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PHL growth forecast cut after weak Q1

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THE ASEAN+3 Macroeconomic Research Office (AMRO) has slashed its Philippine growth forecast for this year following the “weak” economic expansion in the first quarter, which was dragged by the delay in the passage of the 2019 national budget.
In a press conference yesterday, AMRO Chief Economist Hoe Ee Khor said the group sees the country’s gross domestic product (GDP) growing by 6.3% this year, a tad lower than the 6.4% forecast published in AMRO’s ASEAN+3 Regional Economic Outlook (AREO) 2019 published in May.
“It was our best estimate at that time, but we didn’t expect the first quarter to be so weak,” Mr. Khor said yesterday.
He said the economy’s expansion slowed down “unexpectedly” in the first three months of the year “much more on budget impact.”
“We expect growth to bounce back up because (the budget impasse) is expected to be a one-off event,” Mr. Khor added.
The government operated on a reenacted 2018 budget from the start of the year until April 15, when President Rodrigo R. Duterte signed the latest general appropriations bill into law, but vetoed P95.3 billion in appropriations that he said were not in accordance with the administration’s priorities, slashing this year’s national budget to about P3.662 trillion.
The delay prompted the inter-agency Development Budget Coordination Committee in mid-March to cut its 2019 GDP growth assumption to 6.7% from 7-8% originally.
This was also largely blamed by economic managers for the slowdown in the country’s GDP growth in the first quarter to 5.6% — its worst performance in four years.
The first-quarter outcome was lower than the 6.3% print in the preceding quarter and 6.5% in the first quarter of 2018.
In its latest economic outlook, AMRO said Philippine economic growth will likely “recover on the back of buoyant domestic demand,” although “with the balance of risks to growth tilted to the downside.”
“Monetary conditions have tightened, but credit continues to expand,” the group noted in its latest report, adding that “[c]redit growth is anticipated to remain elevated, but as real borrowing cost starts to rise, it is likely to moderate.”
ASEAN+3 OUTLOOK SLASHED
At the same time, Mr. Khor said AMRO also slashed its GDP growth forecast for the ASEAN+3 region to 4.9% from the 5.1% projected in its 2019 AREO.
“Now, we expect growth to be a shade lower. Our latest estimate now is 4.9% this year and for next year. In the worst case scenario, when there’s no (trade) agreement (between the US and China), we expect it to be shaded out by another 0.2 percentage point.”
US President Donald J. Trump said on Twitter Tuesday night that he will meet with his Chinese counterpart Xi Jinping next week during the G20 Summit in Japan, with their respective teams beginning talks prior to the meeting.
Beijing and Washington’s trade relations soured once again in May after both countries imposed tariffs on each other’s imports.
Despite this, AMRO said the region remains resilient, anchored by sustained domestic demand and recent declines in interest rates.
Mr. Khor said the impact of the US-China trade war on the Philippines is expected to be low and is estimated to shave just 0.06% off the country’s economic growth this year.
“As I have mentioned, Philippines is not part of the global value chain. It’s much more of a service economy,” he added.
AMRO — initially formed as a company in April 2011 and transformed into an international organization in February 2016 — conducts macroeconomic surveillance and supports implementation of the Chiang Mai Initiative Multilateralization currency swap arrangement which the 10 members of the Association of Southeast Asian Nations, as well as China, Japan and South Korea adopted to help avert any financial crunch. — Karl Angelo N. Vidal

May marks 7th straight month of BoP surplus

By | Property News

THE country’s balance of payments (BoP) registered a surplus for the seventh consecutive month due to inflows from the central bank’s foreign exchange operations and income from its investments abroad that were partially offset by state foreign debt payments, the Bangko Sentral ng Pilipinas (BSP) reported on Wednesday.
Latest central bank data show that BoP — a summary of the Philippines’ economic transactions with the rest of the world for a given period — swung to a $928-million surplus in May from a $583-million deficit a year ago.
This brought the five-month tally to a $5.193-billion surfeit, also a reversal of the $2.08-billion gap logged in the same period last year.
“The surplus may be attributed partly to remittance inflows from overseas Filipinos during the first four months of the year, and net inflows of foreign portfolio, foreign direct and other investments in the first quarter of 2019,” the BSP said in a statement.
“The BoP position reflects the final gross international reserves (GIR) level of $85.36 billion as of end-May 2019,” the central bank said. “At this level, the GIR represents a more than ample liquidity buffer and is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income.”
The GIR level is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.6 times based on residual maturity.
“The surplus is good and may probably be due to inflows. However, this may also be temporary and that the BoP may post a deficit at the end of 2019,” Ruben Carlo O. Asuncion, chief economist of UnionBank of the Philippines, Inc. said on Wednesday.
“I am expecting merchandise trade (more imports than exports) trend to come back as the second half of 2019 rolls in. Remember, there was a delayed national budget, Impact will be felt only by then. There has been a spending lag this first half,” Mr. Asuncion added.
On the other hand, Michael L. Ricafort, head of Rizal Commercial Banking Corp.’s economics research division, said the balance of payments surplus could be sustained in the coming months on the back of growth in remittances from overseas Filipino workers, business process outsourcing revenues, tourism receipts, and direct investment and portfolio inflows, following S&P Global Ratings’ upgrade of the country’s sovereign score to BBB+ from BBB in April.
“That could encourage more foreign investments in the country as some foreign investors search for higher returns in emerging market countries with improved economic and credit fundamentals such as the Philippines,” Mr. Ricafort said.
Proceeds from the government’s planned $1-billion issuance of yen-denominated or samurai bonds next quarter could also boost the country’s payments position, he added.
The central bank expects the country to post a BoP surplus of $3.7 billion this year versus its previous projection of a $3.5-billion gap.
The Philippines ended 2018 with a $2.306-billion BoP deficit. — Reicelene Joy N. Ignacio

REIT rules to be released by July

By | Property News

By Arra B. FranciaSenior Reporter
THE Securities and Exchange Commission (SEC) said it can release guidelines on the issuance of real estate investment trusts (REITs) as early as July, without changing the minimum public ownership (MPO) requirement.
The commission is set to conduct another round of public discussions this month to finalize the qualification requirements of a REIT fund manager, which is one of three provisions that has dissuaded property players from issuing such a product.
“Kung wala masyadong tanong on the rules… by July finalize na (If there are not many questions on the rules… by July, we can finalize it),” SEC Commissioner Ephyro Luis Amatong told BusinessWorld on the sidelines of the 3rd Asia Pacific REIT Investment Summit in Parañaque on Tuesday.
Mr. Amatong said there is a pending issue regarding how much interest a fund manager can have in a REIT. The fund manager is tasked to implement the investment strategies of the REIT, oversee and coordinate its property acquisition, leasing, and operational and financial reporting, among others.
Rule 6 of the Implementing Rules and Regulations of Republic Act No. 9856 or the REIT law states that a fund manager must be independent of the REIT, its promoters, or sponsors.
“Nakalagay sa batas ay independent, but I think what it really meant was external, na yung fund manager ay hiwalay from the REIT…so pwede naman palang may ownership stake yung REIT or yung sponsor in the property (Under the law, it says the fund manager should be independent, but I think it meant that it should be separate from the REIT… So it can have an ownership stake, the REIT or the sponsor in the property),” Mr. Amatong explained.
However, the rules that are being readied by July will still include the 40-67% MPO for REIT vehicles, against the 33% requirement that property players have said is the ideal public ownership level.
Mr. Amatong said the SEC decided to iron out the rule on REIT fund managers first since it was a concern for all industry players, whereas some companies are already comfortable with the existing MPO requirement.
“Ang lumalabas, may mga willing to comply with the MPO. Pero the issue of the property manager, issue siya for all. So inuna namin kasi applicable to all, lahat gusto may stake sila in the property manager or the fund manager (It turns out, there are some who are willing to comply with the MPO. But the issue on the property manager, it’s an issue for all. So we prioritized that, everyone wants to have a stake in the property manager or fund manager),” he said.
With the amendment for the rule on REIT fund managers, Mr. Amatong is optimistic that the country will see the first REIT issuance this year.
Ayala Land, Inc. (ALI) said last April that it is preparing a REIT offering where it could raise about P25-26 billion within the year. This comes a decade after the REIT law was enacted in 2009.
Mr. Amatong also said that “about one or two” companies have already expressed interest that in conducting a REIT offering with the current MPO requirement.
Aside from issues on the REIT fund manager and high MPO requirement, property players were previously concerned with the 12% tax on the transfer of real properties once they place their assets in a REIT. This rule however has been removed following the passage of the Tax Reform for Acceleration and Inclusion Act last year.

Trade tensions kick Asian business confidence to 10-year low — survey

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A worker walks in a shipping container area at the Port of Shanghai. — REUTERSMUMBAI — Confidence among Asian companies in the June quarter fell to its lowest since the 2008-09 financial crisis, as a US-China trade war disrupts global supply chains and shows little sign of easing soon, a Thomson Reuters/INSEAD survey found.
The Thomson Reuters/INSEAD Asian Business Sentiment Index tracking companies’ six-month outlook worsened in the three months ended June to 53, versus 63 in the previous two quarters.
A reading above 50 means optimistic respondents outnumbered pessimists, but worries about the threat of a prolonged trade war drove the index to its lowest since the June quarter of 2009, when the first edition of the survey was released.
“There was a big dip (in the index) three quarters ago, and we felt it was the uncertainty about the trade war and people were worried about the future,” said Antonio Fatas, a Singapore-based economics professor at global business school INSEAD.
“We get a sense after four quarters of low numbers that now, it’s not just uncertainty. This is a true slowdown in growth. We see activity declining — it’s not just the expectation that activity will decline,” Mr. Fatas added.
For a fourth straight quarter, survey participants cited the global trade war as the chief risk to business, followed by Brexit and a slowdown in the Chinese economy.
The survey interviewed 95 companies in 11 Asia-Pacific countries that together contribute about a third of global gross domestic product and are home to 45% of the world’s population.
It was conducted from May 31 to June 14.
RISING CAUTION
The index staying above the neutral point of 50 suggests companies in the region are not expecting an imminent global recession, but the decade low indicates caution was rising as trade tensions mount.
The United States and China have been embroiled in a trade standoff since last year, marked by tit-for-tat import tariffs, as Washington looks to force Beijing to make changes to its business policies. Talks between the two to reach a detente ended last month without a deal.
Washington’s move to put Huawei, the world’s No.2 maker of smartphones, on an export blacklist that bars US companies from doing business with the Chinese firm without special approval further ratcheted up tensions.
Still, US President Donald Trump has said that a deal would “eventually” be struck.
BNP Paribas, however, does not expect a resolution to the trade war this year, said Hong Kong-based Manishi Raychaudhuri, Asia-Pacific equity strategist at the banking group.
The trade tensions are hurting supply lines, especially that for higher-end smartphones, with many manufacturers looking to move production out of China and into countries such as Vietnam, Taiwan and Bangladesh, Mr. Raychaudhuri noted.
These changes, however, “can’t be made overnight”, he added.
US-based Broadcom Inc, which makes radio-frequency chips used in Apple’s iPhones and iPads, last week forecast a $2 billion hit to annual sales from the trade tensions and the US ban on Huawei.
Huawei has acknowledged a harder-than-expected hit from the ban and slashed its revenue forecast for the year.
China’s economy is also feeling the heat, with industrial output growth sliding to a 17-year low in May.
Respondents to the survey included Japan’s Nikon Corp , South Korea’s Samsung Electronics, India’s Tata Consultancy Services and Reliance Industries Ltd, as well as Thailand’s PTT PCL.
Companies surveyed can change from quarter to quarter. — Reuters

Clark sports complex to be completed by Aug.

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The in-construction Athletics Stadium at the New Clark Sports Complex in Tarlac will be one of the venues to be used in the 2019 Southeast Asian Games later this year, which the country will continue to host, local organizers said. — 2019 SEA GAMES FACEBOOK ACCOUNT2019 SEA GAMES FACEBOOK ACCOUNTCLARK, Pampanga — AlloyMTD Philippines, the contractor of the 9,450-hectare New Clark City, is expected to complete the 40-hectare sports complex by Aug. 31, ahead of the government’s target of Oct. 15.
“We are on track of meeting the actual deadline set by the government of finishing it by Oct. 15. And we are actually eyeing to meet our self-imposed deadline of Aug. 31, or within the next 73 days,” AlloyMTD President Patrick Nicholas P. David told reporters on Wednesday.
“We just want to be ahead of the curve,” he said, noting that work on the project began on March 15, 2018.
To recall, Malaysian firm MTD Capital Berhad won the bid to develop a 220-hectare National Government Administrative Center (NGAC) in New Clark City. AlloyMTD is the Philippine unit of MTD Capital.
Phase 1 of the project involves the construction of the sports complex — the venue of the Southeast Asian Games, which will run from Nov. 30 until Dec. 11, 2019. It will have an open field stadium with 20,000 seats, an aquatic center with 2,000 seats, and an athletes’ village.
According to Mr. David, they have 8,000 workers assigned to the project. Construction is on-going seven days a week.
Meanwhile, Mr. David noted some countries have approached the company to inquire if their athletes can train at the sports complex, in preparation for the upcoming 2020 Olympic Games in Tokyo, Japan.
“We were also approached by some countries to train their athletes here before heading to Tokyo for the Olympics,” he said, without identifying the countries.
Parts of the complex will be opened to the public, while majority of the facilities will be available by reservations, Mr. David said.
There are five phases of development for the NGAC project, which was patterned after Putrajaya in Malaysia, and Sejong City in South Korea. The government is planning to transfer some department offices and agencies to Clark, in an effort to decongest Metro Manila.
“The government offices in Manila are scattered all over the city, and for the public, it’s very difficult for them if they have to deal with several ministries, to go from one place to another…You know I think, we own the land, it is available, it will be accessible through rail, train, highways, so I think it really makes sense to consider moving here. In fact Indonesia is going to move their capital outside of Jakarta,” Finance Secretary Carlos G. Dominguez III said.
As an example, Mr. Dominguez said the Department of Agriculture (DA), located in Quezon City, is not very accessible for farmers.
“For instance, why should the DA be in Metro Manila? How many farmers can they actually access there? Not a lot, di ba? That’s just one example,” he said. — Reicelene Joy N. Ignacio

Faster review of some M&As allowed

By | Property News

RAWPIXEL.COMBy Janina C. LimReporter
THE PHILIPPINE Competition Commission (PCC) is allowing faster review of certain merger and acquisition (M&A) deals that are “less likely to substantially prevent, lessen, or restrict competition” in the market.
The antitrust body on Tuesday said it issued the resolution covering the rules for the expedited merger review process, which would cut the Phase 1 assessment process for qualified transactions to 15 working days from the 30 calendar days recommended by the Philippine Competition Act.
The new rules will take effect on July 2.
The PCC identified several transactions that may qualify for the faster review process, such as those that have no overlaps, global transactions, and joint ventures for real estate projects.
For instance, the PCC may hasten the review of global mergers wherein the acquiring or acquired companies are foreign entities whose Philippine subsidiaries are merely manufacturers or assemblers of products exported abroad.
Another type of deal that may qualify for the expedited review is a global transaction wherein the acquiring and acquired entities have “negligible or limited presence” in the Philippines.
Joint ventures created for the development of residential and commercial real estate projects may also be eligible for the accelerated review process.
In a separate text message, PCC Chair Arsenio M. Balisacan said the Commission’s three years of experience in reviewing mergers and acquisitions showed that these are the types of transactions less likely to pose competition concerns.
“As such, efficiency dictates we dispose them quickly for the benefit of the parties and also for PCC’s use of resources,” Mr. Balisacan said.
The competition watchdog said the new rules were crafted in response to the passage last year of Republic Act No. 11032 or the Ease of Doing Business (EODB) Act of 2018, which mandates all government agencies to work on a uniform turnaround time of three, seven and 20 days respectively for simple, complex and highly technical transactions.
While the EODB law’s implementing rules and regulations have yet to be issued, the government has been encouraging agencies to implement the rules and the public to report violations of the law.
Agencies with quasi-judicial functions earlier raised concerns on implementing the law which was initially meant merely for the releasing of certain business permits or certificates released over frontline transactions.
“The PCC recognizes that a strong and vibrant economy stimulates firms’ appetite for business consolidation, corporate takeovers, and market expansion. The expedited merger review is a testament of PCC’s commitment to be efficient in the review of transactions deemed less likely to pose competition concerns,” Mr. Balisacan was quoted as saying in the statement.
“Every merger review employs different levels of technical expertise and resources. The expedited review of mergers that are less likely to pose competition issues will lead to more efficient use of Commission resources towards the implementation of a holistic merger control regime,” he added.
The PCC noted that the regular 30-calendar day period for merger review is among the shortest review periods in the world.
The watchdog added it offers free pre-notification consultation to parties, including if transactions may qualify for the expedited process.
To date, the PCC has received 184 notifications. Of this total, 174 were approved and one was blocked, totalling P2.87 trillion in accumulated transaction value.
The top five most active sectors for mergers and acquisitions are manufacturing; finance and insurance; real estate; electricity and gas; and transportation and storage.

ADB to work closely with WB on PHL projects

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Asian Development Bank (ADB) President Takehiko Nakao attends a news conference in Beijing, China May 28. — REUTERSTHE Asian Development Bank (ADB) will work closely with the World Bank (WB) in developing projects for the Philippines and other countries in the Asia and Pacific region, responding to a call made by the Department of Finance (DoF) earlier.
“ADB is responding to the Philippine Finance Secretary Mr. Carlos G. Dominguez III’s call for us to become more efficient, responsive, and better coordinated with the World Bank and other multilateral development banks to meet the changing needs of our client countries,” ADB President Takehiko Nakao said in a statement late Monday.
“In the Philippines, ADB is already collaborating with the World Bank on the implementation of the government’s conditional cash transfer program and the rehabilitation and recovery efforts in Marawi, among others. We can do better, and will take concrete steps to further improve the process,” he added.
The ADB said Messrs. Nakao and Dominguez have had several discussions on the matter in the past years.
Mr. Dominguez said during the ADB’s 50th Annual Meeting in Yokohama in 2017 that there is a need for ADB to “reinvent itself.” The Finance chief also recently wrote the ADB president a letter asking the ADB to expand its collaboration with the World Bank.
Mr. Nakao said on Monday that the ADB and the World Bank are exploring new joint initiatives to reduce transaction costs for developing member-countries.
“The two institutions are exchanging views on how to work more closely in areas such as programming support, procurement, project implementation review, and social and environmental safeguards,” the ADB said.
In April, the World Bank Group said it has started working on a coordinated country program for the Philippines with the ADB to help eliminate project redundancies.
The DoF said World Bank Group President David Malpass had said he spoke with the ADB chief on how to reduce overhead and facilitate coordinated development efforts. Mr. Malpass said the World Bank and the ADB should form a subgroup that will focus on specific areas of assistance such as infrastructure, avoid redundancy and ensure that these projects are implemented efficiently.
Meanwhile, beyond the Philippines, the ADB said it is already cofinancing several projects in the Pacific with the World Bank under a common procurement arrangement, which alleviates the administrative burden in small island countries.
“In addition, ADB and the World Bank, along with other development partners, are working to develop a shared approach to the management of environmental and social risks that will take into consideration factors such as fragility, community engagement, and land ownership,” the multilateral lender said.
The Philippines has been an ADB member since 1966 and has 2.377% subscribed capital stock and 2.200% voting power. The ADB’s annual lending to Manila has increased to $2.5 billion in 2019–2021 from just $1.4 billion in 2018. — RJNI

Local property mart ready for REITs

By | Property News

A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India, May 23. — REUTERSTHE Philippine property market is well-prepared for the introduction of real estate investment trusts (REITs), as demand for more office spaces, residential projects, and commercial centers complements regulatory authorities’ willingness to amend rules that initially hampered its implementation.
At the third Asia Pacific REIT Investment Summit yesterday, industry executives discussed how regulations for REITs have come a long way in the Philippines since they were first crafted by local authorities a decade ago.
“The Philippines is ready, all the fundamental components are there to go: tax authorities and Securities and Exchange Commission (SEC) are working on it,” real estate consultancy firm Santos Knight Frank Chairman and Chief Executive Officer Rick Santos said during the panel discussion.
While the REIT law, or Republic Act No. 9856 was passed in 2009, taxation issues and a higher public float requirement have dissuaded companies from participating in the investment vehicle.
The current rules state that REITs must have a minimum public ownership level of 40-67%, which the SEC has recently resolved to bring down to 33%. On the other hand, the implementation of the Tax Reform for Acceleration and Inclusion Act has removed the supposed 12% tax on transfer of real properties.
The SEC however has yet to issue the final rules reflecting the promised amendments.
“I understand that the SEC and BIR (Bureau of Internal Revenue) are very close to these amendments. Whether or not they (companies) can do it under existing rules, we want to see the regulators make good on their moves,” ING Bank Country Manager Hans B. Sicat said during the panel discussion.
So far, Ayala Land, Inc. is the only firm that has expressed its interest in conducting a REIT offering under existing rules. The listed property developer wants to raise about P25-26 billion from the offering anchored on its prime office assets in Makati.
“We’ve been waiting for over 10 years, so retail (investors) and certainly institutional investors will look forward to it,” Mr. Sicat said.
Mr. Santos added that the strong demand for office spaces driven by the business process outsourcing sector and Philippine offshore gaming operators is bound to continue in the following years.
“I think there is a lot of momentum and I hope to see the first successful REIT off the ground soon. Office will probable lead the way, then retail will follow. We’re optimistic, we’re hopeful, and we’ve been patient,” Mr. Santos said.
The introduction of the final REIT rules is seen to boost investments in the local property market, which Mr. Sicat said was affected by the slow regulatory environment.
Atchison Consultants Managing Director Ken Atchison said emerging markets in the region, including Vietnam, Thailand, and the Philippines are already drawing investor interest.
“In property investment per se, nominal GDP growth drives property returns. Where is the growth of nominal GDP? It’s in the Philippines, Thailand, Vietnam. That’s where it’s taking place, and that’s where the property returns will come from,” Mr. Atchison said during the same panel discussion.
Mr. Atchison said that investors should watch out for emerging sectors such as student housing, which he noted would be needed in fast-growing cities.
For his part, UBS Investment Bank Global Head of Real Estate Fergus Horrobin cited logistics as one of the trends that are becoming popular in the Asia Pacific region because of the rise of the e-commerce industry.
“(Logistics) has become very intensive and attractive to investors,” Mr. Horrobin said. — Arra B. Francia

Asia equities now on a wobbling foundation

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A man looks at a screen displaying news of markets update inside the Bombay Stock Exchange (BSE) building in Mumbai, India, May 23. — REUTERSTHE PILLARS of Asia’s stock markets are shaking: Sentiment is fragile, valuations are not all that cheap and earnings forecasts continue to decline.
The MSCI Asia Pacific Index’s estimated 12-month forward earnings per share dropped to a 19-month low at the end of May. Analysts covering these companies have cut profit estimates by 5.4% this year. Compare that with their counterparts in the US, who revised their forecasts for S&P 500 Index stocks up by 2.5%, according to Bloomberg data.
The power struggle between the US and China has weighed on trade and companies’ business activities since last year. With US President Donald Trump threatening more tariffs on China and other countries, worries have arisen about corporate profit sustainability and even potential for a recession.
Trade tensions appear to be exacerbating the downward move in Asia’s earnings cycle, according to Societe Generale SA.
Frank Benzimra, head of Asia equity strategy at the firm, said in an interview that the earnings downgrade phase in Asia is still underway, especially in the semiconductor sector, though he expects profit growth for Asia companies to be “marginally positive” in 2019. Semiconductors have been hard-hit amid the trade tensions due to turmoil in the region’s supply chain.
UBS Global Wealth Management cut its Asian 2019 earnings growth prediction to 5% from a previous 6.4%. Hartmut Issel, the firm’s head of APAC equities, wrote in an e-mail that if the negotiations between China and the US break down completely, “we forecast roughly flat or even negative earnings growth in 2019.”
Asia equities started the year strongly before the trade-inspired plunge in May, and the MSCI Asia Pacific Index is still up more than 5%. The gauge gained a second week last week as the Federal Reserve’s dovish comments pushed up expectations for an interest rate cut in the US.
Strategists at Nomura say Asian countries’ monetary easing and policy support may prevent profit growth from falling off a cliff. An earnings recession could be avoided if central banks and government could have ample support, according to a May 24 note written by Chetan Seth.
And of course, the ultimate obstacle is the trade spats. If the G-20 meeting could serve as an opportunity for leaders of both side to step back and return to the negotiation table with mutual respect, sentiment will improve, CMC Markets Singapore’s strategist Margaret Yang said in an e-mail.
But for now, earnings in Asia look set to struggle.
“It’s a downtrend,” SocGen’s Mr. Benzimra said. “Maybe a little bit of stabilization, but nothing really exciting” like re-acceleration or signals to re-enter emerging markets. — Bloomberg

Aboitiz plans to issue more bonds in next 2 years

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By Arra B. Francia, Senior Reporter
ABOITIZ Equity Ventures, Inc. (AEV) plans to issue more bonds once it locks in acquisition prospects in the next two years, following the completion of its P5-billion fixed rate bond offering yesterday.
AEV Chief Finance Officer Manuel R. Lozano said they may conduct another bond offering “sooner than later,” depending on the growth opportunities they see for the conglomerate’s various subsidiaries.
“We don’t have a specific plan yet. We believe there are a lot of growth opportunities that will require us to use the full shelf of P30 billion,” Mr. Lozano told reporters during the listing of AEV’s P5-billion bonds at the Philippine Dealing and Exchange Corp. on Tuesday.
Mr. Lozano said they see potential for food and agribusiness unit, Pilmico Foods Corp. after it recently acquired Singapore-based agribusiness firm Gold Coin Management Holdings Ltd. He also cited the expansion of the infrastructure and property development businesses.
“We have a lot of infra projects and even Aboitiz Land is also growing. We will be discussing soon when the next tranche will be. We have P25 billion to go, but we still have a couple of years,” Mr. Lozano said.
The top AEV executive added that they intend to fully exhaust the shelf registration.
“What’s nice about the bond is it gives us a very attractive option and then choose which one fits the opportunity as best as possible, that’s why the shelf gives us a lot of flexibility. When we feel the markets are there, then it gives us a quick opportunity to raise more,” Mr. Lozano explained.
The listed company on Tuesday raised P5 billion from the issuance of Series A bonds with an annual interest rate of 6.0157% due on 2024, as well as Series B bonds due 2029 with a coupon rate of 6.3210% per annum.
The capital raised will be used to partially refinance wholly owned subsidiary AEV International Pte. Ltd.’s medium-term loans.
AEV engaged BDO Capital & Investment Corp. and First Metro Investments Corp. to arrange the offering.
The bonds form part of the company’s P30-billion debt securities program registered with the Securities and Exchange Commission (SEC).
AEV saw its net income attributable to the parent drop by 27% in the first quarter of 2019 to P3.52 billion, weighed down by the weak operations of its power unit. This came amid a 27% uptick in gross revenues to P47.4 billion.
The company earlier said it will spend P81 billion in capital expenditures this year, bulk of which would fund the expansion of its power generation unit.
Shares in AEV jumped 1.76% or 95 centavos to close at P55 each at the stock exchange on Tuesday.