BAIPHIL Market Watch – 30 September 2015

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BAIPHIL

MARKET WATCH

30 Sep

2015 Legend Improvement / Up Deterioration / Down No Movement

FINANCIAL MARKETS AT A GLANCE

PHILIPPINES

Financial Rates Current Previous

USD/PHP 46.9300 46.7850

30-D PDST-R1 1.6833% 1.5517%

91-D PDST-R1 1.6850% 1.6768%

180-D PDST-R1 1.8050% 1.8050%

1-Y PDST-R1 2.4300% 1.9130%

10-Y PDST-R1 3.7649% 3.7397%

30-D PDST-R2 1.6833% 1.5517%

91-D PDST-R2 1.6850% 1.6817%

180-D PDST-R2 1.8050% 1.8050%

1-Y PDST-R2 2.4300% 1.8994%

10-Y PDST-R2 3.7658% 3.7427%

Stock Index Current Previous

PSEi 6,859.29 6,815.59

Market Cap (Php Trillion) 10.833 10.798

Total Volume (Php Billion) 1.558 0.959

PSEi Performers Closing % Change

Top Gainers

Keppel Philippines Prop 4.79 33.06%

Forum Pacific Inc 0.250 15.21%

Anchor Land Holdings, Inc 8.30 9.64%

Top Losers

United Paragon Mining 0.0070 -16.67%

Transpacific Broadband 1.52 -11.63%

Zeus Holdings, Inc 0.230 -11.54%

ASIA-PACIFIC

Stock Index Current Previous

NIKKEI 225 16,930.84 17,645.11

HANG SENG 20,556.60 21,186.32

SHANGHAI 3,036.77 3,076.62

STRAITS 2,785.73 2,791.92

SET 1,357.55 1,352.13

JAKARTA 4,178.41 4,120.50

,

Currency Exchange Current Previous

USD/JPY 119.8700 120.4000

USD/HKD 7.7501 7.7492

USD/CNY 6.3638 6.3696

USD/SGD 1.4273 1.4270

USD/THB 36.4200 36.2620

USD/IDR 14,690.50 14,707.30

REST OF THE WORLD

Stock Index Current Previous

FTSEuro First 300 1,336.34 1,312.45

FTSE 100 5,909.24 5,958.86

DAX 9,450.40 9,483.55

CAC 40 4,343.73 4,357.05

DOW JONES 16,049.13 16,001.89

S&P 500 1,884.09 1,881.77

NASDAQ 4,517.32 4,543.97

Various Current Previous

EUR/USD 1.1256 1.1242

GBP/USD 1.5155 1.5161

Gold Spot (USD/oz) 1,126.70 1,133.20

Brent Crude(USD/bbl) 47.94 47.69

3-M US Treas Yield 0.00% 0.01%

10-Y US Treas Yield 2.05% 2.09%

30-Y US Treas Yield 2.86% 2.87%

PHILIPPINES

The local equities market slightly rebounded today, gaining 43.70 points or 0.64% to close at 6,859.29, primarily driven by bargain

hunting as the bourse dropped below the 6,800 level during the first few hours of trading. Most sectoral indices were up, wit h the industrial sector posting the most gains at 1.03% and the services sector losing the most at -1.43%. Market breadth was negative with 109 declines vastly outnumbering 72 advances, while 32 issues remained unchanged. Total value turnover reached Php6.99 billion. Foreign investors were net sellers at Php623 million.

On the local fixed income space, prices of government securities continued to drop as renewed fears on China surfaced and as

investors continued to factor in the probability of the US raising rates this year, leading to further shift to safer-haven assets abroad. Yields

went up by an average of 7.1 bps as the short-end and long-end of the curve climbed by 16.6 and 14.6 bps, respectively. On the other hand, the belly bucked the trend, falling 5.1 bps.

The peso depreciated against the greenback as concerns over the Chinese economy following the disappointment in the country’s industrial profits paved the way for the dollar strength. The local currency weakened by 14.5 centavos to close at 46.930.

The Bangko Sentral ng Pilipinas (BSP) will keep key interest rates steady for the rest of the year as inflation remains benign. BSP Governor Amando Tetangco said it remains watchful of developments overseas especially when the US Federal Reserve will actual ly raise

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rates. "We're monitoring developments on the liquidity front, particularly with the expectation of the Fed lift-off, which may cause some

capital outflows. We continue to follow these to make sure that if such outflows do in fact occur, these will not lead to too tight a liquidity inflation or a situation in the economy," Tetangco told ANC's "Market Edge." "Any tightening measure, as a result of that, if that happens, will have to be taken into account when we look at the current policy requirements," he added. Aside from the Fed rate hike, Tetangco said

the BSP is also keeping a close watch on developments in China, commodity prices, as well as other domestic factors on how it will change monetary policy next year.

Consumer prices are likely to stay stagnant in September as the price of rice and power rates tend to wipe out the ill effects of a weak peso on inflation, according to the central bank's latest forecast. Headline inflation could settle within the 0.2 percent to 1.0 percent range, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. said in a text message to reporters on

Tuesday. "Downward adjustments in power rates and the modest decline in rice prices could offset the effect of a weaker peso during the month," Tetangco said. The Department of Finance estimates that consumer prices will rise at a slower pace of 0.5 percent in September, compared with 0.6 percent in August and 4.4 percent a year earlier. "However, the impact o f a stronger and protracted El Niño on food

prices and utility rates could provide a source of upside inflation in the months ahead," Tetangco said. Following the record-low figures in the past months, the BSP is forecasting headline inflation at 1.6 percent for the year, or below the central bank's target band of 2 percent to 4 percent. But the impact of the El Niño phenomenon on food and electricity production along with the depreciation of the pes o amid

market volatility is expected to accelerate inflation to 2.6 percent in 2016. High inflation erodes the purchasing power of consumers and competitiveness of businesses. But falling inflation can also drag the economy because consumers, for instance, tend to hold back from spending on expectations that prices will continue to fall. "The BSP will continue to monitor evolving price trends to ensure price stability

conducive to a balanced and sustainable economic growth," Tetangco said. The Philippine central bank last week approved the use of an interest-rate corridor framework in setting monetary policy, its

governor said on Tuesday. In a speech, Amando Tetangco also told a gathering of fixed-income, currency and trust market associations that the central bank would introduce a term auction facility so as to conduct monetary policy more effectively. The central bank will start open market operations using the corridor approach from the second quarter of 2016, Tetangco added.

The official growth target for this year will be kept unchanged, Budget Secretary Florencio B. Abad said yesterday, noting it may

be too late to adjust macroeconomic projections with only three months left to the end of 2015. His statement came as Standard Chartered, in a research note, said separately yesterday that elections next year could boost the country’s growth prospects in 2016,

although the bank’s projections still fall short of the government’s goal.Mr. Abad told reporters that the government’s 7-8% target for gross domestic product (GDP) growth for 2015 and 2016 will likely be maintained even as the government conceded it will miss its goal this year. “It’s late already, so why do you have to revise it,” he said at the sidelines of a budget hearing in the House of Representa tives on Monday

night.Mr. Abad said revising GDP projections this year would be unnecessary, while adding that the lower end would still be “aspirational.” The Philippine economy grew 5.3% in the first half, slower than the 6.2% pace logged in 2014’s comparable six months. Last quarter saw GDP growth picking up to 5.6% from January-March’s downward-revised 5.0% as government spending slightly picked up from last year’s

flat performance. Socioeconomic Planning Secretary Arsenio M. Balisacan has said that hitting 6-6.5% GDP growth this year would be “realistic” given the first semester result. Asked if the government will adjust next year’s GDP target, Mr. Abad replied: “I cannot say. That’s three months away. Things happen overnight.” In a related note, Standard Chartered said the 2016 presidential elections could help boost

private consumption -- a mainstay of the economy -- and prod faster GDP growth. The bank sees the economy growing at slower 5.7% this year, compared to 2014’s actual 6.1%, and picking up to 6% in 2016.“The robust domestic sector, along with some support from the upcoming election, should paint a resilient growth picture for the Philippines even as the external picture remains weak,” it said.

“Investment growth will likely remain a key swing factor and confidence in the continuing growth story will be important. We do not expect the election to significantly affect the Philippine peso.”Manufacturing, public and private services, transport, communications and storage sectors stand to benefit from election-related spending, Standard Chartered said.“There may be an additional indirect/secondary impact on

the economy as the manufacturing, communication and government services sectors receive inputs from other sectors, due to high backward linkages,” it said.“This may in turn indicate more demand from the primary industries, utilities and trade sectors, due to high forward linkages. We observed some of these trends during the 2004 general election.”

The Philippine Congress could rationalize the tax benefits of corporations and compensate for revenue losses from the proposed

lowering of income taxes, according to GMA News' resident economist. "The income taxes should be studied because nagtaas ang

presyo. From 1997 hanggang ngayon, more than two times na ang taas ng presyo," said Solita Collas-Monsod, professor emeritus at the

University of the Philippines School of Economics. The Senate and House of Representatives last reformed income tax rates in 1997. The Philippines levies one of the highest income tax rates of 30 percent for corporations and 32 percent for workers in Asia. Several lawmakers

have been pushing for measures seeking to slash income tax rates. But President Benigno Aquino III and finance officials have balked at such proposals because of concerns over revenue losses. Lowering the income tax rates would cost the government P97 billion in revenue losses, Monsod estimates. "Mayroon akong suggestion. Lift the income tax holidays, rationalize income tax holidays on corporations here

in the Philippines. Ang makukuha niyo diyan more than P150 billion," she said. The rationalization of income tax benefits given to

corporations should go hand-in-hand with the adjustments in income tax rates.

The government on Tuesday insisted that the Philippine International Air Terminals Company Inc. (Piatco) was entitled to a just compensation of only US$104.52 million, without any interest and considering a penalty on PIATCO, for building the Ninoy Aquino International Airport (NAIA) Terminal 3. In a motion for reconsideration, the government, through the Office of the Solicitor

General, the award of US$242,810,918.54 in interest was unwarranted and unfair. The OSG also wanted deducted from the just compensation US$113,944,044, representing PIATCO’s penalty for non-compliance with contract specifications. Then subtracting the US$59,438,604.00 "proffered value" already paid by the government to PIATCO, the total just compensation that the government is left to

pay the firm is US$104.52 million. The OSG cited a January 2004 SC ruling (Agan vs PIATCO) that held that “the compensation must be just and in accordance with law and equity for the government can not unjustly enrich itself at the expense of PIATCO and its investors.” The OSG said under the Agan ruling, the idea was to return the value of what PIATCO invested not to return it with opportunity costs. “The

incept of mutual restitution is to make PIATCO ‘whole,’ not ‘whole with benefits.’” “The final resolution of this case should be just and equitable, both to PIATCO (the guilty party) and the Republic (the innocent party). The operative concept is return, not return on investment,” said the OSG. The OSG said a return on investment would imply profit, which is contrary to the obligation to undertake mutual

restitution. It added that the SC's award of a 12% interest rate on the amount of restitution until June 30, 2013 and six percent after that until the full amount is paid was already equal to a reasonable return on investment in public utilities. “To impose a 12% in terest would, in

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fact, be equivalent to allowing PIATCO to ‘profit’ by its own misdeeds. Precisely, the point of restitution is simply to return the investment (to

avoid unjust enrichment) but certainly not to allow a rate of return equivalent to the profits of law-abiding investors in public utilities,” read the motion. The OSG insisted that the return should only be the value of what PIATCO invested into the NAIA Terminal 3 projec t, and not the value of that investment plus a return on that investment. The OSG acknowledged that PIATCO should get restitution adjusted to

inflation and current prices, but said interest should not be included in it. “The idea should only be to maintain the real value of PIATCO’s investment, not what that investment may have generated had it been invested for profit,” read the motion. In its MR, the OSG also asked the high court to declare that upon payment of just compensation, full ownership of the NAIA Terminal 3 be given to the government “free

from any liens and encumbrances.” The OSG also instead that the SC erred in denying the government’s claims for exclusion from the base construction cost valuation (CCV). The amount of just compensation as of Dec. 21, 2004, when the complaint was filed was $325,932,221.26. The SC deducted $59,932,221.26 from that amount, accounting for the "proffered value" which the government had

already paid earlier. The SC said the resulting difference of $267,493,617.26 will be charged with a 12 percent straight interest per annum or $32.099 million a year from September 11, 2006 to June 30, 2013, for a total of $218,450,677.9 million interest for the six years and nine months. Then from July 1 until full payment, the government will pay an additional 6 percent interest per annum or $16,049,617.0356. This

would mean that as of September 2015, the total amount that the government has to pay to Piatco stands at $521,341,395.7079, accounting to:

o $267,493,617.26 base amount,

o $218,450,677.9 million interest for September 2006 to June 30, 2013, and o $35,397,100.5479 million interest from July 1, 2013 to September 8, 2014 (day of en banc session).

The NAIA Terminal 3 was built by Piatco, a consortium which in turn subcontracted Japanese firms Takenaka and Asahikosan for the

project in 1997. A separate assessment by the government placed the CCV of the NAIA Terminal 3 as of December 2002 at $300,206,693. When the expropriation was filed, the CCV had gone down to $263,392,081 due to depreciation which the government said should be deducted from the construction cost. The government added that the CCV should be reduced further to $149,448,037 to account for

deductions due to Piatco's non-compliance with contract specifications. The House of Representatives has sent on to plenary debate the P3.002-trillion national budget, initiating two weeks of marathon

sessions to approve next year’s spending plan. Davao City Rep. Isidro T. Ungab (3rd district), chairman of the House committee on appropriations, delivered his sponsorship speech ahead of the interpellations by legislators on the proposed allocations. The budget bill is officially filed as House Bill 6132. The proposed 2016 budget is 15.2% higher than the P2.606-trillion allocation for this year. It is expected to help drive the economy to 7%-8% growth. “As the proposed budget has been shaped by these reforms, we become more confident that

it is not just a budget where we spell out the sources of funds and the plan for the disbursement of funds, but an investment plan for a better Philippines,” Mr. Ungab said. Starting on Tuesday, the House will open plenary sessions at 10 a.m. to tackle the budget, which is hours ahead of their usual 4 p.m. schedule. The chamber plans to approve the budget on second reading by Oct. 9. Mr. Ungab said he is

“confident” of passing the budget by year’s end. The government still hopes to roll out the P10.528-billion Batangas-Manila (BatMan) Natural Gas Pipeline Project this year despite

technical concerns that have delayed it, an Energy official said on Thursday last week. The BatMan -- which is in the government’s pipeline of public-private partnership (PPP) projects -- was approved by National Economic and Development Authority-Investment Coordination Committee (NEDA-ICC) last July. But prior to the elevation to the NEDA Board headed by President Benigno S.C. Aquino III,

the Department of Energy (DoE) raised some concerns that could affect the project. Zenaida Y. Monsada, DoE officer-in-charge, said the concerns -- mostly technical in nature -- have been discussed with Holland-based Rebel Group International BV, the project’s advisor. “There are certain problematic provisions that have been approved, some of which concern right-of-way,” Ms. Monsada told reporters on

the sidelines of a Senate hearing in Pasay City. “The initial proposal might have conflicts with other expansion programs and road-related activities so we need to present alternative routes.” Given these concerns, Ms. Monsada said the project will have to revert to the NEDA-ICC, which will meet next month. “The PNOC will submit recommendations and present the entire pipeline network. So it will not only be

one route,” Ms. Monsada said, referring to the Philippine National Oil Co. that is in charge of the BatMan project. “After that, it will have to pass the NEDA Board. We are still hoping to get that approval so that we can roll out the project before the end of this year,” she added. “Right now, the target is to award the contract within the current administration.” The DoE originally targeted to complete the bidding

process this year so that project implementation could start next year. Ms. Monsada admitted that this original timetable can no longer be met, saying it takes time to complete the design and secure permits before the actual construction starts. But she added that the government is keen on this infrastructure. “This has been delayed for so long. If we want a balanced energy mix, we have to bring in

natural gas to the country and it could not move if we don’t have the necessary infrastructure,” Ms. Monsada explained. Last July, then Energy Secretary Carlos Jericho L. Petilla had said that more evaluations have to be conducted before the project is offered to investors. Mr. Petilla had said there were questions on project design and on prospective buyers of the natural gas that will flow through the pipeline.

The project involves construction of a 121-kilometer pipeline that will transport and supply natural gas to markets along its route from Batangas, Laguna and Cavite, and eventually to Metro Manila. It is part of efforts to develop the country’s natural gas industry and reduce dependence on imported fuels. Ten PPP deals cumulatively worth some P189 billion have been awarded since the infrastructure program

was launched in the third quarter of 2010. The Bases Conversion and Development Authority (BCDA) has awarded the contract to improve 19.4 kilometers of existing roads

that will pave the way for the development of the proposed Clark Green City. 4B Construction Corp. won the project by offering the lowest bid of P45.9 million, the state-owned corporation said Tuesday. The tender was P32.4 million lower than the approved budget of P78.3 million. The company is a Zambales-based contractor primarily engaged in highway and street construction. The contract covers the

improvement and rehabilitation of roads leading to and within Clark Green City, a 9,450-hectare master planned property at the Clark Special Economic Zone in Tarlac. "The improved roads will allow all types of vehicles, including heavy equipment to effortlessly reach the area all year round. The road network will lay the foundation for building the new metropolis," BCDA President and CEO Arnel Paciano

Casanova said. Eight other firms made a bid for the project: D.K. Jocson Construction, Haidee Construction, IPM Construction Corp., Leadway Construction, New Kanlaon Construction, Subiccon Corp., WERR Corp. and Tokwing Construction. In October, BCDA is awarding Filinvest Land Inc. the contract to be the joint venture partner in developing 288 hectares of Clark Green City. The sole bidder for

the development partnership, the company has tendered P160 million for the project. Clark Green City is envisioned to become the first smart, disaster-resilient and green city in the Philippines. It is expected to contribute P1.57 trillion or 4 percent a year to the country's gross domestic product.

Passenger volume at the Ninoy Aquino International Airport (NAIA) is expected to breach 35 million this year, already exceeding

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the overall design capacity of the four passenger terminal buildings (PTBs). According to the Manila International Airport Authority

(MIAA) General Manager Jose Angel Honrado, the passenger volume at NAIA has already reached 34 million last 2014. “Based on the first semester figures, we expect to breach 35 million passengers at the end of this year,” he said. While passenger growth in NAIA is a welcome development, it also shows the worsening congestion at the country’s premier international gateway, which is only des igned to

accommodate 30 million passengers per annum with four passenger terminal buildings. Data from MIAA showed that Terminal 1 is designed to handle 6.5 million passengers yearly; Terminal 2 with 7.5 million; Terminal 3 with 13 million; and Terminal 4 with 3 million. Despite this, Honrado claimed that “there’s no problem with terminal capacity, the key is the optimization of the runway”. The government

has already dropped a proposal to build a third runway as it will only disrupt movements along the primary runway. Instead, the Department of Transportation and Communications (DOTC) tapped the expertise of British firm NATS to study how to increase runway movemen t from the existing 40 air traffic movements per hour to 60. Government is also considering to build a fifth passenger terminal building within NAIA,

adjacent to Merville Subdivision in Parañaque City. “The proposed Terminal 5 is around the same length as Terminal 3 and the same passenger capacity,” said Rodante Joya, Deputy Director General of the Civil Aviation Authority of the Philippines (CAAP). It is not immediately clear how much it would cost to build Terminal 5 but Joya said it could be funded by the private contractor that will win the

P74.56-billion NAIA Development Project. “The cost will depend on the design and construction materials,” Joya clarified. “But cost also has to cover relocation and replication of the Philippine National Police Aviation Security Group, MIASCOR, Crash Fire Rescue Buildings and the informal settlers.” “Construction of Terminal 5 also has to include aircraft parking ramps, associated taxiways and vehicular access

from SLEX, Service Road and C5 Road,” he added. The P74.56-billion NAIA Development Project is yet to get the nod of the National Economic and Development Authority (NEDA) Board chaired by President Benigno S. Aquino III. The Public-Private Partnership (PPP) project aims to improve, upgrade and enhance the operational efficiencies of all existing terminals of the NAIA covering both landside and

airside to meet the International Civil Aviation Organization (ICAO) standards and develop the main gateway airport of the Philippines. It excludes air traffic services, which will remain under the control of CAAP. The NAIA Development Project were among the six projects presented to the last NEDA Board meeting but it was not among those approved for roll out. According to DOTC Secretary Joseph Emilio

Abaya, “the most common sensical thing to do is to push it forward as much: get NEDA Board approval, publish it, prequalify b idders. If we run out of time, we will turn it over to the next administration, which will carry the baton rather than start from scratch.” According to a 2011 JICA study, annual passenger forecasts for the Greater Capital Region, which covers the National Capital Region and Regions 3 and 4A,

will rise from 49.8-million in 2020 to 75-million in 2030, shooting up to 106.7-million in 2040. JICA has predicted that NAIA will reach its maximum capacity between 2018 and 2020.

Asia Pacific Economic Cooperation (APEC) member economies including the Philippines call for a stronger partnership between

public and the private sector to reduce food losses in the supply chain of fishery and livestock in the region. During one of the meetings of the APEC Food Security Week in Iloilo, stakeholders from both the public and the private sectors exchanged ideas and experiences to generate policy recommendations, action plans, and effective methodologies in order to provide solutions to the global

problem on food losses. With the growing concern for food loss, the Philippines along with other economies deem it necessary to address the issues that contribute to food loss and come up with policies and measures that will address wastage in the agriculture s ector, specifically within the livestock and fishing industries. Postharvest Development and Mechanization (PhilMech) Director Rex L. Bingabing,

who is now in Iloilo to attend the APEC meetings, said there is a need to ensure sufficient supply of affordable, safe and good quality food. “With the additional new challenges in food production such as climate change, decreasing production area and depletion of natural resources, food loss and food waste must be given serious attention,” he said. Bingabing added that APEC economies have a big role in

addressing these challenges since majority of the total global food production comes from the APEC region. As concerned insti tutions recognize that the problem on food loss and wastage is not the sole problem of the government alone, the private sector is called upon to take action and contribute to the long-term solution. Dong-Chong Hsiou, Deputy Director General of the Department of International Affairs

of Chinese Taipei’s Council of Agriculture, said the private sector plays a critical role in reducing losses along the supply chain. About 80 delegates from both public and private sectors exchanged information on basic research, current trends, business models, and postharvest technologies in the fishery and livestock industry during the one-day seminar. Foreign delegates came from Chile, People’s Republic of

China, Japan, New Zealand, Papua New Guinea, Peru, the Philippines, Singapore, Chinese Taipei, Thailand, The United States, and Vietnam. Iloilo City is now hosting a series of APEC meetings on food security, which includes High Level Policy Dialogues on Agricultural Biotechnology, as well as Food Security and Blue Economy. The meetings are expected to gather more than 900 delegates.

The Philippine Dealing and Exchange Corp. (PDEx) expects capital raised at the fixed-income secondary market this year to total

just half of what was initially projected, the head of the market operator said. PDEx Chairman and Chief Executive Officer Cesar B.

Crisol told reporters that the year will end with around P100 billion raised at the secondary market for fixed-income securities, compared with the P200 billion projected earlier for 2015. He added that he expected new listings next quarter from banking, services and conglomerates. “We’re looking at at least four more issuances in the fourth quarter,” Mr. Crisol said on the sidelines of the 2nd ASEAN

Fixed Income Summit at the Diamond Hotel in Manila. “We’re currently at P77 billion, last year we hit P191 billion... hopeful ly this year we’ll have P100 billion or exceed that,” he added, saying the four listings will hopefully involve a total of “P25 billion at the minimum.” He blamed market volatility concerns for the lower amount. “We’re not disappointed because as early as the first quarter of this year, global volatility

has put on hold many plans of issuers... both debt and equity, issuers have basically taken a step back to evaluate the situa tion,” Mr. Crisol said. “I think the listings will push through because the Fed has already said they will increase rates [by yearend], so its clear that interest rates will go up, it’s a signal to our issuers to take advantage of lower interest rates.” Moving forward, he said market volatility “is dependent

on what’s happening in the US, Europe and China.” “If things are clearer by the end of the year, then we’ll see a more aggressive market come next year,” Mr. Crisol said. He also told reporters that PDEx eyes trading between taxable and non-taxable markets by the first quarter of 2016. The nonrestricted trading of government securities is meant to “make the market more liquid and larger by integrating

these two sectors.” The government said in September last year that it would let tax-exempt state-owned firms like the Government Service Insurance System, Social Security System, Philippine Health Insurance Corp., Home Development Mutual Fund and Philippine Deposit Insurance Corp. trade their holdings of government securities to enhance market efficiency and liquidity. “No need for new platform for

that... we’re just putting the rules in place; that’s already being done right now for government securities,” Mr. Crisol said. “We’re still in the initial discussions with regulatory bodies, but... it was always part of the plan to integrate both taxable and tax-exempt markets. It just happened that government securities moved ahead than corporates, but we would like to do this no later than first quarter of 2016.” These

tax-exempt entities, he noted, can be expected to contribute about 30% to the total market.

State-run National Home Mortgage Finance Corp (NHMFC) is looking to issue up to P3 billion worth of sukuk or Islamic bonds to

fund its socialized housing project in Mindanao. NHMFC President Felixberto U. Bustos, Jr., said yesterday that the issuance will finance a housing project in Datu Paglas, a town in Maguindanao, and the agency is “expecting to get funding from abroad.” NH MFC,

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Paglas Corp., and AusPhil Securities signed a Memorandum of Understanding (MoU) for the securitization of the Paglas Housing Bond

Program in December last year, for the issuance of P3 billion worth of contract-to-sell mortgage-backed securities. “It’s going to be peso-denominated and worth P3 billion. We already signed the MoU last year... we will use those assets,” he added. The planned offering of asset-backed securities is seen to have longer tenors, probably up to 25 years, Mr. Bustos said, adding that NHMFC already has the

mandate and it may tap Land Bank of the Philippines for the transaction. Under the tripartite deal, NHMFC will act as the financial advisor, program manager, and arranger for the securitization of Paglas’ Housing Bond, which will be used for the acquisition of land and the construction of approximately 2,400 socialized houses with a maximum selling price of not more than P480,000 in Datu Paglas. The town

of Datu Paglas is home of more than 30,000 Muslims and Christians. Paglas seeks to develop approximately 2,400 houses for mor e than 2,000 of its employees. Sukuk or Islamic debt securities are certificates representing a proportional undivided ownership right in tangible assets, a pool of tangible assets, or a business venture in a project or investment activity in accordance with shariah princ iples, according

to the Islamic Financial Services Board. As the payment or earning of interest is not allowed under shariah principles, the fixed interest of a conventional bond is replaced by fixed lease income under the sukuk structure. NHMFC has successfully securitized its residential loans/mortgages under the Securitization Act of 2004 through Bahay Bonds. According to its Web site, Bahay Bonds “are safe, h igh

yielding and affordable investment instruments... guaranteed by the Home Guaranty Corp.” They were first issued in 2009, then again in 2012, in denominations of P5,000. Meanwhile, NHMFC will also initiate a cross-border bond pool of about $5-8 billion with secondary market brokers to be issued to Association of Southeast Asian Nations (ASEAN) member economies. NHMFC will firm up the details with

its counterparts from Malaysia and Indonesia who are here to attend the 2nd ASEAN Fixed Income summit. The NHMFC chief is also hoping to convince Thailand to join the proposal, which has been under discussion since the first f ixed income summit held last year, he said. “The generic description is that it will be commingled mortgage bonds of different ASEAN countries. It will be multi-currency,” Mr.

Bustos said. The Western Union Company, a leader in global remittance services, has tapped Bank of the Philippine Islands (BPI) for a

synergy that will further develop the direct-to-bank money transfer scheme in the Philippines. Western Union sealed the deal with BPI yesterday that would “promote a more simplified way for overseas Filipinos to send money straight to their loved ones’ bank accounts back home.” The international direct-to-bank service would particularly allow BPI account holders to access their remittances through

nearly 820 BPI branches in the country and its offices and remittance centers across the globe. “Western Union is transforming our business in response to consumers’ needs, providing speed, reliability, and convenience in the most accessible of ways. Our c ollaboration with BPI to offer international direct-to-bank money transfer services further supports our position as a global leader in providing innovative solutions, high service levels and omni-channel integration for cross-border money movement to Filipinos around the world,” said Western

Union president and chief executive officer Hikmet Ersek. For his part, BPI president and CEO Cezar P. Consing said combining BPI’s domestic reach with Western Union’s global footprint would allow BPI account holders to receive funds from over 40 countries around the world within minutes. “This is but one of the many ways that we are addressing the most critical financial needs of many of our mos t

important clients,” Consing further said. To send money directly to a BPI bank account via Western Union, consumers simply need the recipient’s full name and the recipient’s BPI bank account number. The service is also available online in selected markets. Western Union’s international direct-to-bank service can rapidly and conveniently credit remittances from over 40 countries, including the USA,

Canada, Japan, Singapore, Malaysia, Australia, New Zealand, the United Kingdom, Italy, Norway, Denmark, to over 60 Agent banks in the Philippines.

San Miguel Corp. (SMC) plans to more than double its revenues in the next five years, as the diversified conglomerate eyes to grow its businesses and embark on new acquisitions. San Miguel plans to make more purchases in the oil and gas sector, beef up its infrastructure business and become a competitive third player in the telecommunications sector, SMC President and Chief Operating

Officer Ramon S. Ang told reporters yesterday. “Today, the revenue of the group of companies, if we consolidate, is about $20 billion. We hope in the next five years, at least maabot natin ‘yung (we can reach) $40-50 billion revenues through acquisition and organic growth,” Mr. Ang said on the sidelines of San Miguel Corp.’s 125th anniversary celebration in its headquarters in Ortigas. Led by Mr. Ang, the country’s

largest food and beverage company started an aggressive diversification program in 2007 that saw the conglomerate make a series of acquisitions in attractive growth sectors such as infrastructure, fuel and oil, energy, telecommunications and banking. “We w ill continue to manage our existing businesses and hopefully pursue more acquisitions related to energy business, build more infrastructure projects for

our country, and provide a working telecommunications network,” Mr. Ang said. San Miguel is in talks with Australian firm Telstra Corp. Ltd. to shake up the telecommunications industry dominated by Philippine Long Distance Telephone Co. and Globe Telecom, Inc. “The equity contribution of Telstra is not much... Whatever contribution they will put in is nothing to them,” Mr. Ang said. The SMC-Telstra venture will

offer voice, text and internet services with focus on mobile-broadband services, he said. “The moment mag-switch on ang telco natin, it will be a superior network... We are building a network that will provide our countrymen a good network that will work ,” Mr. Ang said, but declined to provide more details about the discussions. The conglomerate is setting its sights on oil and gas fields overseas and has been

in talks with prospects in the past several years, he said. San Miguel saw its consolidated net income slide by an annual 8% to P16.9 billion in the first half from P18.4 billion, dragged by foreign exchange losses and a slump in sales. Shares in SMC added 85 centavos or 1.83% to close at P47.20 apiece yesterday.

The Philippines’ Macay Holdings, Inc. has started pre-marketing its $100 million to $200 million follow-on offer, Thomson Reuters

publication IFR reported on Tuesday. Proceeds from the planned share sale will be used for general corporate purposes and expansion

of soft drinks bottling plants, Macay Chairman Alfredo Yao told Reuters. He, however, refused to confirm the targeted amount for the offering. Books will likely open in mid-October, IFR said, adding that Credit Suisse, Deutsche Bank and HSBC had been hired for the transaction. Macay, which has a market value of $1.07 billion, last year consolidated its bottling and distribution assets into a wholly-owned

subsidiary. It currently holds distribution and bottling rights for RC Cola in the Philippines. The Philippine Rating Services Corp. has maintained its PRS Aaa rating for Manila North Tollways Corp.’s outstanding P7 billion

bonds. Based on the local credit watcher’s benchmarks, PRS Aaa-rated debt securities are deemed “of the highest quality with minimal credit risk” and the borrower’s capacity to meet its financial commitment is considered “extremely strong.” MNTC’s bonds are due in two tranches: P4.4 billion maturing in 2021 and P2.6 billion due in 2024. in assigning the rating, PhilRatings took into account MNTC’s ample

liquidity and buffer to comfortably service debts, adequate capital structure, well-managed toll franchise and resilient demand for its toll services. The rating also took into consideration the political pressures which could continue to cause further delays in the regular and contractual adjustments of toll rates. MNTC was incorporated in 1997 and began commercial operations in 2005. It is in the business of

constructing, operating and maintaining toll roads. At present, MNTC manages the 97.6 kilometer-North Luzon Expressway or NLEX. Last February, MNTC and the Bases Conversion and Development Authority executed the business agreement which assigns to

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MNTC,BCDA’s rights, interest and obligations relating to the management of the Subic-Clark-Tarlac Expressway (SCTEX). Upon

Presidential approval of the Supplemental Toll Operation Agreement (STOA), SCTEX will soon be managed and operated by MNTC. W ith the integration of the SCTEX into MNTC’s portfolio of managed toll roads, MNTC will be the largest toll road operator in the Philippines with an aggregate length of 191.5 kilometers. On March 19, MNTC opened Segment 9 of the NLEX Harbor Link project. It is a 2.42-km

expressway providing alternate access to Valenzuela City and the Manila port areas. It is connected to the NLEX through the Smart Connect Interchange and runs up to MacArthur Highway in Karuhatan, Valenzuela City. Philratings noted that further delays could occur in the regular and contractual adjustments of toll rates. The company is currently pursuing both its 2013 and 2015 toll adjustments with the

Toll Regulatory Board. At the same time, MNTC is also pushing for a provisionary adjustment while the TRB is still deciding on the 2013 and 2015 filings. To further insulate itself from the effect of delays in toll rate adjustments, the company also aims to grow its other non-toll income which includes: advertising revenues, leasing and rest-stop development.

The property arm of DMCI Holdings, Inc. saw strong demand for the first tranche of its bond offering that aims to encourage

home buyers to save enough capital as down payment for a residential property. The Consunji-led conglomerate told the stock

exchange DMCI Project Developers, which is operating under the DMCI Homes brand, kicked off yesterday an offering for P500 million worth of HomeSaver bonds. The offer period will run until Nov. 5. “Demand is healthy,” SB Capital & Investment Corp. President Emilio Federico Galang III said in a mobile phone message. SB Capital was tapped as the issue manager and underwriter f or the debt issuance.

Last week, DMCI Homes secured the approval of the Securities and Exchange Commission (SEC) for the registration and sale of up to P1 billion worth of HomeSaver bonds. The initial tranche, which will mature in three and five years, wil l carry fixed interest rates of 4.5% and 5%, respectively. The remaining P500 million will be issued under shelf registration within one year or the period prescribed by relevant

regulations, whichever is later. The sale of HomeSaver bonds is primarily intended to assist retail investors in accumulating savings to be used as down payment for a DMCI Homes unit, with capital-raising only secondary to the said purpose, according to its registration statement. Still, DMCI Homes will use proceeds from the debt issuance to finance working capital and general corporate expenses. Next

year, DMCI Homes intends to launch 12 projects next year consisting of 15,000 units with an estimated value of P60 billion. D MCI Homes sees net income reaching P3.6 billion this year, 11% up from last year’s P3.2 billion. In the first quarter, the property firm’s net income rose at the same pace to P845 million from P762 million. Sales and reservations are projected to hit P22 billion compared to last year’s P20

billion, with growth coming from unit sales in five projects to be launched this year and 16 other projects which are ongoing construction. DMCI Homes is the real estate unit of DMCI Holdings, which also has interests in power generation, water utility, construction, infrastructure development, and coal and nickel mining.

Philippine Long Distance Telephone Company (PLDT) independent director Alfred V. Ty has resigned from the telco giant to focus on his increasing roles in GT Capital Inc. and other family businesses. In a disclosure to the Philippine Stock Exchange on Tuesday, PLDT said its board of directors has already accepted Ty’s resignation that included his membership in a couple of board

committees. According to the filing, Ty tendered his resignation due to his increasing roles in GT Capital, where he serves as the co-vice chairman of the board of directors. Ty will also focus on other family businesses. “The resignation of Mr. Ty is not expected to have any significant impact on the company’s current or future operations, financial position or results of operation,” PLDT told the stock exchange.

Following Ty’s resignation, the board of directors elected Bernido H. Liu as the company’s independent director to hold offic e effective September 28 and for the unexpired term of his predecessor. A direct shareholder of PLDT, Liu “possesses all the qualifications and none of the disqualifications for independent directorship,” the telco said, citing a recommendation by the governance and nominat ion committee.

Liu was also appointed as an independent member of all the board committees Ty left. GT Capital is the holding firm of Alfred's father, George S.K Ty. The business empire has a portfolio of directly held interests in Metropolitan Bank & Trust Company, Federal Land Inc., Global Business Power Corp., Toyota Motor Philippines Corp., Philippine AXA Life Insurance Corp., Charter Ping An Insurance Corp., and

Toyota Manila Bay Corp. Bayan Telecommunications, Inc. (Bayantel) is on course to exit its corporate rehabilitation way ahead of the original 2023 target

after the ailing telecommunications firm and its new controlling shareholder Globe Telecom, Inc. met all the requirements of its rehab plan. “You have to file the formal documents with the court to close it, but all of the actions including the conversion of loans into equity has been done. All of the actions on the amended rehab plan has been done,” Globe Chief Financial Officer and Treasure r Alberto

M. de Larrazabal said in an interview. The debt-to-equity conversion transaction between Globe and Bayantel ensured the latter’s continued viability as a service provider, allowing it to exit rehabilitation and improve its current service offering, Globe ’s General Legal Counsel Froilan M. Castelo said in July. Bayantel’s newly-appointed Chairman Gil B. Genio said last month Globe could be out of the court-

assisted rehab by October -- ahead of the original target of 2023, with the process cut short following the entry of Ayala-led firm. Asked if Bayantel is on track to exit the court-assisted rehab by next month, Globe President and Chief Executive Officer Ernest L. Cu said: “Sana.” “It’s just paperwork with the court. It’s just a formality,” Mr. Larrazabal said. Globe is still reviewing how much fresh cap ital it would infuse

into Bayantel. “We don’t know yet, but we will modernize Bayantel facilities for sure,” Mr. Cu said. Globe already acquired a 38% interest in Bayantel in October 2013 after the Pasig City Regional Trial Court Branch 158 approved the amended rehabilitation plan jointl y filed by the companies, where Globe converted Bayantel’s unsustainable debt into common shares, according to the listed telecommunication firm’s

2014 annual report. Globe, as principal creditor, was authorized to convert a portion of the debt into a controlling interest of at least 54% in Bayantel’s outstanding shares. Globe reached a purchase agreement with Bayan Telecommunications Holdings, Corp. and Lopez Holdings, Corp. in July for their entire equity holdings in Bayantel. The debt-to-equity conversion scheme, involving up to 70.76 million

shares, jacked up Globe’s control to 98.57% from 56.87%. The Ayala-led telco is buying out the rest of Bayantel’s minority shareholders. So far, Globe’s total investment in the acquisition of Bayantel, including debt-to-equity conversions, has amounted to $172 million, Mr. Genio had said.

Aboitiz Power Corp. (AboitizPower) has gained further traction overseas as it embarks on another partnership that would allow

the company to participate in the development of a hydropower project in Indonesia. This came more than a week after

AboitizPower marked it maiden international venture through the acquisition of a participating stake in a geothermal project in the same Southeast Asian country. In a disclosure yesterday, the listed power firm of the Aboitiz family said it “entered into an agreement with SN Power AS and PT Energi Infranusantara.” The deal involves AboitizPower’s participation “in the feasibility studies for the exploration and

development of a potential 127MW hydropower generation project along the Lariang River in Central Sulawesi.” The project will be undertaken by PT Auriga Energi, which holds the license to develop the project. The project company, AboitizPower said, is currently conducting pre-feasibility studies for the hydropower venture.Antonio R. Moraza, AboitizPower president and chief operating officer, said in

a text message that investment for the project will be determined upon completion of the feasibility studies.“This is preliminary work, which can take several years before construction when the large expenditure actually happens,” Mr. Moraza said.“Gestation for large hydro

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(projects) can be about eight years,” he added. This venture serves as the company’s second project outside the Philippines, the first one

being a potential geothermal project also in Indonesia.AboitizPower’s wholly owned AboitizPower International Pte. Ltd. last Sept. 18 entered into an agreement with PT Medco Power Indonesia to participate in the exploration and development of a potential 100-MW greenfield geothermal plant in East Java. The project will be undertaken through PT Medco Cahaya Geothermal, which is a subsidiary of

PT Medco Power Indonesia. Mr. Moraza said then that AboitizPower will take in a 49% interest in the project, which is currently in the exploratory stage.AboitizPower -- which is one of three power generators in the Philippines -- has been exploring expansion opportunities in Southeast Asia. “We’re basically looking at Indonesia as an opportunity. We’ve seen people and we’ve introduced ourselves but there’s

nothing firm yet,” AboitizPower Chief Executive Officer Erramon I. Aboitiz said earlier.Aside from Indonesia, officials then said Myanmar, Vietnam and Papua New Guinea are also within the company’s radar.AboitizPower currently has an attributable power portfolio totaling about 2,300 MW -- involving coal, geothermal, hydropower and oil-based facilities.The firm committed to have a portfolio of around 4,000

MW in the next five years as it continues to explore expansion opportunities locally and overseas.AboitizPower is the power arm of Aboitiz Equity Ventures, Inc. -- the listed holding firm of Aboitiz-owned businesses, which also include real estate, food and banking.

Local construction firm Datem Inc. is looking to invest in renewable energy as it embarks on further diversification to support long-term growth, a top official said. In an interview, Datem president Levy Espiritu said the company is studying the feasibility of getting into the power sector as part of its overall plan to expand in other industries other than its core business of construction. “We’re looking at

what is needed for the country, like power. We’re looking at a mix of power sources but it will be renewable, basically to address environmental issues. We’re preparing studies right now to prepare us for that eventually,” Espiritu said. He said Datem is considering investing in both base-load and and peaking plants. “Right now, base-load plants already have existing contracts. So peaking plants are

better, but after these base-load contracts expire, we can go into base-load,” Espiritu said. Initial preference are hydropower, solar and biomass plants, he added. Datem, with its core business in construction, expanded in related industr ies such as housing and bulk water treatment through subsidiaries Datem Homes and Datem Water starting 2013. The water subsidiary is gearing up for expansion in

Southeast Asia, establishing its first foreign venture in Vietnam and is eyeing other booming countries in the region such as Myanmar and Cambodia. The company considers expanding in Southeast Asia as strategic given the ongoing integration of the 10-member Association of Southeast Asian Nations (Asean). To fund these planned expansion projects, Datem is gearing up for a P4.6-billion initial public offering

(IPO) in mid-November. Last month, Datem formally filed with the Securities and Exchange (SEC) an application to list 329,046,263 shares at an offer price of up to P14.15 per share. The offer consists of up to 286,127,185 firm shares and 42,919,078 optional shares pursuant to an over-allotment option, according to the company’s application. To date, the company has partnered with top property developers for 24 ongoing projects. These include Alphaland Makati Place, composed of three residential and office towers; Arthaland’s two-tower Arya

Residences; De La Salle University’s new Rufino Campus; Federal Land Inc.’s 47-story Grand Hyatt tower; Megaworld’s One Uptown tower, Two Central residential building and Venice Grand Canal Mall and Global Estate Resort’s Savoy Hotel in Boracay. Its completed projects include Discovery Primea, a luxury residential tower in Makati; Discovery Shores in Boracay and the Mind Museum, the

Philippines’ first world-class science museum and a LEED Gold-certified building for design and construction. For its water subsidiary Datem Water Inc., it has a 15-year bulk water supply contract with Metro Kalibo Water District and is looking at other provinces to expand.

ASIA-PACIFIC

Japanese stocks tumbled more than 4 percent and turned negative for the year on Tuesday, as fears about China's cooling

economy rippled through global markets and pummelled shares of commodity-linked firms and shippers. Data on Monday rekindled lingering anxiety over the world's second-biggest economy when it showed profits earned by Chinese industrial companies declined 8.8 percent, the biggest on-year fall since Beijing began monitoring this data set in 2011. The impact of the slowdown in China,

Japan's biggest trading partner, has been particularly severe on export-reliant economies. With demand ebbing, commodities firms have taken a hammering. The Nikkei stumbled 4.1 percent to 16,930.84 points, the lowest closing level since mid-January. It was the biggest daily drop since Aug. 24, and wiped out the benchmark's year-to-date gains. Adding to the sombre mood, Daiichi Chuo Kisen, a mid-tier

shipping company, filed for bankruptcy protection with about 120 billion yen in liabilities. The news hurt shares of other shippers which are also struggling to grow earnings due to weak demand, with the Topix sea transport subindex falling 6.4 percent. Steel companies, another sector that has been heavily leveraged to demand in China, were also hit hard. The Topix iron and steel subindex shed 6.1 percent, with

Kobe Steel slumping 11 percent after it cut its earnings outlook. Trading houses, which invest in natural resources projects around the world, lost ground. The broader Topix fell 4.4 percent to 1,375.52, also wiping out its year-to-date gains, with all of its 33 subindexes in the negative. The JPX-Nikkei Index 400 shed 4.5 percent to 12,312.62.

China stocks fell around 2 percent on Tuesday, led by energy and commodity-related shares as Chinese investors joined a global

equity selloff triggered by fears of a sharp slowdown in the world economy. But trading remained thin - daily trading volume in

Shanghai was just one-fifth of its early-June peak - reflecting a general "risk-off" mood ahead of a seven-day National Day Holiday that starts on Thursday. Official factory and service sector activity surveys will also be published on Thursday. The CSI300 index of the largest listed companies in Shanghai and Shenzhen fell 2.0 percent to 3,178.85 points, while the Shanghai Composite Index lost 2.1 percent to

3,038.14. "There are mounting concerns over the health of the global economy - growth in Europe, and Asia are both weak," said Zhou Lin, analyst at Huatai Securities, adding that a potential Federal Reserve rate hike later this year could hit emerging markets by luring capital back to the United States. Stocks fell across the board on the mainland. There were 1,992 losers, but only 421 gainers. Energy and

commodity-related stocks were among the biggest casualties, on fears that economic weakness would sap demand for raw materials.

Hong Kong stocks tumbled 3 percent to a two-year low on Tuesday as growing fears of a sharp slowdown in the world economy

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sparked heavy selling, particularly in energy and commodity related shares. The benchmark Hang Seng index fell 3.0 percent to

20,556.60 points, its lowest close since July, 2013. The China Enterprises Index, which tracks Chinese companies listed in Hong Kong, also lost 3.0 percent, to 9,230.50. "Investors are worried about a sharp slowdown in China ... but the biggest risk is a global recession, not just a China issue," said Steven Leung, a director at UOB Kay Hian in Hong Kong. "If you look at Japan ... its economy is in bad shape.

And the economic situation is not good in Europe, either." The bearish view was echoed by the Hong Kong Monetary Authority, which warned in its latest monetary and financial stability report that "concerns of a slowdown in the Mainland economy and uncertainties over U.S. monetary normalisation will continue to cast a shadow over" Hong Kong stocks for the rest of the year. All major sectors in Hong Kong

fell, with the biggest decline seen in energy shares.

Southeast Asian stock markets were mostly weaker on Tuesday as investors awaited direction from key economic data later this week

to assess the health of the global economy, while Indonesian shares recouped losses on stimulus hopes. The Jakarta Composite Index, which fell 2 percent to a two-year low earlier in the session, recovered and was up 0.11 percent at 0820 GMT. Chief economics minister Darmin Nasution said Indonesia will announce the second instalment of a stimulus package later on Tuesday aimed at supporting the

rupiah and reviving growth in Southeast Asia's largest economy. Other markets traded mostly down ahead of key economic data. Japan's industrial production data is scheduled for Wednesday, China Caixin Purchasing Managers' Index (PMI) on Thursday and U.S. non-farm payrolls on Friday. Shares in Singapore Malaysia and Thailand were trading lower. Vietnam's benchmark VN Index fell on investor caution

after a central bank rate cut, despite government data that showed the economy grew at its fastest pace in five years in the first nine months of 2015. Asian shares skidded to 3-1/2-year lows and the dollar sagged on Tuesday, pulled down by sharp losses on Wall Street after weak Chinese data rekindled worries about its fragile economy.

Oil prices remained low in early Asian trading on Tuesday following a slide of almost 3 percent the previous session, dragged

down as concerns over Asia's economic health mounted and as production remained high. Brent crude futures were at $47.31 per

barrel at 0138 GMT, down 3 cents from their last close and following a more than 2.5-percent drop on Monday. U.S. West Texas Intermediate (WTI) futures were at $44.44 a barrel, virtually unchanged from their last settlement. Oil prices, along with most other commodities, have fallen sharply recently, with crude futures losing almost 60 percent of their value since June 2014. Japanese stock

markets, among the earliest to open in Asia, slid to eight-month lows on Tuesday as global stocks came under pressure from worries about economies in China and other emerging markets. "China's industrial profits declined 8.8 percent in August from a year earlier, with the biggest drops concentrated in producers of coal, oil and metals," ANZ said on Tuesday. "These declining margins are likely to add to the global deflationary story, where declining domestic demand is forcing companies to export deflation to the rest of the world." On the supply

side, Russia's 2015 oil production is expected to increase slightly from last year to 526 million tonnes, or 10.56 million barrels per day (bpd), deputy minister for natural resources and ecology Denis Khramov said on Tuesday. That would be up 1 million tonnes from last year but lower than a forecast of 530.5 million tonnes by Russia's Economy Ministry, and another sign that neither Russia nor the main Middle

East producers from the Organization of the Petroleum Exporting Countries (OPEC) are so far willing to curb production in support of prices. The slumping oil and commodities markets are hitting shares of trading merchants hard. Offsetting some of the bearish sentiment was data from market intelligence firm Genscape estimating a drawdown of over 1 million barrels last week from the Cushing, O klahoma

delivery hub for U.S. crude, traders who saw the figures said.

Gold held the biggest drop in a month and headed for a fifth quarterly loss on expectations the Federal Reserve will raise U.S.

interest rates before the year is over, countering demand for a haven amid a commodity and equity slump. Bullion for immediate delivery traded at $1,132.82 an ounce at 9:48 a.m. in Singapore from $1,131.95 on Monday, when it dropped 1.2 percent, the most since Aug. 26, according to Bloomberg generic pricing. A fifth quarterly decline would be the worst run since 1997. The Fed will probably

increase interest rates later this year and tighten policy gradually thereafter, New York Fed President William C. Dudley said Monday, echoing the sentiment of Chair Janet Yellen that an uncertain global outlook won’t postpone liftoff into 2016. Gold fell on Monday even as a selloff deepened in global equities and commodities markets. “Gold is no longer exactly a safe haven,” Bernard Aw, a strategist at IG Asia

Pte in Singapore, said in an interview on Tuesday. “Yesterday we didn’t really see a big jump in risk aversion despite all the selloff in U.S., European equity markets.”

The offshore yuan advanced to a seven-week high, buoyed by intervention speculation and signs the U.S. will support China’s bid to obtain official reserve status for the currency. The freely traded yuan climbed 0.15 percent to 6.3700 a dollar as of 10:41 a.m. in Hong Kong, narrowing its discount to the onshore rate to within 0.1 percent for the first time since China announced a surprise devaluation

on Aug. 11. It earlier rose to a post-devaluation high of 6.3574, according to data compiled by Bloomberg. The U.S. backs the yuan’s inclusion in the International Monetary Fund’s Special Drawing Rights provided it meets the lender’s existing criteria, a sta tement from the two countries showed after President Xi Jinping and President Barack Obama met on Friday. The onshore currency slid in August

by the most in two decades and China’s central bank has been intervening in both the onshore and offshore markets to prop up its exchange rate. “Sentiment is being supported by the U.S.’s move to take a step toward supporting China’s SDR bid and also by the speculation that there’s intervention in the market,” said Eddie Cheung, a strategist at Standard Chartered Plc in Hong Kong. “Closing the

gap is good news for the SDR bid.” The onshore yuan, which is allowed to diverge a maximum 2 percent from a daily fixing set by the PBOC, rose 0.08 percent to 6.3642 a dollar in Shanghai, China Foreign Exchange Trade System prices show. The authority raised its fixing by 0.11 percent, the most since Sept. 2, to 6.3660. The yuan’s discount in Hong Kong exceeded 2 percent a day after last month’s

devaluation. The People’s Bank of China stepped into both the Shanghai and Hong Kong markets to sell the dollar through agents of state lenders on Friday, said two people familiar with the matter. The aim was to keep the currency stable during Xi’s visit to the U.S., one person said. The PBOC has indicated that it wants the onshore and offshore yuan prices to converge. The renewed hopes for the yuan to be

included in the SDR basket after President Xi’s visit to the U.S., and reduced expectations for Federal Reserve tightening have contributed to the yuan strength, said Ju Wang, a Hong Kong-based currency strategist at HSBC Holdings Plc. “Stronger yuan sentiment naturally narrows the spread between the onshore and offshore spot,” Wang said.

An overnight rate to borrow yuan in Hong Kong jumped by a record to an all-time high as the currency’s offshore exchange rate

climbed to the strongest level since a devaluation last month. The Hong Kong Interbank Offered Rate surged 535 basis points to 8.73

percent, a Treasury Markets Association fixing showed. That’s the highest since the fixings began in June 2013. The yuan rose as much as 0.35 percent to 6.3714 per dollar in the city, before paring its advance to 0.13 percent as of 11:37 a.m. local time. The currency appreciated 0.07 percent in Shanghai.

India’s central bank lowered interest rates more than expected to bolster the economy as China’s slowdown threatens global

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growth and a commodity rout contains inflation. Governor Raghuram Rajan cut the benchmark repurchase rate to 6.75 percent from

7.25 percent, the Reserve Bank of India said in a statement in Mumbai on Tuesday. The move was predicted by one of 52 economists in a Bloomberg survey. Forty two expected a quarter-point cut and nine saw no change. “The weakening of global activity since our las t review suggests that commodity prices will remain contained for awhile,” Rajan said. Stronger domestic demand is needed to substitute for weaker

global growth, he said, adding that “monetary policy has to be accommodative to the extent possible” in current conditions. “Investment is likely to respond more strongly if there is more certainty about the extent of monetary stimulus in the pipeline, even if transmission is slow,” he said. Rajan had faced growing pressure from Prime Minister Narendra Modi’s government to reduce one of Asia’s highest borrowing

costs as Indian growth and price pressures slowed. Rajan is looking to keep inflation within 6 percent by January, 5 percent a year later and near 4 percent by early 2018. Rajan said the January target “is likely to be achieved” and “the focus should now shift to bringing inflation to around 5 percent” by March 2017. The bank will be vigilant for signs monetary policy adjustments are needed to s tick to the

deflationary path, he said. “While the Reserve Bank’s stance will continue to be accommodative, the focus of monetary action for the near term will shift to working with the government to ensure that impediments to banks passing on the bulk of the cumulative 125 basis points cut in the policy rate are removed,” Rajan said. While markets have transmitted policy actions via commercial paper and corporate bonds,

the median base lending rates of banks have fallen by only about 30 basis points “despite extremely easy liquidity conditions ,” he said. India also relaxed curbs on foreign ownership of its debt, giving global funds increased access to Asia’s best-performing bonds. Consumer-price gains slowed to 3.66 percent in August -- below Rajan’s target for a 12th month as oil has tumbled below $50 a barrel and global food

costs fell. The central bank projected consumer-price inflation at about 4.5 percent in September, according to a separate report. The figure will average 5.8 in the first three months of 2016, below the target of 6 percent by January, and 4.8 percent in the first three months of 2017. India is a bright spot compared with other emerging markets, with economic growth set to surpass a decelerating China this year.

The U.S. move to retain near-zero interest rates earlier this month eased concerns of capital outflows. The RBI forecast gross-value added growth at 7.4 percent in the year through March 2016, and 7.8 percent in the following 12 months. Finance Minister Arun Jaitl ey told Bloomberg Television last week that inflation is under control and India needs lower interest rates. While Modi’s administration has taken

measures to prevent a food-price spike caused by below-average rainfall, it has struggled to pass a national sales tax and backed off from plans to overhaul land and labor laws. The benchmark stock index has fallen about 3 percent over the past month and the rupee tumbled to a two-year low as exports continue to fall and India’s largest companies struggle to recover from a record drop in profits. Interes t rate

swaps had signaled a cut in the key rate to 7 percent by year’s end. “The RBI’s ambitions to reach its medium-term inflation target means that scope for further loosening is very limited,” Shilan Shah, Singapore-based India economist for Capital Economics Ltd., said in an e-mail before the decision.

Malaysia’s ringgit fell, headed for its biggest quarterly loss since 1997, as the relatively low level of import cover afforded by the nation’s foreign-exchange reserves makes the currency more vulnerable to an emerging markets selloff. The country’s reserves have declined the most among Southeast Asia’s five biggest economies in 2015 and Moody’s Investors Service said in August tha t while

they are sufficient, their adequacy is the weakest in the region. The holdings recovered for a second straight fortnight in the first two weeks of September, suggesting the central bank scaled back its intervention. The currency slumped to a new 17-year low on Tuesday. The ringgit’s drop was due to “the usual concerns around emerging-market growth and the weakness in equity markets,” said Khoon Goh, a

Singapore-based foreign-exchange strategist at Australia & New Zealand Banking Group Ltd. “Although there is already a lot of negative news priced into the ringgit, the fact that Malaysia has the lowest reserve adequacy in the region means the currency is more vulnerable during times of market volatility.” The currency fell for a sixth day and was down 0.9 percent at 4.4650 a dollar as of 10:01 a.m. in Kuala

Lumpur, according to prices from local banks compiled by Bloomberg. It earlier dropped to 4.4690, the weakest level since January 1998, and has plunged almost 16 percent since June 30. The ringgit has lost more than any other Asian currency this quarter as a slump in Brent crude weighs on earnings for the region’s only major net oil exporter, just as a looming U.S. interest-rate increase spurs outflows from

emerging markets. China’s deepening economic slowdown, a political scandal involving Prime Minister Najib Razak and rising debt at state investment company 1Malaysia Development Bhd. have compounded the losses. Malaysia’s foreign-exchange reserves rose 0.6 percent to $95.3 billion in the two weeks to Sept. 15 but are still 18 percent lower than at the end of last year. They declined to a six-year low of

$94.5 billion in early August.

Vietnam’s economic growth quickened in the third quarter, buoyed by foreign investments and exports growth that contrasts

with the performance of many of its neighbors. Gross domestic product rose 6.81 percent in the third quarter from a year earlier, according to figures released by the Hanoi-based General Statistics Office Tuesday that complements other signs of an economic pickup. That compares with a revised 6.47 percent pace in the second quarter this year. Vietnam typically releases growth estimates before the

end of the quarter, weeks ahead of its peers, and the numbers are often revised later. “Vietnam is the only country with strong export growth amid contracting exports among its regional peers,” according to a Australia & New Zealand Banking Group Ltd. research note earlier this week. In a bid to safeguard exports and support government efforts to boost economic growth to a four-year high of 6.2 percent

in 2015, the central bank weakened the dong’s reference rate in August for the third time this year, widening the currency’s trading band after China devalued the yuan. The country is also benefiting from cheaper energy costs as disappearing inflation aids domest ic demand. The faster growth numbers failed to lift Vietnam stocks, which joined Asian markets in a tumble Tuesday as a selloff in commodity-trading

firms spooked investors. The benchmark VN Index dropped 0.9 percent at 10 a.m. in Ho Chi Minh City trading. In the nine months through September the economy grew 6.5 percent, compared with the median estimate of 6.4 percent in a Bloomberg survey.

However, Vietnam’s government has sold only about half of the bonds offered at auctions this year, leading to a funding shortfall

that threatens its ability to give the economy a boost via state spending. The State Treasury has sold just 96.47 trillion dong ($4.3

billion) of debt so far in 2015, 38% of its 250 trillion dong full-year goal. The relatively low yields the government has been willing to pay at auctions has damped demand, according to Bank for Investment & Development of Vietnam, the country’s second-largest lender by assets. Vietnam is seeking to accelerate economic growth by spending on transport, hydro-power and health-care projects, while keeping

its budget deficit within a target of 5% of gross domestic product (GDP). Policy makers are having to rely more on fiscal policy to spur expansion as interest rates can’t fall much further, according to VinaCapital Group. “The sale of bonds is important for the economy,” said Alan Pham, the Ho Chi Minh City-based chief economist at VinaCapital, the country’s largest fund manager. “If bond sale goals are missed

and with a growing deficit, the government has to look for alternatives” like offering dollar debt or borrowing from the central bank, he said. The Ministry of Finance may cut the regular budget of ministries and government agencies by 10% in 2016 and spending on some, unspecified, projects may be slashed by 50%, according to a Sept. 11 report by state-run news service VietnamNet that cited a report from

the ministry. The government is encouraging state-owned firms to sell global bonds to help bridge the budget deficit, Dang Quyet Tien, deputy general director of the finance ministry’s corporate finance department, said in July. The ministry has asked the central bank for 30

BAIPHIL Market Watch – 30 September 2015

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trillion dong of loans as the state budget is constrained, Deputy Finance Minister Huynh Quang Hai said July 31.

Vietnam has issued bonds in 2015 with tenors from five to 15 years at yields of 5.1% to 6.9%, the lowest levels since at least 2010, according to data from the Hanoi Stock Exchange. It sold only 12% of the 3 trillion dong of debt offered at the latest auction on Sept. 23. Sales have slowed from 55.99 trillion dong in the first three months to 19.3 trillion dong in the next and 21.1 trillion dong so far this

quarter. The yield on Vietnam’s five-year bonds has risen 47 basis points to 6.70% this year, having fallen from levels exceeding 13% in 2011. Yields on same-tenor notes from India and Indonesia are 7.72% and 9.55%, respectively. The two nations are rated at the lowest investment grade by Moody’s Investors Services, four levels higher than Vietnam. “Given the need to fund the fiscal deficit, the pressure is

increasing to raise yields at forthcoming auctions,” said Tu Vu, the Ho Chi Minh City-based head of research at Viet Capital Securities JSC, the country’s third-largest brokerage. “Concerns on currency stability after the th ird devaluation of the dong this year also raised yield expectations but the Treasury didn’t budge.” The State Bank of Vietnam weakened the dong’s reference rate by 1% on Aug. 19, the third

such move in 2015. That monetary authority has also widened the currency’s trading band from 1% to 3% this year. Following a government decree issued last November, Vietnam has only sold debt with terms of five years or more. This has damped demand f rom commercial banks, said Nguyen Tan Thang, head of the fixed-income investment at Ho Chi Minh City Securities JSC, the nation’s second-

biggest brokerage. “Banks, which account for 80% of investors, are most interested in short-term bonds, so the government should diversify the tenors to lure demand back.” The Ministry of Finance is seeking National Assembly approval to issue notes with a wider range of maturities, Dau Tu Chung Khoan magazine reported Sept. 22, citing Phan Thi Thu Hien, an official at the ministry. Medium- and long-

term loan rates range from 9.3% to 11%, central bank data show, and the monetary authority estimates credit growth will reach 16.5% this year, more than its target of 15%. Interest rates have bottomed out and will start rising due to loan growth and the need to support the dong, said VinaCapital’s Pham. GDP increased 6.28% in the first six months of 2015 from the same period last year. The government is

targeting full-year growth of 6.2%, compared with 5.98% in 2014, and is aiming for expansion of 6.7% next year. It ran a budget deficit of 100.7 trillion dong in the first seven months of 2015, 45% of the full-year target. Vietnam will need an estimated $48 billion to fund transport infrastructure projects over the next five years, the Saigon Times reported this month, citing information from a conference held by the

Vietnam Institute of Economics and the BIDV. The nation’s fiscal accounts are emerging as a source of concern and debt-servicing costs could pose an increasing burden on its finances, the World Bank warned in July. Local banks are opting to lend more rather than park their funds in sovereign debt, said Tran Kieu Hung, head of the bond trading desk in Hanoi at Bank for Investment & Development of Vietnam.

“The risk of missing the target this year is high,” he said, referring to the government’s debt-issuance goal. “Investors are still hoping for higher yields to compensate them for the uncertainty risks they may have to face.”

REST OF THE WORLD

European shares partially recovered from an early drop on Tuesday, supported after battered miner Glencore halted a slide in its share price, although top indexes lingered near their lows for 2015. The pan-European FTSEurofirst 300 index closed down 0.6 percent at 1,336.34 points, having been as much as 1.7 percent lower in early deals. The index fell more than 2 percent on Monday, and

Tuesday morning's early retreat took it just 0.8 percent away from its low for 2015, set in August. Glencore surged 16.9 percent, its biggest single session gain, having dropped 30 percent in the previous session to an all-time low. It extended earlier gains after the mining and trading company declared its business remained "operationally and financially robust". Several brokers said worries over the commodities

and mining company's debt pile were overdone. The FTSEurofirst 300 is down around 20 percent since April, when it touched its highest level since 2000. Germany's DAX hit a record high of 12,390.75 points in April but is now some 24 percent below those levels. Stock markets have lost ground in the past few months partly due to signs of a slowdown in China, which has also hit the commodity sector as

China is a major consumer of metals and oil. The prolonged plunge in metals prices has been one of the reasons behind Glencore's stock market slump. U.S. bank Citigroup said Glencore should even consider going private via a management buyout if the market turmoil continued, and kept a "buy" rating on Glencore shares. The STOXX Europe 600 Health Care index posted the biggest sectoral decline,

dropping 1.8 percent after U.S. pharmaceutical and biotech stocks fell overnight. The U.S. biotech sector was hit after U.S. Democratic lawmakers on Monday denounced "massive" price increases for two heart drugs from Valeant Pharmaceuticals. In Europe, British healthcare group Shire was down by 3.2 percent while Switzerland's BB Biotech retreated 4.8 percent. Building supplier Wolseley fell 12.5

percent after lowering its second half revenue growth forecast, saying it expected markets in North America and Britain to remain challenging. "The ... drop is probably an over-reaction. The trouble is that volatility breeds volatility," Jasper Lawler, market analyst at CMC Markets, said in a note, citing the wild swings in previous sessions in Glencore. "When Glencore stock plunges 27 percent, it creates an

expectation that there could be a double digit drop on any company news." U.S. stocks ended higher after a volatile session on Tuesday as concerns about the health of the global economy kept investors

cautious after more than a month of turbulence. The S&P 500 recovered after falling earlier to within 0.26 percent of lows it touched in August, when fears of a slowdown in China shocked global markets. Seven of the 10 S&P sectors rose, with the healthcare index up 0.9 percent, ending a seven-day losing streak, thanks in part to gains in Johnson & Johnson and Gilead Sciences. Pharmaceutical and biotech

stocks had faced pressure after Democratic presidential candidate Hillary Clinton criticized drug pricing last week. The Nasdaq Composite ended lower and the S&P technology index dipped 0.55 percent. Although the market's recent rout has forced many strategists to slash their year-end expectations, a new Reuters poll shows the S&P 500 ending 2015 roughly 11 percent above current levels . The Dow Jones

industrial average rose 0.3 percent to end with 16,049.13 points and the S&P 500 gained 0.12 percent to 1,884.09. The Nasdaq Composite dropped 0.59 percent to 4,517.32. Investors are awaiting data scheduled to be released this week, culminating in nonfarm payrolls numbers on Friday. A report on Tuesday showed the consumer confidence index rose to 103.0 in September, topping economists'

expectation of 96.1. Declining issues outnumbered advancing ones on the NYSE by 1,732 to 1,353. On the Nasdaq, 1,759 issues f ell and 1,053 advanced. About 7.9 billion shares changed hands on U.S. exchanges, above the 7.3 billion daily average for the past 20 trading days, according to Thomson Reuters data.

BAIPHIL Market Watch – 30 September 2015

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Euro-area economic confidence unexpectedly increased in September as sentiment in the industrial and services sectors improved. The index of executive and consumer confidence rose to 105.6 in September from a revised 104.1 in August, the European Commission said on Tuesday. Economists predicted a decline to 104.1 from a previously reported 104.2, according to the median estimate

in a Bloomberg survey. With sentiment improving from Germany to Italy, the data add to signs that the euro area’s recovery can withstand an economic slowdown in emerging markets such as China. A gauge of manufacturing and services activity in the region is signaling growth of 0.4 percent in the third quarter amid rising orders. Nonetheless, the European Central Bank has held out the prospect of more

stimulus. After six months of quantitative easing, policy makers cut their growth and inflation forecasts through 2017 earlier in September. The Commission’s report showed industrial confidence in the region increased to minus 2.2 from minus 3.7 in August as product ion expectations jumped. Sentiment in the services sector rose to 12.4 from 10.1 on prospects of improving demand in the coming months.

ECB President Mario Draghi said this month that the central bank is ready to expand its quantitative-easing program if a decline in oil prices and a slowdown in emerging markets were to worsen the inflation outlook. Core inflation slowed to 0.9 percent in August from 1 percent in July. Prices in the euro area have been almost stagnant since the ECB started its 1.1 trillion-euro ($1.2 trillion) QE program in

March. The inflation rate rose to 0.3 percent in May before slowing again in the following months. Data scheduled to be published on Wednesday are likely to show a rate of zero for September, according to the median estimate in a Bloomberg survey, with predictions ranging from minus 0.2 percent to 0.3 percent.

A flurry of planned appearances this week by Federal Reserve officials began on Monday, but conflicting views by policymakers

raised more questions about the U.S. central bank's ability to manage its message at a critical juncture. William Dudley, head of the

New York Fed, and John Williams, head of the San Francisco Fed, both signaled support for an interest rate hike this year, saying they expect inflation to rise towards the Fed's 2-percent target. Williams sounded more hawkish, saying that just "a little bit" more data could convince him that a rate hike is needed. But Charles Evans, head of the Chicago Fed, took a far more dovish view, calling for rates to stay

near zero until mid-2016. The Fed's 17 policymakers have scheduled 16 separate speeches or public appearances this week across the country, less than two weeks after the central bank decided to delay what would be its first rate hike in nearly a decade. With financial markets increasingly predicting rates will not rise until next year, Fed Chair Janet Yellen attempted to set the record straight last week when

she said the central bank was still on track to move before year end. But the conflicting messages from Dudley, Williams and Evans did little to clear the air. U.S. stock markets plunged on Monday with investors complaining that the Fed's so-called data-dependent policy stance is not providing enough clarity for financial markets. Evans acknowledged the frustration and pointed to surprisingly weak inflation readings and the Fed's decentralized structure - in which each policymaker does their own analysis - as reasons. He does not see inflation

reaching the Fed's 2 percent target until 2018. Yellen and Vice Chair Stanley Fischer are among the central bankers taking to microphones this week, including at two Fed-sponsored conferences in St. Louis and Boston. Evans, in his speech on Monday, defended the Fed's dovish wing and said the Fed should take an "extra patient approach" given subdued price pressures. He cited "substantial cos ts" to

prematurely hiking rates, including Fed credibility. Evans, who has proven influential in post-crisis policymaking, is one of just four who want to wait at least until next year. Dudley is also seen as a dove, but, like Yellen, said the rate hike will likely come t his year, possibly as soon as the October policy meeting. There will be one other policy meeting this year after that, in December. Even a modest U.S. rate hike

could rock bond markets, hurt foreign currencies and suck capital from emerging markets. In standing pat earlier this month, the Fed cited worries of a global economic slowdown, market turmoil, and low U.S. inflation. Williams for his part cited rising house prices as evidence that waiting too long to raise rates has its own set of potential risks. The forecasts suggest most Fed officials see a single rate rise this

year, followed by about four further modest moves in each of the next few years. Interest rates futures implied traders remained doubtful of a year-end rate increase, assigning an 11 percent chance of a move in October and 35 percent in December, according to CME Group's FedWatch.

U.S. consumer confidence rose and was higher than expected in September, according to a private sector report released on

Tuesday. The Conference Board, an industry group, said its index of consumer attitudes rose to 103.0, the highest since January, from a

downwardly revised 101.3 the month before. Economists had expected a reading of 96.1, according to a Reuters poll. The August reading was revised to 101.3 from 101.5. The consumer present situation index was 121.1 in September, hitting its highest level since September 2007 and up from 115.8 in August, which was revised up from 115.1. The consumer expectations index however fell to 91.0 from 91.6 and

the "jobs hard to get" index rose to 24.3 from a revised 21.7 the month before. Consumers expectations for inflation in the coming 12 months rose to 5.2 percent from 4.9 percent in August.

U.S. consumer spending grew briskly in August and a key measure of inflation firmed a bit, signs of strength in America's domestic economy that could lead the Federal Reserve to tighten interest rates despite weakness abroad. The Commerce Department said on Monday consumer spending increased 0.4 percent after an upwardly revised 0.4 percent rise in July. The figures give

a bullish sign for economic growth in the third quarter. The report could help convince investors of Fed Chair Janet Yellen's view, most recently expressed on Thursday, that the economy was strong enough to warrant a rate increase this year. New York Fed President William Dudley on Monday also said a hike was likely this year and could come as soon as October. Investors have been doubtful, with

many betting that the Fed's first rate increase in a decade won't come until March. But the U.S. dollar firmed following the consumer spending report, as did yields on U.S. government debt, signs that some investors were bringing forward their bets on a rate increase. Economists polled by Reuters had forecast consumer spending rising 0.3 percent last month. Consumer spending accounts for more than

two-thirds of U.S. economic activity. It was the latest report indicating momentum in the economy as it confronted recent global financial markets turbulence, sparked by concerns over a slowing Chinese economy, which pushed the Fed to hold off hiking rates earlier in September. The economy grew at a robust 3.9 percent annual rate in the second quarter. Personal income increased 0.3 percent in

August. Overall inflation remained muted, reflecting low oil prices. Inflation, which has persistently run below the Fed's 2 percent target in annual terms, rose just 0.3 percent in August from the same month a year earlier. However, prices were up 1.3 percent when excluding food and energy, a key metric used by the Fed to gauge the trend rate of inflation. In July, core prices rose 1.2 percent year-over-year.

Despite the positive signals for consumer spending, the U.S. housing market appeared to loose a step last month, with contrac ts to buy previously owned U.S. homes falling 1.4 percent.

The U.S. Congress moved on Monday to rush legislation to President Barack Obama that avoids a government shutdown on Thursday as the new fiscal year starts while setting aside a bitter Republican feud over money for Planned Parenthood. The Senate kicked off the effort by advancing a measure to extend all previous agency funding levels until Dec. 11, in a bipartis an 77-19

procedural vote. That clears the way for the Senate to pass the spending bill by early Wednesday, sending it to the House of Representatives for passage just in time to beat a midnight Wednesday deadline. The stop-gap spending measure is aimed at buying time

BAIPHIL Market Watch – 30 September 2015

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for negotiators to reach a longer-term budget agreement that lasts through September 2016. Republican House Majority Leader Kevin

McCarthy, who declared his candidacy on Monday to succeed House Speaker John Boehner, vowed to avoid another shutdown threat in December when the stop-gap funding ends and a federal debt ceiling limit is needed. "We've got to stop these," McCarthy told Fox News when asked if there would be a December funding crisis. "We need to join together, not just in our ideas but in a media plan. So those in

America need to join with us. If we are to be successful, we need to be able to fight and win." Boehner is leaving at the end of October after facing repeated ouster threats from hard-line conservatives who demanded that Congress use the spending extension to cut off federal funds for Planned Parenthood to punish the women's health care group over allegations it sold fetal tissue harvested from abortions. The

group, which gets around $550 million annually from the government, has denied any wrongdoing. Faced with a veto threat from Obama and mixed support among Republicans for a strategy that would likely lead to a shutdown, Boehner said on Sunday the House would pass a funding bill without the Planned Parenthood provisions. But Boehner's successor will likely face similar demands from hard-line

conservatives over the December deadlines. Senator Ted Cruz on Monday made a last-ditch effort to try to stop the funding measure and restore the Planned Parenthood provisions. The Republican presidential candidate slammed Republicans leaders for "surrendering" to Obama and Democrats over the issue. Obama "simply has to utter the word shutdown and Republican leadership runs to the hills," Cruz

said.

TAXATION FOR BANKS – 03 October 2015 DEVELOPMENTAL COURSE ON TREASURY PRODUCTS (Remaining 2 Of 8 Days)

- Currency Swaps and Forward Rate Agreement – 03 October 2015 - Financial Options – 10 October 2015

UNDERSTANDING THE IMPLEMENTING RULES AND REGULATIONS OF THE CREDIT INFORMATION SYSTEM (CIC Circular No. 2015-01) – 07 October 2015 UPDATED GUIDELINES ON SOUND CREDIT RISK MANAGEMENT - 10 October 2015 CREDIT LOSS MODELING COURSE – 16 October 2015

BCP/DRP – 20 October 2015 INTRODUCTION TO DERIVATIVES – 22 October 2015

SUPERVISORY EXPECTATION ON COMPLIANCE SYSTEM – 23 October 2015 TREASURY: A FRONT TO BACK OVERVIEW (3 Days)

- Treasury 101 – What Do They Do In Treasury? – 17 October 2015 - The Market Risk Management Process – 24 October 2015 - The Treasury Simulation Game Workshop – 31 October 2015

ACCOUNTING FOR NON-ACCOUNTANTS – 24 October 2015

SIGNATURE ANALYSIS AND FORGERY DETECTION – 24 October 2015 FINANCIAL STATEMENT ANALYSIS AND VALUATION TECHNIQUES (2 DAYS) – 05 & 06 November 2015 BSP CIRCULAR NO. 706, AMLA LAW, RA 10365 AND THE AML RISK RATING SYSTEM – 06 November 2015 INVESTMENT 101 (2 DAYS) – 07 & 14 November 2015

QUANTITATIVE METHODS – (2 DAYS) – 12 & 13 November 2015 INTRODUCTION TO PORTFOLIO MANAGEMENT (2 DAYS) – 26 & 27 November 2015 SIGNATURE ANALYSIS AND FORGERY DETECTION – 28 November 2015

For details, please contact BAIPHIL via telephone (853-4457/519-2433) or email training@baiphil.org.

LEGAL AND REGULATORY COMMITTEE

Director: Maria Teresita R. Dean

Chair: Marissa B. Espino

Objective: To update members on legal and

regulatory developments in the banking industry

and provide legal support and assistance to the

BAIPHIL Board, as necessary.

SEPTEMBER 16-30

17 Ma Elisa E De Santos – JP Morgan

19 Francis M Puzon – Past President

20 Marissa B Espino – China Bank

21 Gilda E Pico –Land Bank of the Philippines

21 Shirley G Felix – PDIC

23 Angelo Dennis L Matutina – UBP

27 Ruth O Pingol – CTBC Bank

30 Victor Geronimo S Calo – China Bank

30 Miguel M Gonzales – Asso. Life Member

BAIPHIL Market Watch – 30 September 2015

Page 13 of 13

KNOW YOUR CLIENT (KYC) - A standard form in the investment industry that ensures investment advisors know detailed information about their clients' risk tolerance , investment knowledge and

financial position. KYC forms protect both clients and investment advisors. Clients are protected by having their investment advisor know what investments best suit their personal situations. Investment advisors are protected by knowing what they can and can not include in

their client's portfolio.

“The mind is not a vessel to be filled but a fire to be kindled”

- Plutarch

Lose weight without exercising!

Celery has negative calories! It takes more calories to eat a piece of celery than the celery has in it.

You burn more calories sleeping than you do watching TV.

Smelling bananas and/or green apples (smelling, not eating) can help you lose weight!

The researchers discovered that laughing increased both heart rate and calorie expenditure by up to 20 per cent – and the longer participants laughed for the greater the

effects. Using the results, the scientists then went on to calculate that just 15 minutes of laughter a day will burn 10 to 40 calories, depending on a person’s weight and the intensity of the laughter. That’s enough to shift between 1 and 4lb a year.

Sex burns 360 calories per hour.

The local bus driver was saying that recently he was driving a bus full of people and no-one got off on the way.

However, at the end of the journey, there was not a single person left on the bus.

How?

Sources

BPI Asset Management Business World Philippine Daily Inquirer Philippine Star

GMA News ABS-CBN News Bulletin Today Reuters

Bloomberg CNN Wall Street Journal Strait Times

Investopedia Brainy Quotes Goodreads Corsinet – Trivia

Trivia Of The Day Filipi-Know Phrases.Org.UK Fun, Trivia & Humor

Compiled And Prepared By: Research Committee FY 2015-2016

Director: Maria Teresita R Dean (PBCOM) Chair: Sheryll K. San Jose (Equicom Savings Bank) Members: Rachelle A Fajatin (Equicom Savings Bank)/ Catalina R Avila (DBP)

DISCLOSURE: The BAIPHIL Market Watch (BMW) is for informational purposes only. The content of the BMW is sourced from third party websites and may be subject to change without notice. Although the information was compiled from sources believed to be reliable, no liability for any error or omission is accepted by BAIPHIL or any of its directors, officers or employees, and BAIPHIL is not under any obligation to update or keep current this information