Philippines Microeconomic Weekly Update #34

MACROECONOMICS WEEKLY UPDATE

Inflation in May 2023 increased by 6.1% year-on-year, aligning with the monthly forecast range of 5.8% to 6.6% by the Bangko Sentral ng Pilipinas (BSP), but surpassing the government’s annual target range of 2% to 4%. However, core inflation rate in May 2023 slowed down to 7.7% from 7.9% in April 2023 and 2.8% in May 2022. Lending growth in April 2023 for big banks decelerated to 9.7% year-on-year, reaching Php10.8 trillion, due to a high base and the impact of BSP rate hikes. The World Bank has upgraded its economic growth forecast for the Philippines to 6%, in line with the government’s target range, despite challenges like inflation and tight monetary policies. Manufacturing activity in the Philippines has seen a boost, indicated by the rise in the S&P Global Philippines Manufacturing Purchasing Managers’ Index (PMI) to 52.2, driven by increased output, orders, and demand, resulting in improved hiring and reduced delivery times.

INDUSTRY UPDATE

INDUSTRIALS

D&L Industries, Inc. (DNL) President and Chief Executive Officer Alvin D. Lao said that the company is developing new products and considering new industries for product expansion albeit he did not disclose the products being developed. Also on Monday, DNL’s board of directors appointed former National Economic and Development Authority (NEDA) Director-General Karl Kendrick T. Chua as its new independent director.

TELLECOMMUNICATIONS 

According to Ernest Cu, President & CEO of Globe (GLO), GCash could be ready for an IPO by the end of the year. The e-wallet has shown significant growth and has turned profitable for almost two years. The previous operator of G-cash, Mynt, was previously valued at $2bn after raising USD300 mln in capital by November 2021. GCash, as of 1Q23, has around 81 mln registered users and has more than Php6 tln in gross transaction value for FY22.

HOLDING COMPANIES

 The consortium of companies that offered to take Metro Pacific Investments Corp. (MPI) private may still quote a price different from what it offered minority shareholders of the listed conglomerate since management expects a restart of the delisting process. Manuel V. Pangilinan, MPI President and Chief Executive Officer said that the bidders are back to square one as their selected independent financial advisor (IFA) was rejected by the Philippine Stock Exchange (PSE)

ENERGY

DMCI Power Corp. (DPC), a subsidiary of DMCI Holdings, Inc. (DMC), intends to develop an 8 MW to 12 MW wind power project on Semirara Island in Antique province. The project will be independently financed and undertaken by DPC, with an expected operational timeline of 12 to 15 months. In a separate development, Aboitiz Power Corp. (AP) has acquired an additional 35.4% stake in STEAG State Power Inc. (SPI), the operator of a 210 MW coal plant in Mindanao. AP’s acquisition of 167,648,480 shares increases its total ownership in SPI to 69.4%.

BANKIG AND FINANCE 

The Philippine National Bank (PNB) granted a Php600 million loan to Metro Zamboanga Hospital and Medical Center Inc. (MetroZam) for the construction of an eight-story hospital with a helipad, expected to offer specialized clinical services, while the Bank of the Philippine Islands (BPI) anticipates double-digit growth in its loans to small businesses this year, with loans to small firms earning Php3 million to Php50 million reaching Php12.1 billion in the previous year.

REAL ESTATE  INVESTMENT TRUST 

AREIT, Inc. (AREIT) has entered a property-for-share swap agreement with Ayala Land Inc. (ALI), Ayalaland Malls, and Northbeacon Commercial Corp., issuing 607.56 million primary common shares of AREIT at Php37 per share, adding three office buildings and two regional malls to its portfolio, including Glorietta 1 and 2 BPO buildings, One Ayala West and East Tower, Glorietta 1 and 2 Mall, and Marquee Mall. Similarly, MREIT, Inc. (MREIT) plans to acquire seven Grade A office assets from Megaworld Corp. (MEG), totaling approximately 150,500 sqm in gross leasable area, generating Php1.2 billion in rental income in 2022 with an average occupancy rate of 94%.

LOCAL MARKET UPDATE

The Philippine Stock Exchange index (PSEi) declined by 32.21 points, closing at 6,507.15, accompanied by a value turnover of approximately Php 4.379 billion and net foreign selling of Php 202 million. Key index losers included ALI (-3.68%), SMPH (-2.53%), and ICT (-1.88%), while GLO (+3.78%), TEL (+1.67%), and BDO (+1.60%) were the top gainers.

Among the sectoral indices, Financials (+0.99%), Services (+0.23%), and Mining & Oil (+0.43%) closed in the green, while Industrials (-0.22%), Holdings (-0.69%), and Property (-2.16%) ended in negative territory.

 

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