Alerts

   George Ching

Government to conduct second round of mining audit. The Department of Finance said the inter-agency Mining Industry Coordinating Council (MICC) will start this month the second round of the mining industry audit. The second round audit, which will cover 17 mining sites across the country, will start at the end of July and be completed by January of next year. The first round of audit, which involved 26 mining sites in the country, was completed last year.

   Andy dela Cruz

PCOR is putting its expansion plans in the Philippines on hold while they wait for crude prices to stabilize. The company is allotting US$600 Million to upgrade and expand is refinery which will add 90,000 bbl/day bring it up to 270,000 bbl/day.

   Frances Rolfa Nicolas

The large decline shown in CEB today may likely have been caused by a trader in error. Given that the PSE removes dynamic thresholds during the closing periods, it does open the stock to be vulnerable to these types of mistakes. Dynamic thresholds (which contain market swings to 10% of market prices) are only in effect during the Market Open (9:30AM) until the Pre-close periods (3:15-3:20PM) and do not function at the price setting of 3:20PM onwards. Without such thresholds, the security is open to move within the extreme limits of the day’s price Ceiling and Floor (which is 50% over or below the previous day’s close.) Prices should try to normalize itself into the next trading day or so.

   Adrian Alexander Yu

The Mislatel consortium (comprised of Udenna Corp, Chelsea Logistics and Infrastructure Holdings Corp.) and China Telecommunications Corp has been awarded as the new major telco player in the country with the receipt of radio frequencies and its permit to operate from the government. The Mislatel has submitted its Php25 Billion performance bond, required by the DICT and National Telecommunications Communication (NTC) before the certificate of public convenience and necessity (CPCN) could be awarded. Mislatel rollout will begin immediately after receiving the CPCN with commercial rollout scheduled for the second quarter of 2020.

   Andy dela Cruz

The Department of Tourism (DoT) said that the visitor arrivals in May grew 15.62% y/y to 621,719. This brought the visitor arrivals in first five months of the year to 3.5Mil, up 9.76% y/y. The five-month total suggests a monthly average of about 700,000 arrivals, on track to exceed 2018 arrivals of 7.1 Mil and the 2019 target of 8.2 Mil. South Korea remained the leading source of visitors at 22.6% of the total, followed by China at 21.03%, and US at 13%.

   Andy dela Cruz

Infrastructure and other capital expenditures rose by 5.9% y/y to Php61.5Bil in May 2019. This is a recovery from the 56.9% contraction recorded in April. The DBM attributes the increase to disbursements for foreign-assisted projects of the Department of Transportation and the Department of Public Works and Highways. Capital outlay was also used for projects under the Armed Forced of the Philippines Modernization Program. Meanwhile, infrastructure spending for the first five months still posted a decline of 4.6% y/y to Php267.9Bil due to the impact of the passage of the 2019 national budget.

   Adrian Alexander Yu

EEI announced that it has signed a strategic alliance agreement with Hanjin Heavy Industries & Construction (HHIC) for potential construction projects in the country. These two companies have already teamed for local projects in the past such as the Berth 6 Manila International Container Project. EEI also noted HHIC has contributed to several projects in the Philippines after completing more than 100 construction projects in the country since 1973.

   Andy dela Cruz

Preliminary data from the BSP shows that domestic liquidity or M3 grew by 6.4% to Php11.7 Tril in May 2019. This is slightly slower than the 7.0% growth recorded in April 2019. Still, M3 increased by 1.6% on a month-on-month seasonally-adjusted basis. Demand for credit eased slightly but remained the driver of money supply growth. Domestic claims grew by 6.8% in May from 8.9% in April due to the sustained growth in credit to the private sector. Loans for production activities were driven by lending to key sectors such as real estate, and financial and insurance, among others. Meanwhile, loans for household consumption moderated due to decline in salarybased general-purpose consumption loans. Moreover, net claims on the central government reversed to a decline by 6.4% in May 2019 after the 0.6% growth in April. This is partly due to the increase in deposits made by the National Government with the BSP

   Andy dela Cruz

Data from the PSA showed that factory output, as measured by the Volume of Production Index, decreased 4.0% y/y in May. This is a reversal compared to the 13.0% growth seen in the same month in 2018. The drop was due to the contraction made by furniture and fixtures (down 35.0%), food manufacturing (down 14.0%), miscellaneous manufactures (down 8.5%), among others. On the other hand, sectors that grew include fabricated metal products (up 45.6%), petroleum products (up 29.9%), wood and wood products (up 26.3%), among others. Likewise, total manufacturing in terms of the Value of Production Index declined 2.1% y/y in May, a reversal compared to the 14.8% increase last year. Average capacity utilization rate was 84.4%, with 11 out of 20 major industries operating at 80% and above capacity utilization rates.

   Andy dela Cruz

The Philippines' gross international reserves as of end-June rose slightly to US$85.38Bil from US$85.36Bil in the previous month. The higher reserves were primarily driven by inflows arising from the revaluation gains from the BSP’s gold holdings on the back of higher gold prices in the international market, government's net foreign currency deposits, BSP’s foreign exchange operations, and BSP’s income from its investments abroad. However, these are partially offset by the payments made by the government for servicing its foreign exchange obligations. Meanwhile, the end-June GIR level is equivalent to 7.4 months’ worth of imports of goods and payments of services and primary income. It is also equivalent to 5.1 times the country’s short-term external debt based on original maturity and 3.7 times based on residual maturity.