquino International Airport (NAIA). The Manila International Airport Consortium (MIAC) said the unsolicited proposal, valued at over Php100 bn, includes a significant upfront payment to the government and committed investments in new facilities and technology to turn NAIA into a world-class airport. With its proposal, MIAC also expects NAIA to be able to serve up to 62.5 mln passengers per annum by 2028, over double its current capacity of 31 mln passengers per annum. MIAC is composed of Aboitiz InfraCapital, Inc., AC Infrastructure Holdings Corp., Asia’s Emerging Dragon Corp., Alliance Global – Infracorp Development, Inc., Filinvest Development Corp., JG Summit Infrastructure Holdings Corp. and GIP.

AIRLINES  

On May 17, the Manila International Airport Authority (MIAA) announced that the entire Philippine airspace will be closed for six hours due to the scheduled maintenance or replacement of the uninterruptible power supply (UPS) of the air traffic management center at Ninoy Aquino International Airport (NAIA). The downtime will occur between midnight and 6 am, and all flights will be suspended during this period. The UPS system is essential for providing emergency power to the air traffic management center in case of a power outage or other disruptions. The MIAA assured the public that the temporary closure of the airspace is necessary to ensure the safety and efficiency of air travel.

 

LOCAL MARKET UPDATE

The PSEI ended in green, but remained virtually flat, as it gained 1.31 bps to 6,685.66 as investors digested new corporate earnings and the latest inflation data which eased to 6.6% in April. Today’s top index gainers were CNVRG (+5.03%), MONDE (+2.51%) and ACEN (+2.49%) while the index losers were led by BDO (-2.84%), ALI (-1.40%) and BPI (-1.37%).

 

Trading was mixed for the sectoral indices with Industrial (+0.44%), Holding Firms (+0.50%), Services (+0.06%) and Property (+0.32%) ending in the green while Financials (-0.29%) and Mining & Oil (-0.35%) closed in the red.

Value turnover reached ~Php3.92 bn with foreign funds being net sellers of as much as Php2.68 bn

Related Posts