01:36.8
Still, traders will monitor any step the BOJ takes to address the weak Japanese yen.
01:43.7
Taking a look at the board now, Japanese shares inch slightly higher, while the KOSPI index climbs 0.8%.
01:50.5
Australian shares, meanwhile, are down 1.33%.
01:55.2
Stateside, Wall Street stocks closed lower Thursday as markets were rattled by a sharp slowdown in the world's largest economy and stubborn inflationary pressures.
02:07.4
The US economy grew at its slowest pace in nearly two years in the first quarter at 1.6%, that's less than half of the 3.4% in the fourth quarter of 2023.
02:19.1
On the other hand, inflation accelerated, picking up from a 2% annualized rate to 3.6%.
02:25.2
The disappointing data further dampened hopes the Federal Reserve would begin cutting rates this year.
02:33.3
Despite this, US Treasury Chief Janet Yellen believes the US economy is not likely weakening.
02:40.4
I think I still see in the underlying core drivers of economic activity considerable strength.
02:48.9
So I think that the US economy continues to perform.
02:55.2
It performed very, very well, and I think to me that was evident.
02:59.5
The headline figure was off a little bit, but for reasons that are peculiar and not really indicative of underlying strength.
03:10.1
The fundamentals here are in line with inflation continuing down back toward normal levels.
03:20.1
Now a look at the board.
03:21.6
The Dow led the pack in the negative, falling nearly 8%.
03:25.2
The S&P 500 and the tech-heavy Nasdaq also closed lower.
03:29.7
The GDP results added further pressure to an already tensed market, hounded by concerns over a pullback in growth among technology earnings.
03:40.1
We got a GDP report today that was hot and cold in the wrong areas.
03:45.4
So that really spooked investors.
03:47.2
Having said that, if you look underneath it, on the growth side, it really wasn't as bad as the headline might suggest.
03:55.2
It might make those, you know, feel at first.
03:58.8
Basically, underneath it, really what hit it was a reduction in inventories and a single-digit, high single-digit growth in exports.
04:08.7
Tech is really trading off today, A, because this long-duration asset, which is tech, and has been running for years now,
04:15.9
was hit by the fact that inflation was hotter than expected in this report.
04:21.0
And, you know, 10-year treasury is up to a five-month high today.
04:25.2
And so tech in general is off on that.
04:30.0
Taking a look at U.S. futures, they're pointing to a higher open following Big Tech's Alphabet and Microsoft's rally on strong earnings.
04:40.0
Now here's a look at the local corporate headlines we're watching out for this morning.
04:44.3
A $305 million deal is struck by the Kansuni Group to acquire the Philippine unit of Mexican cement giant Cemex.
04:52.9
The two firms announced the widely speculated...
04:55.2
...the deal on Thursday, which would see DMCI, Semirara Mining, and Dacon Corporation taking over Cemex Holdings Philippines.
05:03.7
The transaction involves 42 million worth of common shares of Cemex owner KSEC,
05:10.2
with the entities expected to be finalized before the end of the year.
05:16.0
CHP shares ended yesterday's trade significantly higher by 15%.
05:21.9
Now also in mergers and acquisitions, Ayala Land...
05:25.2
...shareholders' approval for the company's planned merger with its 34 entities.
05:29.9
Now the property developer is undertaking the merger to simplify ownership structures,
05:35.2
which it hopes would lead to operational synergies and efficient jobs and funds management, among others.
05:41.1
Now ALI's merger plan heads next to the Securities and Exchange Commission with approval expected within this year.
05:50.9
In earnings this morning, Philex Mining's profit down significantly.
05:55.2
In the first quarter, fresh numbers moments ago showed its core net income at 105 million pesos from the 388 million last year.
06:06.0
Philex EBITDA also lowered by more than half at 295 million pesos.
06:11.4
The firm cites, among others, higher gold prices, which it said provided tailwinds for its silangan and padkal mines.
06:19.5
Finally, Philinvest Land and KMC Community launched a joint venture...
06:25.2
...a foray perhaps into the co-working business solutions.
06:28.7
Now FLI says the new entity, Our Space Solutions, will cater to the growing demand for co-working spaces here at home.
06:36.1
The JAV will be tasked to establish, operate and develop flexible workspaces, such as private serviced office seats and co-working arrangements with commercial buildings.
06:50.0
Also in stock market news, the Securities and Exchange Commission issues new guidelines...
06:55.2
...to increase transparency in initial public offerings.
06:58.2
A memo circular made public Thursday would allow or require IPO issuers to include cornerstone investors in the material contracts of its registration statement.
07:10.6
Cornerstone investors refer to those who agree with a company to subscribe in advance to an upcoming IPO.
07:17.9
The SEC memo also requires companies going public to ensure these investors do not get information related to the IPO.
07:25.2
Beyond what's available to the public.
07:28.4
IPO registrations now also need to disclose, among others, the number of participating cornerstone investors and their profile descriptions.
07:39.8
Philippine foreign tourist arrivals already breached 2 million so far this year.
07:44.7
The tourism department said as of March 31st, nearly 1.9 million foreign tourists and over 100,000 overseas Filipinos entered the country.
07:55.2
...15% higher than the international arrivals recorded in the same period last year.
08:01.4
Tourism receipts hit over 157 billion pesos, around 27 billion pesos higher, before the COVID-19 pandemic lockdown.
08:10.8
South Korea remains the Philippines' top source of visitors, followed by the U.S., China, Japan and Australia.
08:18.4
The tourism department aims to welcome 7.7 million international visitors this year.
08:25.2
Now, the Philippines ended 2023 on a high note after being the fastest-growing economy in Southeast Asia.
08:35.4
The global management consulting firm believes the country could further grow this year with financial services, energy and power as the main economic drivers.
08:44.1
To share more about their outlook on the Philippine economy, we have with us John Canto.
08:48.8
He's the managing partner at McKinsey Philippines.
08:51.8
Hi John, welcome to Market Edge.
08:55.2
Thank you for having me. Good morning.
08:56.9
Alright, good morning.
08:57.7
Now, you're looking at a 5.6% thereabouts growth,
09:01.0
which is below the Philippine government's target range, actually, of about 6 to 7%.
09:06.2
What did you consider when you repriced those projections?
09:12.5
So I think, look, in terms of just where we are, right,
09:15.8
all the uncertainties in the market geopolitically and also economically
09:20.6
in terms of inflation and interest rates,
09:22.9
to put that into context, I believe that 5 to 5.5% GDP growth is robust.
09:33.4
Yeah, and I think that if you look at it also this year,
09:38.6
we are still projected in 2024 to have the fastest growing GDP in Southeast Asia.
09:44.6
So all in all, Philippines is a growth story for us.
09:48.4
Now, growth has been largely attributed, of course, to the resumption of commercial activities,
09:52.9
but this was at least in 2023.
09:55.0
You also had heightened public infrastructure spending,
09:58.2
an increase in digital financial services.
10:00.9
The downers remain.
10:02.2
El Nino, of course, that's a factor that we need to really see.
10:05.7
We have not, you know, realized the extent of the effect of the weather phenomenon on GDP.
10:12.1
We also have inflation, persistent geopolitical tensions,
10:15.9
and deferred rate cutting too late this year, even next year for the BSP.
10:20.4
Now, are you seeing GDP really?
10:22.9
Are you seeing GDP really down by policy rates considering this could affect corporate growth in the next couple of months?
10:30.9
Indeed, that remains to be seen, Stanley.
10:33.8
I think there's strong economic fundamentals that will underpin the growth of the economy,
10:40.4
regardless of what happens to interest rates, right?
10:44.6
So consumer spending, growth in middle class, we expect that to grow by 8% per year until 2030.
10:52.9
So pillars of our economy, BPO, manufacturing, particular semiconductors, continue to grow.
11:00.2
In fact, I think the Q1 results for exports are really much, much better in terms of semiconductors manufacturing than last year.
11:09.6
So there are initial signs that the economy will still continue to grow and be resilient this year, despite everything that you've said.
11:17.7
John, let's show one of your slides from the McKinsey report, talking about the industries.
11:22.6
Now, that would significantly contribute to, there it is, GDP this year.
11:27.4
Now, what are these and how much would this affect or what effect do you see do these sectors and industries have on growth?
11:37.3
You're mentioning, we're seeing, we're bullish on transportation, construction, financial services as well to contribute significantly to GDP.
11:52.6
I guess pillars of our GDP growth include manufacturing, financial services, and others like BPO.
11:59.3
It also includes, as you see here, transportation and construction, right?
12:02.3
So I think those, by and large, still hold.
12:06.0
What we need to consider here are, when we talk to investors, right, I think the critical part is continue to get our fair share of FDI into the country.
12:19.0
There's a few things top of mind, usually top two or top three.
12:22.9
One of them is the cost, the ease of doing business, right?
12:26.9
Which can be many, many things.
12:28.9
And the second one is around the cost of power, cost of doing business, in fact, when it comes to supply chain logistics, lack of critical infrastructure.
12:40.3
So if we are able to manage this, again, from an investor perspective, we should be able to stem the decline in FDI over the past couple of years, which is critical for long-term growth.
12:52.6
Well, Raja, let's talk about consumer spending now because, you know, this economy has really been buoyed by domestic spending in the past recessions or in the past years, particularly during the pandemic when GDP was really low.
13:06.1
Now, what kind of growth now are you seeing for consumer and retail?
13:10.5
How big a growth, perhaps, or a factor will they contribute given inflation may alter the way Filipinos spend?
13:17.1
We've always relied on domestic consumption to offset weaknesses in the other sectors.
13:22.6
So are you still seeing domestic or robust domestic spending moving forward in the coming months?
13:30.2
I think there's a challenge clearly in terms of inflation, right?
13:34.0
And what that means in terms of consumer wallets in this environment.
13:39.1
That being said, and of course, increasing input prices as well due to supply chain constraints and the like.
13:46.3
So there is something to be looked into in terms of how then do we enable...
13:51.6
Enable, right, consumer spending, particularly those in particular classes and also SMEs that will still allow them to operate and thrive in this environment.
14:03.3
So it will be a challenging year, Stanley, in terms of consumer spending, but still, you know, our challenging year is still relatively, I think, robust compared to a lot of the other markets.
14:15.4
Speaking of a challenging year, here's another one.
14:18.5
You know, the Philippines is grappling with a power crisis.
14:21.4
You know, it's...
14:21.6
We have increasing electricity demand due to El Nino.
14:25.1
Only highlighted the much-needed investments as well to improve the country's power mix.
14:29.9
Now, still a long way to go before we really improve power supply, let alone sustainability and green energy initiatives.
14:38.1
Now, what can a power crisis possibly do to the economy this year?
14:43.5
I think, you know, unfortunately, growing up in this country, we are not unfamiliar with power crises.
14:51.0
We're not familiar with blackouts and brownouts, right?
14:52.9
I think we need to...
14:55.5
We are in a power crisis today that will exacerbate probably with the rising demand, the lack of base load alternatives in the short term and the shift to importing our gas requirements from Malampaya to some extent, right?
15:14.0
But there is clear now there's a collaboration between private sector, public sector.
15:21.0
To try to intervene, right?
15:24.7
To make short-term solutions and the investments required to do this, both on the generation side and on the transmission side, the grid, which is quite critical to addressing our power crisis.
15:38.5
Lastly, you know, when the growth numbers slid last year, John, it was because government did not spend enough, or at least that's one of the reasons.
15:46.5
The government was not spending enough to improve GDP numbers.
15:50.6
Or for it to have at least an impact on those growth numbers.
15:54.9
Now, for the rest of 2023, we played catch-up.
15:58.9
A quarter into 2024 is government spending in full throttle now.
16:03.4
What are you seeing?
16:04.9
Would this have an impact at least on final 2024 GDP?
16:10.7
Yeah, I think the government's...
16:12.2
Just take a step back.
16:13.4
The government's role really here is to enable economic growth, right?
16:19.1
And that's through spending.
16:20.6
That's through attracting investments.
16:23.0
And that's through improving the ease of doing business, both for local entities and also for foreign entities.
16:33.0
And by all accounts, from what I've heard and seen, they have all the intent to spend and invest in the right places.
16:41.4
It's still quite early in the year if you think about it, Stanley, right?
16:45.0
So we'll need to see how much of the investments on infrastructure.
16:50.6
both physical and digital, come into play.
16:54.2
And lastly, you know, in relation to that, what do you think, John, are the low-hanging fruits for us to achieve better growth numbers this year?
17:02.2
Given, you know, all the headwinds, given all the circumstances we're in,
17:06.5
and given that, you know, we need to have longer timelines in order to achieve the kind of spending,
17:13.7
the kind of investments that we need to up our numbers.
17:18.7
Yeah, great question, Stanley.
17:20.7
I think we need to focus on industries and sectors that we really have a right to compete in, right?
17:27.9
So this, for example, could be the PPO sector.
17:31.0
What are the quick wins we can do to support that sector to get investment, growth, employment?
17:36.9
Other sectors would include, obviously, the financial services sector when it comes to financial inclusion.
17:44.7
Consumer lending stimulate both from a retail perspective and also SMEs.
17:50.3
These are ones which are relatively quick wins if we can continue to focus on them, right?
17:56.4
And not play catch-up, as you say, in terms of growth this year.
18:03.8
On that note, Mr. John Canto, partner and managing partner, Pakensian Company,
18:07.5
thank you so much for the insights this morning.
18:09.6
Have a great weekend.
18:11.4
Thank you, Stanley.
18:13.6
Now, here's a quick look at the other stories we're tracking today.
18:17.5
Happening within the hour, transport groups and advocates.
18:20.3
We'll conduct a forum against government's PUV modernization program.
18:25.3
Still at 9 a.m., shipping firm to go.
18:28.2
We'll launch its newest vessel.
18:30.0
The event will be attended by First Lady Liza Araneta Marcos.
18:34.6
At 10 in the morning, several women's groups will hold a forum expressing opposition to the Philippines' ongoing military drills with the United States.
18:43.1
During the same hour, the National Economic and Development Authority will hold a press briefing in Malacanang.
18:49.0
And at 12 noon, we'll have a press briefing in Malacanang.
18:50.3
Soon, a memorial service will be held in Makati for former statesman and human rights lawyer, Rene Sagisan.
18:58.5
Time for a short breather, but stick around because we bring you the opening numbers at the local boards
19:04.0
and for the analysis of this week's trading from Helen Goleta of RCBC.
19:20.3
You're still watching Market Edge, the headlines.
19:41.9
France eyeing to begin talks for a visiting forces agreement with the Philippines next month.
19:47.7
The Justice Department warns police officers against...
19:50.3
cooperating with an international probe on the Duterte administration's drug war.
19:56.0
And atop New York court, overturning the rape conviction of disgraced Hollywood mogul, Harvey Weinstein.
20:06.6
Now, the local boards closed flat on Thursday, barely managing to extend its winning streak to a fourth day.
20:13.0
The PSE index kicking off from 65-74.
20:17.7
Joining us now for more on the markets and the global facts...
20:20.3
at play, we have with us Helen Goleta, first vice president and head of trust trading at RCBC.
20:26.7
Hi, Helen. Good morning.
20:28.5
Good morning, Stanley.
20:30.1
All right. Now, you know, last week, it was a rough time, really, for equities
20:35.0
because of that very steep dive from highs of 69 to 7,000 down to 64 and 65.
20:43.1
Today, we've seen quite, I mean, at least in the past two days, we've seen quite a recovery.
20:47.7
What is the disposition now of investors?
20:50.3
After coming from that fear cycle, Helen?
20:54.3
Actually, if you look at the market, the market has been trained in a way through the years,
21:01.2
especially for the local market when we see ranges moving up and down.
21:05.0
So, it's more of not really fear for the market, but more of the mindset, okay, here we go again.
21:14.1
So, we've been there, we've done that.
21:15.8
So, we are very much familiar with how these markets move, right?
21:20.3
Yes, you've seen the last, as you mentioned, last two days up.
21:24.3
And with the market weaker for the U.S., this overnight, we expect the local boards to follow as well.
21:32.2
So, if you look at that, I think there was a gap of around 6550, that range.
21:37.4
So, you can see that it might go tip back at the 6,500 level for now.
21:42.1
But that's healthy because in a way, we're just following the market at this point.
21:48.7
Hopefully, we've seen that.
21:50.3
6,400 actually tested a few, I think, a few weeks back.
21:57.4
So, definitely, that is a very, for now, the strong support that everyone wants to see supported moving forward.
22:08.3
So, that's good to know.
22:09.5
It's comforting to know that at least we have established quite a strong support for now.
22:14.2
And, well, on the downside, you mentioned that the U.S. situation will actually rub off.
22:20.4
And the way we will be trading today, another concern today would be turnover.
22:25.0
We've been seeing thin volumes lately.
22:28.7
Helen, what conditions must be there to see a return of investors to risky assets at this point?
22:36.3
For the 13s, we've already seen.
22:38.4
Actually, when we move up, as you mentioned, up to the 7,000 level, we've seen our volume move to around 6B.
22:46.4
Now, we're back to the 4, 3.54B.
22:50.3
But I think that we've been there.
22:52.4
So, we all know what are the concerns for the market.
22:55.3
We all know that, I think, having a level playing field across ASEAN in terms of, as mentioned previously by our colleagues,
23:05.3
in terms of the way we tax our investors, in terms of the sales transaction tax being 0.6 compared to the whole ASEAN,
23:13.5
except one country with a zero sales tax.
23:17.2
So, I think that's very crucial.
23:18.5
That's what we want to.
23:20.3
Move a momentum or more liquidity churning type of market.
23:25.9
So, that is very crucial.
23:27.3
Every time you get out and in and out, you're going to be slapped with that tax.
23:32.4
So, I guess that's very important, especially for foreign.
23:35.3
We've seen the foreign exposure.
23:38.5
I think almost 93% of the foreign from months ago is already out.
23:43.7
So, it's more of us saying that foreign goes in and out.
23:48.4
So, that's what we also do.
23:50.3
For the local market.
23:51.7
But local is more loyal in terms of a long-term horizon in terms of investment.
23:57.4
So, not opportunistic.
23:59.6
So, the most important thing at this point, as you move to the long-term, there are a lot of pockets of opportunities that we need to make.
24:06.2
And for that to happen, you need to make those movements.
24:09.8
So, I think a while ago, you were mentioning about fear.
24:12.4
It's not fear, but more of opportunities that we have to look at it that way.
24:16.9
Because when you talk about fear, it's very negative, right?
24:20.3
But if you look on a medium to long-term mindset, everyone knows that the interest rates will go down.
24:27.0
Yeah, eventually.
24:28.9
Eventually, eventually.
24:30.1
But it's just a delay.
24:32.2
So, you know that moving forward, investors will find avenues to get their returns in.
24:39.1
So, I think equities would be a very strong asset class.
24:43.6
Maybe latter part or maybe first 2025.
24:47.3
But it's really these kinds of opportunities.
24:49.8
When market weakens, that you find entry points, right?
24:55.0
Remember, there's a very famous line from Warren Buffett that he likes to borrow.
24:59.2
That when there is, as you mentioned, fear in the market, then you should be greedy.
25:04.7
Yes, you should be looking at opportunity.
25:07.5
Which of your names you think would be something that you can hold on to from the medium to the long-term, depending on your investment price.
25:14.6
Yeah, hell and the horizons, though, for better days.
25:17.8
Too far away, at least.
25:19.8
And, you know, you have a market that lives day to day.
25:23.4
Looking forward to catalysts, at least, to buoy it.
25:27.3
Now, we have persistent global headwinds.
25:29.7
We have inflation.
25:31.1
We have higher rates.
25:33.1
Of course, on the plus side, we're looking forward to better earnings, at least to confirm or to support our bets in this kind of market.
25:41.0
Now, are you expecting now muted or marginal revenues, at least for companies that are least favored or sectors that are least favored?
25:49.8
For the rest of the year, given all those headwinds?
25:53.8
Actually, these headwinds is already expected.
25:56.9
Even before mid of last year, we all know that we should be seeing easing inflation.
26:04.0
It may be delayed, but if you look at the inflation numbers, you can see that there are, with a high base last year, we're really seeing it's still elevated, right?
26:16.4
So, we're going to have that kind of a little elevated.
26:19.8
For the local inflation number for the next quarter, maybe.
26:24.7
And that is already expected by the market.
26:26.7
So, it's more of the going beyond the expectation.
26:31.2
That is, as a business owner, assuming a registered company, you all know where your costs are.
26:36.9
So, you've seen easing across the take commodities market.
26:39.7
You've seen oil having a resistance of crude oil at 85.
26:44.4
So, 85 resistance.
26:47.5
So, therefore, it's just ranging at 80-85.
26:49.8
Not much of a concern on the oil side on contributing to inflation, but it's more really a food for the Philippines.
26:58.8
So, I guess that's something that the government needs to look into.
27:03.8
So, how they can improve in terms of supply.
27:07.2
It's really supply-demand factor at this point.
27:11.4
So, for the market, we expect it to not as good as last year because last year was having a low base.
27:19.8
So, you've seen a lot of consumer demanding, but it's demanding to buy more, right?
27:27.6
Because it's really the first time for people to go out.
27:30.4
So, you see a lot of people going out.
27:32.3
If you go out any time of the day, especially at night, sorry, here in the Philippines, you see everyone out in the streets buying consumer, going out, eating out.
27:43.4
So, there's a lot of activities on the consumer side for the Philippines.
27:46.9
So, I guess there is that.
27:49.8
Support for that sector of the market that's really unique for the Philippines.
27:55.7
All right, Helen.
27:56.4
Let's just bring in the opening numbers.
27:58.3
We're down one-fourth of a percent.
28:00.9
We're now at 65-57.
28:03.4
Really, as you mentioned, this will be a reaction to a lot of stateside developments.
28:08.1
Now, we mentioned, we covered already earnings.
28:11.1
Are there other exciting developments on your radar in the coming month that could push this market in either direction?
28:19.9
I think we're very much watchful of the data in the U.S. especially because that's really more of the barometer globally in terms of how inflation would be eating.
28:30.1
So, we're really, even the central bank, actually, the SBI mentioned that it's really inflation-focused for the Philippines.
28:37.4
And I guess we have to watch that number where it's going to move from here.
28:45.9
And you see OSW, since now, you've seen the...
28:49.9
The OSW, it's right at enrollment time.
28:53.0
So, there's some pockets of opportunities for OSW remittances to come in, right?
28:59.0
But also, opportunity for the importers, the man, by June to usually buy their requirements now.
29:09.5
So, that's the play on the exchange side.
29:11.8
That's why you've seen the dollar-peso weaker for the peso.
29:17.3
So, since overall, for the past few weeks,
29:19.6
it's really a strong dollar environment anyway.
29:24.1
You've seen the peso weakening, but still mid of the pack compared to the whole of ASEAN.
29:30.5
So, it's really a move for the market, not just specifically for the Philippines.
29:37.0
You mentioned the weakening of the Philippine peso.
29:39.8
That has been a concern.
29:41.4
Why do you think that is?
29:42.7
And maybe what's your outlook for the Philippine peso?
29:44.9
So, when is it going to regain its strength?
29:49.6
Considering that a lot of the factors that are attributed or a lot of the factors that may bring the peso up are still far, far away, way ahead.
29:59.1
We're even talking about Fed rate cuts that might affect that as well.
30:03.7
Remittance season is not yet here.
30:06.1
So, what do you think?
30:08.6
I think for the peso, if you look at, on the technical side, if you look at the change rate, the 58 peso is the resistance right now.
30:16.9
And on a medium...
30:19.5
Medium to long term, if you look at the support levels at 57.50, 57, 56.50, all the way to the 56 peso, chart-wise, it's still a strong dollar environment, especially for us.
30:34.5
So, I guess these weaknesses would be an opportunity to buy the peso.
30:41.2
On the equity side, you see different names having different exposures in terms of...
30:49.5
effects, whether it be purchases of their commodities or products, or is it on the borrowing side?
30:58.8
That's why, if you notice, even the government, it's majority peso borrowing.
31:03.5
So, I guess we've learned from 1997, then, crisis that if you have peso exposure, then you borrow also in peso.
31:13.3
So, I guess most of the borrowing, if you notice, there's really a dwindling supply.
31:19.5
Of dollar borrowings from most of our corporates all through the past few times.
31:26.3
That's also a challenge.
31:27.3
That's why, actually, I think, aside from that, it's also being seen across other countries.
31:32.7
That's why, you've seen a very thin spread.
31:37.3
And investors are buying into this dollar asset because there's really no other outlet.
31:44.6
There's really very few supply on the dollar front.
31:49.5
Mostly are really borrowing based on the local currency to reduce that kind of exposure.
31:55.8
Helen, what's your view on capital raising moving forward, at least in the next couple of months, which is critical?
32:01.7
A lot of companies and corporates might be turned off by really prohibitive borrowing rates
32:06.6
and may look to other ways to raise capital bonds and fixed income, for instance.
32:12.3
How do you see that panning out this year?
32:14.8
Do you see more of that?
32:17.0
Actually, for the next...
32:19.5
Three months, it's really an exciting market, especially for the bond market.
32:25.5
I think we have at least three, four names borrowing with a tenor ranging from one and a half years all the way to seven years.
32:35.0
So, you can also see that the borrowing plan for most of the corporates are also in the belly side of the curve.
32:43.9
Because if you look at the borrowing cost...
32:47.4
I'm sorry, the borrowing calendar of...
32:49.5
of the Bureau of Treasury, most of the borrowing is 7, 10, 15, 20.
32:54.1
So, it's on the long end of the curve.
32:56.3
And that much supply from the 3, 5, and...
33:01.7
So, that's why the corporates are going into that channel.
33:04.7
And if you look at the spreads, the spreads are very, very thin.
33:08.4
It's like 20 to 30 basis point spreads on these tenors.
33:12.9
So, I guess, with a base of a little higher interest rates or higher base,
33:17.0
you can see that investors with so much...
33:19.5
liquidity also invest in these types of names.
33:24.9
And I guess, if you look at the...
33:26.9
for the rest of the year, we expect that since the expectation of a lower interest rate is not happening yet,
33:33.8
there are a lot of corporates who decided,
33:35.6
okay, we'll just borrow, but it's just a short-term,
33:38.4
just a very short to medium-term borrowing cost.
33:43.5
So, I guess that's wise.
33:44.9
At least, they can continue their plan going into...
33:49.5
next three years for their business and not hampered by the borrowing side.
33:54.7
So, you can borrow directly on the bond market.
33:58.3
We all know that the CASA of the banks have built because of the pandemic, right?
34:03.6
And last year, you've seen it reduced significantly as well.
34:07.1
So, there are a lot of borrowings.
34:08.6
You've seen, I think, the banks releasing increasing loan sizes,
34:14.3
whether it's consumer or the corporate side, depending on the bank.
34:17.7
So, there are a lot of activities on the loan side.
34:19.7
So, it's very busy this year.
34:21.6
So, I guess we see that number still growing for the rest of the year.
34:26.4
And another option, of course, for corporates is to go public.
34:30.7
We have one IPO, in fact, coming up next week.
34:34.2
What is your outlook for IPOs now?
34:36.6
Companies raising money or capital through public listing for 2024?
34:42.1
I think there is a newly released FTC in terms of IPO-related.
34:49.5
Especially on the investor side.
34:54.9
So, I guess these IPOs are also another channel, of course.
34:59.4
But if you look at the market now, it would be better if the market would be a stronger market, right?
35:06.6
But every single IPO in the region, why they're using that channel, right?
35:12.1
So, I guess as long as they have investors to position at this point,
35:19.7
price point, assuming it's a little lower, hopefully it's lower than what the market wants.
35:24.7
Is there appetite, though, for an IPO right now?
35:27.8
What are you seeing?
35:29.8
Honestly, compared to, let's say, the 100% appetite, especially if you look at the retail before, right?
35:36.3
When you say IPO, there's a lot of activity from the, I think more than 40% is retail-related and 60% is in-state.
35:44.0
So, at this point, obviously, if you look at the market now, it's not as expensive.
35:49.5
So, it's not as exciting, we hope, to be for IPO.
35:53.0
But definitely, there are opportunities there.
35:55.4
So, it's really a matter of how you get those investors convinced that there's opportunity in this business company.
36:04.9
Helen, you know, we've been running a special the whole week on Fund Managers Association of the Philippines in line with its anniversary.
36:11.3
Congratulations, by the way.
36:12.7
And I'm sure you're excited about its future.
36:15.8
Thank you very much for giving us this opportunity.
36:18.5
So, what can we expect?
36:19.5
What can we see from FMAP as it embarks on another year?
36:23.6
For FMAP, we would like to actually still continue what we have started.
36:30.2
So, we very much envision ourselves as catalyst for change.
36:37.9
So, we want to really have a voice in terms of discussing with regulators or government agencies into how we can help.
36:49.5
So, we want to really have a voice in terms of discussing with regulators or government agencies into how we can help.
36:49.8
So, we want to really have a voice in terms of discussing with regulators or government agencies into how we can help.
36:50.0
Express what our investors are, the retail investors are very concerned about, let's say, or want to help.
37:00.1
So, I guess we are just channeled between regulators and investors.
37:06.7
So, we can also give our insights as to why markets, let's say, are to the littlest detail of the market concerns.
37:17.4
So, I think it's very...
37:19.5
timely that even the regulators are very open to communicate with us.
37:23.5
We really appreciate it because for them to have the time to communicate to us the different concerns that we raise every time we speak to them.
37:32.9
Lastly, Helen, do you have a wish list, a personal wish list for investment climate in the Philippines?
37:38.7
What improvements do you think are still necessary for us to really mature and improve our markets,
37:46.6
both on the investor side and the corporate side,
37:48.9
and even the regulatory side?
37:49.5
I think for the investment environment, what we really, if I have a wish list,
37:55.8
definitely, I think the concern would be, as mentioned a while ago, the sales transaction tax,
38:01.1
to support this local market.
38:04.1
We've seen the local market for the past 10 years just being in a range.
38:08.8
Liquidity-wise, also in the same size.
38:11.1
So, we want it to grow like everyone else, like most of the ASEAN.
38:14.3
So, I guess that's a step, although little, but I think that's a very good step.
38:19.5
A good step towards that goal, one.
38:22.3
And I think we also want, like right now, there are a lot of regulations that have been drafted years ago, right?
38:31.8
Like 10 years ago, 15 years ago.
38:34.1
So, we see the capital markets moving very fast, especially on the ASEAN side, U.S. side.
38:40.1
So, we want our regulators as well, who've been tirelessly reviewing all these regulators,
38:46.0
how to open up more opportunities for investors.
38:49.5
And more relaxed regulations.
38:52.9
But definitely, we need all these controls as well.
38:56.0
So, it's a balance between the business as well as the controls to make sure that the risks are properly managed.
39:04.0
And I guess, I think the last would be the pension reform.
39:07.4
I think that's very crucial, not just for us, but for the whole of the Philippines.
39:12.1
Because I think we have around 46 million of the 117 million population working.
39:19.5
So, the pension, as we mature, is really a concern.
39:24.1
You've seen that we're underfunded for most of our operations.
39:28.3
The pension liabilities are not, it's on a need basis.
39:35.4
So, when it comes, you pay, something like that.
39:37.2
So, I think the government needs to, or the Senate also, we need to put the bill in.
39:43.1
So, we can see how to move forward.
39:46.7
So, for others who are outside.
39:49.5
The country will come back to the field and say, oh, we like the pension for the business.
39:52.7
So, it's something like that, but that we don't have at this point.
39:56.1
So, it's really a challenge.
39:57.3
There are a lot of things to do.
39:58.6
But I guess, one step at a time, we will get there.
40:02.2
One step at a time, indeed.
40:04.1
Helen Oleta, First VP, Head of Trust Trading at RCBC.
40:08.1
Thank you so much for this conversation.
40:09.6
Have a great weekend.
40:11.2
Thank you very much, Stanley.
40:12.5
And thank you on behalf of FMAP as well.
40:14.9
Thank you and congratulations to FMAP.
40:19.6
As we reported, the final trading day of the week kicks off at the Philippine Stock Exchange.
40:23.9
Friday's opening number is 65.57 with the PSE index down by nearly three-tenths of a percent now.
40:31.2
Value turnover so far is at 382 million pesos.
40:35.1
This time, though, decliners outweighed advancers, 37 to 26.
40:42.5
Moving on to more news.
40:44.2
The Philippine Energy Department admits the country is already facing a power crisis
40:48.1
with more alerts expected until next month.
40:51.2
Alvin El Chico reports.
40:54.1
As the country sizzles due to the intense heat,
40:57.2
power consumption rose to its highest level this year,
41:00.3
even surpassing the projected peak demand for the summer season.
41:04.3
The Energy Department still sees some yellow and even red alerts
41:07.6
in the power grid until the middle of May.
41:10.5
In the next few weeks until the middle of May,
41:15.1
that we are going to have yellow alerts.
41:18.1
Possibly red alerts in some areas.
41:20.7
If none of our plants are going to go offline,
41:25.2
then perhaps it's just yellow alerts.
41:27.2
Energy Secretary Rafael Otili admits the current state of power supply in the country
41:32.3
can be considered a crisis situation which he likens to a calamity.
41:37.6
Do you consider our situation to be already in crisis mode?
41:45.2
It remains a challenge, right?
41:47.6
It's a challenge.
41:48.1
It's a calamity and we are responding to it as needed.
41:54.6
The good news is there are a number of new power facilities
41:58.5
that are scheduled to be online running this year,
42:02.1
including coal-fired power and renewable energy plants.
42:05.4
More than 4,000 megawatts will come online this 2024.
42:11.3
Of the expected capacities, 4,030 megawatts are in Luzon,
42:18.1
and 52.5 megawatts are in Mindanao.
42:23.6
That's why Otili is confident the series of yellow and red alerts
42:27.1
will not be repeated during the hotter months next year.
42:31.0
Then we will have adequate supply for next year.
42:38.1
And next year, it's La Niña that we are facing, not really El Niño.
42:48.1
the D-rated hydropower plants
42:54.0
are likely to be performing optimally.
43:01.1
Dottiria says no one can stop the intense hot weather,
43:04.7
so the appeal is for consumers to remain energy efficient
43:08.5
in order to manage demand
43:10.1
that can prevent power interruptions from happening.
43:13.4
If I had the power to bring on the rains,
43:18.1
by doing a rain dance,
43:19.8
I will be the first to do so.
43:23.1
Meanwhile, the Energy Regulatory Commission
43:25.0
has called on operators of six power plants
43:28.2
to provide information related to its probe
43:31.3
on the series of yellow and red alerts
43:33.6
in the Luzon and Visayas grids last week.
43:36.5
The ERC has monitored an almost 50% increase
43:39.6
in electricity prices at the spot market last week
43:42.8
due to the tightness in power supply.
43:46.0
Alvin Olchico, ABS-CBN News.
43:48.1
A Philippine senator meanwhile urges a cautious approach
43:53.6
in tapping nuclear power as an energy source in the country.
43:57.4
Senator Sherwin Gatchalian says
43:59.1
while nuclear power would be more efficient,
44:01.7
there remain some concerns over its use
44:03.7
and requires more study.
44:05.6
The vice chair of the Senate Committee on Energy
44:07.6
also wants the Bataan nuclear power plant
44:10.5
to remain unused if the country embraces nuclear energy.
44:14.3
The facility in the northern Philippines
44:16.1
was mothballed in the 1980s,
44:18.1
amid safety concerns and corruption allegations
44:21.2
that hounded its construction.
44:48.1
A slight rollback in oil prices expected next week.
44:55.4
The Philippine Energy Department says
44:56.9
kerosene may see the biggest drop
44:58.7
of as much as 90 centavos per liter,
45:01.1
while gasoline and diesel may fall by 40 centavos.
45:04.9
The DOE attributes the price adjustments
45:06.9
to what it calls easing geopolitical tensions
45:09.3
after Iran said it has no retaliation plan against Israel.
45:15.3
The Philippine Economic Zone Authority
45:17.6
is advocating for sustainability and eco-friendliness
45:20.6
in the development of economic zones.
45:23.3
It wrapped up this week a two-day forum
45:25.9
dedicated to educating stakeholders
45:28.1
about emerging technologies,
45:30.3
promoting clean and green manufacturing practices.
45:33.7
The event highlighted initiatives
45:35.2
such as reducing carbon footprints
45:37.3
and emphasizing ESG,
45:39.5
or environmental, social, and government's principles.
45:43.5
The forum featured 13 speakers from various fields,
45:46.8
including senators,
45:47.6
and trade chief Alfredo Pascual.
45:52.0
PESA manages more than 420 economic zones nationwide,
45:57.1
accommodating over 4,000 enterprises
45:59.3
across diverse sectors.
46:06.2
The country's first equity crowdfunding platform
46:09.8
seeking to provide a holistic solution
46:12.0
for entrepreneurs to raise funds
46:14.3
and receive expert mentorship.
46:17.6
More startups will benefit from crowdfunding
46:20.6
if there are better regulations
46:22.5
and knowledge about the sector.
46:25.2
Crowdfunding is a method
46:26.6
by which businesses raise money
46:28.4
by seeking capital
46:29.7
from a larger number of investors.
46:33.4
There is just a more push for regulations.
46:37.7
At the end of the day,
46:38.5
we want investors to trust
46:40.5
the institutions that they deal with.
46:42.6
You can say that you're doing XYZ in a business,
46:45.4
but you can't expect everyone
46:47.0
to take your word for it.
46:48.0
So they look to regulators
46:49.9
to ensure that there is something like a watchdog,
46:53.9
that there is someone watching out for them too.
46:56.9
So investor protections
46:57.9
that the government puts in place.
47:00.2
You have to educate both the fundraisers and investors
47:03.7
because in order to create this ecosystem
47:06.9
that sort of supports each other,
47:09.6
you need to empower both
47:11.6
and you have to teach them
47:12.8
how to become better business owners
47:15.2
at the same time.
47:16.2
Better business owners,
47:18.5
have good corporate governance
47:19.7
and then you can attract the good investors
47:22.1
to invest in your company.
47:25.4
we want to teach them
47:26.2
to know their rights and responsibilities.
47:28.6
You don't just invest in the next person
47:30.4
that comes to you.
47:34.4
We're taking a quick break.
47:36.2
the Biden administration
47:37.1
keeping all options on the table
47:38.8
to respond to China's industrial overcapacity.
47:42.1
because Market Edge
47:43.1
will be right back.
47:54.7
Time to zip through
47:55.8
the top headlines
47:56.6
for major business papers
47:58.0
from Business World Finance Chief
48:00.8
the Philippine Peso's current slump
48:02.9
is unlikely to prompt the central bank
48:04.9
to raise its key interest rates.
48:07.1
The Peso fell to a fresh 17-month low
48:09.6
against the U.S. dollar Thursday.
48:12.3
From the Business Mirror,
48:14.2
U.S.-based think tank
48:15.5
Global Source Partners,
48:17.0
says the Philippine economic growth
48:19.2
will likely disappoint
48:20.4
given the El Nino phenomenon
48:22.4
and rising inflation.
48:25.0
And from the Philippine Daily Inquirer,
48:27.2
a group of meat importers
48:29.7
over limited supplies
48:31.2
coming from abroad
48:32.2
amid increasing production costs
48:34.2
and the ever-present problem
48:36.2
of the African swine fever.
48:39.9
Now here's a quick look
48:41.4
at the flash business headlines
48:43.0
from overseas now.
48:44.9
The Federal Communications Commission
48:47.0
the U.S. units of China Telecom
48:52.0
to discontinue fixed
48:53.6
or mobile broadband internet operations
48:57.5
The FCC cites national security concerns
48:59.7
in revoking or denying
49:01.3
the Chinese company's rights
49:02.7
to provide U.S. telecom services.
49:05.7
Noting Chinese telecom firms
49:07.1
are subject to exploitation,
49:09.4
influence and control
49:10.5
by the Chinese government.
49:13.2
U.S. Treasury Secretary Janet Yellen
49:15.1
asserts the Biden administration
49:16.1
is not a threat to the U.S. economy.
49:16.1
The U.S. Treasury Secretary Janet Yellen
49:16.3
asserts the Biden administration
49:16.6
is not ruling out any options
49:18.7
to respond to China's
49:20.0
excess industrial capacity.
49:22.6
Yellen and other U.S. officials
49:24.0
are increasingly concerned
49:25.4
about China's overproduction
49:27.5
of electric vehicles,
49:29.3
semiconductors and other goods
49:30.8
flooding global markets
49:32.3
amid a demand slump
49:33.7
in China's domestic market.
49:36.2
In an interview with Reuters,
49:37.8
Yellen says Chinese officials
49:39.2
have acknowledged the problem
49:40.6
with industrial overcapacity
49:42.1
but admits resolving the issue
49:46.6
The profit of tech-heavy Nasdaq
49:50.2
saw its biggest contraction
49:52.8
as firms continue to wait
49:54.2
for economic stability
49:55.4
before going public.
49:57.0
Its earnings stumbled
49:58.2
by over 8% to 63 cents a share
50:01.5
below the expected 65 cents.
50:05.0
Now, 27 companies went public
50:07.8
in the first quarter of the year,
50:09.7
lower than the 40 recorded
50:11.5
in the same period a year ago.
50:14.9
Google parent Alphabet
50:16.6
announcing its first-ever dividend
50:19.4
a $70 billion stock buyback.
50:22.6
This sent its stock surging
50:24.5
nearly 16% after the bill.
50:27.0
The dividend will be 20 cents per share
50:29.2
and comes as the Google parent
50:32.2
while spending billions of dollars
50:35.1
to catch up with rivals
50:36.7
on generative artificial intelligence.
50:41.4
And before we go,
50:42.9
spectators at the Paris Olympics
50:44.5
with Deep Pockets
50:45.8
will be able to take a look at the news.
50:46.0
We'll be able to take a look at the news.
50:46.2
We'll be able to take a look at the news.
50:46.2
We'll be able to take advantage
50:47.0
of a variety of luxury services
50:49.6
when the games kick off in July.
50:52.0
VIP guests can sip champagne
50:55.7
at almost every event
50:56.9
and are also guaranteed reservations
50:58.9
at some of Paris' finest restaurants.
51:02.2
Offered by American company
51:04.8
a six-night package
51:06.0
that includes a city tour
51:08.5
will cost more than $47,000.
51:11.8
But it also offers
51:13.2
less expensive packages
51:14.4
with the entry-level
51:15.8
starting at $10,000.
51:15.8
The hospitality upgrades
51:20.6
International Olympic Committee's agenda
51:22.4
to introduce reforms
51:24.5
aimed at simplifying operations
51:26.5
and driving new revenue streams.
51:31.8
And that's it for the show.
51:33.4
I'm Stanley Palisada.
51:34.5
Thank you so much for watching.
51:35.7
Stay safe and stay with ANC.
51:42.7
We have allowed more transportation
51:46.4
that's going to prove
51:47.8
to be better for demand.
