Philippines Microeconomic Weekly Update #36

MACROECONOMICS WEEKLY UPDATE

A poll of 15 economists predicts that the Bangko Sentral ng Pilipinas (BSP) will maintain its overnight repurchase rate at 6.25% for its upcoming meeting on June 22. This projection is based on the continued decline in inflation and the US Federal Reserve’s decision to delay tightening its monetary policy. The BSP Governor, Felipe M. Medalla, emphasized that the central bank’s decisions would primarily be guided by its inflation target, downplaying the impact of the US Federal Reserve’s actions. He also noted that a narrower interest rate differential with the Fed does not necessarily result in peso depreciation. Similarly, BSP Deputy Governor Francisco G. Dakila, Jr. highlighted the greater significance of domestic issues over the policies of the US Federal Reserve during a Philippine Economic Briefing in Singapore. With concerns of a global economic slowdown and persistent price pressures, the BSP’s focus is on managing inflation and strengthening the economy against potential challenges.

INDUSTRY UPDATE

BANKING AND FINANCE 

 Bank of the Philippine Islands (BPI) has finished distributing 406.18 mln common treasury shares via a property dividend scheme, raising its total outstanding shares from 4.539 bn to 4.94 5bn.

PROPERTY AND CONSTRUCTION

Smart Communications Inc., PLDT’s (TEL) wireless arm, leads in SIM registration with 47.02 mln subscribers, which is 70.92% of its total base. On the other hand, Globe (GLO) has 45.64 mln registered SIM users (52.61% of its total base), while DITO has 6.84 mln (45.73% of its subscriber base).

TELLECOMMUNICATIONS 

Globe (GLO) has expanded its 5G roaming coverage to 67 countries and territories through partnerships with international telecom providers, including ten new locations. Users can access surfing offers via GCash or the GlobeOne application. Meanwhile, PLDT’s (TEL) e-wallet service, TEL, is seeking to raise USD100-150 million in new funds this year. Maya, managed by TEL, is in discussions with foreign investors and considering a potential market listing, but the primary focus remains on strengthening the bank’s fundamentals, such as deposits, loans, and loan books.

AIRLINES 

The Senate committee on tourism and public services will conduct an investigation into Cebu Pacific (CEB) in response to multiple complaints about flight overbooking and unjustified passenger offloading. Meanwhile, the Manila International Airport Consortium (MIAC) has unveiled a USD3.8 billion (Php210 billion) investment plan for the refurbishment of the Ninoy Aquino International Airport (NAIA). The objective of this initiative is to increase NAIA’s passenger capacity twofold by 2028 and make a significant contribution of USD14.6 billion (Php803 billion) to the Philippine economy.

RETAIL 

Wilcon Depot (WLCON) anticipates limited sales growth in 2023 but remains optimistic about the renovation market and construction projects in the hospitality sector. They expect these sectors to benefit from shifting lifestyle trends and the recovery of the industry from the impacts of COVID-19. In another development, Vermirich Foods Corp., a supplier of beverages for Puregold (PGOLD), has been temporarily closed by the Bureau of Internal Revenue (BIR) due to the sale of untaxed beverages in S&R outlets. The closure resulted in a significant tax deficiency of Php800 million, which the company must address in order to resume operations. Vermirich Foods Corp. supplied 2 SKUs under the S&R brand.

PROPERTY AND CONSTRUCTION 

Megaworld Corporation (MEG) has announced its intention to invest Php350 billion by 2027 to expand and develop new townships in emerging regions beyond Metro Manila. This strategic move aims to meet the rising demand for diverse residential and commercial spaces in these areas. On the other hand, Ovialand Inc. (OLI) has decided to postpone its Php2.2 billion initial public offering (IPO) to the first quarter of 2024 due to the current market instability, despite recording strong sales. The funds raised from the IPO will be utilized to expand Ovialand’s land bank and support its nationwide growth plans.

LOCAL MARKET UPDATE

The Philippine Stock Exchange index (PSEi) concluded the week at 6,393.55, experiencing a daily decline of 0.1774% and a weekly decrease of 1.76%. Sectoral indices displayed a mixed performance, with Property (+0.59%), Services (+0.2487%), and Mining & Oil (+0.78%) in positive territory, while Financials (-0.1512%), Industrials (-0.3744%), and Holdings (-0.4300%) declined.

 

he value turnover remained low at Php 3.1 billion, accompanied by a net foreign selling of Php 268 million. The top index gainers were POGLD (+3.14%) and ALI (+2.95%), while JGS (-4.66%) and URC (-2.54%) were the top index decliners.

 

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