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BAIPHIL Market Watch – 04 Aug 2017 of 17

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BAIPHIL MARKET WATCH ~ Scaling New Heights In Banking Excellence ~

04 Aug 2017

Legend Improvement / Up Deterioration / Down No Movement

FINANCIAL MARKETS AT A GLANCE

PHILIPPINES

Financial Rates Current Previous

USD/PHP 50.2700 50.3900

30-D PDST-R1 2.7564% 2.9089%

91-D PDST-R1 2.1745% 2.1600%

180-D PDST-R1 2.9339% 2.9907%

1-Y PDST-R1 2.8897% 2.8865%

10-Y PDST-R1 5.0014% 4.9911%

30-D PDST-R2 2.0116% 2.0468%

91-D PDST-R2 2.1683% 2.1595%

180-D PDST-R2 2.4203% 2.9907%

1-Y PDST-R2 2.8897% 2.8864%

10-Y PDST-R2 4.6501% 4.9911%

Stock Index Current Previous

PSEi 7,876.66 7,872.65

Market Cap (Php Trillion) 13.434 13.414

Total Value (Php Billion) 5.737 7.026

PSEi Performers Last Price % Change

Top Gainers

Manila Electric Company 279.60 + 2.19

Aboitiz Power Corporation 39.70 + 1.79

Bank of the Phil Islands 105.40 + 1.74

Top Losers Jollibee Food Corporation 216.00 - 0.92

Metropolitan Bank & Trust 85.50 - 1.16

GT Capital Holdings 1,195.00 - 1.24

ASIA-PACIFIC


NIKKEI 20,029.26 20,080.04

HANG SENG 27,531.01 27,667.39

SHANGHAI 3,273.41 3,294.41

STRAITS 3,342.92 3,340.03

SET 1,578.25 1,580.13

JAKARTA 5,780.58 5,812.84

Currency Exchange Current Previous

USD/JPY 110.1500 110.7200

USD/HKD 7.8176 7.8144

USD/CNY 6.7150 6.7267

USD/SGD 1.3580 1.3589

USD/THB 33.2500 33.2700

USD/IDR 13,322.00 13,329.00

REST OF THE WORLD


FTSEuro First 300 1,489.49 1,485.65

FTSE 100 7,474.77 7,410.55

DAX 12,154.72 12,257.58

CAC 40 5,130.49 5,126.03

DOW JONES 22,031.86 22,016.24

S&P 500 2,472.97 2,477.57

NASDAQ 6,346.68 6,362.65

Various Current Previous

EUR/USD 1.1870 1.1848

GBP/USD 1.3126 1.3227

Gold Spot (USD/oz) 1,267.80 1,260.90

Brent Crude(USD/bbl) 52.22 52.36

3-M US Treasury Yield 1.05% 1.05%

10-Y US Treasury Yield 2.24% 2.26%

30-Y US Treasury Yield 2.82% 2.84%

PHILIPPINES

The local stock barometer firmed up slightly on Thursday as investors scouted for fresh leads from the second quarter corporate

earnings season. The main-share Philippine Stock Exchange added 4.01 points or 0.05 percent to close at 7,876.66. Across the region, stock markets were mostly sluggish. “Philippine shares traded on a lackluster note as investors continue to digest earnings and stay on the sidelines as evident by reduced trading volumes,” said Luis Gerardo Limlingan, managing director at local stock brokerage Regina Capital Development. "It was up barely by 4 points. For the last three trading days we were down. So with an oversold market, investors found it wise to bargain-hunt in a number of issues," Aniceto K. Pangan, equities trader at Diversified Securities Inc., said. The main index was down most of the session, touching an intraday low of 7,862.11 and an intraday high of 7,946.31. "A number of investors have seen overselling in a number of issues. Thus, they waited until the market continued to correct in the afternoon. And prior to the closing, they started to bargain-hunt," Pangan said. "Foreign investors also kept on accumulating local stocks despite the negative ending of the Philippine market in the past days," he added. Foreign funds bought P2.712 billion of shares during the session and sold P2.577 billion for a net buying position of P135.674 million. More than 917.421 million shares, valued at P5.736 billion, changed hands. Losers led winners, 114 to 83, and 54 issues were unchanged. The financial, industrial, services and property counters firmed up while the holding firm and mining/oil counters slipped. Value turnover for the day amounted to P5.74 billion. There were 114 decliners that edged out 83 advancers while 54 stocks were unchanged. There was net foreign buying amounting to P135.67 million for the day. Meralco rose by 2.19

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percent while Megaworld went up by 1.7 percent. BDO, AC, Semirara, SM Investments and PLDT also firmed up. Outside of the PSEi, notable gainers included DoubleDragon (+8.44 percent) and GERI (4.43 percent). On the other hand, JG Summit fell by 2.06 percent while Metrobank and GT Capital slipped by over 1 percent. SM Prime, Ayala Land, URC, Jollibee and AGI all declined. Notable non-PSEi decliners included Bloomberry (-3.19 percent) and Cemex (-1.32 percent).

The Philippine peso rebounded against the greenback on Thursday, to hit a fresh six-week high after market players sold the

dollar amid softer US labor reports and ahead of the release of non-farm payrolls data on Friday. The local unit ended at P50.27 versus the dollar yesterday, gaining 12 centavos from its P50.39-per-dollar close on Wednesday. Yesterday’s close was a fresh high for the peso in more than a month or since it closed at P50.22 per dollar on June 23. The local currency traded generally strong after it opened the session at its intraday peak and closing rate of P50.27 per dollar while its worst showing for the day was at P50.43 against the foreign currency. Dollars traded on Thursday went down to $505.5 million from the $576.04 million that exchanged hands on Wednesday. One trader attributed the peso’s strong close to lower-than-expected US ADP employment data, which caused the dollar to slump against a basket of currencies. “The peso closed stronger on weaker-than-expected ADP data. Locally, the exchange rate was also momentum driven, particularly the market’s decision to sell the dollar,” the trader said by phone on Thursday. Latest data from payrolls processor ADP National Employment Report bared US private employers gained 178,000 jobs in July, well below economists’ estimates of as much as 225,000 jobs added. “Also, markets are awaiting for the results of NFP (non-farm payrolls) on Friday. The ADP also serves as a gauge of the NFP’s outcome, to which global investors are looking at weaker employment data and will result in a lower dollar,” the trader further said. The report came a day ahead of the US Labor Department’s more detailed non-farm payrolls report, set to be released today, that includes public and private sector employment. Meanwhile, another trader said the peso moved higher versus the greenback after a sell-off despite strong demand for the dollar from some corporates. “We generally saw a sell-off, there was selling interest despite power and oil companies’ strong demand for the dollar,” the trader said. For Friday, one trader expects the peso to move between P50.25 and P50.45 versus the dollar, while the other trader said the exchange rate could settle within P50.20 to P50.35.

A sustained deficit in the country’s current account will put further pressure on the peso, analysts at a global bank said, noting

that the currency is likely to trade weaker than the P50-per-dollar level at least until the second quarter of next year. In its mid-quarter report on Asian currencies, analysts at DBS Bank tagged the Philippine peso as a regional outlier alongside the Hong Kong dollar, saying that other currencies have seen a “stable” run against the greenback so far. “The PHP has been Asia’s weak link this year,” the Singapore-based bank said in an Aug. 1 report. “With record trade deficits cancelling out foreign worker remittances, the current account surplus is set to fall into deficit. 2017 will be the first year since 2002 that the Philippines returned to being a twin-deficit country.” DBS went on to describe the peso as Asia’s “worst-performing” currency this year, particularly citing the deterioration of the Philippines’ current account to a deficit as the biggest weight on the exchange rate. The current account measures money flows from goods and services trade. A deficit means more foreign currency from these activities went out than came in. The country posted a $318-million current account deficit in the first quarter, equivalent to 0.4% of GDP. This compares to a $600-million deficit expected by the central bank for the full year. If realized, the current account will turn around from 2016’s narrow $601-million surplus. This comes amid sustained double-digit growth in monthly importations, which analysts attributed to the greater need for raw materials and equipment to support the government’s aggressive infrastructure development. DBS also cited comments from Moody’s Investors Service, which flagged overheating risks for the economy even as it affirmed its “Baa2” rating for the Philippines in June. The global bank sees the peso ending the year at P50.70 versus the greenback, weakening to P51 and to P51.30 in 2018’s first and second quarters, respectively. “[M]arkets will continue to monitor the trade deficits which have not only widened to more than eight percent of GDP, but also look set to overtake overseas foreign worker remittances,” the report read, referring to the double-digit climb in goods imports which has led to the shortfall. On the other hand, remittances from overseas Filipino workers totalled $11.346 billion in the five months to May, 4.5% more than the year-ago amount. Economic managers, in their June review of macroeconomic assumptions, expected the peso to trade P48-50 to a dollar this year. The peso averaged P50.03 versus the greenback from January-July, according to central bank data. In 2016, the local unit depreciated by 4.19% to a P47.49 average from P45.50 in 2015.

In the local fixed income market, the short and long ends of the yield curve fell while the belly rose, with investors positioning

ahead of tomorrow's scheduled domestic inflation data release. Consensus estimates put the inflation at 2.8% YoY. On average, yields fell 2.73 bps, but the belly of the curve gained 12.01 bps.

Demand for term deposits recovered yesterday, driving yields higher as banks wanted to park more funds with the central bank

as they look for viable outlets to place their excess liquidity. Wednesday’s offering received bigger bids amounting to P174.847 billion, recovering from the previous week’s P141.24 billion and moving close to the P180 billion the Bangko Sentral ng Pilipinas (BSP) placed on the auction block. The offering of the seven-day tenor was oversubscribed yesterday after two weeks of receiving tenders less than P40 billion. Banks wanted to place P52.579 billion in the week-long facility from just P35.05 billion last week. However, the firms asked for bigger returns to fetch a 3.3345% average rate, climbing from 3.308% previously as requested yields ranged between 3.25-3.4%. Offers for the 28-day term deposits also inched higher to P122.268 billion from P106.19 billion a week ago, but still failed to fill the P140 billion put up for auction by the central bank. The average yield rose higher to 3.4949% from 3.4929% previously, nearly maxing out the 3.5% ceiling rate set by the BSP. The term deposit facility (TDF) is the central bank’s primary tool to capture excess money supply in the financial system by allowing banks to park their excess funds with the BSP -- or those which are not used for loans or set aside as reserves -- in exchange for a small return. Only banks can participate in the weekly central bank auctions since July, as the one-year leeway given to trust firms ended last June 30. As a rule, firms can ask for rates ranging from 2.5-3.5%, which is the current spread of benchmark rates since June 2016. Yesterday’s offering is the first TDF auction following the decision of the United States Federal Reserve to keep rates steady during their July 25-26 review. This week’s auction of Treasury bills likewise saw strong demand which allowed the government to fully award its P15-billion offer, as market players unravelled their positions from a wait-and-see mode the previous week ahead of the Fed’s decision. BSP Deputy Governor Diwa C. Guinigundo has said recent auction results showed banks are choosing to deploy funds to lending activities, which are higher yielding when compared to rates paid by the central bank under the TDF. For next week, the central bank kept the TDF auction volume at P180 billion. Broken down, P40 billion carry a seven-day term, while P140 billion will come with a month-long maturity.

Philippine banks are seen on track in rolling out two clearing houses for electronic transactions by September, the Bangko

Sentral ng Pilipinas (BSP) chief said, seen to simplify payments and access to funds across industry players. BSP Governor Nestor A. Espenilla, Jr. said the clearing houses for digital payments are expected to go live by next month, in keeping with the industry’s target under the National Retail Payments System (NRPS). In March, banks and e-money issuers agreed to set up the PESO Net clearing house for electronic fund transfers, and the InstaPay -- which will process real-time credit for online settlements worth P50,000 or less within and across banks -- by the third quarter of 2017. “That’s still our time frame. I just met with the key players and they said they can do it,” Mr. Espenilla said in a recent interview in his office in Manila. The NRPS aims to steer financial transactions gradually away from


cash and checks towards electronic fund transfers and e-wallets. Improved ease of access to money is seen to spur more economic activity, as the funds can be deployed for other uses once received by retail clients and businesses. The PESO Net will receive payment messages from one bank account to another, and will process money transfers in batches. This platform is expected to eventually replace the use of physical checks, Mr. Espenilla previously said. The digital clearing house, which will build on the existing Philippine Clearing House Corp., is eyed to be used by the national government for salaries, budget releases, and revenue collections. On the other hand, the InstaPay platform is seen to be a 24/7 platform that would process small-value fund transfers across financial players. The technology will spring from the existing interbank network BancNet. A Payment System Management Body composed of industry representatives will oversee the two clearing houses, in coordination with the BSP. The central bank is looking to raise the share of e-payments from 1% of total transactions in 2013 to a high of 20% by 2020, which is seen to fast-track the availability of funds circulating in the local economy. The United States Agency for International Development has said that shifting to electronic transactions from cash-based settlements could help boost gross domestic product growth by as much as 2-3%. Mr. Espenilla has been actively promoting the NRPS in his public speeches one month into his six-year term as central bank chief, saying that using digital banking channels would boost growth and improve financial inclusion in the Philippines.

Washington has given Manila 63,830 metric tons raw value of sugar allocation under the tariff rate quota (TRQ), according to the

Sugar Regulatory Administration (SRA). In a statement, the United States Trade Representative said it "is reallocating 86,495 metric tons raw value (MTRV) of the original TRQ for raw cane sugar from countries that are unable to fill previously allocated." The Philippines got 14, 932 MTRV from the latest reallocation. The US informed Manila of the additional allocation on Thursday, said SRA administrator Anna Rosario Paner. The Philippines can ship out 53,000 metric tons of the commodity, the SRA official noted. The US Department of Agriculture also noted an additional in-quota quantity of 244,690 MTRV under the raw cane sugar TRQ for fiscal year 2017. The Philippines was given 48, 898 MTRV from the additional in-quota quantity. This means that the additional Philippine quota totaled 63,830 MTRV, Paner said. Under the US tariff rate quota, the Philippines has a yearly allocation of 136,827 MTRV of sugar at lower tariff rates. Sugarcane output reached 2.5 million tons as of end-July, up 12.11 percent from 2.3 million tons a year earlier, breaching the 2.25-million ton target for the current crop year, said Paner.

Just as the country’s miners breathed a sigh of relief with the replacement in May of a staunch environmentalist at the

Environment department’s helm, their industry group was hit yesterday by the exit of a member who claimed some of them paid “mere lip service to responsible mining,” consequently putting all at risk of a fresh state crackdown. Apex Mining Company, Inc. -- one of the 13 miners that passed the audit conducted by the Department of Environment and Natural Resources under former secretary Regina Paz L. Lopez starting July last year -- said in a press release yesterday that it “has resigned from the Chamber of Mines of the Philippines” (COMP). Ms. Lopez -- who was replaced in May by current Environment Secretary Roy A. Cimatu -- in early February ordered 26 of the country’s 41 operating metal mines either shuttered or suspended, and followed that move weeks later with a similar crackdown on 75 other projects in pre-production stage. Her orders are now under review by the interagency Mining Industry Coordinating Council (MICC) and by the Office of the President. Ms. Lopez had also ordered a ban on open-pit mining -- a method that is widely used worldwide -- a directive which Mr. Cimatu said earlier this week would stay pending a review. The statement yesterday said Walter W. Brown, Apex Mining’s president and chief executive officer, “expressed his disappointment and frustration with COMP’s response to the President’s call for the mining industry to clean up its act.” In his two State of the Nation Addresses (SONA) since he took over on June 30 last year, President Rodrigo R. Duterte had railed at environmental degradation in a number of mining sites, warning in his second SONA on July 24 that he wanted to ban the export of ore and to tax the industry more heavily than it is today after noting that such destruction has persisted. Big miners in the country have argued that they have been observing international standards in mitigating the environmental impact of their operations and in rehabilitating their sites. The blame for environmental degradation, rather, lies with small illegal miners, they have insisted. “I do not agree that we should blame illegal small-scale miners when the mining industry is put to task for perceived destruction of the environment,” the press statement yesterday quoted Mr. Brown as saying. “I would rather that the chamber regulate its own ranks and discipline its members who do not comply with existing mining rules and regulations, and those who pay lip service to responsible mining,” he added. “Every organization has its own share of good members and bad members. But the mining industry is subject to intense scrutiny now,” he noted. “If we do not clean up our ranks, all the good will go down the same drain with the bad, when the industry is taxed to death, as the President has warned.” Apex Mining, which operates a gold-silver mine in Maco, Compostela Valley in eastern Mindanao, grew consolidated net income by more than fourfold to P322 million last year from 2015’s P71.4 million, as consolidated revenues increased by 45.8% to P3.5 billion from P2.4 billion while consolidated cost of production rose 35% to P2.7 billion from P2.0 billion. Its shares ended yesterday relatively flat at P1.57 apiece from Wednesday’s P1.58, compared to an overall 0.15% fall of the mining and oil sectoral index under which Apex Mining is listed. “It’s unfortunate that we’re seeing a member resign. We hope it could have been avoided,” Ronald S. Recidoro, COMP’s Legal and Policy vice-president, said in a telephone interview yesterday when sought for comment. Members of the chamber yesterday met with Mr. Duterte for about an hour in Malacañang, where -- Mr. Recidoro recalled -- the chief executive merely reminded them of the need to “take care of the environment and the people.” The country’s mining industry has been reeling from unfriendly policies since former president Benigno S. C. Aquino III issued Executive Order No. 79 in July 2012 which formed the MICC, emphasized the need for more responsible mining and stopped the approval of new projects pending the enactment of a fresh revenue-sharing scheme that will give the government a bigger slice of industry earnings. A mining revenue bill was filed shortly before Mr. Aquino and the 16th Congress ended their terms, hence, was left in limbo.

The Department of Energy (DoE) may turn to the private sector anew for the development of an integrated facility for liquefied

natural gas (LNG) estimated to cost $2 billion. Energy Secretary Alfonso G. Cusi, who chairs the board of Philippine National Oil Co. (PNOC), told reporters on Wednesday he has yet to receive a proposal from the state firm, which was evaluating offers from six countries to develop an LNG facility in the country. “Wala pa... Hindi pa sila nakakapili,” Mr. Cusi said on the sidelines of the 48th founding anniversary of the National Electrification Administration in Quezon City. PNOC Technical Adviser Arwin L. Ardon said last month that the company has received proposals from China, Japan, South Korea, Indonesia, Singapore and the United Arab Emirates. PNOC had aimed to submitted a recommendation to the DoE by the end of July. Asked if the government is now open to accepting unsolicited proposals from the private sector, Mr. Cusi replied: “Yes, we will open (the project to the private sector) to get what is really beneficial for the country.” Before the LNG facility became a government-to-government project, the PNOC had been swamped with unsolicited proposals from 55 domestic and foreign entities. The DoE is sticking to its target of breaking ground on the LNG project next year despite the delay. “Hahabulin namin ‘yan. Mas importante (We are pursuing that plan. It is more important) that we do it properly para sigurado na matatapos (so we can ensure its completion),” Mr. Cusi said. The LNG “mega project” has several components, including gas storage facility with a capacity of five million tons per annum and a power plant with an initial capacity of 200 megawatts but scalable to 1,000 MW. Aside from the storage facility and the power plant, the proponents submitted proposals for an integrated facility with components for liquefaction, regasification and a floating storage regasification unit, PNOC’s Mr. Ardon said. In June, Mr. Cusi said the DoE was planning the construction of a common receiving and distribution infrastructure for LNG -- considered the “cleanest” of all fossil fuels -- that is aimed at making the country Southeast Asia’s hub for the energy resource. The facility is planned to rise on a PNOC-owned property in Batangas.


Mr. Cusi previously said the facility would cost around P100 billion and targeted for completion by 2020, which should give the country enough lead time ahead of the anticipated depletion of the Malampaya natural gas find in 2024. The offshore Palawan platform supplies gas to several power plants in Batangas. It powers up to 20% of the country’s electricity requirements. After the DoE selects the winning proponent, the next step would be to evaluate the project cost, which will involve the National Economic and Development Authority, as well as the Department of Foreign Affairs.

The Department of Energy (DoE) will soon come out with the implementing guidelines of an executive order (EO) that fast-tracks

the issuance of permits for power generation ventures regarded as projects “of national significance.” Energy Secretary Alfonso G. Cusi told reporters on Wednesday the Energy Investment Coordinating Council (EICC) met yesterday to “organize the framework on how we’re going to implement it.” Signed by President Rodrigo R. Duterte on June 28, EO 30 streamlines the regulatory procedures covering energy projects of national significance under the Philippine Energy Plan (PEP). The EICC, chaired by the DoE, will release the implementing rules and regulations of EO 30 “within the first half” of August, Mr. Cusi said on the sidelines of the 48th founding anniversary of the National Electrification Administration in Quezon City. “We don’t have to wait for next year. We’re going to do it within this year. Kailangan ma-implement agad ‘yung mga projects (The projects have to be implemented at once),” Mr. Cusi said. EO 30 defines “energy projects of national significance” as those involving power generation, transmission or ancillary services “including those required to maintain grid stability and security...” For a project to be classified of national significance, the scale of capital investment should be at least P3.5 billion, among others. The order directs the EICC to, among others, “establish a simplified approval process and harmonize the relevant rules and regulations of all government agencies involved in obtaining permits and regulatory approvals...” The council will also maintain a database of information and a Web-based monitoring system for information exchange and updates to uphold transparency and accountability. The EICC is chaired by the DoE and is composed of representatives from various national government agencies and relevant energy institutions, including the departments of Natural Resources, of Finance, of Justice and of Transportation, and their relevant attached agencies, as well as the Housing and Land Use Regulatory Board and the Palawan Council for Sustainable Development.

The Bureau of the Internal Revenue (BIR) and of Customs (BoC) have received marching orders to nab and build cases against

more big-time tax cheats that could each add P20-30 billion to state coffers as part of government efforts to boost revenue collection, the Department of Finance (DoF) said in a press statement yesterday. Finance Secretary Carlos G. Dominguez III ordered the BIR and the BoC to catch more “big fish” during the department’s executive committee meeting on Friday last week, citing the successful campaign to make an example of cigarette maker Mighty Corp. which had been caught in February and March allegedly using fake cigarette tax stamps in a bid to evade paying correct levies. “You better line up another big one,” the statement quoted Mr. Dominguez as telling BIR Commissioner Caesar R. Dulay and BoC Commissioner Nicanor E. Faeldon in Friday’s meeting. “Next year, if possible, catch somebody, another big fish,” he added, saying later: “...[W]e are out for big amounts... our time is limited, so let’s go for the big ones.” The Finance chief said P20-30 billion would be “a good target” for taxmen in this campaign, following the government’s decision last week to accept Mighty’s offer of P25 billion to settle its excise and income tax deficiencies, along with the voluntary halt to its cigarette operations. The DoF estimates the total take from the settlement deal with Mighty to reach some P30 billion, inclusive of value-added tax (VAT) from the sale of its assets to Japan Tobacco International (JTI), which paid the first tranche of P3.44 billion on July 20. JTI will pay the P21.5-billion balance upon closing the deal, which has yet to be cleared by the Philippine Competition Commission. “As a result of BIR’s decisive action against Mighty, we now expect revenues from ‘sin’ taxes to increase by at least P1 billion a month,” Mr. Dominguez said in his speech during ceremonies yesterday marking the BIR’s 113th anniversary. In his second state of the nation address (SONA) last July 24, President Rodrigo R. Duterte said Mighty’s settlement of its tax liabilities “will be the biggest... on record” that will “produce a windfall for the government...” and should serve as a “lesson to others.” Mr. Duterte had added in his SONA that the settlement “does not preclude other criminal charges” against Mighty. The campaign to make an example of big tax evaders in order to encourage wider compliance with tax laws is another pillar of the current administration’s efforts to increase revenues substantially. Compromise settlements form part of the BIR’s priority programs to collect some P1.829 trillion this year. “The key to fiscal stability is revenue generation,” Mr. Dominguez had told lawmakers in the House of Representatives in a briefing last Tuesday. Last semester saw BIR collections increase by eight percent annually to P848 billion but miss an P881.7-billion target by four percent, while BoC’s take fell three percent short of a P217.7-billion goal even as it increased by 10% year-on-year to P210.3 billion. The government’s first pillar is its tax reform program that consists of up to five packages, the first of which hurdled the House of Representatives at the end of May, about four months after the bill was filed in that chamber. That package -- which consists of a cut in personal income tax rates whose foregone revenues will be offset by increases in auto and fuel excise taxes, a P10-per-liter excise tax on sugar-sweetened drinks, as well as removal of VAT exemption of some sectors -- is now undergoing deliberations in the Senate. The tax reform program is designed to rebalance the tax burden towards those who can afford it, as well as raise more revenues to support an P8.4-trillion infrastructure drive up to 2022. The government targets its infrastructure spending to rise to an equivalent of 7.1% of gross domestic product (GDP) by 2022 from 5.4% currently. That way, it hopes to prod GDP to grow by 7-8% annually until 2022 from a 6.2% average in 2010-2015 and slash poverty incidence to 13-15% by then from 21.6% in 2015, among others.

A consortium of private equity funds is offering to acquire nearly a third of Energy Development Corp. (EDC) that will use the

capital to settle debt and support future growth, at the same time setting the stage for the delisting of its shares from the bourse. In a briefing in Makati City on Thursday, First Gen Corp. Chairman Frederico R. Lopez announced that the company’s wholly owned subsidiaries Red Vulcan Holdings Corp. and Northern Terracotta Power Corp. (NTPC) entered into an implementation agreement with Philippines Renewable Energy Holdings Corp. (PREHC), which is buying up to 31.7% of the country’s largest renewable energy company for P64.5 billion. The P7.25-per-share offer price represents a 22.3% premium to EDC’s last 30-day volume weighted average market price of P5.93, parent First Gen said in a press release yesterday. The offer to EDC shareholders will run from 9 a.m. on Aug. 10 to 12 noon on Sept. 18. PREHC is owned by a consortium of investors with funds managed by Macquarie Infrastructure and Real Assets (MIRA), the world’s largest infrastructure asset manager, and Arran Investment Pte. Ltd., which is an affiliate of Singaporean sovereign wealth fund GIC. Together, they have a portfolio of 11.5 gigawatts of renewable energy assets globally. “Bringing in an experienced and credible partner to work with us makes a lot of strategic sense and we look forward to forming a partnership with Macquarie and GIC which will benefit EDC as it intends to grow our energy platform,” First Gen President and Chief Operating Officer Francis Giles B. Puno said. “The consortia partners MIRA and GIC are committed, long-term, patient investors. We look forward to a fruitful partnership,” said David Luboff, senior managing director of MIRA. First Gen has agreed to tender 10.6% of its total outstanding shares in EDC, subject to scale-back provisions under applicable regulations. Proceeds from the share sale amounting to P14 billion will be used to reduce debt and support growth initiatives, Mr. Lopez said. Post transaction, First Gen will retain a 40% economic and 60% voting control in EDC through its stake in Red Vulcan. First Gen will also maintain day-to-day management control of EDC’s operations. PREHC and First Gen have a “firm intention” to eventually delist EDC from the Philippine Stock Exchange, citing a plan to reinvest a greater proportion of earnings in the business and increase leverage to optimize capital structure and fund future growth, according to a disclosure. While EDC’s public float will go down to 12.5% from 49.28% at end-June, it still falls above the required 10% minimum public ownership (MPO) requirement of the


local bourse, Mr. Puno said. However, with the Securities and Exchange Commission (SEC) keen on hiking the MPO requirement to 15% by the end of 2018 and 20% by the end of 2020, the key shareholders have “no proposals to increase the company’s public float after the tender,” First Gen said. “We’ll cross the bridge when we get there,” Mr. Puno said. PREHC is acquiring through the tender offer a minimum of 6.6 billion common shares up to a maximum of 8.9 billion common shares of EDC. The tender shares represent 23.5%-31.7% of the listed company’s total outstanding voting shares. “I think First Gen got a good price,” Luis A. Limlingan, business development head at Regina Capital Development Corp., said in a telephone interview, referring to the tender offer price’s 22.3% premium. “Maybe there’s something that PREHC sees that we don’t,” he added. “The next question is who will replace EDC in the PSE index since it will be delisted.” EDC forms part of the 30-company bellwether index. Mr. Lopez said the tender offer provides First Gen with an opportunity to realize part of its investment in EDC. The former, through Red Vulcan, won the bid to acquire the latter from state-owned Philippine National Oil Co. and the PNOC EDC Retirement Fund in 2007. First Gen is the country’s leading independent power producer that utilizes primarily “clean”, indigenous fuels like natural gas, geothermal energy from steam, hydroelectric, wind and solar power. The company has 3,477 megawatts of installed capacity in its portfolio. First Gen and EDC shares were on a one-day voluntary trading suspension to give investors time to digest information on the transaction. Trading of the shares resume today.

The Philippine Stock Exchange, Inc. (PSE) has given 52 inactive trading participants until the end of September to signify their

intention to continue operations or else be declassified. This is part of the PSE’s bid to bring down broker ownership of the bourse in order to pass regulatory hurdles to its proposed merger with the Philippine Dealing System Holdings Corporation (PDS). PSE President and Chief Executive Officer Ramon S. Monzon said one of the key features in securing the Securities and Exchange Commission’s approval for the merger is the reduction of broker ownership to 20%. Brokers currently own a 27.9% stake in the PSE. A total of 52 out of 184 trading participants under the PSE are inactive, 14 of which hold shares in the company. “Basically, what we’ve done is we’ve written to all these inactive brokers... telling them that we are giving them three months from June 30 to signify their intention, if they are still interested to operate as a broker... Under the PSE rules then we can declassify them as a trading participant or as a broker because they have no more plans to operate,” Mr. Monzon told reporters in a press briefing in Makati City, late Wednesday. The PSE president said they talked to the SEC about declassifying inactive trading participants, given that some have not operated for around 15 to 20 years. “The SEC by itself can close the company if it has not operated for more than five years under the corporation code. While we have been talking to the SEC about this possibility, the SEC wants to give these companies what they call due process,” he said. Should the inactive brokers signify their intention to continue operations, the PSE will then give them another three months to raise a market capitalization of P100 million, which is required under the Securities Regulation Code (SRC). If they can raise the amount, the brokers will be given six months to prepare operations, which would include hiring employees and finding an office, among others. “If they are not interested to operate as a broker under the PSE rules then we can declassify them as a trading participant... Then your trading rights under the PSE by-laws becomes vacant and goes back to the PSE. They will not be considered brokers anymore. Should they have shares, then they will not be included in the computation,” Mr. Monzon said. The declassification of inactive trading participants will bring down broker ownership to 23-24%, he added, closer to the 20% required by the SEC to comply with the single industry share ownership limit rule. Item C of Section 33.2 of the SRC states that “no person may beneficially own or control, directly or indirectly, more than five percent (5%) of the voting rights of the Exchange and no industry or business group may beneficially own or control, directly or indirectly, more than twenty percent (20%) of the voting rights of the Exchange.” Prior to the issuance of letters to inactive brokers, the PSE had also disclosed its intention to sell up to 11.5 million common shares out of the unissued portion of the company’s authorized capital stock through a follow-on offering. This forms part of its efforts to further bring down broker ownership to the required amount. With a closing price of P241 on Wednesday, this would allow the PSE to raise up to P2.77 billion. To recall, talks for the PSE-PDS merger began in 2013, when the former proposing to secure majority ownership of the fixed-income bourse to merge operations of the two capital markets. Difficulties in the purchase of shares from other stakeholders alongside regulatory approvals from the SEC and the Philippine Competition Commission have since delayed the merger. Last July, the PSE managed to secure majority ownership of the PDS after buying Whistler Technologies Services, Inc.’s 500,000 common shares in the PDS priced at P320 each for a total of P160 million. The Company has now a total of 52.78% majority ownership interest in the PDS, according to an earlier disclosure by the PSE.

Philippine oil and gas firm PXP Energy Corp (PXP.PS) expressed eagerness on Thursday to resume exploration in the disputed

South China Sea and said any joint venture development would likely involve a Chinese company. Chairman Manuel Pangilinan told reporters he was looking to discuss plans to resume PXP's stalled Reed Bank project in the hotly contested waterway with the Philippine government. "We should start doing that because all of the pronouncements that appear to have been made by both China and the Philippines are moving in a positive direction," he said. The Philippines suspended exploration in the Reed Bank, known locally as Recto Bank, in late 2014 as it pursued international arbitration over territorial disputes with China. Last year, the Permanent Court of Arbitration in The Hague invalidated China's claim over most of the South China Sea, though the country has refused to recognize the ruling. The ruling clarified Philippine sovereign rights to access offshore oil and gas fields, including the Reed Bank, within its 200 mile Exclusive Economic Zone. PXP had been talking with China National Offshore Oil Corp (CNOOC) (0883.HK) about joint exploration and development of the Reed Bank during the administration of President Rodrigo Duterte's predecessor, Benigno Aquino. But Manila's move to seek arbitration disrupted the negotiations. Both countries are now open to the idea of joint energy ventures in the disputed waters. China's foreign minister voiced his support during a visit last week to the Philippines, adding that unilateral action could cause problems for both sides. Such an arrangement would be extremely complex and sensitive as both countries claim the oil and gas reserves. Sharing them could be construed as legitimizing the other side's claim, or ceding sovereign territory. Last week, Duterte said a partner had been found for oil and gas exploration and development but gave no details. Pangilinan said he had no idea who Duterte was referring to, but believed "the joint venture (partner) will likely be a Chinese company like CNOOC". "I'm not sure that a non-Chinese company, at least in the beginning, would be involved because (the project) is in the middle of a geopolitical issue between the Philippines and China," he said. PXP has a 70 percent interest through its Forum Energy subsidiary in the Reed Bank project, covered by a Philippine permit called service contract 72 (SC72). It has a 50 percent interest in a nearby project called SC75, which has also stalled because it is within the disputed area. Duterte, who took power shortly before The Hague ruling, has said he will raise the landmark ruling with China eventually but first needed to strengthen relations between the two countries.

PXP Energy Corp. narrowed its losses in the first half of the year due to foreign exchange gains and lower overhead costs. In a

disclosure to the stock exchange, PXP posted a consolidated net loss attributable to the equity holders of the parent company of P11.3 million in the six-month period from a net loss of P21.8 million in the same period a year ago. Reported consolidated net loss during the period slid to P17.2 million from a net loss of P30.6 million in the same period of the prior year. “The lower net loss was primarily attributable to the foreign exchange gain of P6.3 million realized by the parent company this year compared with a net foreign currency exchange loss of P2 million incurred last year, as well as the containment of group overhead to P24.9 million from P30.8 mill ion in 2016,” PXP said. In May, PXP increased its direct shares in Forum Energy Limited to 71% from 69.5% after acquiring shares held by a subsidiary of First Pacific Co., increasing the former’s total direct and indirect interest in the latter to 79% from 77.5%. Forum’s principal asset is a 70% interest in service contract (SC) 72 Recto Bank, which is covered by the decision handed down by the Permanent Court of Arbitration


in The Hague in the Netherlands on July 12, 2016. The court ruled that Reed Bank -- or Recto Bank, as it is called locally -- where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea (UNCLOS). On March 2, 2015, the DoE granted a force majeure on SC 72 because the contract area falls within the territorial disputed area of the West Philippine Sea, which was the subject of the arbitration process. Under the terms of the force majeure, all exploration work at SC 72 was suspended from Dec. 15, 2014 until the DoE notifies Forum that it may continue drilling. First Pacific, which owns more than a quarter of PLDT, Inc., is the single biggest shareholder of PXP Energy Corp.’s parent, Philex Mining Corp. Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a majority stake in BusinessWorld through the Philippine Star Group, which it controls.

The Philippine Competition Commission (PCC) yesterday said it has started its review of Japan Tobacco International’s deal to

acquire the assets of cigarette maker Mighty Corp., which has offered the government P25 billion to settle its massive tax liability. In a press briefing in Malacañang, PCC Chairman Arsenio M. Balisacan said his office received the deal notice required of parties involved in the week of President Rodrigo R. Duterte’s July 24 State of the Nation Address, in which he said he had ordered the Finance department to accept Mighty’s offer of settlement for its alleged attempt to evade excise and income taxes by using fake cigarette tax stamps in February and March. “We’re evaluating their compliance with the requirements at the moment. As you know if there are no problems with the submission, approval can be as early as within the first 30 days upon completion of all the requirements,” Mr. Balisacan said. “If there are issues, or additional concerns of data that are needed from them, the total number of days required or given to us to evaluate the submission is 90 days.”

Coconuts seem to be everywhere these days. Whether as “water” in PepsiCo Inc.’s Naked drink range, as “milk” in Starbucks

Corp.’s coffees, as shampoo in L’Oreal SA’s products or even as a patty in Beyond Meat’s vegan burgers, the tropical fruit has captured new markets with a growing reputation as a healthy, natural product. The popularity has been a boon for prices, with the cost of coconut oil alone more than doubling since its low in 2013. But it hasn’t translated into increased production as diseases, natural disasters and aging plantations kept global output stagnant over the past decade. That’s about to change, thanks to a program of replantings and rehabilitation across the tropics. Output of copra, the dried coconut meat that’s used to make coconut oil, will jump more than 30% in the decade to 2026 as yields in the biggest growers rebound, according to a July 10 report by the Organization for Economic Cooperation and Development (OECD) and the United Nations’ Food and Agriculture Organization (FAO). “The international market is not only buying the oil, which they purify into cooking oil,” Danilo D. Valdez, managing director of trading company Raco Commodities Phils. Inc., said in a July 20 interview. “They also have found out uses for virgin coconut oil, coconut water and those kinds of derivatives products from coconut which are very good for people, that they’ve positioned for an organic and healthy lifestyle.” The key to the coconut’s popularity comes from the many products that a single nut produces. One package offers a high-energy food, a versatile oil, a nutrient-rich water, and coir -- a fiber that’s used to make rope and bedding. And that’s all contained in a water tight package that helped it spread across the globe’s tropical regions from the Philippines to the Caribbean. Its versatility has led to the coconut being dubbed the “Swiss Army Knife” of plants and has made it staple product in many countries. It remains so important in the Philippines, the biggest producer of copra, that the FAO estimates a quarter of its 100 million people are dependent on industries associated with it. “There’s great demand in foreign countries like South Korea and Canada,” said Carlito D Villamayor, a coconut farmer in the Philippine province of Quezon who’s switched his palms to make coconut sugar rather than copra because prices are higher. “Now China is ordering from us, so we have to increase our production.” Investment in production will lift copra output by 1.1 million metric tons by 2026, according to the OECD and FAO report. Plantation yields in Southeast Asia will climb 15% in that time, thanks to the replanting of aged palms and rehabilitation of growing areas, particularly in storm-hit parts of the Philippines and Indonesia -- which provide almost three quarters of global copra production between them. That follows a decline of more than five percent in the 12 years to 2016 due to aged palms, pests and diseases, which effectively neutered the 1 million hectares of new coconut plantings in the past decade, according to the FAO. Following Typhoon Haiyan in 2013 “a main feature of the rehabilitation program was to make the conditions of the affected coconut farmers better than pre-typhoon conditions,” Philip Soliven, the president of Cargill Inc.’s Philippine unit said in an interview. Cargill led a replanting program in Leyte province that helped more than 400 coconut farmers. A second phase program should help about 3,300 more in the Philippines and Indonesia. Coconut palms start bearing fruit about five years after planting, which means supplies may begin picking up soon. Copra production in the Philippines is forecast to rise to 2.255 million tons this year from 2.081 million tons in 2016, Yvonne T.V. Agustin, executive director of the United Coconut Association of the Philippines (UCAP), said in an interview from Manila. Exports will likely rise 6.5% this year, she said. It should be good news for lovers of coconut products, who may get some relief, with that extra production potentially weakening prices. But it’s potentially bad news for palm oil growers. Prices of coconut oil had a closing peak of $2,027.50 a ton this year from a low of $745.25 in 2013 before Typhoon Haiyan hit, causing as much as $14.5 billion of damage, according to AIR Worldwide, and affecting 33 million coconut trees in the Philippines’ Eastern Visayas region alone, according to the FAO. Coconut oil closed at $1,635 a metric ton on Rotterdam on July 31. Palm kernel oil, its rival and closest substitute, peaked of $1,845 a ton in January this year before easing to $1,110 on July 31. “The premium of coconut oil over palm kernel oil is really very high,” UCAP’s Ms. Agustin said. “Maybe if prices come down, it may attract demand. There is always a demand for coconut production especially the core demand, where no other oils can replace coconut oil in certain usages. Even with prices now, which is much higher than palm kernel oi l, there’s still that core demand for coconut oil.” That demand doesn’t look like stopping, thanks mainly to Western consumers. Starbucks in April launched another coconut-infused coffee beverage, indulging customers who want more than just the option of having single-origin coconut milk in their drinks. Toasted Coconut Cold Brew, which is sweetened with flavors of toasted coconut and honey, comes on the heels of its Coconut Milk Mocha Macchiato which Chief Marketing Officer Sharon Rothstein said lifted sales. Sales of PepsiCo’s Naked juice and coconut waters reached more than $1 billion last year. Jamba Inc. has introduced colada fruit smoothies made with coconut water, while in Malaysia, Nestle SA launched a coconut-flavored coffee mix. Food manufacturers are also rolling out new products such as Beyond Meat vegan burgers made with coconut oil, Dairy Crest Group Plc’s dairy-free coconut spread, McCormick & Co.’s coconut milk cooking sauces, and Mondelez International Inc.’s savory crackers made with dried coconut. -- Bloomberg

Bank of the Philippine Islands (BPI) reported a lower net income as of end-June following one-off gains from the sale of

securities a year ago, coupled with higher operating costs as the lender spent more for technology upgrades. The Ayala-owned lender reported an P11.7-billion net profit for the first semester, down 7.7% from the P12.6 billion tallied during the first six months of 2016, it said in a disclosure to the Philippine Stock Exchange yesterday. Net revenues stood flat at P35.3 billion, with the increase in interest income offset by lower non-interest profits. The country’s third biggest bank in asset terms said interest income rose by 13.6% to P23.5 billion, which came alongside an 18.4% slide in other revenue sources to just P11.8 billion. BPI reported lower securities trading gains as of end-June due to the sale of securities a year ago, as the lender raised fresh funds which were deployed to loans and additional bank capital. “The absence of one-off trading gains in 2017 H1 was partially offset by higher fee-based income, which grew at a robust pace of 17.8% year-on-year driven by cards and payments, service charges, and investment banking,” the bank said in a statement. Netting out the sale of hold-to-maturity debt notes, BPI said net income picked up by 48% from a year ago. Total loans reached P1.1 trillion, surging by 16.9% from P904.38 billion from January-June 2016 as corporate lending grew by a fifth. Deposits likewise climbed by 8% to reach P1.4


trillion from P1.33 trillion posted in end-June 2016. Return on equity also slipped to 13.7% from 16.4% a year ago, while return on assets likewise dipped to 1.4% from 1.6% previously. On the other hand, the bank’s operating expenses rose by 5.4% to P18.3 billion, attributed to higher spending on technology and regulatory costs. BPI faced a two-day interruption in its electronic banking services after an internal processing error led to incorrect balances posted for 1.5 million clients on June 7 and 8. It took the bank some 37 hours to correct the account balances and had to shut down access to online banking channels and automated teller machines (ATMs). Despite this, the bank said it held more than enough capital buffers at 13.7% of total assets, which is well above the 10% standard set by the Bangko Sentral ng Pilipinas. The lender also set aside more reserves versus potential loan defaults, even as the share of soured debts declined further to 1.5% from 1.6% previously.

Henry Sy-led China Banking Corp. (China Bank) saw its bottom line grow by a tenth in the first semester of the year, on the back

of its robust loan operations and core recurring income. In a disclosure to the Philippine Stock Exchange on Thursday, China Bank reported its net profit reached P3.6 billion in the January to June period, jumping by 10% from the P3.27 billion recorded in the same period a year ago. “The results for the first half of the year is an encouraging indication of China Bank team’s ability to execute on our strategic direction of strengthening our core businesses while achieving revenue diversification,” China Bank President and Chief Executive Officer Ricardo R. Chua was quoted saying in a statement. “The network expansion started 10 years ago continues apace, while the substantial investments in recent acquisitions and subsequent integration are starting to bear fruit,” he added. China Bank said net interest revenues rose 16% year-on-year to P9.2 billion, while non-interest revenues increased by 6% to P3.1 billion, after a drop in trading gains was offset by the expansion in service charges, fees from bancassurance, investment banking and trust and income from asset sales. Stripping out trading gains and one-off items, operating income rose 18% year-on-year in the January to June period which mirrored strong growth in earnings from its core businesses. The listed lender’s gross loans portfolio expanded faster than the banking sector’s performance by 22% to P401.7 billion on the back of strong growth across all loan segments. Consumer loans jumped 25% in both the China Bank and its thrift banking arm, China Bank Savings the first six months of the year, while commercial loans grew by a tenth. “Loans to the corporate segment also rose by a better-than-expected 25% as the bilateral loans generated by the Institutional Banking Group were boosted by bookings arising from deals generated by China Bank Capital, which has continued to reinforce its presence in the corporate market,” the Henry Sy-led bank said. After its loan operations expanded during the six-month period, its asset quality improved in both absolute amounts and non-performing loans (NPL) ratio of 1.81% during the period, much better from the sector’s average of 1.94%. The lender’s consolidated NPL coverage ratio was at 92.8%, better from industry average at 155.6%. Likewise, China Bank’s total assets hit P657.5 billion in the first half of the year, an 18% growth year-on-year after its consumer base and market share also expanded after it put up additional branches during the period. To date, the lender has a total of 563 branches, of which 156 branches are of China Bank Savings. “The savings bank’s branch network alone is now bigger than the 148 branches of China Bank before its expansion phase triggered by the acquisition of Manila Bank in 2007,” it stated. Meanwhile, the bank’s operating expenses jumped 12% to P7.5 billion in the first half of the year on the back of branch and distribution network expansion as well as investments in technology and people to boost its new businesses. Cost-to-income ratio stood at 60.91% in the January to June period, improving from the 61.37% in the same period in 2016. China Bank said capital ratios improved in the first half due to its P15-billion stock rights offer last May, with common equity Tier 1 ratio at 14.65% and total capital adequacy ratio at 15.5%. In March 22, the listed lender secured the PSE’s approval for its P15 billion capital buildup program, which the bank offered up to P483.871 million shares to its stockholders as of April 19. Each shareholder has one rights share for every 4.1375 existing common share of the bank. “We have raised our capital funds to support robust growth in all businesses in the next few years,” China Bank Executive Vice President and Chief Operating Officer William C. Whang was quoted saying in a statement. “We will continue to build our fee-based businesses while pursuing growth in market share. We are happy to see steady progress in high-growth and better-yielding consumer market,” he added.

The United Coconut Planters Bank (UCPB) will start implementing the one-day clearing for checks on Monday (August 7), as

mandated by the Bangko Sentral ng Pilipinas (BSP) and Philippine Clearing House Corp. (PCHC). In a statement on Thursday, UCPB said it has shifted to the clearing time of checks will be cut to one day from three days with the implementation of the check image clearing system (CICS), which is set to take effect next week. Starting Aug. 7, funds from its clients’ check deposits are to be made available for withdrawal not later than 3 p.m. the following banking day. “With one-day clearing, the cash flow of UCPB clients, especially those running businesses, will improve significantly,” UCPB Senior Vice-President and Operations Group Head Arnel A. Valles was quoted saying in a statement. In January, the BSP and PCHC announced the migration to the CICS, requiring lenders to accept digital images of checks as authority to move funds. Previously, the transfer of physical checks took three to five banking days. The central bank has given banks until April 21 to upgrade their computer systems and feedback channels for electronic check clearing aligned with PCHC’s standards. UCPB Savings Bank, UCPB’s thrift banking arm, has also complied with the requirements needed for CICS.

East West Banking Corp. (EastWest Bank) booked a double-digit growth in its bottom line in the second quarter to boost its first-

half performance on the back of a surge in consumer loans, prompting the bank to raise its full-year profit target to P4.8 billion. In a disclosure to the local bourse, the Gotianun-led bank reported a P1.29-billion net income for the second quarter, up 66.45% from the P776.56 million recorded in the same period in 2016. Net interest income in the three months ended June totalled P4.47 billion, climbing from the P3.73 billion posted in the same period a year ago. Meanwhile, total operating income came in at P6.05 billion, up from the previous year’s P5.301 billion. On the other hand, total operating expenses for the quarter stood at P4.16 billion, declining from the P4.26 billion recorded in the same period last year. EastWest Bank’s strong second-quarter performance brought its first semester earnings to P2.502 billion, up 60% from the P1.563 billion booked during the comparable period in 2016. Total loans grew by 19% from a year ago to reach P212 billion as consumer lending jumped by a third. Retail loans rose to P150.3 billion at end-June from P111.9 billion during the same year-ago period, which offset a 6% decline in corporate loans amounting to P61.6 billion, according to the bank’s quarterly report filed at the Philippine Stock Exchange. The bank saw its net revenues rise by 16% to P12.1 billion year-on-year, even as income from trading gains plunged by 71% to P262.6 million from P918.2 million. In particular, net interest income totalled P8.972 billion, up 22% from P7.348 billion as of June 2016. Bank deposits totalled P254.9 billion during the first semester, posting a 24% growth from P206.3 billion the year prior. In turn, total assets climbed by a fifth to reach P309.6 billion from P257.4 billion a year ago. On the other hand, the bank’s operating costs grew at a milder 14% pace to reach P6.5 billion, coming from last year’s P5.714 billion largely due to its issuance of new Europay Mastercard Visa cards to its clients ahead of the June 2018 deadline set by the regulator. “The bank’s operating leverage continues to improve as we complete our store expansion program. Our businesses, particularly consumer loans and deposits, continue to post robust growth,” EastWest Bank President and Deputy Chief Executive Officer (CEO) Jesus Roberto S. Reyes was quoted as saying in the statement. He pointed out that core revenues grew twice as fast as the bank’s rising expenses. With the bank’s stellar run during the semester, EastWest said it stands assured of a P4.8-billion net income for the entire year, higher than the previous P4.25-billion projection. “Income growth will likely be higher than 25%. Based on the first half 2017 results and the trajectory of our businesses, we have a chance to end 2017 with above industry average return on equity,” EastWest Vice-Chairman and CEO Antonio C. Moncupa, Jr. was also quoted as saying. The bank said its return on equity improved to 14.1% from 9.8%, while return on assets rose to 1.7% from 1.3% previously. Capital buffers stood at 13.7% relative to risk weighted assets, well above the central bank’s 10% standard although lower than the 14.2%


ratio posted in June 2016. As of June, the bank runs 389 branches and 576 automated teller machines nationwide. Earnings of Manila Electric Co. (Meralco), the country’s largest power retailer, slid in the second quarter dragged by the lower

contributions of its subsidiaries and increased competition in the retail electricity business. Betty C. Siy-Yap, Meralco senior vice-president and chief finance officer, said in a briefing on Thursday at the company’s headquarters in Pasig City its reported net income fell by a tenth to P5.6 billion in the April to June period from P6.2 billion in the same period last year. Core net income, which excludes one-time, exceptional gains and charges, dropped 5% to P5.5 billion in the three-month period from P5.8 billion a year ago, Ms. Yap added. In the first half, consolidated core net income slid by an annual 3% to P10.1 billion from P10.4 billion. Reported net income decreased 2% to P10.5 billion from P10.7 billion. Meralco attributed the drop in earnings to lower global prices of coal and oil, a decline in top line contribution from non-electric subsidiaries due to the delayed award of some projects, and a decrease in overall retail revenues. Consolidated revenues rose 9% to P141 billion in the January to June period from P128.8 billion a year ago, as energy sales climbed 3% to 20,338 GWh from 19,717 GWh sold in the same period last year. The average Meralco retail price was at P8.10 per kWh for the first half of 2017, which the generation, transmission, distribution, system loss, and taxes and universal charge components represent 55%, 10%, 18%, 4% and 13%, respectively. Meralco President and CEO Oscar S. Reyes noted the company managed to grow energy sales despite coming from a high base a year ago when sales growth reached 11%. Meralco Chairman Manuel V. Pangilinan did not give a profit guidance for the year, but issued a favorable outlook on the business. “We continue to be encouraged by the optimum, locally and overseas, of the country’s ability to sustain its robust growth trajectory and its continuing transformation to a regionally competitive economy. This will be achieved mainly through massive infrastructure development, a comprehensive tax reform program and an effective tax collection system, energy, water, and telecommunications security, policy and regulatory stability, and maintenance of peace and order, among others,” Mr. Pangilinan said. “Despite some regulatory challenges, we remain optimistic about the business for the remainder of the year as we continue to find new ways to grow our revenues from serving our customers, as well as finding ways of operating more efficiently,” he added.

Philex Mining Corp. reported its net income slipped 5% in the first six months due to lower output at its Padcal mine. In a

statement on Thursday, Philex Mining said its net income stood at P719 million during the January to June period, from P757 million a year ago. The gold and copper miner’s core net income dropped 3% to P748 million, from the P774 million recorded during the same period last year. Philex Mining said its earnings before interest, taxes, depreciation, and amortization (EBITDA) reached P1.821 billion, 7% higher than the P1.69 billion EBITDA last year. Consolidated revenues stood at P4.76 billion, 0.67% lower than the P4.788 billion last year, as the lower metal production canceled the impact of improved copper prices and favorable exchange rates. The company’s Padcal mine in Benguet milled 4.138 million tons of ore during the January to June period, 12% lower than the 4.704 million tons it milled in the same period last year. “(The lower output was) mainly due to low mine delivery, brought about by equipment availability issues, limited capacities of ore passes at lower mining levels affecting operational flexibility, and bouldery ore in newly commissioned draw points, affecting the ore extraction and transport processes,” Philex Mining said. Gold sales, which accounted for the bulk of revenues, dropped 8% to P2.710 billion in the first semester, as production slid 13% to 43,251 ounces during the period. Average realized gold prices stood at $1,258 per ounce for the period, compared to $1,263 a year ago. Meanwhile, copper sales reached P2.007 billion, up 12% from P1.795 billion a year ago, as higher average realized copper prices offset the lower production. Average realized copper prices stood at $2.65 per pound during the first six months of the year, compared to $2.14 per pound last year. Copper production decreased 13% to 14.992 million pounds from last year’s 17.341 million pounds. Sales of silver climbed 4% to P38.9 million, as average realized prices also rose to $17.6 per ounce from $16.6 per ounce a year ago. At the same time, Philex Mining said it contributed P884 million in the form of taxes and other fees to the national and local governments, as well as social development and environmental management initiatives in the first half of the year. “In fact, we have tapped Australian and Canadian counsel to assist us in our efforts to align further with these countries’ mining, safety, and environmental standards. In addition, we are also spearheading efforts for the possibility of Canada’s Towards Sustainable Mining or TSM initiative being adopted by the local industry while continuing to be ISO 14001 (Environment Management System) and OSHAS 18001 (Occupational Health and Safety Standard) certified,” Philex Mining President and CEO Eulalio B. Austin, Jr. was quoted as saying. Philex Mining is one of three Philippine units of Hong Kong-based First Pacific Co. Ltd., the others being PLDT, Inc. and Metro Pacific Investments Corp. Hastings Holdings, Inc. -- a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. -- maintains interest in BusinessWorld through the Philippine Star Group, which it controls.

H&M Philippines is planning to open three more stores in Metro Manila in the second half of the year, as the Swedish fast fashion

giant continues to expand its footprint in the country. In a statement, H&M Philippines said it is opening its first branch at the SM Mall of Asia on Friday (Aug. 4). Two stores at Greenbelt 4 in Makati City, and Robinsons Galleria in Ortigas, will also be opened before the end of the year. The three new openings add to the company’s 26 stores nationwide, to bring its year-end total to 29 stores. “As of May 2017, we have over 700 colleagues working in the stores, distribution center, and the support office. We are truly happy that our customers continue to patronize our business offer -- fashion and quality at the best price in sustainable way,” Dan Mejia, H&M Philippines head of communications and press, was quoted as saying in a statement. In 2016, H&M Philippines generated 869 million Swedish krona (around P5.38 billion) in sales from 21 stores. This was over 50% higher than the 557 million Swedish krona (around P3.45 billion) in sales generated from 15 stores in 2015. Sales this year are expected to grow, as the company opens more stores. Mr. Mejia said H&M Philippines will launch an online shop later this year, but did not give details. Globally, H&M has opened a total of 4,351 stores in 64 markets as of end of 2016.

Conglomerate Aboitiz Equity Ventures has consolidated all its water investments into Aboitiz InfraCapital Inc. (AIC), grooming

this subsidiary for greater role in the local infrastructure sector. The group recently announced AIC’s acquisition of LiMA Water Corp. (LWC) in Batangas. This unit also took a minority stake in Balibago Waterworks System Inc. (BWSI) in Pampanga. On August 1, AIC acquired LWC from affiliate Aboitiz Land Inc., the land business unit of the Aboitiz Group and took full operational control of LWC on the same day. In addition, AIC acquired on Aug. 3 for about P275 million an 11.14 percent stake in BWSI previously held by San Fernando Electric Light & Power Co. This minority stake will allow AIC to be a part of an established water market participant. “These acquisitions will enable AIC to establish its position as a provider of water and wastewater-related services to residential, commercial and industrial customers. These steps are key for AIC to achieve its goal of building franchises across the entire water value chain,” said AEV president and chief executive officer Erramon Aboitiz, who also chairs AIC. LWC provides industrial and potable water with a daily capacity of 8,700 cubic meters and a full capacity of 40,000 cubic meters from its own deep well sources and reservoirs and ensures the 24-hour availability and sufficiency of water supply. BWSI provides running water to over 150,000 households in its franchise areas. After 54 years in public service, the National Water Resources Board currently considers BWSI the largest and most efficiently operated provincial privately owned waterworks system in the country. Through its investment in BWSI, AIC will partner with an established market player in the water sector operating over 50 water distribution franchise areas throughout the country, the group said. AIC undertakes the infrastructure and infrastructure-related investments of the Aboitiz Group. Aside from AIC, the Aboitiz group’s other infrastructure units include Republic Cement and Building Materials Inc. (a partnership with CRH plc) and Apo Agua Infrastructura Inc., a joint venture between AEV and J.V.


Angeles Construction Corp. that will build one of the country’s largest private bulk water supply projects. Apo Agua Infrastructura will provide Davao City with 300 million liters of water per day sourced from the Tamugan River, seen to benefit Davao City’s one million residents.

A unit of Premiere Horizon Alliance Corp. (PHA) is teaming up with Thailand-based hospitality firm Dusit Group for the

development of hotels in its West Palawan township. In a statement issued Thursday, the listed firm said its subsidiary West Palawan Premiere Development Corp. (WPPDC) has signed a memorandum of understanding (MoU) with the Dusit Group to build three of its hotel brands inside the township, namely Dusit Thani, Dusit D2, and Dusit Princess. The Dusit Group currently has one existing property in the Philippines, Dusit Thani Manila in Makati City. The firm has two more projects in the pipeline with the Dusit Hospitality Management College slated to open in Bonifacio Global City in 2018, and the Dusit Thani Mactan Cebu Resort in 2019. The hospitality group currently operates 29 properties globally, with more project openings targeted in key cities such as Australia, Bhutan, China, Indonesia, Kenya, Myanmar, Oman, Qatar, Saudi Arabia, Singapore, Thailand, Turkey, and United Arab Emirates. “The market continues to be strong. We believe this will be an excellent partnership that will enable us to build an outstanding mixed-use township that will offer various lifestyle choices to our target markets,” WPPDC Chairman Augusto Antonio Serafica, Jr. said in a statement. Signatories of the MoU included Mr. Serafica, WPPDC President Danilo A. Antonio, and Philippine Hoteliers, Inc. President Evelyn R. Singson. The MoU also includes the possibility of the Dusit Group providing equity for PHA’s master planned project, the 100-hectare North Cove Development. The North Cove project is part of the company’s plans for its first tourism estate in Puerto Princesa, which will include beachfront and mountainside resorts located 40 minutes away from the Puerto Princesa International Airport. PHA widened its net loss to P34.6 million in the first three months of 2017, against the P22.3-million loss in the same quarter in 2016.

Energy Secretary Alfonso Cusi yesterday called on the National Electrification Administration (NEA) to step up efforts to save

power co-ops in the brink of bankruptcy amid a drive to bring electricity to the remaining unserved two million households in far-flung sitios. According to the NEA, 10 of the 121 cooperatives under its management were “ailing” or near bankruptcy while 78 were described as having outstanding operational performance. “I urge NEA to exert all efforts to help these (cooperatives) by identifying which remedies are available under Republic Act 10531 and its IRR so that they can become more viable,” Cusi said, referring to the amended NEA Charter. The energy chief was speaking to NEA officials and staff who kicked off yesterday the celebration of their 8th National Electrification Awareness Month. “I encourage NEA to take the initiative to reach out to these ECs, do thorough investigations on their operations and find out what has gone wrong,” he said. “In so doing, NEA can recommend to DOE policies that may be adopted to address their needs.” Still, Cusi noted that as the Department of Energy institutionalized the concept of resiliency in the planning and construction of distribution facilities, “NEA continuously extends its financial, technical and institutional assistance to enable affected electric cooperatives to deliver electricity to their member-consumers.” He said that given that calamities like earthquakes and typhoons were of increasing frequency and intensity lately, power cooperatives have been encouraged to develop and implement comprehensive vulnerability risk assessments to identify disaster preparedness and mitigation measures to protect their distribution facilities. The DOE is looking at attaining 100-percent electrification of targeted and identified households by 2022. Cusi noted that the DOE’s target of bringing electricity to 90 percent or 20.59 million out of 22.72 million households was achieved a year ahead of schedule in 2016.

Charter operator GCA Skyline Aviation Inc. on Thursday said it has acquired a new Airbus helicopter H130. In a statement, GCA

Skyline said its very first H130 was acquired early last month and will be immediately operational to perform commercial missions, including VIP transport and tourism. “As a fast growing company, we look to the most efficient and reliable aircraft to expand our operations in a sustainable manner,” Joenina Mah, accountable director of GCA Skyline, said in a statement. “Having experienced the powerful and cost-efficient H125 and the successes it has brought us, we are confident that the H130 is the ideal platform to meet our needs, as we expand our operations," Mah added. According to GCA Skyline, H130 has roomy interior that allows an eight-seater configuration for panoramic "helitours" and comfortable VIP transportation. “The Philippines is the one of the most active markets in the Southeast Asia region, presenting abundant opportunities for new helicopter acquisition. We are happy that Airbus Helicopters is chosen by GCA Skyline once again as its sole helicopter provider," Lionel de Maupeou, managing director of Airbus Helicopters Philippines, said.

BDO Leasing & Finance Inc. on Thursday reported a slight drop in second quarter bottom line, on the back of higher interest

rates that constricted margins. Net income fell to P137.7 million in April to June, from P137.9 million a year earlier, BDO Leasing said in a regulatory filing. Expenses rose to P587.5 million from P518.4 million in the same comparable period, while income grew to P766.4 million from P705.3 million. The latest figures brought the first half net income of BD Leasing to P281.7 million from P281.6 million year-on-year. Expenses in the first six months climbed to P1.143 billion from P1.024 billion, while income grew to P1.520 billion from P1.407 billion. "These results were flat compared to the same period last year as rising interest rates caused a contraction in margins, and offset the benefits of volume growth," the company said.

Taxi drivers who haggle for a higher fare is similar to the price surge mechanism of transport network companies (TNCs), a taxi

operators’ group said Thursday urging that the same regulations be applied to cabs as well as Uber and Grab. The haggle between taxi drivers and passengers is “not justified,” but there is a reasonable explanation behind it, Bong Suntay, president of the Philippine National Taxi Operators Association, told the Senate public services committee. “Kapag ang pasahero magpapahatid sa lugar na ma-traffic, malulugi ang driver,” Suntay said. He explained that that a taxi driver stuck in traffic for an hour would earn only P75. This means that the taxi driver would make only P15 per hour, with P60 going to the operator. “A driver who pays a boundary of P1,200 would need P60 an hour to meet the boundary; so this is the reason why may mga taxi driver tumatanggi na maghatid sa ma-ta-traffic,” he added. The driver haggles for a fare higher than what the meter would dictate going through traffic congestion, Suntay noted. “This is also similar to the rationale of surge pricing. They’re trying to incentivize drivers para pag traffic, pag may high demand, pupunta 'yung auto nila sa pasahero,” he said. “If they do not do it, hindi susunduin ng mga sasakyan nila yung pasareho.” Suntay complained why Uber and Grab are allowed to have dynamic pricing while taxi drivers are limited by their meters. On the issue of passengers preferring to hail new vehicles instead of old cabs, Suntay said drivers and operators are having a tough time buying new taxis because the fare in the Philippines is the “lowest in Asia.” “We would like to acknowledge that there may be some complaints about the service we give. Baka sabihin may mga lumang taxi, hindi naman lahat. We have to look at the reason why naluluma ang taxi,” he said. Taxis are required to put huge markings on their vehicles while Uber and Grab are not, making theirs look cleaner, Suntay noted. "Minsan yung pasareho iisipin kung sasakay na ba o babasahin 'yung taxi sa dami nang nakasulat," he said. Senator Grace Poe, chairman of the Senate committee, said the LTFRB should require taxis to “update their fleet and teach their drivers to be more courteous” to encourage passengers to take cabs. “TNVS provide the safety and convenience that we all look for in public transportation. Siguro, dahil ilang beses na rin naging hindi maganda ang karanasan natin sa mga taxi, nagsawa na rin ang regular nitong mga pasahero at lumipat na sa Grab at Uber,” she pointed out. “We have to acknowledge that unlike taxis, Uber and Grab have a complaint mechanism and allow passengers to rate their experience. Diretso agad kung mayroong problema. Drivers are also more courteous because Grab or Uber can automatically disconnect or remove from their system any pasaway or erring driver,” Poe said.


Transport network companies (TNCs) Grab and Uber must comply with the law just as taxis, jeepneys, and buses do, the Land

Transportation and Franchising Regulatory Board (LTFRB) said Thursday. “Just attend to your cars. We just want you to comply,” Atty. Aileen Lizada, member of the LTFRB Board, said during a Senate public services committee hearing on proposals regulating TNCs and transportation network vehicle services (TNVS). Lizada said both Grab and Uber should be reminded that the issuance of a franchise is an authority delegated by Congress to the LTFRB. Both Grab and Uber have allowed its partner drivers to accept passengers even if most of them have no Certificate of Public Convenience (CPC) franchise or provisional authority (PA) to operate. “That is what we are saying here. We want you to comply with the law the way we want the taxis, jeepneys, buses to comply. We cannot bend so far to accommodate you,” she said. “We will not allow as well that they be allowed to just accredit and kami ang—we will just bow down to what they want, no. We are a regulatory body. As long as we are here, we will definitely regulate based on terms and conditions,” Lizada said. Last month, the LTFRB slapped both Grab and Uber with a P5-million fine each for various violations of terms and conditions of the Certification of TNC accreditation under Memorandum Circular Number 2015-016. Lizada also said it is unfair that TNCs have given false hopes to their drivers by accrediting drivers despite the apprehension order on “colorum” vehicles. “As they increase their numbers, their TNVS are hoping for a better income at ang tingin, kami ‘yung balakid,” she said. Earlier, Uber Philippines Government Relations and Public Policy head Yves Gonzalez said there were 66,000 Uber cars which made a single trip in the past year. Out of the 66,000, only 2,500 hold a provisional authority (PA) from the LTFRB and 1,000 have a pending application from an extension of the PA. On the other hand, Grab Philippines country head Brian Cu disclosed there were 52,398 Grab cars, of which only 3,000 to 4,000 hold a PA. Asked during the Senate hearing whether they are open to being required to get a franchise, Gonzalez said only their TNVS partners should do so. “We agree that our TNVS partners would need to get a franchise but the TNC itself should not, because the TNC itself is not engaging in actual transportation of a person,” Gonzalez said. Grab public affairs manager Leo Gonzales meanwhile said they are open to getting a franchise both as a TNC and for TNVS partners “if needed.” “We will abide,” Gonzales said.

Mass housing developer 8990 Holdings Inc. posted a net income of P485 million in the second quarter of 2017, down 58 percent

from P1.15 billion a year earlier, amid delays in securing licenses for new projects. "Main reasons for this are the continued delays in the delivery of its new projects’ licenses, labor shortages in the construction finishing and the momentum build-up of recently launched projects, but which are being addressed by the company," the 8990 Holding said in a in a disclosure to the Philippine Stock Exchange on Thursday. Gross revenue slipped by 43 percent to P1.447 billion from P2.561 billion. In the first semester of the year, 8990 recorded a net income of P1.221 billion, down 44 percent. Gross revenue was 36 percent at P3.041 billion. However, the company is keeping its profit guidance of P10 billion for 2017on the premise that a chunk of the income will materialize in the second semester. “What we’re experiencing in 2017 is nothing new. If we look at 8990’s growth history, the change in government in the years 2003 and 2010 has always led to a weak year –growth-wise – because of changes arising from a new President, a new administration, new officials and new housing policies ... 2016 and 2017 are not exceptions," 8990 president and CEO Januario Jesus Atencio III said

The Bureau of Internal Revenue (BIR) on Thursday filed with the Department of Justice (DOJ) tax evasion complaints worth

P58.55 million against four Manila-based businessmen. Facing charges for violation of the Tax Code are Maria Cheryl Corpuz Lagat; Eduardo Socuaje Jr. of Gold East Trading; Hanwell Industrial Corporation Inc; and Jin Hung Bijou Art Inc. Lagat was assessed with a tax liability of P16.898 million for 2010, while Socuaje allegedly failed to pay P27.923 million worth of taxes also in 2010. The BIR is seeking to recover P4.238 million in unpaid taxes covering the period January 1 to June 30, 2017 from Hanwell Industrial Corporation Inc. and its officers Felix Chung Lopez (president) and Maribeth Lopez (treasurer). Jin Hung Bijou Art Inc, meanwhile, was charged for a tax liability of P9.492 million for 2011. The BIR said the respondents had been issued notices of the tax liabilities but failed to either protest or to submit additional documents to refute said assessments, thus making them "final, executory, and demandable."

ASIA-PACIFIC

Japan's Nikkei share average fell on Thursday as investors wasted little time taking profits in tech shares which rallied the

previous day on Apple's strong quarterly earnings. The Nikkei ended 0.3 percent lower at 20,029.26 points. "The Japanese market rose ahead of U.S. markets after Apple's earnings so investors were quick to lock in gains," said Norihiro Fujito, a senior investment strategist at Mitsubishi UFJ Morgan Stanley Securities. The Dow climbed above the 22,000 mark overnight for the first time, buoyed by Apple Inc's healthy quarterly iPhone sales. But other tech stocks such as Applied Materials fell, while Philadelphia SE Semiconductor Index dropped 0.7 percent. "Although Apple surged overnight, other U.S. tech stocks were weak, and that's why investors quickly decided that the overall market would not continue to benefit from 'the Apple effect' and Japanese companies like Tokyo Electron fell today," Fujito added. Chip equipment maker Tokyo Electron Ltd shed 2.4 percent, while Advantest Corp stumbled 2.9 percent. Bucking the trend, ANA Holdings Inc soared 5.4 percent after Japan's biggest airline by revenue said its first-quarter operating profit rose 80 percent due to brisk business on international routes and after taking control of low-cost arm Peach Aviation Ltd. Market reaction was muted to Prime Minister Shinzo Abe's reshuffle of his cabinet on Thursday, as he attempts to regain public support hurt by a series of scandals. "The correlation between opinion polls and Japanese stocks is seen weak for now," said Takuya Takahashi, a strategist at Daiwa Securities, adding that unless Abe's support rate declined sharply from the current level, the impact from political developments on the Japanese market should be limited. Abe had until recently been seen as likely to win a third term as head of his ruling Liberal Democratic Party (LDP), guaranteeing him the premiership and putting him on track to be Japan's longest-serving prime minister. But his support has fallen below 30 percent in the recent polls, hit by opposition-fanned suspicions of Abe's favouritism to a friend, as well as voter perceptions that he and his aides have grown arrogant in office. The broader Topix ended nearly flat at 1,633.82.

Chinese shares lost ground as liquidity concerns persisted and a private survey showed growth in China's services sector

slowed in July as new business growth eased. The Caixin China services PMI slipped to 51.5 from 51.6 in June. The benchmark Shanghai Composite index dropped 12.13 points or 0.37 percent to 3,272.93 while Hong Kong's Hang Seng index was down 76


points or 0.28 percent at 27,531 in late trade. Hong Kong stocks followed other Asian markets lower on Thursday, as investors paused for breath after recent strong gains in

financial and resources firms. The Hang Seng index fell 0.3 percent, to 27,531.01 points, while the China Enterprises Index lost 0.5 percent, to 11,002.20 points. The financial and information technology sectors led the decline, while gains were seen in material and telecommunications shares. China Unicom Hong Kong gained 2.3 percent as Beijing seeks to revitalize state-owned firms through changes to their management structure. China Shenhua, the largest coal producer, slid 1.5 percent, and was the biggest drag on the energy sector. New China Life Insurance, one of China's leading life insurance operators, dropped 3.3 percent, sending the financial sector lower. China Shenhua and New China Life are dual-listed in Shanghai and Hong Kong. The index measuring price differences between dual-listed companies in Shanghai and Hong Kong stood at 127.09. It widened to 129.04 last month, its widest since August 2016. A value above 100 indicates Shanghai shares are pricing at a premium to shares in the same company trading in Hong Kong, and vice versa.

Japanese Prime Minister Shinzo Abe, beset by scandals and falling support, opted for safe hands over fresh faces in a cabinet reshuffle on Thursday but the changes may not boost his support to the extent he seeks. Many ministers are being reappointed, such as Finance Minister Taro Aso, or are taking up posts they have held before, some in Abe's first 2012 cabinet. One exception is new Foreign Minister Taro Kono, known for his willingness to criticize the ruling party and a frankness unusual for a Japanese politician. Abe also appointed longtime ruling party policy veteran Toshimitsu Motegi as new economy minister overseeing structural reforms, which are part of the premier's "Abenomics" stimulus policies aimed at reviving the stagnant economy. "The economy remains our top priority," Abe told a news conference after the reshuffle, apologizing for the scandals he described as having harmed public trust in his policy handling. "We'll seek to end deflation by accelerating a virtuous economic cycle." Motegi lauded the achievements of Abenomics but said more had to be done, especially to raise the potential growth rate. "We will focus on improving the level of skills in the work force and make investments in the seeds of future growth," he told a news conference. Opinion polls show support for Abe has plunged to its lowest since he returned to office in December 2012 with a promise to revive Japan's stale economy and bolster its defenses, endangering his goal of revising the pacifist constitution. Abe had until recently also been seen as likely to win a third term as head of his ruling Liberal Democratic Party (LDP) and thus the premiership, putting him on track to be Japan's longest-serving prime minister. But support in recent polls has fallen below 30 percent, with the opposition fanning suspicions of Abe's favoritism to a friend and voters believing that he and his aides have grown arrogant in office. He was also hurt by the LDP's defeat by a novice political party in a July assembly election. The market appraisal of the reshuffle was lukewarm. "Interpreting it positively, he's re-assembled his first cabinet with hands-on people prioritizing economic revival," said Hiroyuki Fukunaga, chief executive at Investrust. "But it also seems as if we've returned to that time." New Foreign Minister Kono, a former administrative reform minister, has a degree from Georgetown University in Washington and worked as an aide for several U.S. politicians. "In the current state of confusion and flip-flop in Washington, Kono's deep and broad network of personal connections will be a huge asset," Jesper Koll, head of equity fund WisdomTree Japan, said in an email. One of Kono's major tasks will be to coordinate closely with the United States, Japan's closest ally, in the face of North Korea's missile and nuclear development programs. "As a result of these issues, which have worsened the security environment surrounding Japan, we will have to strengthen our relationship with the United States more than ever before," he told a news conference. Besides Aso, Trade Minister Hiroshige Seko and Chief Cabinet Secretary Yoshihide Suga, who has drawn criticism as the face of a cabinet that many voters feel came to take them for granted, will remain in their posts. Internal Affairs Minister Seiko Noda, often spoken of as a possible future female premier, may have been added in an attempt to woo women voters, who are less enthused by the Abe government than men. Despite Abe's promises to create a society "where women can shine," the cabinet now has only two women, down from three in the last and five in one of his previous cabinets - a sign of how far women still have to go in the LDP, said Misako Iwamoto, a women's studies professor at Mie University.

Japanese Prime Minister Shinzo Abe said on Thursday reviving the economy remains his newly-created administration's top

priority, stressing that he will continue to take steps to end deflation. "The economy remains our top priority," Abe told a news conference after reshuffling his cabinet, adding that newly appointed Economy Minister Toshimitsu Motegi will oversee further structural reform efforts. "We'll seek to end deflation by accelerating a virtuous economic cycle," he said.

Kabbage Inc, a U.S. online lender for small businesses, said on Thursday it had raised $250 million in equity funding from

SoftBank Group Corp (9984.T), the latest fintech investment by the Japanese technology conglomerate. That is the largest equity investment in such lenders outside of China so far, according to data provider CB Insights. The Atlanta-based startup, which operates in North America and Europe, will use the cash to add lending products and other types of financial services, it said in a statement. Kabbage plans to launch in Asia within the next 18 months, co-founder and Chief Executive Rob Frohwein said in an interview. "We believe that our system can be deployed rapidly on an international basis." He declined to disclose Kabbage's new financial services. Kabbage is among a group of young companies that use digital technologies to lower lending costs and offer credit faster than brick-and-mortar institutions. Founded in 2009, Kabbage sells its technology to large banks to provide credit online, and has provided nearly $3.5 billion in funding to small businesses. Its technology powers automated lending for banks Banco Santander SA (SAN.MC), ING Groep NV (INGA.AS) and Scotiabank (BNS.TO). SoftBank, led by Chief Executive Masayoshi Son, has become a prolific global investor in technology startups. In 2015 it invested $1 billion in San Francisco-based online student lender Social Finance, known as SoFi. While online lending is expanding, the sector has faced growing pains, including softer institutional investor demand due to concerns about loan quality. This has made it harder for such lenders to raise funding, leading analysts and market participants to suggest the sector might be headed for consolidation. In March Reuters reported that Kabbage was looking to raise a new round of equity funding for potential consolidation, with listed competitor On Deck being one of its acquisition targets. Kabbage has no "specific plan" to buy On Deck, Frohwein said. "We look at all sorts of opportunities, but it needs to be in spaces that are not similar or overlapping with what we do."

Western Digital Corp on Thursday said it still intends to invest in a new memory chip production line along with Toshiba Corp,

despite the Japanese joint venture partner saying that it would go it alone. Toshiba said earlier it would go ahead with the investment to build the Fab 6 equipment line in Yokkaichi without Western Digital as the two failed to reach an agreement about the investment. "While we are disappointed by Toshiba's announcement, the agreements governing the JVs give us the right to participate in investments in Fab 6 equipment along with Toshiba and that is exactly what we intend to do," Western Digital said in a statement.

China held a drill on Thursday with internet service providers to practice taking down websites deemed harmful, as the country's

censors tighten control ahead of a sensitive five-yearly political reshuffle set to take place later this year. Internet data centers (IDC) and cloud companies - which host website servers - were ordered to participate in a three-hour drill to hone their "emergency response" skills, according to at least four participants that included the operator of Microsoft's cloud service in China. China's Ministry of Public Security called for the drill "in order to step up online security for the 19th Party Congress and tackle the problem of smaller websites illegally disseminating harmful information", according to a document circulating online attributed to a cyber police unit in Guangzhou. An officer who answered the phone in the Guangzhou public security bureau confirmed the drill but declined to elaborate. President Xi Jinping


has overseen a tightening of China's cyberspace controls, including tough new data surveillance and censorship rules. This push is now ramping up ahead of an expected consolidation of power at the Communist Party Congress this autumn. The drill asked internet data centers to practice shutting down target web pages speedily and report relevant details to the police, including the affected websites' contact details, IP address and server location. China's Ministry of Public Security and China's cyberspace administration did not respond to faxed requests for comment. Several service providers, including 21Vianet Group and VeryCloud, issued notices to users, warning of possible temporary service disruptions on Thursday afternoon as a result of the drill, which were confirmed to Reuters by their customer service representatives. Nasdaq-listed 21 Vianet Group is China's largest carrier-neutral internet data center services provider according to its website, and counts many Western multinationals including Microsoft, IBM, Cisco and HP among its clients. It runs Microsoft's Azure-based services in China. 21 Vianet Group did not immediately respond to an emailed request for comment. China has been tightening its grip on the internet, including a recent drive to crack down on the usage of VPNs to bypass internet censorship, enlisting the help of state-owned telecommunication service providers to upgrade the so-called Great Firewall. Apple last week removed VPN apps from its app store, while Amazon's China partner warned users not to use VPNs.

Foreign investors increased their holdings of Chinese bonds for a fifth consecutive month in July, but official data showed little

evidence that the country's one-month-old scheme to ease bond market access for overseas investors has had a significant impact on trading. Holdings of Chinese treasury bonds by overseas investors rose by 37.82 billion yuan ($5.62 billion) in July to 487 billion yuan, according to Reuters' calculations based on data from China Central Depository and Clearing Co (CCDC), the official bond clearing house. Increases in holdings of Chinese treasury bonds and some corporate bonds offset a net decrease in holdings of policy bank bonds. Data showed that foreign investors increased their holdings of all Chinese bonds by 37.8 billion yuan in July to 841.5 billion yuan. For the first seven months of the year, foreign holdings of Chinese debt rose 62.6 billion yuan. While the monthly increase in holdings of all Chinese bonds was the highest since September 2016, the numbers appear to reflect Chinese money lured home from overseas by a stable yuan and relatively high onshore rates, rather than significant new interest among foreign buyers prompted by the Bond Connect scheme. Yields on benchmark 10-year Chinese government bonds were at 3.644 percent on Thursday, up 98 basis points from lows in October. "In the early days, it's mainly the overseas companies of Chinese institutions that are coming in (through Bond Connect). Later there should be real overseas institutions. Overseas investors need time," said David Qu, markets economist at ANZ in Shanghai. Described by regulators as a significant step toward increasing cooperation between capital markets in mainland China and Hong Kong, the Bond Connect scheme began on July 3 with the opening of "Northbound" trade, allowing eligible Hong Kong and overseas institutions to buy and sell onshore bonds. Since then, the programme has been slow to take off as many overseas investors adopt a wait-and-see attitude to increased participation in the onshore bond market. The 7.05 billion yuan in aggregate first-day trading volumes through Bond Connect, described as "brisk" in a statement by CFETS, represented a small fraction of trades in a market where a single trader chat group can produce daily trade volumes of 10 billion yuan. Regulators have not released additional Bond Connect data since July 3. In an emailed response to questions from Reuters, a spokeswoman at Hong Kong Exchanges and Clearing did not provide trading data, but said that 24 onshore institutions are participating in the programme as dealers, providing quotations to more than 150 overseas institutional investors. Seventy overseas institutions participated in trade on the launch day. Income Partners, a Hong Kong-based asset manager specialising in Asian fixed income, bought onshore paper through Bond Connect on July 3, but had not made any further trades through the programme since then, said Raymond Gui, senior portfolio manager. "It's true that we haven't traded more after the first day, but that's because it's our medium-term allocation and the onshore market hasn't moved much since then," he said. He said that the company remains interested in using the scheme in addition to its existing quota for investing in onshore bonds through the RQFII program, and sees particular value in Chinese government and policy bank bonds. Market participants say that the potential inclusion of China's $9 trillion bond market into major global bond indexes would prompt large inflows into the market, with some arguing that the Bond Connect itself removes some barriers to inclusion. But, Bank of America Merrill Lynch Rates Strategist Yang Chen said in a note on Wednesday that while it represents a useful addition to existing programmes, "the Bond Connect alone does not increase the chance of potential inclusion much, as hedge funds and interest-rate derivatives remain excluded, at least on paper."

Malaysia’s bonds are coming back in favor but the respite may be brief. The level of the nation’s foreign reserves is coming

under scrutiny as investors brace for outflows from emerging markets. The lowest reserve adequacy in Asia is sapping demand for the securities just as they are recovering from the longest sell-off by foreign investors in eight years. Relatively high foreign ownership and an acceleration in inflation from last year are adding to risks as major central banks sound increasingly hawkish on interest rates. “There has been a rebound of flows into Malaysia bonds after huge redemptions late last year,” said Desmond Soon, head of investment management for Asia ex-Japan at Western Asset Management Co. in Singapore, which oversees $433 billion.“But considering Malaysia’s FX (foreign exchange) reserve coverage, the number remains vulnerable to a significant change in global risk appetite.” Malaysia’s reserves are sufficient to finance 6.5 months of imports, according to data compiled by Commerzbank AG using a 12-month moving average. That compares with 9.9 months for Indonesia, 10.8 for Thailand, 11.2 months for the Philippines, and 21.6 for China. Bank Negara Malaysia’s reserves amount to just 1.1 times the amount of short-term debt on issue, Commerzbank estimates. The corresponding ratio is 2.8 for Indonesia, 3.7 for the Philippines and 4.3 for India. While a concern to investors, the ratios don’t faze Malaysian policy makers. “Malaysia’s level of foreign-exchange reserves is adequate for our stage of economic development, domestic market structure and external position,” Bank Negara Governor Muhammad Ibrahim said in a speech last week in Kuala Lumpur. “Malaysia’s reserves are well within the adequacy range, placing us in a comfortable position relative to regional peers and fulfilling recognized global standards.” Bank Negara’s international reserves are sufficient to finance 7.9 months of retained imports, according to the central bank’s calculations, higher than Commerzbank’s estimate. Malaysia’s reserves have dropped for four straight years, declining to $93.3 billion in September 2015, from as high as $141.4 billion in May 2013. They climbed back to $99.1 billion as of July 14 as the ringgit strengthened, according to central bank data. “Foreign-exchange reserves are still low relative to the near term risk of outflows,” said Julian Wee, a senior market strategist at National Australia Bank Ltd. in Singapore. “This weak foreign-exchange reserves position will play a greater role during strong dollar periods, wherein Bank Negara has to be far more cautious about intervening to slow a fall in the ringgit, thereby leading to underperformance.” Global funds have started to return to Malaysian bonds after cutting holdings for five straight months through March, the longest streak since December 2008. They bought 15 billion ringgit ($3.5 billion) during April and May, after selling 59 billion ringgit in the five months through March. Malaysia’s 10-year bond yields have dropped almost half a percentage point to 3.99% since reaching an eight-year high of 4.46% in November. The ringgit has strengthened to 4.2873 per dollar from as weak as 4.5002 in January and the median forecast in a Bloomberg survey of analysts is for it to end the year at 4.27. Pioneer Investment Management Ltd. said in June it’s cautiously positive on ringgit bonds, while Schroder Investment Management Ltd. likes the ringgit due to Malaysia’s positive macroeconomic conditions. While Commerzbank points out the weakness in Malaysia’s reserves, it sees positives in the nation’s economic fundamentals. “A stabilization in FX reserves, the currency, and volatility should all bode well for sentiment toward Malaysian government bonds,” said Charlie Lay, an analyst at Commerzbank in Singapore. “Healthy domestic demand and firm exports should also reinforce the positive macro picture.” Sentiment toward Malaysian bonds may also be affected by the ongoing scandal over state investment company 1Malaysia Development Bhd. and the central bank’s forecast for inflation to accelerate this year. 1MDB failed to make payments totalling more than $628 million to Abu Dhabi’s sovereign wealth fund as part of a settlement over a debt dispute,


according to a filing to the London Stock Exchange on Tuesday. Inflation surged to an eight-year high in March amid a recovery in energy prices. The central bank said that month it expects consumer-price gains to average 3% to 4% this year, up from 2.1% in 2016. Accelerating inflation, coupled with strengthening domestic demand, has prompted Natixis SA and United Overseas Bank Ltd. to flag that an interest-rate increase may be on the way. Bank Negara has kept its benchmark at 3% since July 2016 and said last month headline inflation is expected to moderate in the second half of the year. “Reserve adequacy is toward the low end, which is one factor the market latches onto in periods of broader weakness,” said Wilfred Wee, a fund manager at Investec Asset Management Ltd. in Singapore, which oversaw $124 billion as at end-June. “If Bank Negara can stabilize the ringgit and inflation, and inflation expectations moderate further, the appeal of Malaysia government bonds can improve.”

REST OF THE WORLD

European shares fell back on Thursday as energy and banking stocks dragged broader indices, while retail was a bright spot

after an upbeat set of results from Britain's Next. The pan-European STOXX 600 slid 0.3 percent as cyclical sectors weighed, while euro zone blue chips fell 0.6 percent. Britain's FTSE 100 slipped 0.2 percent as investors awaited the Bank of England's monetary policy decision. German stocks underperformed peers, down 0.4 percent as Siemens and Beiersdorf fell after results. "German equities have been strongly impacted by the euro over the course of the last few weeks," said Pierre Bose, head of European strategy at Credit Suisse. "We have also had some negative sector headlines on autos and industrials which have definitely weighed." The DAX has fallen more than 6 percent from its record high hit on June 19. "Earnings momentum and revisions have not been very strong in Germany but they are no worse than the middle of the pack, so the discount you are seeing relative to the rest of the euro zone is not fully merited," Bose added. Energy stocks fell 0.9 percent, weighed by Finnish refiner Neste which dropped 7.4 percent after second quarter profit missed expectations. Norwegian oil services firm TGS also fell 5.3 percent, with traders citing slightly lighter revenues for the second quarter. The oil and gas sector is the worst performer in Europe this year and the only one trading in the red. While banks overall fell on the day, shares in Italy's largest bank Unicredit bucked the trend, climbing 4.6 percent after reporting forecast-beating profits for the second quarter. Unicredit helped Italy's blue-chips outperform, up 0.2 percent. Shares in Tenaris meanwhile were suspended after sharply dropping at the open, after earnings were released overnight. Credit Agricole shares fell 0.5 percent despite the bank's profits beating estimates. Some traders cited concerns over one-off items flattering the earnings numbers. German industrial giant Siemens fell 3.1 percent to the bottom of the DAX after it delayed its healthcare IPO and earnings missed estimates. French stationery supplier Bic jumped more than 6 percent to the top of France's SBF 120 index after reporting sales up 3 percent in the first half. Retailer Next jumped 9 percent, helping retail stocks outperform, after the British firm returned to sales growth in the second quarter, boosted by improved product ranges and a better online offer. Deutsche Telekom was a rare gainer on the DAX, up 0.9 percent after its profit beat. Exane strategists upgraded their view on the telecoms sector to 'overweight', saying after underperformance this year the second-quarter earnings season has been better. "We see a favourable top-down environment for outperformance," they wrote. Of the 56 percent of MSCI Europe companies having reported earnings for the quarter, 62 percent have either beaten or met estimates. Basic materials, energy and financials were leading the sector table in terms of forecast-beating results, while utilities and industrials have seen the most forecast misses. In a further sign that Europe's economy and the outlook for monetary policy has turned a corner, the Czech central bank raised its main interest rate - becoming the first central bank in the European Union to embark on a new tightening cycle in more than five years. Its decision to deliver its first rate hike since 2008 lifted the Czech crown. "There is definitely a change of trend in interest rates," said TD Securities head of emerging markets strategy Cristian Maggio. "I think the Czechs are more in need of normalising rates because they have held them so low for such a long time... The ECB will be the last one to move in the region, but the market will be anticipating it."

The S&P 500 and the Nasdaq fell on Thursday, weighed down by Amazon.com, Apple and other top-shelf technology stocks,

while the Dow Jones Industrial Average edged up to a seventh straight record high. Stocks lost a little ground late in the session after the Wall Street Journal reported that Special Counsel Robert Mueller has impaneled a grand jury in Washington to investigate allegations of Russia's interference in the 2016 U.S. presidential election. "It's more distraction for the White House and less stability," said Chris Zaccarelli, chief investment officer at Cornerstone Financial Partners. "It definitely was market moving." The S&P 500 information technology index .SPLRCT, which has led other sectors in 2017, dipped 0.35 percent. Apple lost 1.0 percent after hitting a record high the day before. It and Amazon.com (AMZN.O), down 0.90 percent, weighed more than any other stocks on the S&P 500. Silicon Valley electric carmaker Tesla (TSLA.O) jumped 6.50 percent after reporting quarterly results above Wall Street's expectations. Analysts, on average, expect S&P 500 earnings to have grown 11.8 percent and they project earnings up 9.2 percent for the September quarter, according to Thomson Reuters I/B/E/S. The S&P 500 has risen 11 percent in 2017 and is trading at 18 times expected earnings, pricey compared to its 10-year average of 14, according to Thomson Reuters Datastream. "Earnings are supporting this market and consumers are supporting it from a macroeconomic standpoint," said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. "This is a Goldilocks economy, good enough to push the market higher, no bubbles in sight." The Dow Jones Industrial Average .DJI edged up 0.04 percent, or 9.86 points, to end at 22,026.1, an all-time high. On Wednesday, the Dow rose above 22,000 for the first time. "When you hit these major milestones it's not unusual to trade sideways for a few days," Blancato said. The S&P 500 .SPX lost 0.22 percent to 2,472.16 and the Nasdaq Composite .IXIC dropped 0.35 percent to 6,340.34. Wall Street has shrugged off a recent failure by a Republican-controlled Congress to overhaul healthcare legislation as well as doubts about how easily President Donald Trump will be able to fulfill promises to cut taxes and increase infrastructure spending. Investors are watching economic data for clues on the health of the economy ahead of the keenly awaited monthly payrolls data on Friday. Labor Department data on Thursday showed weekly jobless claims fell last week, pointing to a tightening labor market, while a report from the Institute for Supply Management showed its non-manufacturing index fell to 53.9 last month from 57.4 in June. Yum Brands (YUM.N) fell 2.30 percent, while Dish Network (DISH.O) lost 4.52 percent after releasing their earning reports. Avon Products (AVP.N) fell 10.71 percent after the cosmetics seller posted an unexpected quarterly loss and said its CEO will step down. About 6.6 billion shares changed hands in U.S. exchanges, above the 6.1-billion average over the last 20 sessions.

The number of Americans filing for unemployment benefits fell last week, pointing to a tightening labor market that likely keeps


the Federal Reserve on course to announce plans next month to start reducing its massive bond portfolio. Labor market strength was also underscored by another report on Thursday showing U.S.-based employers last month announced the fewest job cuts in eight months. But a moderation in services sector activity to an 11-month low in July put a wrinkle in the brightening economic outlook. The services sector accounts for more than two-thirds of the U.S. economy and analysts worry that the slowdown, if sustained, could keep inflation tame. "The services economy is cooling, which makes the Fed's goal of 2 percent inflation a little harder to achieve," said Chris Rupkey, chief economist at MUFG in New York. "But with the labor market tight, the Fed can continue mopping up the stimulus provided to fight the financial crisis and recession." Initial claims for state unemployment benefits decreased 5,000 to a seasonally adjusted 240,000 for the week ended July29, the Labor Department said. Economists had forecast claims falling to 242,000. Claims have now been below 300,000, a threshold associated with a healthy labor market, for 126 straight weeks. That is the longest such stretch since 1970, when the labor market was smaller. The labor market is near full employment, with the jobless rate at 4.4 percent. The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 2,500 to 241,750 last week, the lowest level since May. Economists believe that labor market tightness will encourage the Fed to announce a plan to start offloading its $4.2 trillion portfolio of Treasury bonds and mortgage-backed securities in September. The U.S. central bank is, however, expected to delay raising interest rates until December because of low inflation. The Fed has raised rates twice this year. The claims data has no bearing on July's employment report, which is scheduled to be released on Friday, as it falls outside the survey period. According to a Reuters survey of economists, nonfarm payrolls probably increased by 183,000 jobs last month after surging by 222,000 in June. The unemployment rate is seen falling one-tenth of a percentage point to 4.3 percent. The U.S. dollar .DXY initially firmed against a basket of currencies on the claims data but gave up gains after the services sector survey. Prices for U.S. Treasuries rose, buoyed in part by the Bank of England's decision to keep interest rates at a record low and downgrade its economic and inflation forecasts. U.S. stocks were mixed, with the S&P 500 <.SPX) and the Nasdaq .IXIC falling, but the Dow .DJI setting a new record high. In a separate report on Thursday, global outplacement consultancy Challenger, Gray & Christmas said U.S.-based employers announced 28,307 job cuts last month, down 9 percent from June and the fewest number since November 2016. Retailers planned to cut 3,862 jobs in July. They were closely followed by the healthcare products and services sector where employers planned 3,634 layoffs. "While retailers are cutting the most jobs this year, those companies are also announcing the most hiring," said John Challenger, chief executive officer of Challenger, Gray & Christmas. "New retail jobs could be going to places like fulfillment and distribution centers." Retailers have accounted for 245,616 of the 556,493 new jobs that have been announced so far this year, according to Challenger tracking. Online retail giant Amazon (AMZN.O) plans to hire about 50,000 workers this month at its warehouses and sorting centers. A third report from the Institute for Supply Management (ISM) showed its non-manufacturing index fell to a reading of 53.9 last month, the lowest since August 2016, from 57.4 in June. A reading above 50 in the ISM index indicates an expansion in the services sector. "The ISM report is clearly a big disappointment and suggests that the economy may have lost some momentum going into the third quarter," said Andrew Hunter, an economist at Capital Economics. "But it is worth remembering that these monthly surveys have always been volatile." Last month, a gauge of new orders received by services industries fell to 55.1 from 60.5 in June. A measure of services sector employment dropped 2.2 points to 53.6. Nine industries reported increasing employment and four said they had cut payrolls. Some companies said they "continued to refine workforce through efficiencies" and others reported "filling more open positions."

BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System – 04 August 2017

Signature Verification & Forgery Detection – 12 August 2017 Basics of Financial Math – 12 August 2017 Process Mapping as an Operational Risk Management Tool – 19 August 2017 Advanced Excel Training for Bankers – 24 & 25 August 2017 Basic Course on Corporate Governance for Savings & Loan Associations, Rural Banks and

Cooperatives - 25 & 26 August 2017 Tax Insights – Understanding the Key Issues and Trends Affecting Banks and Other Financial

Institutions – 26 August 2017 Counterfeit Detection – 26 August 2017 Basics of Fixed Income Securities – 02 September 2017 BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System

(Board of Directors) – 08 September 2017 – 1:00 to 5:00pm Bond Duration – 09 September 2017 Updated Guidelines on Sound Credit Risk Management (Includes BSP Cir. No. 908: Agricultural

Value Chain Financing Framework and BSP Cir. No. 941: Amendments to the Regulations on Past Due and Non-Performing Loans) – 09 September 2017

Basic Leadership and Effective Supervision Seminar (BLESS Program) for Bank Supervisors – 14 & 15 September 2017

BSP Cir. No. 706 as Amended by BSP Cir. No.950, AMLA Law & the AML Risk Rating System – 15 September 2017

Overview of Business Continuity Management ISO 22301: Aligning to BSP Cir. No. 951 – 16 September 2017

Preparing for PFRS 9 Compliance by Philippine Banks – 16 & 23 September 2017 IT Security & Auditing – 23 September 2017 Spot, Forwards and FX Swaps – 23 September 2017 Macros Training for Bankers – 28 & 29 September 2017 Operational Risk Management Guidelines – 29 September 2017 Related Party Transactions – 29 September 2017 Interest Rate Swaps – 30 September 2017 Training the Bank Trainers – 05 & 06 October 2017 Updated Guidelines on Sound Credit Risk Management (Includes BSP Cir. No. 908: Agricultural

Value Chain Financing Framework and BSP Cir. No. 941: Amendments to the Regulations on Past Due and Non-Performing Loans) – 07 October 2017

A Regulatory Perspective on Trust Activities & Administration – 06 & 13 October 2017 Bootstrapping – 07 October 2017 Currency Swaps / Forward Rate Agreement – 14 October 2017 BSP Circ. No. 706 as Amended by BSP Cir. No.950, AMLA Law & the AML Risk Rating System –

20 October 2017


Supervisory Expectations on the ICAAP – 20 October 2017 Financial Options – 21 October 2017 Project Management Framework – 21 October 2017 Code of Champions (A Leadership Effectiveness Program for Bankers) – 27 October 2017 Fraud Risk Management – 28 October 2017 Professional Selling Skills – 09 & 10 November 2017 Operational Risk Management Guidelines – 10 November 2017(CEBU CITY) Related Party Transactions – 11 November 2017(CEBU CITY) BSP Circ. No. 706 as Amended by BSP Cir. No.950, AMLA Law & the AML Risk Rating System –

17 November 2017 BSP Supervisory Process and CAMELS Rating System – 17 November 2017 Signature Verification & Forgery Detection – 18 November 2017 Accounting for Non-Accountants with Financial Statement Analysis – 23 & 24 November 2017 Fraud Risk Management – 25 November 2017 BSP Circ. No. 706 as Amended by BSP Cir. No.950, AMLA Law & the AML Risk Rating System –

01 December 2017

For details, please contact BAIPHIL via telephone (853-4457/519-2433) or email ([email protected]).

BAIPHIL BOARD OF DIRECTORS FY 2017-2018 WITH HON. NESTOR A. ESPENILLA, JR. Seated (L-R): Myrna E. Amahan, Domingo B. Gavino Jr., Liza L. Ortiz, Hon. Nestor A. Espenilla Jr., Irene DL. Arroyo, Maria Teresita R. Dean and Blesilda P. Andres

Standing (L-R): Arnel A. Valles, Racquel B. Mañago, Herminio J. Matute, Restituto C. Cruz and Romel D. Meniado


AUGUST 1-15

1 Ricardo P. Lirio – Past President 11 Imelda B. Capistrano – Wells Fargo Bank NA

5 Angelita L. Esguerra – Associate Life Member 13 Jeanne Frances T. Chua – Century Savings Bank

7 Ana Rose T. Kwan – Philippine National Bank 13 Luisa A. Lucin – Philippine Trust Co

8 Antonio V. Viray – Past President 14 Lyneth L. Derequito – CARD Bank Inc

10 Edel Mary D. Vegamora – Bank of Commerce

TOTAL RETURN SWAP - A total return swap is a swap agreement in which one party makes payments based on a set rate, either fixed or variable, while the other party makes payments based on the return of an underlying asset, which includes both the income it generates and any capital gains. In total return swaps, the underlying asset, referred to as the reference asset, is usually an equity index, loans or bonds. The asset is owned by the party receiving the set rate payment. Total return swaps allow the party receiving the total return to gain exposure and benefit from a reference asset without actually owning it. These swaps are popular with hedge funds because they get the benefit of a large exposure with a minimal cash outlay. The two parties involved in a total return swap are known as the total return payer and the total return receiver.

WEB PAGES - Web pages are what make up the World Wide Web. These documents are written in HTML (hypertext markup language) and are translated by your Web browser. Web pages can either be static or dynamic. Static pages show the same content each time they are viewed. Dynamic pages have content that can change each time they are accessed. These pages are typically written in scripting languages such as PHP, Perl, ASP, or JSP. The scripts in the pages run functions on the server that return things like the date and time, and database information. All the information is returned as HTML code, so when the page gets to your browser, all the browser has to do is translate the HTML. Please note that a Web page is not the same thing as a Web site. A Web site is a collection of pages. A Web page is an individual HTML document. This is a good distinction to know, as most techies have little tolerance for people who mix up the two terms.


REFERENCE COMPILED AND PREPARED BY: RESEARCH AND INFORMATION COMMITTEE FY 2017-2018

BPI Asset Management Business World Philippine Daily Inquirer Philippine Star GMA News ABS-CBN News Philippine Stock Exchange Philippine Dealing System Reuters

Bloomberg CNN / CNBC SCMP / Japan Times Wall Street Journal Investopedia Goodreads TechTerms IT Information Exchange Life Hacks

Director: Maria Teresita R Dean (ChinaBank Savings) Chair: Carlota A. Bacani (ANZ Bank) Members: Sheryll K. San Jose (Equicom Savings Bank) Rachelle A Fajatin (Equicom Savings Bank)

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

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