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Market Edge | ANC (28 March 2023)
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00:00.0
Hello everyone, I'm Michelle Long. It's 9PM in Manila, 10PM in Tokyo, and 9PM in New York, the headlines.
00:15.0
Asian markets heave a sigh of relief as contagion fears in the banking industry fade with the First Citizens' SVB deal.
00:23.0
The PSC Index, though, struggling to pierce through and stay above the 6600 level.
00:31.0
Moody's Analytics expects the BSP to continue its tightening cycle until sizzling hot inflation cools.
00:37.0
Moody's Analytics Chief Economist Steve Cochrane joins us in a bit.
00:44.0
And the National Grid Corporation is warning of potential power interruptions
00:48.0
after the Regulatory Commission denied its petition to continue with the month-on-month extensions on its ancillary service agreements.
01:00.0
We're counting down to more Asian markets opening within the hour, including Philippine Stock Exchange.
01:05.0
So far, we are seeing small gains for benchmarks in Japan, Hong Kong, and Australia
01:11.0
as fears of a broader contagion from the banking turmoil begin to fade.
01:16.0
Taking a look at where the Asian markets are doing, let's pull up the board.
01:21.0
There you go. Everybody is in the green, led by ASX 200. In Australia, up by 1.1%.
01:27.0
The KOSPI Index in South Korea, also higher by half, and Nikkei 225 by a quarter of 1%.
01:32.0
Stateside, regional lenders jumping 2.5% and treasuries fell with a two-year yield topping 4%
01:39.0
as traders recalibrate their outlook for the Federal Reserve.
01:42.0
The consensus is now one hike left in the Fed's cycle.
01:46.0
The US dollar also edging lower for a second day.
01:52.0
Take a look at how overnight markets did.
01:54.0
The Dow and the S&P 500 edged slightly higher on Monday
01:57.0
as First Citizens' deal to buy troubled Silicon Valley Bank lifted banking shares.
02:04.0
You know, SVB was a very sought-after institution,
02:09.0
very well-heeled and exciting to some people clientele.
02:15.0
Interesting matchup with citizens.
02:17.0
California is not part of their footprint.
02:20.0
It's a great opportunity to get into that part of the footprint.
02:23.0
And they do have a history of building out their business buying distressed assets.
02:32.0
A gauge of regional lenders climbed roughly 2.5% as First Citizens' bank shares rallied more than 50%.
02:39.0
While First Republic Bank jumped on a Bloomberg report
02:42.0
that US authorities are considering expanding an emergency lending facility
02:46.0
that would give the lender more time to bolster its balance sheet.
02:51.0
Taking a look at how Wall Street did.
02:53.0
There you go.
02:54.0
Strong performance from the Dow, up 0.6% of 1%.
02:57.0
The S&P by about a fifth of 1%.
03:00.0
The Nasdaq also.
03:01.0
Treasuries, meanwhile, retreating while tech shares also gave up some of the gains
03:05.0
from Nasdaq's two-week winning streak.
03:07.0
Investors now training their focus on personal consumption expenditures price index,
03:12.0
which is the Fed's preferred measure of underlying price pressure.
03:15.0
That will come out later this week for direction on the US central bank's rate path.
03:19.0
Consensus is for another quarter point rate hike at the Fed's next meeting.
03:24.0
Meanwhile, oil prices jumping more than $3 per barrel on Monday
03:29.0
as a halt to some exports from Iraq's Kurdistan region added to worries about oil supplies.
03:38.0
Here now is a quick look at the local corporate headlines this morning.
03:41.0
Semirada Mining and Power more than doubling its cash dividends to eligible shareholders,
03:46.0
each getting 3 pesos and 50 centavos per share.
03:50.0
Breaking that down, that's a regular cash dividend of 180 and a special dividend of 170 for April,
03:56.0
translating to a total payout of 14.9 billion pesos record date, April 13,
04:03.0
ex-dividend date on April 5, and payment on April 25.
04:07.0
For context, based on Semirada's March 24 closing price, this is actually a dividend yield of 12%.
04:14.0
Meanwhile, Ayala Land has filed a new long-term bond program of as much as 50 billion pesos.
04:20.0
The developer says it plans to raise some 12.3 billion under the first tranche
04:25.0
with an over allotment option of 5 billion.
04:27.0
The fund raising exercise is meant to stretch cost maturities, boost balance sheets,
04:32.0
and support its budget, which is 17% higher this year at 85 billion pesos.
04:38.0
And Medalco sets up a new subsidiary, MUVEM Electronic,
04:43.0
incorporated to own, create, develop, manufacture, distribute, lease, import and export
04:48.0
transport service networks utilizing electric energy and other alternative energy sources
04:55.0
and their component charging stations, hardware, software, and batteries,
04:58.0
both for domestic and foreign markets.
05:02.0
In other local stories, the Bureau of Customs nabs 19 million pesos worth of illicit cigarettes in Davao del Sur.
05:09.0
Authorities intercepted a small motorized vessel or banca in the waters off Santa Cruz.
05:15.0
The vessel was carrying 499 cases of smuggled cigarettes.
05:19.0
That's a little over 24,000 rims.
05:23.0
Crew members of the MV Amicia had failed to present legal documents for the said cargo.
05:30.0
And the National Grid Corporation is warning of potential power interruptions
05:34.0
after the Energy Regulatory Commission denied its petition
05:37.0
to continue its monthly extensions on its ancillary service agreements.
05:42.0
Ancillary services are used as reserve electricity to balance the grid in case of power fluctuations.
05:49.0
The volatility of oil prices does not disappear.
05:54.0
There are different factors for it to rise.
05:58.0
There are still different factors for it to fall.
06:01.0
In fact, in just a day, it changes because of the actions that would contribute either to rise or fall.
06:10.0
NGCP President and CEO Anthony Almeda has written Energy Secretary Rafael Rotilla
06:15.0
to seek help in allowing month-on-month contracts as the grid operator smoothens
06:19.0
its competitive selection process for long-term contracts.
06:23.0
ERC Chair Mona Lisa Di Malanta, meanwhile, says the commission is just waiting
06:27.0
for NGCP's motion for reconsideration to act on the matter.
06:32.0
Senator Sherwin Gatchalian, meanwhile, has also called the attention of ERC
06:36.0
for the delay in the approval of power supply contracts,
06:39.0
which pushed electricity prices up for consumers.
06:44.0
Meron palang 20 na mga power supply agreements na hindi naaprubahan ng ERC
06:50.0
at nakakabahala yan dahil na hindi natin alam kung tama ba, mataas, mababa.
06:55.0
Marami rin tayong nadetect na yung power supply agreement na labis-labis naman sa pangangailangan nila.
07:03.0
So for example, ang isang electric co-op kailangan lang ng 1,000 megawatt.
07:08.0
Ang kinokontrata nila, 2,000.
07:13.0
Oriental Mindoro forced to delay the filing of compensation claims
07:17.0
for thousands of residents affected by the massive oil spill in the area.
07:21.0
The insurance company tasked to process the claims said
07:24.0
the personnel at the provincial capital still need to be briefed on the filing procedures.
07:29.0
The filing will now begin on Friday, March 31st.
07:33.0
Oriental Mindoro Governor Homer Lito Dolores says
07:36.0
claims officers will also visit affected towns to brief local officials.
07:40.0
The processing of claims is expected to take up to three months.
07:44.0
On Monday, the owner of the sunken tanker Princess Empress appeared before the National Bureau of Investigation.
08:12.0
He, however, refused to take questions from the press.
08:18.0
Now, over the weekend, Finance Secretary Ben Giorno said the BSP is likely pausing in the next meeting
08:23.0
and that monetary authorities have done enough on inflation
08:26.0
and these rate adjustments aren't the only game in town.
08:30.0
Our first guest this morning doesn't think so.
08:33.0
In fact, he sees the BSP tightening until inflation trends lower.
08:37.0
Steve Cochrane of Pudis Analytics joins us now live.
08:40.0
Hi, Steve. Thanks so much for joining us.
08:43.0
Good morning.
08:44.0
Good morning.
08:45.0
So, what do you need to see to be able to say that inflation is sustainably, convincingly trending lower?
08:54.0
Well, I think there's two indicators we look at.
08:57.0
They're related to one another.
08:59.0
One, of course, is the top-line inflation number,
09:02.0
which did come down a little bit in February, 8.6% over the year.
09:07.0
In February, down from 8.7% in January.
09:11.0
That was good news in that it was the first time in quite some time
09:15.0
that inflation actually didn't continue to accelerate month by month.
09:20.0
So, some indication that the pace of inflation may begin to ease.
09:26.0
But that difference of 8.6%, 8.7%, it's a pretty small difference.
09:32.0
Moreover, core inflation, which strips out some food items and some fuel items, continues to go up.
09:40.0
Core inflation rose to 7.8% from 7.4% in January.
09:48.0
So, I think it's clear that inflation hasn't been whipped.
09:53.0
So, that's why at least I do think there may be one more rate hike coming.
09:59.0
It depends on some intermediate data coming in before the next PSP meeting.
10:04.0
But we'll see where it goes.
10:06.0
The inflation is still high, and the Philippines does have the highest inflation rate
10:12.0
amongst all the major economies within Southeast Asia.
10:16.0
But, Steve, you did mention high inflation will be a fixture throughout the year.
10:21.0
What are the sticky drivers that you're seeing?
10:24.0
What's causing this inflation, specifically the core inflation, to keep going up?
10:54.0
The rebound in travel and tourism with the opening up of borders and travel is generating some inflation,
11:01.0
although it's a little bit separate from what the ordinary consumer faces,
11:04.0
but high transport costs and high food costs and high lodging costs.
11:10.0
So, that adds to the top-line numbers, even if it's not quite felt by the ordinary person in the street.
11:18.0
So, this, along with some potential increases in energy prices, could mean that inflation is a little bit sticky.
11:28.0
We heard a moment ago that energy prices, crude oil prices, were up by about $3 a barrel just in the last day or so.
11:37.0
And I do expect that actually as the Chinese economy rebounds, particularly in the second half of this year,
11:43.0
that may put a little bit of pressure on demand for energy,
11:46.0
keeping crude oil prices elevated for a while this year before they begin to head back more towards a long-term equilibrium price next year.
11:58.0
So, Steve, you mentioned China, because when you zoom out, not just look at the Philippines, but Asia in general,
12:05.0
you've got China yesterday releasing their industrial profits for the first two months of the year.
12:10.0
It actually contracted 23% year-on-year, deeper than the 4% contraction from last year.
12:16.0
Demand is softening and cost remains high.
12:19.0
Then you've got Germany, other side of the world, seeing business climate indicator go up, 93.3 in March, highest since Feb 2022.
12:28.0
And then Turkey's business morale is at a nine-month high.
12:31.0
Malaysia's producer price index falling for the first time in two years.
12:34.0
When you look at all of these numbers, do they seem like they're screaming a recession, at least for Asia?
12:40.0
What are you seeing?
12:43.0
No, I don't think they're screaming a recession.
12:46.0
Actually, I think when you look at Asia and you look at ASEAN in particular, you're looking at some of the stronger global economies.
12:56.0
And again, particularly because there still is a fair amount of pent-up domestic demand in a lot of the economies in Asia.
13:05.0
We're looking at global growth of something close to maybe 2% this year.
13:13.0
But Asia growth might be something closer to 4%, that includes China.
13:20.0
And Philippines, even stronger.
13:24.0
I suspect that the economy in China will be an important driver of the broader Asian economy.
13:33.0
I think the turnaround will be slow, and we saw that in the profits number that came out yesterday.
13:40.0
But we are seeing gains in retail sales, in industrial production, in fixed asset investment.
13:46.0
So the number is a little bit mixed, but I think on balance positive for China.
13:51.0
And I think that China rebound from its zero COVID policy is here to stay.
13:55.0
And the second half will look a lot better than the first half.
13:58.0
And that should help a turnaround in export demand, which is so important for Southeast Asia and for the Philippines as well.
14:06.0
So what about the West? What are you seeing for the US and for Europe?
14:10.0
I mean, how bad are things going to get this year?
14:13.0
Everyone's talking about whether it's a hard landing, a soft landing, a no landing.
14:18.0
And the new meme is a rolling recession where industries take turns going into a recession, not happening all at once.
14:25.0
What are you expecting to see from that side of the world?
14:29.0
Well, frankly, I think that the risk of recession has risen.
14:37.0
A month or two ago, at least before the banking crisis in the US,
14:41.0
we might have said that the risk of recession in the US was maybe about 45 percent.
14:47.0
When we look at, say, the next 12 months out, that's certainly risen to about 50-50.
14:54.0
And it's going to be very, very difficult to determine how this plays out,
15:01.0
partly because of the uncertainty in terms of monetary policy or interest rates will go over the next six months.
15:10.0
And certainly how business confidence plays out over the next six months or so.
15:17.0
The banking crisis has knocked business confidence a little bit, particularly because bank lending has constricted a bit.
15:26.0
We see that in the US again in the senior loan officer's survey that's conducted very frequently.
15:34.0
And there's been quite a bit of tightening of lending standards.
15:38.0
Given all the uncertainty in the banking industry and such, that may not last,
15:43.0
given particularly now the seemingly successful resolution of Silicon Valley Bank.
15:50.0
But there will be some uncertainty to come.
15:53.0
So it's going to be a very tight call, 50-50, whether we hit a recession and a lot of uncertainty ahead.
16:03.0
So given the difficulty of calling whether a recession is coming for the US and Europe, for the West generally,
16:12.0
should central banks have stopped raising already? I mean, when you look at the Fed?
16:16.0
Is it time to step on the brakes?
16:21.0
Well, certainly, as the Fed reaches its terminal rate,
16:27.0
that terminal rate is the final rate that the Fed ends up at in this tightening cycle.
16:33.0
And we do expect that at the May meeting there will be another 25 basis point hike perhaps, but that may be it.
16:43.0
And so this is a time for central banks to begin thinking about also purely watching their own inflation rates
16:51.0
rather than kind of looking over their shoulders at what the Fed is doing.
16:54.0
That won't be quite so necessary anymore.
16:58.0
There have been a couple of central banks in Asia that have already gone on at least a brief pause.
17:05.0
If we look at Indonesia, Malaysia, Korea, they've all taken a break from raising rates.
17:11.0
They have promised that this is the end, but at least they've taken a break.
17:15.0
So there is a little bit of breathing room coming up for central banks to be able to slow the process.
17:21.0
And I think, indeed, that's what BSP has done at their last meeting.
17:25.0
Instead of raising 50 basis points or 75, they raised only 25 basis points,
17:30.0
perhaps the beginning of the end for BSP as well.
17:35.0
Beginning of the end.
17:37.0
Do you think, though, final question, that investors who are watching us now,
17:42.0
who are watching where the macroeconomy goes, where the markets are going,
17:45.0
should investors start to be repricing at this point?
17:50.0
Well, the way I look at it from the point of view of looking at the broad economic picture
17:56.0
is that probably the fourth quarter of last year, the earlier months of this year,
18:01.0
were probably the weakest period of this sort of, if we want to call it a mini cycle,
18:07.0
not exactly a business cycle, we're not falling into recession,
18:10.0
but this mini cycle of a slowdown, that we are beginning to work past that low point.
18:16.0
And I think we will see the economies begin to accelerate as we get into the second quarter,
18:23.0
particularly Q3 and Q4.
18:26.0
And so I think the outlook looks good given all of the constraints of high interest rates,
18:35.0
the uncertain business climate, still the uncertainty in terms of energy prices.
18:41.0
I think the second half of this year looks to be an improvement in the macroeconomic situation.
18:48.0
And will that trickle down to an improvement in corporate earnings as well?
18:53.0
Well, it certainly should. Costs may still be high.
18:56.0
It depends on where inflation ends up, particularly in the Philippines.
19:01.0
And it depends on where interest rates go.
19:05.0
I think it's going to be a long haul before inflation truly comes back, say, to the BSP's target of 2% to 4%.
19:17.0
It might be end of 2024, early 2025 before we get into that range.
19:22.0
So there will be interest rate considerations to consider for some time.
19:29.0
But I think with the demand still fairly strong, the economy hopefully accelerating, conditions should look pretty good.
19:35.0
All right. On that positive note, thank you so much, Steve.
19:38.0
Always a pleasure to speak with you. Have a great week ahead.
19:43.0
All right. Now here are the other stories we're tracking in the newsroom today.
19:47.0
The Korean Coast Guard is getting a situation briefing on the oil spill of Oriental Mindoor.
19:52.0
That's happening at the Coast Guard's national headquarters in Manila.
19:56.0
And at 2 this afternoon, President Ferdinand Marcos Jr. is expected to attend the Pag-ibig Fund Chairman's Report.
20:03.0
Also happening this afternoon, we're going to be covering the Women Arise,
20:07.0
the first ever leadership conference by Adobo She Creative Network happening at Shangri-La the Fourth.
20:14.0
And this evening, the Manila Bulletin Uplift Awards 2023.
20:18.0
This year's winners include the SM Group, Dolly DeLeon and Carlos Yulo, among many others.
20:27.0
Up next, we weigh the growth prospects against elevated risks for the local stock market with ICCP's Mani Ocampo.
20:33.0
The PSC Index at its current level of 65.95 is flat year-to-date, wiping out gains of as much as 9% in the first two months of the year.
20:41.0
Where to go now? Market Edge will be right back.
20:56.0
Welcome back to Market Edge.
21:20.0
Manila and Manila Water announced daily water service interruptions this week
21:25.0
as part of conservation measures in preparation for the El Niño phenomenon. Warren de Guzman has more.
21:31.0
Anita Unlayao is just one of the residents of Paranaque who have been dealing with a water shortage for two months now.
21:40.0
They are directly affected by repair work on Diputatan Water Treatment Plant of Manilad in Muntinlupa.
21:46.0
Anita says while they are given access to water at certain hours of the day,
21:51.0
it is very difficult for them to ration their H2O, especially with a household of 10.
21:57.0
Doon po sa two months na iyon, nang naranasan namin yung supply ng trakdaan, yung tubig, nakikipagpilahan kami.
22:08.0
Kaya kung mabagal kang kumilos, hindi ka talagang magkakatubig.
22:11.0
Kumawa yung mga nagtatrabaho, hindi ba kaligo, wala tubig.
22:14.0
Kumagawa ng paramisan, mineral, pwede paligo. Walang choice, di ba?
22:19.0
Anita is also frustrated that even though she hasn't been getting regular water service, her water bill has actually gone up.
22:26.0
Yun na nga ang mali si Rey, kasi noong maaisman tubig, ang bill namin nasa 400 plus lang.
22:31.0
Ngayon 600. Kung kayo nagpatakpatak ang tubig, tumaas.
22:35.0
Nagtataka nga ko eh.
22:37.0
Jennifer Rufo, Head of Corporate Communications at Manilad, says water rates rose not because of ongoing repairs or the like,
22:44.0
but because of a previously approved rate adjustment to help Manilad cope with the rising cost of keeping the water flowing.
22:51.0
For the next five years, tulugan yung increase na mararanasan ng ating customers.
22:57.0
Para hindi mabigat yung ating mga treatment chemicals, lahat po yan tumatasang halaga.
23:01.0
Kaya inflation adjustment po ang ginawa nating increase this year.
23:04.0
There is good news for Anita and her neighbors in Paranaque, as well as Muntindupa, Las Piñas and Cavite.
23:11.0
Diputatan Water Treatment Plant is expected to be back at full capacity this April.
23:16.0
But there is also bad news.
23:18.0
There will be daily water interruptions for Manilad's customers in other parts of its concession area this week.
23:24.0
So mag-improve na yan by the latter half of April.
23:28.0
Because by then, matatapos na yung ating intensified filter cleaning sa putatan treatment plants.
23:33.0
Laguna Lake only provides around 10% of the raw water supply for Manilad.
23:38.0
90% of our supply still comes from the Algate and Ipo water system.
23:44.0
That's in Bulacan.
23:45.0
So yan ang ating binabantayan sa ngayon.
23:48.0
Dahil base po sa pronouncement ng pag-asa, matasang likelihood na magkaroonan ng El Nino by the latter half of the year.
23:56.0
Kaya kami sa Manilad, as a prudent conservation measure, mag-implement na po tayo ng daily service interruptions.
24:03.0
Dito po sa area naman natin na siniservisohan ng Algate and Ipo water system.
24:09.0
Implementation will start officially March 28.
24:12.0
We will make the schedules available on our website and social media accounts.
24:17.0
Daily po siya na maranasan ng customers all the way from Caloocan in the north.
24:25.0
Pababa po yan sa portions ng Cavite.
24:28.0
Data from the Department of Science and Technology show water levels at Angat and Ipo Dam are already below their normal high water level.
24:36.0
Manilad says they are waiting to see the intensity of the El Nino phenomenon this year to determine if more water conservation efforts will be needed
24:44.0
and whether it will affect customers in Caloocan, Makati, Malabon, Manila, Pasay, Quezon City, and Valenzuela.
24:51.0
Jennifer adds they are also taking steps to increase water supply from other sources.
24:58.0
Manila Water, meanwhile, has also announced a service interruption affecting customers in Cainta and Antipolo, Rizal from March 27 to March 29 for leak repair and line maintenance.
25:10.0
Meanwhile, lawmakers want to check up on government agencies and their preparations for the upcoming El Nino.
25:16.0
Senate Minority Leader Coco Pimentel says there should be measures in place for agriculture.
25:21.0
Senate Majority Leader Joel Villanueva says President Ferdinand Marcos Jr.'s executive order creating the Water Management Resource Office is a timely measure to help the country survive.
25:32.0
Senator Nancy Binay wants to look at the implementation of older laws such as RA 6716 of 1989 requiring the over 42,000 barangays or villages to install rainwater collection systems.
25:48.0
Warren De Guzman, ABS-CBN News.
25:53.0
Philippine shares join most Asian peers fluctuate in cautious trade.
25:57.0
Yesterday, that's Monday, as investors weighed recession risks and their impact on already elevated policy rates.
26:03.0
The PSC index fell by a tenth of one percent to a hairline below 6,600.
26:08.0
For more on the markets, let's bring in ICCP's Manny Ocampo.
26:12.0
Hi, Manny. Good to see you. Welcome back to Market Edge.
26:15.0
Good morning, Mimi. Good to be back.
26:16.0
All right. Manny, we're counting down to the opening bell this morning. We're about a minute away.
26:21.0
But what are you seeing? Are you seeing more rough times ahead for the local stock market?
26:26.0
How are you sorting out the so many different moving parts?
26:30.0
Yeah. You know, I think generally the market will, I guess we will take our cues from our movements in the U.S. go.
26:41.0
Yeah. You know, I guess locally, independently, local markets will probably be consolidating at current levels, absent any new big news coming from the U.S. at all.
26:57.0
And by consolidation, are you seeing more upside or downside at this point?
27:03.0
Because for those who are monitoring the index, we're actually flat.
27:07.0
We're down to just up 0.4 percent for this year, considering, I remember back in January, the impressive run-up saw us gain as much as 9, 10 percent.
27:16.0
Right. Right. So that's taking, you know, I guess the uptick is taking a rest, you know, with all the things that developed.
27:26.0
But, you know, we probably will wait for, you know, a lot of the company's full year 2022 results are out already.
27:39.0
So that has provided, if you like, a bit of cushion on the downside.
27:45.0
So we're, you know, maybe looking at the upside a little bit.
27:49.0
But again, inflation will probably affect performance this first quarter.
27:55.0
So I guess we wait a few more weeks until first quarter numbers start coming out.
28:00.0
All right. And we are looking forward to that.
28:04.0
Manny, I just wanted to share, we've got the opening numbers.
28:07.0
Let me pull up the numbers for you.
28:10.0
We're about a minute into trade.
28:12.0
And wow, we're joining most of our Asian peers higher this morning, up by a third of 1 percent.
28:17.0
21 points for its 66-16.
28:20.0
So PSEI firm at the open.
28:23.0
As for the peso, we actually open slightly stronger as well, 54-25 against the greenback from yesterday's close of 54-29.
28:31.0
I wanted to talk about how you think the financial market may be mirroring economic fundamentals on the ground.
28:38.0
Or do you think the two are telling conflicting stories at this point?
28:42.0
If anything, maybe the financial markets, companies in the financial sector are probably going to be a lead indicator of where overall markets are.
28:57.0
I think banks in general, Philippine banks in general, have pretty much decoupled from the concerns, for example, of the spate of U.S. and European bank closures over the past month or so.
29:16.0
So we pretty much decoupled on that one.
29:19.0
I think Philippine banks have pretty much bulletproofed their balance sheets with capital raising in either stock rides or Tier 1 capital over the past one, two years.
29:33.0
So the banking system is coming out very strong.
29:36.0
Now, because of that, I think you have a good, solid banking system in place.
29:43.0
I think that will still be there to continue to maybe support other productive sectors of the economy.
29:50.0
And other productive sectors, maybe the one we really will feel a bit of need to grow these next few years, if you like, would be the energy sector.
30:03.0
Energy sector.
30:04.0
Before we get to your energy bet, I wanted to ask, because the expectation is that the BSP, and of course, like the Fed, is just about to end its tightening cycle.
30:14.0
But what about the banks?
30:16.0
A few weeks ago, we did hear from Fitch, an analyst who said that out of the 400, back then it was 400 bps increase, and now it's 425 increase.
30:25.0
Our local banks have actually just passed on 80 bps when they raised their rates to consumers.
30:31.0
So what are your expectations for where our banks are when it comes to raising rates and how that could impact consumer spending and behavior?
30:40.0
And of course, confidence in the economy.
30:43.0
Rates will go up, but maybe not in the same proportion.
30:47.0
Remember that our banks have very decent margins relative to their cost of funds.
30:57.0
So there's a lot of leeway for them to play around with.
31:02.0
So I guess banks are also going to be looking at each other and see if they price competitively.
31:13.0
So you have some kind of gap as well as banks increasing their rates too much.
31:21.0
If they price too much and they will be out of the market, people will just shift to be more competitive banks.
31:31.0
So the banks that price out of the market are going to be stuck with government securities, which is really subpar as far as returns are concerned.
31:41.0
All right. From the banking sector, let's go to energy.
31:44.0
Big news this morning, Manny.
31:46.0
I actually sent you this news, and we have this just in.
31:50.0
Metro Pacific of Manny Pangilinan, he seems like he's in a shopping spree of some sorts.
31:56.0
He's now buying 16 percent of Leandro Levis's SP New Energy Corp.
32:01.0
That's 16 percent for a price tag of two billion pesos.
32:06.0
So 16 percent is roughly 1.6 billion shares at this price.
32:12.0
One peso, 25 centavos per share.
32:15.0
I checked the last closing price for SPNEC shares. It was at 168.
32:21.0
When you look at the price difference, should shareholders of SPNEC feel bad that this chunk was sold at a substantial discount?
32:31.0
Well, could have gotten a better price, I think.
32:35.0
Really?
32:37.0
I think MPIC's entry into SPNEC should be seen as a strategic move.
32:48.0
Strategic for who?
32:51.0
For SPNEC as well as MPIC slash Meralco, that group.
33:01.0
I think they both benefit.
33:04.0
I think for MPIC, it's really a hedge getting into renewable energy resources.
33:13.0
Leon, of course, touting that he pretty much has a cover of land resources that could be built up for solar farms.
33:26.0
Manny, I want to go back to what you said earlier.
33:29.0
You said you think they could have gotten this at a much lower price?
33:33.0
I think Leon could have maybe gotten a better price.
33:39.0
A better price.
33:40.0
Why do you think this is the price?
33:45.0
Would you venture a guess?
33:47.0
I guess people will negotiate and something like that.
33:54.0
I think it actually works well for Metro Pacific that they're getting into that.
34:01.0
Remember, I think the biggest asset of SPNU Energy Corp is really the land bank that they have that could be built up for solar farms.
34:14.0
Unfortunately, for solar energy, you really need a massive land bank to build up your solar farms.
34:23.0
That's a quick way for Metro Pacific to get into that resource.
34:31.0
What does this say about Manny Pangilinan?
34:35.0
I remember when I was covering the stock market, everybody's saying San Miguel is one of those companies that are everywhere.
34:43.0
They have their hands on every industry and it's so hard to cover San Miguel.
34:47.0
We've always known Metro Pacific as an infrastructure play, but now we're seeing all of these new investments that Manny Pangilinan is getting into
34:55.0
from media to agriculture and now to renewable energy.
35:00.0
It's not exactly new, but RE.
35:02.0
What does this say about maybe the trajectory, his strategy?
35:07.0
I think if you look at it, they're really going into basics.
35:13.0
Agri, for example, that may have come as a surprise, but at the end of the day, you're really securing food resources for the country.
35:27.0
That actually makes sense.
35:29.0
Infrastructure from several years back, that had made a lot of sense.
35:36.0
I guess building up investments in energy is something, again, is going to be a need to be fulfilled.
35:45.0
They're maybe going at it more aggressively.
35:49.0
All right.
35:50.0
Manny, we have this just in as well.
35:54.0
ABS-CBN, the parent of this news channel, has just disclosed that premium ABS-CBN dramas are now streaming on India's leading, over-the-top market leader, MX Players.
36:07.0
We've heard executives say ABS-CBN is no longer a broadcasting company.
36:12.0
We're a content creator and now our content is being aired in India.
36:16.0
Quick thoughts, your comments on this and how this pivot is working out for shareholders as well.
36:23.0
Sorry, I just came back from the U.S.
36:28.0
People have pretty much left traditional broadcast TV and are now looking at streaming services.
36:37.0
This is the future.
36:39.0
That's pretty much where ABS-CBN is headed to, if not there already.
36:46.0
Kudos to you guys.
36:49.0
That's a move in the right direction.
36:51.0
Really, it's a way to go for the future, I think, for TV.
36:56.0
I think the important thing is that your ABS-CBN is still there, creating content that gets delivered via streaming services any way possible.
37:11.0
All right.
37:12.0
Manny, I'm sure you watch also some of the dramas here, but for those who are wondering which shows are airing in India,
37:19.0
you've got The General's Daughter, you've got Hanggang Saan Hindi, A Love to Last, Meya Kulpa, Love Thy Woman, and I guess several more others.
37:30.0
Sorry, I'll try to catch up over the Holy Week.
37:34.0
All right.
37:35.0
Manny, before we go to your blind item, I just wanted to, very quickly,
37:40.0
I mean, the first quarter is about to end this week.
37:44.0
Just a quick, fresh look at the top gainers and losers for the PSE in the first three months of the year so far.
37:52.0
I think we have a graphics of the top performers.
37:55.0
There you go.
37:56.0
So the PSEI is flat, up less than 1%.
38:01.0
The next big winner, best performers, these are index issues, as you can see, is BDO.
38:06.0
It's up 20%.
38:07.0
GT Cap, up 16%.
38:09.0
San Miguel is up 13%.
38:11.0
Lushutan Group is up by 9%.
38:13.0
BPI by 9%.
38:15.0
URC, Chippy Maker, up by 8%.
38:18.0
Aboitiz Power by 7.5%.
38:20.0
Metro Pacific by 7.5%.
38:23.0
Metro Bank by 7%.
38:25.0
And Alliance Global Group of Androtan by 6.7%.
38:29.0
On the other end of the spectrum, your top performers in red, let's pull up that board there.
38:36.0
There you go.
38:37.0
These are the big losers.
38:39.0
The worst performers so far is Converge.
38:41.0
Maybe it's about normalization from the pandemic.
38:44.0
Darlings down 15%.
38:46.0
You've got ASEN also down by 15%.
38:49.0
Aboitiz Equity Ventures by 11%.
38:51.0
I'm reading from the bottom.
38:53.0
Semirada Mining down by 10%.
38:56.0
DMCI by 8%.
38:58.0
Ayala Land by 7.5%.
39:00.0
Pure Gold by 6.3%.
39:02.0
Wilkin Depot by 6%.
39:04.0
And SM Prime by 5%.
39:06.0
Anything that stands out for you?
39:08.0
Or does this pretty much make sense?
39:11.0
Well, the ones on the bottom, if you'd like, because they're coming in from high numbers in the past.
39:18.0
During the pandemic, these were the darlings, if you'd like.
39:23.0
I guess because things are normalizing, the high growth rates that they've maybe achieved during the pandemic period,
39:36.0
well, that's starting to slow down and clearly converge there at the bottom, if you'd like.
39:44.0
So it's normal.
39:45.0
What comes up must go down.
39:47.0
It's not to say that they're losing money.
39:49.0
Except that growth is not going to be sustained at 50% year on year.
39:55.0
So, yeah, one of those things.
39:57.0
All right.
39:58.0
Manny, we've come to the most exciting part of the conversation, the blind item.
40:02.0
Talk to us about the stock that you're monitoring closely.
40:04.0
And I think you like this stock.
40:05.0
Don't tell us, just describe.
40:07.0
What do you have for us today?
40:08.0
Well, this one is a clear market leader.
40:12.0
Maybe it's suffered a decline in prices over the past few months.
40:18.0
I would like to see that as an opportunity to buy into the issue.
40:25.0
We think that they will be coming up with a surprise strong fourth quarter and looking forward to 2023 with,
40:36.0
shall we say, with new assets or new base that they will have.
40:42.0
They should come out with a stronger 2023.
40:46.0
Furthermore, I guess with the economy opening up, they should benefit from that one as well.
40:53.0
All right.
40:54.0
Because of their higher end stores.
40:55.0
Okay.
40:56.0
And when you say benefit, what sort of upside can we expect from this share?
41:00.0
At least 15% from current levels.
41:03.0
15%.
41:04.0
What's the time horizon?
41:07.0
Next three months.
41:08.0
Wow.
41:09.0
15% next three months.
41:10.0
We're going to have to guess which stock this is to benefit.
41:14.0
Manny, thank you so much for joining us.
41:16.0
Always a pleasure picking your brains.
41:18.0
Thank you for the insights and the context.
41:20.0
See you soon.
41:21.0
Thank you, Mimi.
41:22.0
All right.
41:23.0
Now, before we zip through the top headlines, just wanted to give you an update.
41:27.0
We're about 14 minutes into trade.
41:29.0
We're managing to stay in the green.
41:31.0
Just like most of our Asian peers, the index is up by a 51%, 13 points.
41:37.0
We're at 6,608.
41:39.0
The question is, can we stay above 6,600?
41:43.0
We'll find out.
41:44.0
We've got the rest of the day to figure that out.
41:46.0
In the meantime, I also wanted to share with you, we have this just in.
41:51.0
Philinvest Land of the Gotianan Group reporting growth in 2022 driven by strong residential revenue performance.
41:59.0
I'm going to read it off the bat here because we have this just in.
42:02.0
FLI actually reported a 20% increase in income before taxes for last year.
42:09.0
That's 4.25 billion pesos.
42:12.0
Qualitated revenues reaching 19.9 billion.
42:15.0
That's also a 12% growth.
42:17.0
As I mentioned earlier, the big driver would be strong residential revenues, which grew 14% to 12.8 billion pesos
42:24.0
due to accelerated construction progress and strong performance of housing projects in Cavite, Laguna, and Rizal,
42:31.0
as well as their medium-rise condo projects in Metro Manila and Davao.
42:35.0
More details throughout the day.
42:38.0
Meantime, ready to zip through the top headlines from major business papers from Business World.
42:43.0
The Agriculture Department says it is validating projections of a pork shortage in April,
42:49.0
saying it is trying to reconcile government data with input from the hog industry.
42:53.0
The agency is saying it will have a clearer picture of the supply situation in the next few days.
42:59.0
For context, the National Livestock Program is projecting shortage in pork to be felt starting April.
43:05.0
That's already next week.
43:06.0
And to intensify by June due to the African swine fever.
43:10.0
According to data from the Bureau of Animal Industry or BAI, 17 provinces in 10 regions have active cases of ASF.
43:18.0
From Business Mirror, Bureau of Internal Revenue Commissioner Romeo Lumagi Jr.
43:22.0
has officially declared war against all those who profit in propagating a culture of tax evasion
43:28.0
using ghost receipts nearly four weeks before the deadline of filing of tax returns.
43:34.0
And from the Wall Street Journal, U.S. ride-sharing firm Lyft, which is grappling with competition
43:39.0
and a battered stock price, is tapping a board member as its chief executive
43:43.0
and its two co-founders will step back from managing the company.
44:34.0
The heat index spiking in parts of the country in Pagasa
45:02.0
with reports of even hotter weather in the coming days.
45:05.0
What's driving the high temperatures joining us now is Pagasa weather forecaster Veronica Torres.
45:10.0
Hi Veronica, how hot is it going to be today?
45:14.0
So hi, good afternoon Mimi and to all of our audience.
45:18.0
For Metro Manila, we're expecting the temperature range to be from 23 degrees Celsius to up to 34 degrees Celsius.
45:28.0
That's the air temperature.
45:31.0
Not so hot. What about the heat index? How it feels in the skin?
45:35.0
So looking at the data based on the forecast for Metro Manila here in Science Garden,
45:43.0
the heat index could rise up from 29 degrees Celsius to up to 34 degrees Celsius.
45:51.0
All right, so it looks like today is not going to be extra hot like the previous days.
45:55.0
You know, Veronica, I was looking at the record because I love monitoring the weather.
45:59.0
I used to do the weather many years ago.
46:01.0
And I'm not sure if this is still relevant, but from 1949 to 2023,
46:07.0
the hottest weather, the hottest temperature recorded here in the Philippines was 41.5 degrees Celsius.
46:15.0
That was in Zamboanga, October 2006.
46:18.0
Do you think we're going to be breaking that record anytime soon?
46:21.0
So looking at here, we're still not ruling out that possibility.
46:27.0
Although what we feel right now is like it's almost normal.
46:36.0
I see. I see. And it's not just that we're in the summer season, but we're also experiencing El Nino.
46:41.0
How do the two affect each other or impact the weather, the temperature rather?
46:46.0
Yes, as of now, we're still in the neutral phase of ENSO or El Nino Southern Oscillation.
46:54.0
So we're expecting our El Nino might be experienced.
46:59.0
There's a high chance in June, July, August.
47:02.0
But as of now, it's still in the neutral.
47:04.0
All right. Neutral in oscillation. So that's June, July, August.
47:08.0
And this El Nino is expected to last just three months?
47:11.0
So for now, usually it can last maybe three months to eight months.
47:18.0
All right. All right. Aside from the hot temperatures, are we monitoring any other weather disturbance near or about to enter the Philippines?
47:27.0
So as of now, there's no low pressure area or tropical cyclone near or within the Philippine area of responsibility.
47:36.0
All right. So we're just going to have to buckle up and maybe enjoy a little bit more of the summer, hit the beach with the warm temperatures, with the sun out there.
47:46.0
Thank you so much, Veronica, for joining us this morning.
47:50.0
Thank you.
47:51.0
All right. Now, the Philippine government will offer alternative sources of livelihood to tourism workers affected by the oil spill in Oriental Mindoro.
47:59.0
DOT Secretary Christina Frasco says skills training and capacity building activities will also be provided.
48:06.0
According to the agency, the oil spill has already affected 63 tourism sites and 1,000 tourism workers.
48:13.0
The municipal government of Puerto Galera earlier said it remains open for business.
48:19.0
Now, here are some economic data releases we're monitoring for the rest of Tuesday, March 28th.
48:25.0
Qatar will report its balance of trade numbers for February.
48:29.0
Its trade surplus fell to 24.3 billion Qatari rials in January from 25.9 billion the same period last year.
48:37.0
Italy also set to release its business confidence data for March.
48:41.0
Manufacturing confidence in Italy remains steady at 102.8 for February.
48:46.0
And from the U.S., we get wholesale inventories for February that actually decreased 0.3 percent in January over the previous month.
48:57.0
A quick look at the flash business headlines from overseas.
49:00.0
The Biden administration plans to give Mexico an ultimatum, an act now or else message in an attempt to break a stalemate in an energy trade dispute.
49:08.0
The issue actually stems from Mexico's decision to roll back reforms that are supposed to open up Mexico's power and oil markets to outside competitors.
49:16.0
If Mexico pushes back, the U.S. is reportedly set to request an independent dispute settlement panel under the United States-Mexico-Canada agreement or USMCA.
49:27.0
Meanwhile, the world's largest entertainment company, Walt Disney Company, is cutting over 7,000 jobs.
49:33.0
In a letter to employees, Disney's chief executive Bob Iger says the mass layoff is part of the company's 5.5 billion peso cost-cutting plan to control costs, of course, and create a more streamlined business.
49:46.0
The first round is starting this week and the next round is due for April.
49:51.0
And Alibaba founder Jack Ma returns to his home country of China after more than a year of staying under the radar overseas.
49:58.0
The Chinese billionaire's re-emergence offers support for the government's softening tone toward the private sector as leaders try to shore up China's battered economy.
50:07.0
And Saudi Arabia's oil titan Arabco raising its multi-billion dollar investment in China with two new refinery deals.
50:14.0
These are the supply of 480,000 barrels per day of crude oil to Zhijiang Petroleum Corporation and the acquisition of a 10% stake of Rongsheng Petrochemical Company for 3.6 billion dollars.
50:28.0
And crypto exchange Binance Holdings and its chief executive officer Chang Pengchao are being sued by the United States Commodity Futures Trading Commission for routinely breaking American derivatives rules.
50:40.0
The CFTC asserts Binance should have registered with them years ago.
50:47.0
In the U.S. again rocked by school shooting this time in Tennessee.
50:51.0
A woman armed with several guns opened fire at a private school in Nashville killing three children and three adults.
50:57.0
The shooter who once attended that school was later killed by police.
51:01.0
An investigation is underway to determine the shooter's motive.
51:06.0
At 10.13 this morning the police department received a call of an active shooter inside Covenant school, Covenant Presbyterian Church.
51:15.0
The police department response was swift.
51:19.0
Officers entered the first story of the school, began clearing it.
51:24.0
They heard shots coming from the second level.
51:27.0
They immediately went to the gunfire.
51:30.0
When the officers got to the second level they saw a shooter, a female who was firing.
51:37.0
The officers engaged her.
51:39.0
She was fatally shot by responding police officers.
51:45.0
Deadly mass shootings have become commonplace in the U.S. but a female attacker is highly unusual.
51:51.0
Only four of the 191 mass shootings since 1966 have been carried out by a woman.
51:59.0
And before we go, for those who tried to guess the blind item, this is the pick of Manny Ocampo.
52:03.0
15% upside in three months if you're patient.
52:07.0
And he says this is a market leader that's supposed to show rather very strong performance this year.
52:14.0
This stock is, drumroll please, this is Puregold Price Club.
52:20.0
So if you got that, do tweet us at ANC Alerts.
52:22.0
In the meantime, that's it for the show. I'm Michelle Long.
52:24.0
Thank you so much for watching. Stay safe and stay with ANC.


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