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BAIPHIL Market Watch – 22 May 2017

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BAIPHIL MARKETWATCH

22 May

2017

Legend Improvement / Up Deterioration / Down No Movement

FINANCIAL MARKETS AT A GLANCE

PHILIPPINES

Financial Rates Current Previous

USD/PHP 49.8700 49.8050

30-D PDST-R1 2.9816% 2.6375%

91-D PDST-R1 2.7217% 2.6589%

180-D PDST-R1 2.9064% 2.2982%

1-Y PDST-R1 2.8169% 2.8030%

10-Y PDST-R1 5.0596% 4.9961%

30-D PDST-R2 2.9738% 2.6375%

91-D PDST-R2 2.7217% 1.9631%

180-D PDST-R2 2.8667% 2.2961%

1-Y PDST-R2 2.8228% 2.8020%

10-Y PDST-R2 5.0504% 4.8449%

Stock Index Current Previous

PSEi 7,767.72 7,757.69

Market Cap (Php Trillion) 13.096 13.074

Total Value (Php Billion) 5.968 7.492

PSEi Performers Last Price % Change

Top Gainers

Petron Corporation 10.68 + 2.69

Jollibee Food Corporation 203.00 + 1.50

MERALCO 278.80 + 1.38

Top Losers Ayala Land Inc 37.40 - 0.40

SM Investment Corporation 775.00 - 0.51

Semirara Power & Coal 158.00 - 0.63

ASIA-PACIFIC


NIKKEI 19,590.76 19,553.86

HANG SENG 25,174.87 25,103.21

SHANGHAI 3,090.93 3,090.14

STRAITS 3,216.92 3,216.00

SET 1,549.64 1,543.79

JAKARTA 5,791.88 5,629.47

Currency Exchange Current Previous

USD/JPY 111.2600 111.0400

USD/HKD 7.7630 7.7847

USD/CNY 6.8830 6.8930

USD/SGD 1.3860 1.3909

USD/THB 34.3200 34.4800

USD/IDR 13,292.00 13,340.00

REST OF THE WORLD


FTSEuro First 300 1,539.13 1,528.63

FTSE 100 7,470.71 7,445.21

DAX 12,638.69 12,570.20

CAC 40 5,324.40 5,283.77

DOW JONES 20,804.84 20,663.02

S&P 500 2,381.73 2,365.72

NASDAQ 6,083.70 6,055.13

Various Current Previous

EUR/USD 1.1204 1.1107

GBP/USD 1.3033 1.2950

Gold Spot (USD/oz) 1,251.70 1,251.70

Brent Crude(USD/bbl) 53.82 52.58

3-M US Treasury Yield 0.89% 0.89%

10-Y US Treasury Yield 2.24% 2.23%

30-Y US Treasury Yield 2.91% 2.91%

PHILIPPINES

The local stock barometer firmed up slightly yesterday as domestic investors picked up shares when the index neared the 7,700

barrier. Reversing losses in morning trade and eventually tracking the overnight rebound in Wall Street, the main-share Philippine Stock Exchange index (PSEi) added 9.93 points or 0.13 percent to close at 7,767.62 on selective buying. For the week, the PSEi lost 43.25 points or 0.5 percent from last Friday’s closing of 7,724.37 due to escalating political jitters in the US and the lower-than-expected Philippine gross domestic product (GDP) growth rate of 6.4 percent year-on-year in the first quarter. Market consensus expected a Philippine GDP growth rate of at least 6.7 percent for the quarter. Yesterday, the day’s gains were led by the industrial and services counters while the holding firm, mining/oil and property counters slipped. Value turnover for the day stood at P5.97 billion. Local investors supported the PSEi’s slight rebound as foreign investors were net sellers to the tune of P559.48 million. There were 108 advancers that beat 73 decliners while 58 stocks were unchanged. The PSEi was led higher by Petron Corp., which rose by 2.69 percent on expectations of higher earnings and following its inclusion in the MSCI global small cap index. International Container Terminal Services Inc., Jollibee and Metro Pacific all gained more than 1 percent while Universal Robina Corp., GT Capital, BDO Unibank, JG Summit, Alliance Global Group Inc. and Metrobank also contributed gains. Outside of the PSEi, one notable gainer was Melco Crown, which rose by 3.66 percent. The operator of City of Dreams Manila has swung to profitability in the first quarter of the year on higher gaming bets and higher winning rate. Meanwhile, the PSEi was led lower by Ayala Land, SM Prime, Semirara, LT Group, Security Bank


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and Ayala Corp. LT Group slipped by 0.55 percent after President Duterte signed an executive order setting strict rules on smoking in public areas.

The Philippine peso declined further against the dollar on Friday, weighed by lingering disappointment over the first quarter

economic growth data. The local currency shed 6.5 centavos to close at P49.870:$1 from 49.805 on Thursday. "The depreciation most probably came from the lower-than-expected GDP (gross domestic product) growth released recently," Union Bank of the Philippines chief economist Ruben Carlo Asuncion told GMA News Online. The Philippine Statistics Authority (PSA) reported the economy grew by 6.4 percent in the first quarter of the year, compared with a median expectation of 6.8 percent. Asuncion, however, expects the negative sentiment towards the country's GDP will dissipate "because the overall economic growth is still positive ... Moving forward, investors will continue to factor in the overall growth momentum." Week-on-week, the local unit shed 11 centavos from P49.760:$1 on May 12. Year-to-date, it softened by 15 centavos from 49.720 on December 29, the last trading day of 2016.

In the local fixed income market, the yield curve rose as investors took caution ahead of the Php15 billlion Treasury bill auction

on Monday. Yields went up by 16.88 bps on average, led by the 42.16 bps hike in the short-end of the curve.

The Philippine Government is contemplating on floating retail dollar-denominated bonds targeted at overseas Filipinos, tapping what it described as uninvested dollar inflows to fund its ambitious infrastructure program, Budget Secretary Benjamin E. Diokno said on Friday. It will be the first time for the Duterte administration to issue such bonds, potentially to be packaged as “infrastructure bonds”, although the Arroyo government in April 2010 employed a somewhat similar scheme -- multicurrency retail treasury bonds catering to OFWs to raise $346 million. Those bonds carried three-and five-year maturities. “I’ve been thinking about that for a long time. You give it to the OFW, kasi diba padala sila ng padala [because they’ve kept sending money home]. But I think the option for them is to invest,” said Mr. Diokno on the sidelines of the BusinessWorld Economic Forum in Taguig on Friday. Remittances have been a main driver of the economy -- manifested in retail spending -- and have been keeping the country’s balance of payments healthy. Earlier this week, the central bank reported that remittances surged to a record high of $2.6 billion in March for an annual growth of 10.7%. The central bank expects remittances to grow by 4% this 2017, although new estimates could be announced this month. Cash remittances hit a record high of $26.9 billion last year, 5% higher than the $25.607-billion tally in 2015. “Because the criticism is they do not invest, so why not invest in small denominated dollar bonds, tapos magiging parang [and then it will be like an] infrastructure bond,” Mr. Diokno said. The Budget chief did not elaborate but he said the idea is that the offer would be similar to retail treasury bonds, but with Filipinos abroad as the market, and that the papers will be denominated in US dollars instead of the local currency. “I think we can start having such fund. Infrastructure fund. You invest in your country, your country’s future,” Mr. Diokno said. “Most of them (OFWs) have children, mga anak na pag-aaralin nila [children whom they need to provide education for] after five, 10 years. So that’s better, they can participate in nation building,” he added. The Budget Secretary said that the offer should attract demand, with government bonds being a “riskless” investment, as investors see sustained confidence in the country signaled by the oversubscription of the recently issued 20-year Treasury bonds. On May 16, the Treasury Bureau fully awarded the fresh bonds maturing in early May 2037, raising a total of P15 billion. The Duterte administration plans to spend P8.4 trillion on infrastructure and social spending over the medium term in a bid to boost the economy at a 7-8% pace next year until 2022 from 6.9% in 2016, and slash poverty incidence to 13-15% from 21.6% in 2015. In funding these infrastructure projects, the government programmed a “hybrid” financing scheme utilizing a mix of government funds, Official Development Assistance (ODA) loans, as well as public-private concessions. But on Thursday, Malacañang said the Philippines has declined fresh aid from one of its biggest foreign aid donors -- the European Union -- arguing that the grants set conditions the Duterte government viewed as “interfering in internal affairs.” Mr. Diokno, while noting that economic managers were not informed of the decision, had said there are other funding options. The government also borrows in the form of Treasury bonds and bills to fund maturing debts and plug the budget deficit. Government borrowings from the debt market are usually done by the Bureau of the Treasury although the entire financing program is a work of the interagency Development Budget Coordination Committee (DBCC) whose chairman is the Budget Secretary.

The country’s first quarter year-on-year economic growth of 6.4 percent disappointed financial markets as this was below the

consensus forecast of at least 6.7 percent expansion. The first-quarter GDP growth was next to China’s 6.9 percent and surpassed the rate of growth in most of the emerging Asian economies, Socioeconomic Planning Secretary Ernesto M. Pernia said in a press conference. However, the first-quarter figure was below the 6.8 percent a year ago and the 6.6 percent a quarter ago. It was also the slowest growth since the 6.3 percent posted in the fourth quarter of 2015, Philippine Statistics Authority data showed. “Our first-quarter performance bodes well for the economy as it is broadly in line with our target of 6.5-7.5 percent for this year. It is, however, lower than expected, and for this we were somewhat downcast because we were expecting something around the midpoint of (the target) growth range,” said Pernia, who also heads state planning agency National Economic and Development Authority. Pernia blamed “base effects,” pointing out that “growth last year was high due to election spending, the impact of which has already dissipated.” PSA data showed that the increase in government spending on public goods and services slowed to 0.2 percent year-on-year in the first quarter from 11.8-percent jump a year ago. According to Pernia, “the changing of the guard in the government and reorientation of programs take time to settle, and this slowed government spending for the quarter.” “Note, however, that this was better than during the previous administration where government consumption spending and public construction contracted by about 15 percent and 37 percent, respectively. Of course, this could also mean we have benefited from reforms that have been put in place by the previous administration. This further demonstrates the strategy of the Duterte administration, which is to sustain good practices of previous administrations, and improve upon or correct those that require correction or improvement,” Pernia said. Neda Undersecretary Rosemarie G. Edillon said public construction was expected to catch up in the next few quarters as the government was scheduled to roll out more infrastructure projects under its “build, build, build” mantra launched last month. The government plans to roll out more than P3.6 trillion worth of infrastructure projects from 2018 until 2020 while also jacking up to 75 from 55 the number of so-called flagship, “game-changing” projects that the administration aims to start and complete before 2022. A total of P8 trillion to P9 trillion will be spent by the Duterte administration in the next six years to build vital infrastructure such that the share of infrastructure spending to GDP will rise from 5.3 percent this year to 7.4 percent in 2022. Also, the Neda chief said the “pretty high” rate of increase in prices of basic goods during the first three months tempered economic growth. Based on PSA data, household expenditure grew 5.7 percent in the first three months, slower than the 7.1-percent growth recorded in 2016. Inflation averaged 3.1 percent in the first quarter, a little past the midpoint of the government’s 2-4 percent target range for 2017. In contrast, the average inflation rates in the past two years were below 2 percent. “Incidentally, the main factor bringing up inflation had to do with food prices, including rice. That’s why we have to be very careful about having enough buffer stock of rice especially during the lean months,” the Neda chief said. “With improving global demand, growth in exports was robust. Exports of goods grew by 22.3 percent, the fastest since the third quarter of 2010, and exports of services grew steadily by 14.3 percent in the first quarter of the year,” Pernia noted. “On the supply side, agriculture made a great comeback with 4.9-percent growth rate after several quarters of negative growth or decline, contraction of the agriculture sector. The services sector continued to be the main driver of growth as it grew by 6.8 percent. The 6.1-percent growth in industry also remained respectable with the boost in manufacturing, although tempered by the slowdown in construction and utilities, and decline in mining and quarrying production,” Pernia added. For the remainder


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of the year, Pernia said “the domestic economy is poised to maintain its growth momentum with the recovery of external trade and private sector’s steadfast optimism.” “The government has also been busy laying down a strong foundation for sustainable and equitable growth with an ambitious infrastructure program, among the many reforms and programs contained in the Philippine Development Plan 2017-2022, among which are infrastructure spending and as well as other government programs, including investment in human capital,” Pernia said, referring to the Duterte administration’s medium-term socioeconomic blueprint. Still, Pernia said the economy should be shielded from external downside risks such as market volatility from continuing US interest rate normalization, geopolitical tensions, as well as looming protectionism in the West. Other risks to economic growth include a possible El Niño, according to Pernia, which could be countered by continuous production support for farmers, timely importation of rice as well as distribution of seeds. For outgoing Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr., “the outlook for growth remains strong, even as the first-quarter outturn is slower than what the market anticipated.” “The BSP will continue to provide an operating environment that would support non-inflationary domestic demand. As in the past, we will continue to calibrate our policy levers so these provide the appropriate incentive structure for businesses to plan with risk-adjusted returns in mind,” Tetangco said in a text message to reporters. “It’s (first-quarter GDP growth was) lower than expected although it remains robust. What is good is that exports have started to recover and contribute to overall output growth in support of domestic demand. The challenge is to further strengthen infrastructure spending to help boost jobs and increase income as well as extend urbanization and economic activities in key areas from Luzon to Visayas and Mindanao. Hence, legislative action on the tax reform package is critical so that infrastructure and economic activities are sustained with actual public revenues. Productivity and efficiency enhancements are critical today to ensure our competitiveness and sustain the growth momentum,” BSP Deputy Governor Diwa C. Guinigundo said in a separate text message. Finance Secretary Carlos G. Dominguez III, meanwhile, remained optimistic that the full-year growth target remained achievable. “GDP expansion in the year’s first three months illustrates that growth remains steady and could gain momentum for the rest of the year partly as a result of this administration’s ‘Dutertenomics’ strategy to stimulate economic activity and achieve financial inclusion for all Filipinos in the long haul via an aggressive expenditure program on infrastructure, human capital formation and social protection,” Dominguez said in a statement. “Solid macroeconomic fundamentals plus strong domestic consumption and investment sentiment have enabled, and will continue to enable, our country to sustain its pace as one of the world’s fastest-growing economies on the Duterte watch despite the ever-changing global market conditions,” Dominguez added. Moving forward, Dominguez said “we hope our legislators could help Malacañang sustain the growth momentum this year and onwards by acting soon enough on the first package of the comprehensive tax reform program that is now pending in the Congress, as it will help guarantee a steady revenue stream for the Duterte administration’s high—and inclusive—growth agenda.”

The country’s balance of payments (BOP) position swung to a surplus of $917 million in April, a reversal of six straight months of

deficits, the latest Bangko Sentral ng Pilipinas (BSP) data released Friday showed. The BOP surplus—which meant more dollars entered the economy—last April was the biggest since February 2015’s $985 million as well as wider than the $184 million posted during the same month last year. Last month’s surplus, hence, also halted the monthly deficits posted from October last year until March. But at the end of the first four months, the year-to-date BOP position remained at a deficit of $78 million, although much narrower than the $994-million deficit a month ago. The end-April deficit was also about three times bigger than the $25 million recorded a year ago. “It is very encouraging that the April BOP position reversed to a surplus position and mitigated the cumulative BOP shortfall for the first four months of 2017. While the data on the actual and specific BOP components have yet to be released, we expect the support to be coming from the recovery in merchandise exports, sustained overseas Filipino workers’ remittances and business process outsourcing revenues, and additional inflows from tourism and foreign investments,” BSP Deputy Governor Diwa C. Guinigundo said in a text message to reporters. “As a result, the BSP’s foreign exchange operations netted in large foreign exchange inflows, including investment income. The national government’s deposits of its foreign exchange borrowings also contributed to the favorable outturn even as the national government’s debt servicing moderated the inflows,” Guinigundo said. The BOP is a summary of all the businesses the country does with the rest of the world. BOP data is tracked closely to ensure that the supply of dollars in the economy remains ample to allow the government as well as businesses to transact with the rest of the world. Sources of dollar income for the country include remittances from Filipinos overseas, sales from exports of goods and services, as well as foreign investments and revenues from industries such as business process outsourcing and tourism. The country uses the dollars it earns for the importation of goods, such as food and fuel and also for external debt payments. For 2017, the BSP targets a BOP surplus of $1 billion even as the current account is seen narrowing to $800 million as the projected 10-percent growth in imports would outpace the 2-percent exports growth. According to the BSP, the 2017 BOP position outlook was based on the following assumptions: A pickup in the global growth outlook; gradual increase in oil prices; less volatility in global financial markets; as well as continued favorable growth prospects for the domestic economy. Foreign direct investment net inflows were expected to hit $7 billion this year, while foreign portfolio investment would post a net outflow of $900 million. Gross international reserves would likely rise to $84.7 billion in 2017, equivalent to 8.8 months of imports, while cash remittances from overseas Filipinos would further increase to $27.7 billion.

Investors’ anticipation of sustained strong economic growth in the first quarter attracted a net inflow of foreign portfolio

investment or “hot money” worth $51.49 million in April, the Bangko Sentral ng Pilipinas said. Last April, the $1.32 billion in portfolio investment inflow exceeded the $1.27 billion in outflow, reversing the net outflow posted during the two preceding months as well as a year ago, latest BSP data showed. The “hot money” inflow that month was up 3.6 percent year-on-year but down 3.9 percent month-on-month. April outflow dropped both from a year ago and a month ago by 22.1 percent and 30.8 percent, respectively. “This development may be attributed to investor reaction to the World Bank’s view that the Philippines will continue to be a top performer in the region, coupled with positive sentiment in anticipation of the country’s strong gross domestic product number for the first quarter of 2017,” the BSP explained in a statement. In April, the World Bank kept its 2017 gross domestic product (GDP) growth forecast for the Philippines of 6.9 percent to match last year’s stellar performance, citing that “the government’s commitment to further increasing public infrastructure investment is expected to sustain the country’s growth momentum through 2018 and reinforce business and consumer confidence.” But on Thursday, the government reported that GDP growth eased to 6.4 percent in the first quarter, the slowest expansion since the 6.3 percent posted in the fourth quarter of 2015. Socioeconomic Planning Secretary Ernesto M. Pernia blamed the lower-than-expected first-quarter growth rate to slower government spending, higher prices of consumer goods as well as the lack of a boost from election-related expenditures unlike the previous year. Pernia nonetheless pointed out that the Philippines remained among the fastest-growing among emerging Asian economies during the first three months, just behind China’s 6.9-percent expansion. Last month, “about 67.8 percent of investments registered in April went to Philippine Stock Exchange-listed securities (pertaining to mainly holding firms, banks, property companies, food, beverage and tobacco firms, and telecommunication companies); 32 percent to peso government securities; and the 0.2-percent balance to other peso debt instruments,” the BSP said. Transactions in peso government securities and other peso debt instruments yielded net inflows of $82 million and $3 million, respectively, while those for PSE-listed securities resulted in net outflow of $33 million during the month, the BSP added. The top five sources of foreign portfolio investments in April were Hong Kong, Malaysia, Singapore, the United Kingdom and the US, accounting for more than four-fifths of the total. The US remained the top destination of hot money outflow, cornering more than three-fourths that month, according to the BSP. At the end of the first four months, however, portfolio investments recorded a net outflow of $516.04 million as the end-April outflow of $5.34 billion were more than the $4.82 billion in inflow,


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BSP data showed. The four-month net outflow was a reversal of the $56.26-million net inflow during the same period last year. The BSP attributed the end-April net outflow to “international developments such as the United States’ air strike against Syria and the increase in US interest rates.” Based on the latest BSP data as of May 5, the $5.72 billion in “hot money” outflow outpaced the $5.08-billion inflow, resulting in a net outflow of $644.3 million. During the week of May 1-5, a $128.26-million net outflow was registered as the $382.23 million in outflow was higher than the inflow of $253.97 million. For 2017, the BSP has projected portfolio investment to yield a net outflow of $900 million by yearend. Foreign portfolio investments are in the form of placements in publicly listed shares, government and private sector IOUs and deposit certificates. Portfolio investments are considered short-term bets—hence the nickname “hot money”—because these placements may be pulled out quickly.

The Bangko Sentral ng Pilipinas said that the outlook for growth remains strong -- even as the economy expanded less than

anticipated in the first quarter -- signaling that its current monetary policy remains appropriate although economists continue to expect hawkish moves later this year. Bangko Sentral ng Pilipinas Governor Amando M. Tetangco, Jr. said the 6.4% gross domestic product (GDP) growth continued to point to an upbeat momentum for the year, even as the GDP reading fell below the government’s official 6.5-7.5% target range and the 6.8% median forecast in a BusinessWorld poll. “The outlook for growth remains strong, even as the Q1 outturn is slower than market anticipated,” Mr. Tetangco said in a text message to reporters, while noting that the central bank “will continue to provide an operating environment that would support non-inflationary domestic demand.” “As in the past, we will continue to calibrate our policy levers so these provide the appropriate incentive structure for businesses to plan with risk-adjusted returns in mind.” The government attributed the slower growth last quarter to base effects in the absence of election-related spending that was seen during the same period in 2016, even as exports and farm output rebounded during the period. BSP Deputy Governor Diwa C. Guinigundo said current borrowing rates have proven appropriate in sustaining the country’s rosy growth story. “In the last meeting of the Monetary Board, it was clarified that there is no basis for a change in policy. Output dynamics is an important consideration of monetary policy, but promoting price stability is our fundamental basis in reviewing monetary policy,” Mr. Guinigundo said in a separate text message. “With economic growth continuing to be generally robust and inflation readings showing some uptrends, it is difficult to even think of monetary easing.” The BSP kept policy rates unchanged during its meeting last week, citing manageable inflation and firm domestic activity. Inflation logged 3.4% in April, which brought the four-month average to 3.2%, well within the central bank’s 2-4% target band. This marked the 21st straight meeting when the BSP stood pat on its monetary policy stance, except for procedural cuts introduced in June 2016 to usher in the shift to an interest rate corridor. At present, the main policy rate stands at 3%, with the floor and ceiling rates at 2.5% and 3.5%, respectively. On the other hand, several economists said conditions are ripe for the central bank to consider raising rates this year. “In an environment of strong growth and rising inflation, our call for tightening in monetary policy to start in Q3 remains,” ANZ Research economist Eugenia Fabon Victorino said in a market commentary sent yesterday, referring to the bank’s forecast of two rate increases this year and three more in 2018. Analysts have said that the BSP will likely turn more hawkish in the coming months, and will soon see the need to raise rates by 25 basis points after the US Federal Reserve pursues another round of tightening expected in June, which would be the second “lift-off” for the year. Tim Condon, chief economist for ING Bank Asia, said that while a rate hike may be in the offing, the BSP still has ample space to hold fire on policy rates: “The slower GDP growth could prompt a reassessment of the monetary policy path, where the consensus is forecasting two 25bp rate hikes to 3.50% in the second half of the year.” “With inflation evidently well-anchored the BSP could entertain a prolonged period of steady policy settings,” Mr. Condon added. Analysts from DBS Bank, Security Bank Corp., and IHS Markit have retained their 6.4% estimate for full-year GDP growth, saying that prospects remain strong even though the forecast would slow down from a 6.9% climb in 2016. If realized, that consensus estimate meant the government will miss its growth goal for the year. Economic managers, however, said the Philippines remains on track to hit its growth goal with its aggressive infrastructure spending plan seen to pick up steam later this year. Research firm Capital Economics sees a 6.5% GDP growth this year, while Nomura bank expects a 6.7% pace. For its part, the International Monetary Fund is seeing a 6.8% climb for the Philippine economy this 2017.

The Bangko Sentral ng Pilipinas (BSP) would unlikely cut banks’ reserve requirement in the near term with inflation expected to

peak by August, Deputy Governor Diwa C. Guinigundo said on Monday. “Part of the reason for putting up the IRC (interest rate corridor) is to help reduce the reserve requirement. All things being equal, yes, we will do it. But today, what are the facts? The inflation rate is now doing 3.4 percent and 3 percent for 2017 and 2018, respectively. In fact, by August of this year, we expect inflation to be about 3.7-3.8 percent,” Guinigundo said in a forum organized by the Financial Executives Institute of the Philippines. “If you’re in a situation when inflation is seen increasing until the third quarter of the year, is this the best time to reduce the reserve requirement? [It’s] a form of easy monetary policy. At this time, it’s not good to be talking about easy monetary policy when the inflation rate is surging. At the same time, you have as your backdrop the tightening of monetary policy in the US,” Guinigundo said. The reserve requirement ratio stands at 20 percent, which means that for every P1 of deposit and deposit substitute generated by banks, regulators require that 20 centavos be set aside as buffer, representing the portion that banks cannot lend out. “Once we’re in a more hospitable monetary and price condition, there’s no reason for the BSP to keep the reserve requirement up there,” Guinigundo said. “There’s always a time for everything. The reduction in reserve requirement will come in the fullness of time,” he added. Since June last year, the BSP conducts weekly term deposit facility (TDF) auctions as part of its implementation of the IRC, aimed at bringing market rates closer to the policy rate of 3 percent. The TDF auctions mop up excess liquidity.

The Securities and Exchange Commission (SEC) has suspended the primary license of 104 lending companies for not having a

secondary license in January to April, as part of the agency's crackdown on illegal lenders. “In addition to the 84 lending companies whose primary licenses were suspended on March 7, 2017 for failure to obtain a Certificate of Authority (CA), the Commission suspended the primary licenses of 20 more lending companies on April 6, 2017 for the same reason," SEC Commissioner Emilio Aquino said in a report to Finance Secretary Carlos Dominguez III. A primary license is a certificate of registration issued by the commission to companies, and a secondary license is the certificate of authority to engage in regulated activities like lending and financing, as well as to securities dealers and brokers, and stock exchanges and investment houses, SEC spokesperson Armand Pan earlier told GMA News Online. “The Commission will revoke the primary license of the suspended lending companies once they fail to secure from the SEC an order lifting their suspension before May 22, 2017,” Aquino noted. The regulator is expanding its investigations into lending companies suspected of either violating the law or not complying with SEC requirements, the SEC commissioner said. Aquino said the SEC will deploy enforcement teams in the regions through its extension offices in the cities of Cebu, Baguio, Davao, Tarlac, Iloilo Legazpi, Zamboanga and Cagayan de Oro. Aquino noted there was a spike of nearly 500 percent in the number of lending companies registered in the first four months of 2017. “There has been a significant increase of 477 percent in registration of lending companies for the first four months of 2017. A total of 248 new lending companies were registered in the first four months of this year compared with only 43 last year,” Aquino said. Over 200 informal lenders applied for SEC registration after the commission initiated a crackdown on illegal and usurious lending late last year. Two advisories have been issued by the SEC to inform the public about prohibited lending practices under the law and encouraged informal lenders to register with the Commission, according to SEC chairperson Teresita Herbosa. The first advisory, issued in October last year, cited provisions of Republic Act No. 9474, or the Lending Company Regulation Act, which makes it illegal for firms to act as lending companies or investors unless registered with the Commission as lending companies. Herbosa said the SEC issued


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another advisory in November to encourage “five-six” lenders to register. The advisory warned informal lenders facing complaints for violating RA 9474 and those engaged in “fraudulent, oppressive and illegal practices in lending to borrowers including those violating the Truth in Lending Act” that they will be investigated for possible prosecution.

The Bureau of Fisheries and Aquatic Resources (BFAR) is pushing for the inclusion of additional funds to cover the protection

and conservation of the 13-million hectare (ha) Philippine Rise, formerly known as Benham Rise. BFAR submitted the proposed P5-billion allocation for the Philippine Rise, which lies to the east of northern Luzon, on Wednesday to the Department of Budget and Management during the technical committee hearing on the Department of Agriculture’s (DA) budgetary requirements for 2018, Agriculture Secretary Emmanuel F. Piñol said in his Facebook post on Thursday. This will hike the DA’s proposed budget to P218 billion from the original P213 billion, which will mainly fund programs for greater food security and productivity. “The proposed funding was a last-minute addition to the budgetary proposals as a result of the directive of President (Rodrigo R.) Duterte for government to protect and conserve the rich fishing area which is now being poached by foreign fishing vessels,” Mr. Piñol said. The undersea feature formerly known as Benham Rise, a continental shelf located 250 kilometers off the northeast coast of Luzon recognized by the United States as within the Philippines’ economic zone, is believed to be potentially rich in mineral and natural gas deposits apart from its diverse marine ecosystem. Chinese vessels were reportedly spotted conducting research activity in the area in March. Prior to this incident, Mr. Duterte has been working toward warmer relations with Beijing. The initial budget will fund the establishment of a research and monitoring facility in the Benham Bank, a 15,000-ha area in the middle of the Philippine Rise which at a depth of 50 meters is considered the shallowest portion of the Rise. The facility will serve as a “refuge” area for Coast Guard vessels and Filipino fisherfolk. It can accommodate helicopters and long-range drones deployed to monitor the area. The proposal was a result of the Philippine Rise Expedition composed of scientists and government officials led by Mr. Piñol on May 5 to 7 to explore what could be done to protect and conserve the resource-rich grounds.

A group of truckers and customs brokers warned of possible port congestion as empty containers start piling up in the seaports

of Manila. "Ang nakikita namin bumalik 'yung sitwasyon noong 2014 at 2015 na nagkaroon ng port congestion, dahil napupuno na naman ng empty containers ang mga port," Aduana Business Club (ABC) Vice President Abe Rebong told GMA News Online. "Maaring magtaas ang presyo ng commodities pagnagkaroon ng port congestion kasi naiipit ang imports at magkukulang ang supply," he said. He urged the government to scrap the Terminal Appointment Booking System or TABS in the absence of any law or executive order that supports its legality. Yard utilization at the Manila South Harbor has reached 89 percent or beyond the ideal 80 percent, Rebong claimed. The situation has prompted Asian Terminals Inc., operator of the Manila South Harbor, to issue a notice that it will no longer accept empty containers to address the pile up, he said. Rebong claimed the pile up was triggered by the long holidays from the Holy Week and the 30th Association of Southeast Asian Nations Summit last month. He also blamed the various requirements imposed on port stakeholders, particularly with the implementation of TABS. Implemented in February 2015, TABS compelled truckers to schedule cargo pickups, export deliveries and returning empty containers by online booking. As a result, however, TABS turned out to be more of an inconvenience to truckers and brokers than anything else, Rebong claimed. "Sa TABS, let's say, ngayon may gate pass kami, the following days hindi na 'yun pwede ... At may bagong penalties, whether early or late arrival, may corresponding penalties ... Ang laki ng penalty ranging from P300 to P10,000," he said. To prevent another port congestion crisis, Rebong said port stakeholders are calling on the Bureau of Customs (BOC) to exercise its authority by making sure that a Customs administrative order is properly implemented. Customs Administrative Order 01-2015 specifies that empty containers must be returned to the port of origin within 90 days. The ABC has sent a letter to Customs Commissioner Nicanor Faeldon, however, Rebong said they have not received any reply from the BOC chief yet. The 2014-2015 port congestion crisis led to P70 billion of economic losses, according to estimates by the National Economic and Development Authority.

The Philippines will no longer accept grants from the European Union (EU) particularly those that would allow the bloc to interfere in Manila’s autonomy, Malacañang said yesterday. The country, according to the Finance chief, will let go around 250 million euros (approximately $278 million) in development aid from EU -- most of them are targeted at strife-torn areas in Mindanao -- to block the 28-member bloc from interfering in Manila’s internal affairs. “We’re supposed to be an independent nation,” Executive Secretary Salvador C. Medialdea said in a text message to reporters on Thursday. Manila’s new policy was confirmed by EU’s ambassador here, Franz Jessen, who was quoted in a report by Reuters as saying: “The Philippine government has informed us they no longer accept new EU grants.” He did not elaborate. That decision by the Philippine government came on the heels of President Rodrigo R. Duterte’s arrival from his second visit in China, bringing home with him billions of dollars in pledges. Mr. Duterte railed against the EU almost as soon as he took office on June 30 last year, after the bloc started raising concerns over the new government’s bloody anti-drug campaign. Last year, the firebrand leader challenged Europe and the US to withdraw assistance if they disagree with his brutal measures against drug-traffickers. “How do you look at us? Mendicants?” he said. Thousands of alleged drug-traffickers have been killed in Mr. Duterte’s bloody drug war, with human rights watchers saying many fatalities in the crackdown could be extrajudicial killings committed by cops and vigilantes. In a press briefing yesterday, Presidential Spokesperson Ernesto C. Abella said the fresh policy of rejecting new grants from EU was based on a recommendation by the Department of Finance (DoF) to Mr. Duterte. Mr. Abella also clarified that the directive only applies to a “particular” grant offered by EU that has an “item” which supposedly “allows” the bloc to meddle in Manila’s “internal policies.” He declined to disclose the specifics of the said grant. Asked what the Philippine government qualifies as “interference,” Mr. Abella said it does not “necessarily” mean comments made by EU officials on the Duterte administration. “Comments do not necessarily interfere but when it begins to impose certain conditionalities that will interfere with the way we handle it, then we consider that objectionable,” the Palace spokesman said. Finance Secretary Carlos G. Dominguez III disclosed in a text message to reporters yesterday that EU offered an aid package worth $280 million, which involves a review of the Philippines’ “adherence to the rule of law.” “That specific grant that is considered interference in our internal affairs,” Mr. Dominguez added. The EU hands out grants or direct financial contributions for development projects in foreign countries like the Philippines, which is drawn from the European Development Fund. In receiving the aid, nations must comply with 27 international conventions on human and labor rights, environmental protection, and good governance. In 2015, EU had more than doubled its grant assistance to the Philippines to 325 million euros (P17 billion) for 2014-2020, channeling “a more than proportional amount” of it to Mindanao as part of the bloc’s contribution to the peace process. At least two economic managers of the Duterte administration said the new policy on dealing with EU aid was not discussed with them or the Cabinet. Ernesto M. Pernia, director-general of the National Economic and Development Authority (NEDA), Manila’s move to cut aid from EU might still change because “it’s not a policy decision.” “I will not take that as a policy,” Mr. Pernia told reporters yesterday. “It is more of a reaction to criticism. I don’t think it’s going to remain as such.” Budget Secretary Benjamin E. Diokno said the Philippines can turn to other funding sources as it opted out of securing additional grants from EU. The economy, he said, can still borrow more despite rising global interest rates. “To me, the impact isn’t as big because those are technical assistance grants. There are other fund sources which we can access,” Mr. Diokno told reporters on the sidelines of the Open Government Dialogues, while noting that he has not officially heard of the decision to reject EU aid. Asked for clarification on other economic managers being left out of the decision to cut EU aid, Mr. Abella said: “As far as I know, the recommendation came from the DOF. So it’s not entirely accurate that they (economic managers) were not consulted.” Europe had been funding about 100 community projects across the country. The government will respond to the needs of communities that are depending on the renewal of EU grants, Mr. Abella assured, adding that Manila can forego conditional EU assistance given bullish economic


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prospects. “The Philippines is growing by leaps and bounds. It’s second fastest growing right now in Asia. We have to gain a certain confidence in ourselves. This is exactly the kind of mentality the President wants the Filipinos to avoid -- a mendicant attitude,” Mr. Duterte’s spokesman said. The Philippines currently enjoys the EU Generalized System of Preferences Plus (GSP+), which has allowed tariff-free export of over 6,000 local products to that economic bloc since December 2014. The scheme requires compliance with 27 international conventions, which include a commitment to never reinstate the death penalty. In late-January, Europe sent a team to the Philippines to ascertain the government’s compliance with the condition as talks for a prospective bilateral free trade agreement (FTA) proceeds. Department of Trade and Industry Secretary Ramon M. Lopez said in a mobile phone message to journalists yesterday that the Philippines does not want the GSP+ to be affected by the government’s rejection of EU grants. “It’s not a grant and their commercial transactions that can mutually benefit both sides. EU should continue to engage the country,” Mr. Lopez said. “It’s a mutually beneficial arrangement.” In an interview last month, the trade chief said Mr. Duterte’s war on drugs could not be “sacrificed” just to maintain the trade perks provided by Europe to the Philippines. “But of course we would want to keep such a pact,” he said. In March, the EU overtook the United States and Japan as being the largest destination of exports from the Philippines, according to data from the Philippines Statistics Authority.

A group of prominent economists warned against a “populist” move to distribute free land to farmers, arguing that this will

neither boost agricultural productivity nor end rural poverty. The Foundation for Economic Freedom (FEF) – an advocacy group for good economic governance and market-friendly reforms – issued on Friday a statement reacting to reports that the government had agreed to the demand of left-wing group National Democratic Front of the Philippines to offer free land as part of the ongoing peace talks. FEF explained that restrictions on rural land imposed by the Comprehensive Agrarian Reform Law were what had been keeping farmers poor and preventing them from raising their agricultural productivity. These restrictions include the prohibition to sell or mortgage the property within 10 years from grant, prohibition to lease, and the prohibition to own more than five hectares of land, the FEF said. These restrictions prevent agrarian reform beneficiaries from accessing cheap loans from the formal financial markets and also prevent efficient farmers from working on larger tracts of land and buying out inefficient ones, the group said. “Giving out free land will not affect the situation on the ground because only 17 percent of agrarian reform beneficiaries are paying their loan amortizations. Therefore, farmers are effectively given their lands for free. Yet, agricultural productivity has remained stagnant and our farmers have remained poor,” FEF said. “Giving out free land will just be a populist measure similar to free irrigation and free cavan of rice without really solving the fundamental problem of Philippine agriculture: restrictions in the rural land market,” it added. According to the FEF, what Philippine agriculture needs is to provide the conditions for efficient farmers to introduce management, technology, and capital to farmlands by removing the restrictions on the rural land market. “Instead, we propose that agrarian reform beneficiaries be given unrestricted titles to their lands, instead of the collective Certificate of Land Ownership Awards (CLOAs), that rob farmers of economic freedom and private initiative,” FEF said.

The country’s first quarter year-on-year economic growth of 6.4 percent disappointed financial markets as this was below the

consensus forecast of at least 6.7 percent expansion. The slowdown was not just due to base effects as on a seasonally adjusted sequential basis, this implies 1.1 percent quarter-on-quarter growth, from 1.8 percent in the previous quarter, Japanese investment house Nomura said in a research note. “The main source of disappointment for us was private consumption which eased to 5.7 percent from 6.2 percent despite resilience of remittances and stronger agriculture output. Investment spending also slowed to 11.8 percent year-on-year from 18.5 percent with public sector investment seeing some unfavorable base effects. These offset the strong pick-up in exports of goods and services, which grew 20.3 percent from 13.4 percent,” Nomura said. From the supply side, Nomura noted that manufacturing improved but mining declined by 20 percent, likely reflecting the closure order on some mines announced in February. Consistent with slower investment spending, it noted that construction activity had also eased along with the services sector. Despite the disappointing first quarter growth, Nomura said it would maintain the full-year growth forecast for the Philippines at 6.7 percent. A 6.4- percent growth, it said, was still robust. “We continue to expect government spending to accelerate with the administration’s strong push to implement public sector infrastructure projects. This also bodes well for private sector spending, including consumption. Both consumer and business confidence have held up despite the government transition and associated political noise,” it said. Nomura still sees the Bangko Sentral ng Pilipinas hiking key interest rates by 50 basis points in the second semester, citing the need to curb inflation risks. ING senior economist Joey Cuyegkeng, on the other hand, noted that government spending and infrastructure activity was very slow— “a disappointment after all the hype.” “High base effects and likely some difficulty to get things moving accounted for the slowdown,” Cuyegkeng said, noting that real government spending was only up 0.2 percent year-on-year in the first quarter while real public construction activity posted only a 2 percent year-on-year growth. But the economist said he was expecting government spending to recover in the second half with the ramp-up in infrastructure spending. Meanwhile, he noted that private sector economic activity remained strong, thus perking up first quarter growth. “Momentum from private sector activity is likely to continue for the rest of the year but negative base effects would continue in second quarter since second quarter 2016 growth of private sector was also high on the back of election spending and capacity expansion as companies planned for at least a trend growth of 6-6.5 percent in the coming years,” Cuyegkeng said.

The Management Association of the Philippines (MAP) has called for the redevelopment of both Ninoy Aquino International

Airport (NAIA) and the Clark International Airport (CIA) as part of a “holistic” solution to Greater Manila Area’s clamor for a more modern, spacious and efficient aviation system. “The rapid increase in the volume of visitors to the Philippines, most of whom pass through the NAIA, calls for immediate action and the harnessing of all available resources to promptly provide the needed infrastructure and management support for the growing number of air passengers,” MAP said in a position paper. Airport infrastructure is a hot item for many business groups, which are scrambling to participate in aviation-related projects to be sanctioned by the government. The group of William Tieng, in partnership with the SM group, proposed the conversion of a former US Navy station at Sangley Point, Cavite into a new international gateway. Conglomerate San Miguel Corp. earlier proposed the construction of a new airport hub along CyberBay’s reclaimed land but amended its proposal to build a new airport instead in Bulacan, where the local government unit is perceived to be more receptive. In the case of Clark, two groups separately submitted unsolicited offers to redevelop the airport into an alternative gateway. One offer was submitted by construction and engineering firm Megawide Construction Corp. which now runs Mactan International Airport in partnership with Indian firm GMR. The Filinvest group, meanwhile, teamed up with the Gokongwei group to submit an offer to redevelop CIA. Other groups like Metro Pacific have likewise expressed interest on the project. On the other hand, conglomerate Ayala Corp. favors the redevelopment of NAIA to expand capacity and make it a more suitable main gateway for the metropolis. MAP said a city airport, such as NAIA had the “great advantage of accessibility.” As such, MAP backed Department of Transportation (DOTr)’s decision to maintain and upgrade this valuable state asset. “Many large cities in the world recognize this, so they are improving and maintaining their old airports instead of phasing them out, as some originally planned for NAIA. Tokyo is expanding its Haneda to supplement Narita. Shanghai has its HongXiao in addition to Pudong. Berlin’s Tempelhoff continues to operate in addition to Tegel. Washington, D.C. has Reagan National besides Dulles and Baltimore,” the group said. “Upgrading the existing NAIA facilities now will provide early and welcome relief to the present problem of severe passenger and aircraft traffic congestion at a time well within the term of the current administration. Pending completion of the upgrades, one quick way of mitigating the congestion in NAIA is to make Clark attractive as an alternate departure and


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arrival airport through appropriate inducements,” the group said. Meanwhile, MAP noted that a fast train between Tutuban and Clark had been presented as part of the “Build, Build, Build” program under “Dutertenomics,” the economics roadmap of Pres. Duterte. A fast train link between the two airports – passing through the metropolis at a travel time of one hour maximum – is seen enabling Clark to augment NAIA’s operations while it, at the same time, serving the needs of air travelers to and from Central and Northern Luzon. “For better connectivity and convenience of the traveling public, we suggest that the proposed fast train to Clark be extended to NAIA, instead of terminating at Tutuban, Manila,” MAP said. MAP said “in-city” check-in stations would be another vital infrastructure component, adding that these check-in stations should be easily accessible and are to be strategically located adjacent to the fast train and near either the NLEX-SLEX expressway or EDSA. One such facility could be located at the proposed fast train terminal at the junction of Gil Puyat (Buendia) Avenue and PNR line in Makati while another can be set up at the MRT3 common station in Quezon City, the paper said. “An in-city check-in facility will provide travellers the added convenience of dropping off their baggage before they board the train. Such facilities have proven their worth in large metropolitan cities, including Singapore and Hong Kong,” the association said. “An in-city check-in facility will provide travellers the added convenience of dropping off their baggage before they board the train. Such facilities have proven their worth in large metropolitan cities, including Singapore and Hong Kong,” the association said. Pending the train service, MAP recommended the setting up of transport connection from these check-in stations to NAIA and to Clark via point-to-point (P2P) airport limousine service using modern tourist-type buses that can quickly negotiate the distance. “We believe that, together with the other components of the envisioned aviation system, optimization will extend the usefulness of NAIA for another eight to ten years. However, we strongly recommend that the government look beyond that time frame and plan for the long term sustainable future of NAIA. Studies have been made to increase the airside capacity of NAIA with the construction of a new parallel runway. Others involve complementing or replacing NAIA with a new airport. It would be ideal that before the end of the current administration in 2022, a definite path be plotted for the future of NAIA,” MAP said. MAP likewise called for a centralized management of the entire aviation system under a single authority in order to allow “expeditious decision-making, better control, and efficient coordination.” “This does not preclude the setting up of a separate managing board for each facility under the supervision of the centralized authority. Also, the outsourcing of operation and maintenance (O&M) of each facility using the Public Private Partnership (PPP) mode is an option. Such outsourcing of O&M would enable the government to avail of private sector expertise, technology, and incentive system for efficient operation and maintenance of the facilities without giving up ownership and control of strategic capital assets for aviation,” the group said.

The Department of Environment and Natural Resources (DENR) has cancelled the tree-cutting permit of Ipilan Nickel Corp. (INC)

following Environment Secretary Roy Cimatu's inspection of the company's mining site in Barangay Maasin, Brooke's Point, Palawan. DENR-MIMAROPA Regional Director Natividad Bernardino, together with Cimatu, issued the order cancelling INC tree-cutting permit on Friday. The DENR MIMAROPA issued a one-year tree-cutting permit to the company on May 26, 2016 and is about to expire on the same date this year. According to INC's resident manager Ferdinand Libatiqui, around 7,000 trees have been cut already covering more than 20 hectares within the 353-hectare land in its Mineral Production Sharing Agreement granted by the government. Libatiqui argued that the company's tree-cutting activities were legal because of its pending appeal on the cancellation of its Environmental Clearance Certificate (ECC). The Mines and Geosciences Bureau (MGB), however, said that the ECC of Ipilan was cancelled on December 14, 2016, thus the company should have stopped from conducting any activity, including the cutting of trees. Cimatu emphasized that the company should face the possible charges to be filed against them. To recall, Brooke's Point Mayor Jean Feliciano earlier said she would press charges against INC for supposedly illegally cutting down thousands of trees despite the cancellation of its ECC and having no mayor's permit from the local government. Feliciano welcomed Cimatu's action, but said it had come late because a lot of trees have already been cut. Apart from the cancellation of its tree-cutting permit, the DENR also urged INC to explain why the company should not be held liable for violating Presidential Decree 705 or the Forestry Code of the Philippines. Sought for comment, Global Ferronickel Holdings Inc. President Dante Bravo said, "We already stopped any activity since May 15, long before Sec. Cimatu came to the minesite. However, it was unfortunate that it was still issued by Ms. Bernardino even before there was a proper investigation. Precisely, we stopped our said activity for the DENR to conduct an investigation first." Global Ferronickel is the parent company of INC.

Motorists should brace for another round of increase in the prices of petroleum products next week, the Department of Energy

(DOE) said on Saturday. "Domestic prices of gasoline, diesel, and kerosene may increase by around P0.40 to P0.60 per liter," Energy Undersecretary Felix Fuentebella said in a text message. "This is mainly due to oil-producing countries expected to extend proposed cut in production until March 2018," Fuentebella added. The Energy official noted that estimated oil price movements may still change pending the effect of the Friday trading, which will be assessed on Monday. The latest available data from the DOE showed diesel prices range from P26.70 to P31.91 per liter, and gasoline from P37.65 to P49.80 per liter.

Meralco announced that the decrease for May 2017 for a typical residential household will amount to PhP0.29 per kWh, thereby

bringing the overall rate to PhP9.60 per kWh from last month’s rate of PhP9.89 per kWh. This amounts to a PhP58 decrease in the total bill of a typical residential household consuming 200kWh. The rate decrease this month is mostly due to the downward movement in the generation charge. Contributing to the downward movement is the decrease in the cost of power sourced from the Independent Power Producers (IPPs) and the PSAs (Power Supply Agreements). Overall generation charge decreased this May by PhP0.2126 per kWh, from PhP5.0965 per kWh in April to PhP4.8839 per kWh for this month, inclusive of the last installment of the incremental liquid fuel cost due to the Malampaya maintenance shutdown from January 28 to February 16, 2017. Contributing to the decrease are the P0.87 per kWh decrease in the cost of power sourced from IPPs and the P0.14 per kWh decrease in PSA prices. As a result of the quarterly repricing, natural gas prices increased this month to reflect higher world crude oil prices. Despite the increase in fuel prices, there was a reduction in IPP costs because of higher plant dispatch and the recent Peso appreciation. The strengthening of the Peso against the US Dollar also contributed to the decrease in PSA costs this month. The share of IPPs and PSA purchases to Meralco’s total requirements are 38.5% and 40.6% respectively. On the other hand, there was an increase of PhP0.68 per kWh in power supplied through the Wholesale Electricity Spot Market (WESM) due to plant outages and higher power demand in Luzon. The share of WESM this month stood at 20.9%. This month, there was a slight increase of PhP0.02 per kWh in the transmission charge of residential customers, while taxes and other charges went down by a combined amount of around PhP0.10 per kWh. Meralco’s distribution, supply, and metering charges, meanwhile, have remained unchanged for 22 months, after these registered reductions in July 2015. Meralco reiterated that it does not earn from the pass-through charges, such as the generation and transmission charges. Payment for the generation charge goes to the power suppliers, while payment for the transmission charge goes to the National Grid Corporation of the Philippines (NGCP). As the end of summer approaches, Meralco once again advised its customers to continue practicing energy efficiency initiatives to help manage their electricity consumption despite the warmer weather. These include everyday household tips that may help save energy. Simple tips such as unplugging appliances when not in use to avoid “phantom load.” Using the aircon at mid-setting or at 25 degrees Celsius for maximum efficiency. Using a power board or strip which can supply power to several appliances at once and allows a user to conveniently turn them off simultaneously using just one switch. Maximizing natural light during daytime and keeping appliances well maintained to ensure optimal performance.


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Yuchengco group-led construction firm EEI Corp. has rolled out a new scaffolding and formworks rental business in partnership with two Japanese firms. The new unit JP System Asia Inc. (JPSAI) is a joint venture among EEI’s subsidiary Equipment Engineers Inc., Japan’s leading scaffolding and allied products rental company Sansin Sangyo Co. Ltd. and KYC Machine Industry Co. Ltd., a Japanese construction machine manufacturer. In a disclosure to the Philippine Stock Exchange on Friday, EEI said JPSAI had been formally launched in April. JPSAI was incorporated last December 2016 with a 60-percent stake under EEI, aiming to “bring in the Japanese scaffolding and formworks rental standards and discipline in the Philippine construction industry.” Founded in 1974, Sansin Sangyo offers numerous types of scaffolding and state-of-the-art solar panel systems. For its part, KYC Machine manufactures construction machines from the small machineries to large plants. The new venture seeks to bring in its expertise in supplying shoring and scaffolding products.

The Bureau of Internal Revenue (BIR) has filed a tax evasion complaint against a Caloocan City businessman for alleged failure

to pay nearly P2 million in taxes for 2011. Filed with the Caloocan City Prosecutor's Office on Thursday, the BIR accused Johnny Hung So of violating Section 255 of the Tax Code. Hung So is the owner of Vastlink Trading Corp. which engaged in the business of retailing office machines, equipment and computers. His prominent clients include Gentro International Products, Inc., and Philippine National Construction Corporation. Hung So was sued for failing to pay his deficiency tax liabilities for 2011 amounting to P1.61 million, inclusive of increments, broken down as follows: income tax - P0.67 million; and value added tax - P0.94 million. The BIR said Hung So was served notice of his tax liability but failed to either protest or to submit additional documents to refute said assessment, thus making it "final, executory, and demandable."

The government is now eyeing the possibility of transforming state-run Development Bank of the Philippines into an

infrastructure bank in efforts to ease the implementation of the administration's ambitious infrastructure spending program. "We want to improve the DBP. Our plan is to make it the Philippines' infrastructure bank," Finance Secretary Carlos G. Dominguez III was quoted as saying in a statement by the Department of Finance. According to the DOF, Dominguez made the remark at a meeting with Daiwa Securities Group Inc. President and CEO Seiji Nakata in Yokohama, Japan. "The DBP, in my view, lost its way for a few years so we want to redirect it like the Development Bank of Japan (DBJ Inc.)," Dominguez added. Currently, the DBP supports the government's infrastructure program through assistance in the public-private partnership (PPP) projects. It's priority lending areas include infrastructure and logistics, social services, and environmental projects. Meanwhile, the DBJ is said to be the pioneer energy and infrastructure project financier in Japan. Under its "build, build, build" thrust, the present administration plans to spend over P8 trillion to finance the so-called "golden age of infrastructure" over the next six years, with P860.7 billion allocated for big-ticket projects this year alone. Aside from the DBP, the Philippines may also secure infrastructure funding from the Asian Infrastructure Investment Bank (AIIB), of which it is a member. Earlier, the government said that the EDSA Bus Rapid Transit and the Metro Manila flood control will be two priority projects that will be presented before the AIIB for possible funding.

Philippine Airlines has announced the temporary suspension of its flights to Abu Dhabi in the United Arab Emirates as the flag

carrier conducts route assessment initiatives. PAL said that flights to and from Abu Dhabi (PR 656/657 Tuesdays/Thursdays/Saturdays) are suspended from July 8 this year until further notice. "PAL is seeking the kind understanding of affected passengers as the airline implements these operational adjustments," it said in a press statement. Ticket holders dated July 8 and onward have an option to either refund their tickets or rebook their flights to the Manila - Dubai route where they will be transported by PAL to Abu Dhabi and vice versa. PAL advised affected passengers to avail any of the said options within 30 days from their original flight dates without any rebooking or refund charges. The airline will also communicate with affected passengers via email or call-out. It will likewise notify the public once the service resumes.

PXP Energy Corp. is hoping a recently formed bilateral consultation mechanism between the Philippines and China may pave the

way for the resumption of exploration of gas resources in the South China Sea, its chairman said on Friday. PXP Energy Chairman Manuel V. Pangilinan told participants of the BusinessWorld Economic Forum that the consultative mechanism could agree on the code of conduct in the region, "which will help us explore and hopefully develop" the area. He said the Philippines needs to set aside sovereignty issues and build ties with China to move forward the exploration and development of resources in South China Sea, referred locally as the West Philippine Sea. "Our view has always been that, setting aside the sovereignty issues, which of course, are very important to the Philippines... we need a relationship. We need to deal with China. They are undoubtedly an economic and military superpower. They are the 800-pound gorilla in our backyard," he said during the forum at the Shangri-La at the Fort in Taguig City. Mr. Pangilinan said his company is encouraged that the Duterte government had provided an "accommodating environment with its open, constructive approach to China." "We know that Malampaya will start depleting in 2024. It is imperative that we start looking for alternative sources of gas now, failing which, gas will have to be imported. It's as simple as that," he said. Mr. Pangilinan said the country could not afford to simply leave the three natural gas-fired powered plants in Batangas province, with a combined capacity of around 2,000-3,000 megawatts (MW), to be "stranded." "Brownouts will ensue for certain," he said. "I know there are plans to build a gasification facility out there in Batangas and that makes sense because we don't know whether there's actually gas in the South China Sea." "Of course, we don't know whether we could come in, enter the area without some understanding with China," he said. The critical step, Mr. Pangilinan said, is to first determine if there are indeed commercial gas resources in the area. But in 2012, he said the company, then named Philex Petroleum Corp., disclosed its best estimates of the contingent resources in the north bank of service contract (SC) 72. "Those resources are equivalent to about 2.6 trillion cubic feet of gas, about the size of Malampaya when it started, plus oil and condensate gas of 65 million barrels equivalent," he said. "There's, of course, no assurance at this time that these estimates are accurate until further drilling and technical evaluations are made. So it is important again that we have to enter the area precisely to do our test drilling and that's part of our program approved by the Department of Energy (DoE). But we have not moved since 2014," he said. PXP Energy directly and indirectly owns 77.5% of Forum Energy Ltd., a London-listed company whose main asset is a controlling interest in offshore exploration SC 72 west of Palawan island in the disputed seas. SC 72 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, where SC 72 lies, is within the Philippines’ exclusive economic zone as defined under United Nations Convention on the Law of the Sea. On March 2, 2015, the DoE placed SC 72 under force majeure because the contract area falls within the disputed area, which was the subject of the arbitration process. Under the terms of the force majeure, exploration work at SC 72 is suspended from Dec. 15, 2014 until the DoE notifies Forum Energy that it may continue drilling. The Malampaya gas field began production in 2001. Its reserves is expected to start running out by around 2022 to 2024. The natural gas project delivers up to 20% of the country's electricity requirements.

Pilipinas Sheel Petroleum Corp. has gained its stockholders’ approval to expand its business to include the sale of excess

electricity through the wholesale electricity spot market (WESM), it told the stock exchange on Thursday. “We will do some operational adjustments, and just by making these operational adjustments it will allow us to sell some excess power to the grid if need be,” Cesar G. Romero, Pilipinas Shell president and chief executive officer, told reporters. The expansion of the company’s business purpose was approved by its board on April 20, and the amendment to its articles of incorporation was approved by stockholders during the


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company’s annual meeting on May 16. “Just to clarify, that selling of excess power is not the main driver of our business. We see that there is an opportunity because of the equipment we have, but our core business continues to be our highly profitable marketing businesses,” Mr. Romero said. Stockholders representing 88.71%, or more than two-thirds, of the total issued and outstanding capital stock of Pilipinas Shell voted in favor of the ratification of the board decision. “As any astute business operation, if there’s an opportunity to make extra margin on our refinery, then we will continue to do so,” Mr. Romero said. Separately, Mr. Romero said the company is “very open” to forming a partnership with other companies in building an import facility for liquefied natural gas (LNG) in the country. In the past, local and foreign companies had expressed interest in putting up a facility that will allow the importation of LNG ahead of the expected depletion of the country’s offshore natural gas find west of Palawan province starting in 2024. “It’s still very early days,” Mr. Romero said. “We are very open to partnerships with various groups including PNOC (Philippine National Oil Co.).” PNOC has previously announced that local and foreign companies have approached the state-led exploration company for a possible partnership to build an LNG import terminal, storage and re-gasification complex. “We had some exploratory conversations about it in the latter part of last year,” he said. “The key is to be able to understand how the economics would work because it’s a huge investment.” He said an LNG facility would cost between $600 million and $1 billion, thus putting it up would require partnerships to shore up funding. “The economics must be carefully understood in terms of how the investment will be recovered,” he said. Shell companies in the Philippines include Shell Philippines Exploration B.V. (SPEx). SPEx and consortium partners Chevron Malampaya LLC and PNOC Exploration Corp. operate the Malampaya natural gas platform, which supplies gas to several power plants in Batangas and to Pilipinas Shell for its refinery and compressed natural gas refilling station. The project delivers up to 20% of the country’s electricity requirements.

Integrated resort giant MGM Resorts International is not currently interested in setting up shop in the Philippines, as it sees the

market slowly becoming saturated with the new casinos operating at Entertainment City. MGM Resorts International Senior Vice-President for Global Development Ed Bowers told BusinessWorld that it has deferred looking into entering the Philippine market due to intensifying competition among casinos. “We looked at Philippines a couple of years ago, and we decided not to go there. I’d say probably partly to do with the market, certainly about the ability of the market to grow,” he said in a chance interview at the sidelines of the Global Gaming Expo Asia forum here. “There’s a country risk element in doing business in the Philippines and it’s really high. My concern is that the Philippines is maybe getting a bit oversaturated because you already got operators and there’s another one building,” said Mr. Bowers. The Philippines’ Entertainment City is envisioned as Asia’s Las Vegas-like entertainment complex. Three casinos are currently operating within the property owned by the Philippine Amusement and Gaming Corporation (PAGCOR), namely City of Dreams Manila by Melco Crown Philippines (Resorts) Corp., Solaire Resort & Casino by Bloomberry Corp. and Okada Manila by Tiger Resorts, Leisure & Entertainment, Inc. Alliance Global Group, Inc. (AGI), meanwhile, continues to work together with Malaysia’s Genting Group on the blueprint of its integrated casino-resort in the Entertainment City. Its partnership, Travellers International Hotel Group, operates Resorts World Manila. Mr. Bowers said MGM evaluates a country’s specific risks regarding regulation, market feasibility, and market size, in determining its business model. “And I don’t know whether that’s going to be too much because you need to bring people in. Whereas the local market has only a certain size,” he noted. Mr. Bowers also cited the PAGCOR, being both a casino operator and regulator, as a risk. The lack of adequate infrastructure in the country has also been flagged as a risk. The Nevada-based operator MGM Resorts International, which has multiple properties in the US and China, is currently focused on the Japanese market, according to Mr. Bowers. Asked whether they have closed its door to the Philippines, Mr. Bowers said: “No, not necessarily. We didn’t really close our doors on too many things. Sure, obviously you got Solaire and many projects so it would really be interesting to see how they’re doing.”

Eagle Cement Corp. (ECC) expects strong demand from both institutional and retail investors for its P8.6-billion initial public

offering (IPO), attracted by the company’s production efficiency, strong brand equity, and sound financials, the underwriter of the issue said. “The issue was well received by institutional and retail investors alike and we are confident that Eagle will keep this momentum as it launches the offer,” SB Capital Investment Corp. President Aurelio Noel G. Dayrit was quoted as saying in a statement. SB Capital is one of the joint lead underwriters of the IPO, along with China Bank Capital Corp. and Philippine National Bank Capital and Investment Corp. “The investors’ warm response is a strong indication of confidence in Eagle’s fundamentals and potential to be the major driver of the Philippine cement industry,” Mr. Dayrit said. ECC priced the IPO at P15 apiece. The cement firm of tycoon Ramon S. Ang will conduct a primary offer of 500 million shares worth P7.5 billion. An over allotment option of 75 million shares will enable the firm to raise up to P1.125 billion more. The offer period began on May 15 and will end on May 22, as the company targets to debut on the bourse by May 29. Upon listing, Eagle Cement will have a public float of 11.5% out of its total 5,000,000,005 outstanding common shares. Net proceeds of the IPO will be used to finance the company’s expansion, particularly the construction of a fourth production line in Cebu that will add 2 million tons to the firm’s capacity. ECC will also be building marine terminals in Cebu and Davao, in an effort to stamp the “Eagle” brand in the regions. Even before the expansion in Cebu, ECC is already looking to be the largest cement firm in the country in terms of capacity with the completion of the third production line in its Bulacan plant by 2018. By next year, ECC will have a total capacity of 7.1 million tons per annum.~~

Chelsea Logistics Corp. (CLC) has secured a $220-million bridge loan from Bank of China Ltd., the proceeds of which will be

used for the acquisition of a substantial stake in integrated transport solutions provider 2GO Group, Inc. Davao-based tycoon Dennis A. Uy, who is the founder and chairman of CLC, signed the loan agreement with Bank of China Country Head Deng Jun on Thursday. The loan is part of the $3-billion financing package the Bank of China committed “for the development of infrastructure and other strategic industries in the Philippines” during President Rodrigo R. Duterte’s state visit in China last October 2016. “Bank of China has demonstrated its commitment to be a partner in helping the Philippine economy grow, and we look forward to further cooperation with the Udenna group,” Mr. Jun said in a speech during the signing ceremony. Mr. Uy is also president and chief executive officer of Udenna Corp., parent company of CLC. The loan for CLC will be used for its acquisition of a 32% stake in 2GO through an affiliate. In March, CLC acquired the outstanding capital stock of Udenna Investments BV (UIBV), which has economic interests in KGLI-NM Holdings, Inc., which in turn has direct ownership in the controlling shareholder of 2GO, Negros Navigation Co., Inc. “Bank of China views the further development of the shipping and the logistics business to be a vital component of infrastructure development. Efficient shipping and logistics are key components to boost the foreign and domestic trade,” Mr. Jun said. The $3-billion will be rolled out for various projects in the next five years, with the bank noting that this amount is the bare minimum for the commitment and could increase in the future. “We would like to finance the infrastructure and as well finance the other important industries in the Philippines to support the economy’s growth,” Mr. Jun said. The executive added that in terms of infrastructure, they are looking at highways, tollways, and railways, while financing could also extend to trade and small to medium enterprises. Asked if the subsequent loans will involve Udenna, Mr. Jun said they are keen on working closely with the group in the future. For his part, Mr. Uy said he envisions CLC to be a super-shipping logistics company in the future, serving all the islands of the country “which complements the logistics -- serves end to end, from manufacturing up to the consumer.” The country’s conglomerates have recently ramping up their logistics businesses, with Metro Pacific Investments Corp. acquiring Ace Logistics and SM Investments Corp. purchasing shares in 2GO earlier this year. “They’re bullish about the economy. This infrastructure growth leads to more shipment of goods and with our demographic, going to the countryside, we really need shipping from one place to another,” Mr. Uy said. CLC is currently awaiting approval from the Securities and Exchange Commission for an initial public


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offering of up to P8 billion (IPO), through the sale of 546.59 million primary shares priced at a maximum of P14.63 apiece. Proceeds from the IPO will be used to fund the firm’s expansion, with P4 billion allotted for the acquisition of other firms and P2.73 billion for the purchase of more vessels and equipment.

SM Prime Holdings, Inc. returned to the fixed-income market for the first time this year, with the listing P20 billion worth of bonds

on the Philippine Dealing and Exchange Corp. “We celebrate this resurgence by now seasoned issuers such as SM Prime showing the way for other corporate issuers to tap the resources of the market,” Philippine Dealing System Holdings (PDS) group President and Chief Executive Officer Cesar B. Crisol said during the listing ceremony. The P20-billion fixed-rate bonds consist of Series G Bonds maturing in seven years with an interest rate of 5.1683%. The Philippine Ratings Services Corp. gave the issue a rating of Prs AAA, which indicates a positive outlook and that the obligor’s capacity to meet its financial commitment is strong. The bond issue of the property holding firm of country’s richest man Henry Sy, Sr. brings the total volume of listings at the PDEx to P93.04 billion. Total outstanding listed securities volume stood at P699.7 billion from the issuance of 120 securities of 43 companies. This is SM Prime’s fourth listing on the bond market, with the last one in July. The issue is also the hundredth listing since the start of the corporate bond board on the organized market in 2008. Proceeds of the issue will be used to fund the company’s capital expenditure of P5 billion per annum over the next two years. Of this, 80% will be used for residential projects, the construction of malls, and landbanking. “We expect SM Prime’s growth to continue over the years,” SM Prime Chief Finance Officer John C. Ong said for his part during the listing ceremony. SM Prime is slated to finish the construction of five new malls outside of Metro Manila this year, ending 2017 with a footprint of 65 malls in the country. The firm is also setting its sights on the Southeast Asian market, with SM Prime President Jeffrey C. Lim saying that they are currently conducting studies on which markets it can enter. “I don’t think we’ll go to all countries in the ASEAN, maybe two or three countries just to study and then we decide. Hopefully within the year we’ll get to assess,” Mr. Lim said. Mr. Lim added that they have sent people to Thailand, Vietnam and Indonesia, and could be sending people to Myanmar and Cambodia to test the market as well. “It depends on the market, if there is demand.” SM Prime’s earnings grew by 13% to P6.6 billion in the first quarter of 2017, as the company’s shopping mall business continues to grow.

PLDT Home on Thursday said it registered double-digit growth in revenues in the first three months of the year, driven by a 32%

increase in net gain in subscribers amid aggressive fiber rollout and affordable broadband plans. In a statement, PLDT HOME said its subscriber base increased by 10%, “with net adds of 340,000 subscribers during the first quarter.” Revenues from both voice and data rose 6% and 16%, respectively. PLDT Chairman and CEO Manuel V. Pangilinan noted the highest growth was seen in data services, as the company pushes for faster Internet connection. PLDT continued to expand the reach of its fiber-powered fixed line network which boasts of delivering 1 gigabit per second (Gbps) Internet speed to Filipino homes. As of end March, PLDT’s fiber-to-the-home (FTTH) service has reached more than three million homes, on track to reach 4.4 million homes by year end. Hastings Holdings, Inc. -- a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc. -- has a stake in BusinessWorld through the Philippine Star Group, which it controls.

NLEX Corporation, formerly Manila North Tollways Corp., on Thursday reported higher earnings in the first quarter driven by

strong revenues amid higher traffic volume in the North Luzon Expressway (NLEx) and Subic-Clark-Tarlac Expressway (SCTEx). The tollways arm of the Metro Pacific Group said its consolidated net income reached P1.07 billion in the January to March period, 16% up compared to the P921.61 million posted during the first quarter of 2016. “Income growth was driven by higher revenues on the back of sustained traffic growth across NLEx and SCTEx and lower cost of services,” NLEx said in a filing. It said that average daily traffic for the NLEx reached 229,633 daily vehicle entries, higher by 7% versus the same period last year, while average daily traffic in SCTEx reached 51,128, 20% higher than the previous year. The firm said based on historical traffic, the month of January is slightly below the normal average due to the end of the Christmas holidays, while traffic is “above the normal average” between February to May due to the summer holiday, which is traditionally a peak season for travel. The volume growth pushed quarterly revenues -- derived mainly from toll fees -- up by 8% to P2.79 billion, from P2.59 billion recorded during the first quarter of 2016. For the three-month period, it said toll revenues reached P2.74 billion, 7% higher from the P2.56 billion posted during the comparable period last year due to higher traffic volume. Non-toll revenues, meanwhile, rose 33% to P47.7 million from the P35.7 million recorded previously which the company attributed to higher income from toll service facilities and advertising revenues. NLEX Corp. took over the SCTEx toll facilities, as well as operations and management in October 2015. On Oct. 19, the parent company’s board of directors approved the change in the corporate name of Manila North Tollways Corp. to NLEX Corp. The Securities and Exchange Commission approved the change on Feb. 13. Last year, the parent firm also approved the proposed merger between NLEX Corp. and Tollways Management Corp. (TMC), with NLEX Corp. as the surviving entity, part of efforts to streamline the processes and services of the two firms, as well as strengthen its fiscal position to undertake bigger projects. As of April 30, 2017, it is still awaiting SEC approval for the proposed merger. NLEx is the concessionaire for the NLEx and the SCTEx projects as well as the Connector Road Project linking North Luzon Expressway and South Luzon Expressway. On the other hand, TMC is engaged in the operations and maintenance of tollways, its facilities, interchanges and related works, among others.

ASIA-PACIFIC

Japan's Nikkei share average edged up on Friday as bargain hunters snapped up financial stocks heavily sold the previous day,

but gains were limited as political uncertainty in the United States kept investors cautious. The Nikkei ended 0.2 percent higher at 19,590.76, crawling back from negative territory in early trade. The index suffered a weekly fall for the first time in five weeks, dropping 1.5 percent. Takata Corp jumped 20 percent on Friday after four automakers including Toyota Motor Corp agreed to a $553 million settlement to address claims covering owners of nearly 16 million recalled vehicles with potentially defective Takata airbag inflators. The broader Topix gained 0.3 percent to 1,559.73 and the JPX-Nikkei Index 400 rose 0.4 percent to 13,929.80.

China's main stock indexes were little changed on Friday but ended the week higher, with Shanghai shares snapping a five-week


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losing streak, as soothing regulatory comments and the central bank's injection offset worries over tighter regulations and economic growth. The blue-chip CSI300 index rose 0.2 percent, to 3,403.85 points, while the Shanghai Composite Index ended flat at 3,090.63 points. For the week, CSI300 was up 0.5 percent, while SSEC added 0.2 percent. Over the weekend, Premier Li Keqiang said China would strike a balance between financial stability, gradual deleveraging, and steady economic growth, noting the government was capable of maintaining stability in the financial markets. The market had posted five consecutive weeks of declines on concerns over Beijing's stepped-up campaign against shadow banking and that efforts to de-leverage could sap liquidity and hurt the economy. In an apparent effort to settle market nerves, China's banking regulator said risks in the banking sector were completely controllable, and the market did not have to be nervous of scrutiny. On Tuesday, China's central bank injected a net 170 billion yuan ($24.67 billion) into money market through open market operations - the most in nearly four months - to offset liquidity stress caused by corporate tax payments and maturing repos, indicating Beijing's intention to maintain market stability amid widespread concerns over policy tightening. However, according to most analysts Reuters spoke to, market sentiment remains fragile and investors are expected to be cautious, with some saying de-leveraging remains the direction of Beijing's policy despite soothing regulatory rhetoric. Investors are also worried that China's economy could witness renewed slowdown as a recovery - triggered mainly by government stimulus - peters out, said Yang Hai, strategist at Kaiyuan Securities Indeed, an official survey published this week showed Chinese stock investors' confidence fell for a second straight month in April, to the lowest in seven months, dented by economic concerns. For the week, consumer stocks outperformed among main sectors, with the index tracking those stocks rallying 4.7 percent in its best week in 10 months, while banking stocks dragged the most.

Hong Kong stocks edged up on Friday, ending the week roughly flat, as Chinese money continued to flow into the city's share

market, while index heavyweight Tencent closed at an all-time high. Sentiment was also aided by an overnight recovery on Wall Street amid political troubles in Washington. The Hang Seng index rose 0.2 percent, to 25,174.87, while the China Enterprises Index was unchanged at 10,267.39 points. For the week, the indexes were roughly flat. The market has been hovering near 21-month highs, as Chinese money poured into Hong Kong stocks. On Friday, mainland investors used 25 percent of the daily quota under the Shanghai-Hong Kong Stock Connect to buy Hong Kong equities. Most sectors rose on Friday, with IT and property shares among the leading gainers. An index tracking mainland developers rebounded more than 3 percent.

Japan tightened regulations on high-frequency trading (HFT) this week, passing into law measures that will require HFT firms to

register with regulators. Other nations in Europe and elsewhere in Asia are looking to tighten the leash on high-frequency traders who programme ultra-fast computers to trade in milliseconds without human intervention. Some major U.S. exchanges want to introduce speed limits on trading. The growing presence of HFT on the Tokyo Stock Exchange (TSE) has raised concerns high-speed trading could destabilise markets and leave retail investors at a disadvantage. The law was passed by parliament on Wednesday and the new regulations could come into force as early as 2018. Japan's market regulator, the Financial Services Agency (FSA), has said previously it wanted HFT participants to register and to ensure proper risk management measures were in place. "The definition has not yet been created. We can guess at who might be affected, but we don't know for sure the full scope of who will be affected," said Seth Friedman, chief executive of advisory firm Shiroyama Consulting Co.. The new rules stipulate that a company engaging in HFT will have to establish an office in Japan or be represented in the country by an agent. HFT accounted for about 70 percent of orders on the Tokyo Stock Exchange in 2016, FSA estimates show. High-speed trading accounted for slightly less than half of actual traded value, according to market participants, taking into account order cancellations. That would amount to slightly less than 321 trillion yen ($2.9 trillion) based on figures on the TSE website for total trade in cash equity of 643 trillion yen.

Growing signs of life in Japan's economy have presented its central bank with a fresh communications challenge, pushing it to

be clearer with markets on how it might dial back its massive stimulus - even though such action remains a long way off. The Bank of Japan (BOJ) faces a tricky balancing act, according to people familiar with its policymakers' thinking, as it must convince people it has a credible exit strategy without destabilizing the bond market by giving too much away. Graphic on central bank balance sheets since 2007: tmsnrt.rs/2ryoKCi "There's no point elaborating on a future exit strategy when inflation remains stuck at zero," said one of the sources. "But it's important for the BOJ to show it isn't without a plan." Telegraphing an exit is a challenge for any central bank, as seen in the 2013 "taper tantrum" of market volatility that followed hints from the Federal Reserve that its bond-buying program would slow. The task is made all the more difficult for the BOJ, say analysts, because its credibility has already been damaged by the failure to come close to its 2 percent inflation target despite four years of money printing. The market impact of miscommunication could also be bigger, with the BOJ's balance sheet having swelled to 90 percent of Japan's nominal gross domestic product - triple the ratio for the European Central Bank and nearly four times that of the Fed. Still, the BOJ feels compelled to speak more openly about an exit, say the sources familiar with its thinking, as improvements in the economy - now enjoying its longest period of expansion in a decade - have spurred calls from some ruling party lawmakers for clarity on a future withdrawal of stimulus. Instead of rebuffing debate of an exit strategy as premature, Governor Haruhiko Kuroda told parliament on May 10 the BOJ may consider publicizing calculations on how an exit could affect its financial health. Deputy Governor Kikuo Iwata, among the most vocal proponents of massive asset purchases, also said on Thursday that raising interest on excess reserves financial institutions park with the BOJ could be among the tools it can use in easing back stimulus. "The priority is to stress the BOJ's ultra-loose policy will remain intact," said another source. "That said, there is room for improvement" in communication beyond repeating that debate about an exit strategy is premature, the source said. A BOJ spokesman said the central bank had "nothing to add beyond what Governor Kuroda said in public". The BOJ has no immediate plans to publish numerical estimates on how a future monetary tightening could affect the health of its balance sheet, the sources say. The central bank aims instead to convince markets it has the means to exit smoothly and reserves set aside to cover any losses it may incur from an abrupt spike in bond yields, without going into details, they say. This reflects concerns held by many central bankers that revealing too much of a future exit plan could spook markets into thinking a policy shift is imminent. Talk of an exit strategy could also cast doubt on the BOJ's determination to achieve its price goal, thereby undermining the psychological impact of its stimulus program, the sources familiar with its thinking say. But growing concerns at the cost of the BOJ's radical monetary experiment voiced by some politicians and market participants have become hard to ignore, the sources say. The BOJ already owns 40 percent of Japan's government bond market, and could face losses on those holdings if its moves to withdraw stimulus prompt a sudden rise in yields. If it decides to tighten policy, the BOJ would need to guide market short-term rates higher by raising the interest it pays to excess reserves financial institutions park with it. The cost of this could surpass the feeble interest the BOJ earns from its bond holdings, push its book into the red and hurt market confidence in the currency it prints, said Izuru Kato, chief economist at Totan Research. Alarmed by such risks, a group of lawmakers from Prime Minister Shinzo Abe's ruling party called in April for more clarity from the BOJ. "Some may argue that it's premature to discuss an exit strategy," the group, led by former cabinet minister Taro Kono, said in a proposal presented to the government. "But the BOJ must analyze the risks and communicate them to markets." Even if the BOJ seeks to enhance transparency on its exit strategy, there is no guarantee markets will pay heed. Kuroda deployed its massive asset-buying program in 2013, promising to achieve 2 percent inflation in two years. But four years into the program prices are barely rising. Few market players share the BOJ's forecast that inflation will hit 2 percent by around early 2019. Many expect the BOJ's next move to be a withdrawal, not an expansion, of stimulus on the view its massive bond buying is unsustainable - despite repeated assurances by Kuroda that it can keep buying bonds. Paul Sheard, chief economist at S&P Global, warns of the pitfalls of sending signals


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about an exit plan when markets remain skeptical the BOJ can achieve its price goal. "There's a danger if the BOJ behaves like a traditional, forward-looking central bank," he said. "Market players who don't believe the BOJ could achieve its target would take it as evidence it is making a policy error. I think Kuroda understands that. There's no hurry to do anything."

Some six months after his visit to Donald Trump's Manhattan mansion cheered investors, Masayoshi Son, Japan's richest man,

is set to follow his friend to Saudi Arabia as the new U.S. president makes his first overseas trip since taking office. Son, head of Japan's SoftBank Group Corp (9984.T), travels to Riyadh this weekend where he is expected to announce the close of the first fundraising round for what will be the world's biggest private equity fund, backed by Saudi Arabia's sovereign wealth fund and Apple Inc (AAPL.O). His appearance in the Saudi capital and the expected launch of the $100 billion Vision Fund coincide with Trump's official visit to the kingdom, one leg of a presidential trip that also includes Israel, Belgium and Italy. Son describes the fund as essential for setting up SoftBank for a data "gold rush" which he expects to happen as the global economy becomes increasingly digitized. "The Vision Fund has created a framework for SoftBank to grow over the next 100, 200 and 300 years," Son said in February. "The next 10 years would be the time for me to put the plan into practice while grooming successors." Son is scheduled to attend a forum of global chief executives in Riyadh on Saturday to be held on the sidelines of the Trump visit, a list of attendees showed. A SoftBank spokesman declined to comment on Son's schedule. The aggressive dealmaker made headlines in early December when he appeared in the marble lobby of Trump Tower in New York alongside the then president-elect, dressed in a red vest and near-identical red tie to the tycoon-turned-commander-in-chief. He was among the first in a series of Asian billionaires and leaders to pay tribute to Trump, who won office in November on a platform that focused heavily on national security and protecting American jobs. Son's pledge to Trump to invest $50 billion in the United States and create 50,000 new jobs was light on details but spoke to the president's election promise to boost economic growth by making deals with individual companies, rather than through complicated trade deals. SoftBank Group shares surged after Son's December meeting with Trump and his announced investment. Foreign tycoons who paid homage to Trump after Son include Foxconn founder Terry Gou and Alibaba boss Jack Ma, who are both close business partners of Son. In November, Japanese Prime Minister Shinzo Abe visited Trump in New York, less than two weeks after the U.S. election.

Four automakers agreed to a $553 million settlement to address class-action economic loss claims covering owners of nearly 16

million recalled vehicles with potentially defective Takata airbag inflators, court documents filed on Thursday showed. Toyota Motor Corp.'s share of the settlement costs is $278.5 million, followed by BMW AG at $131 million, Mazda Motor Co. at $76 million and Subaru Corp. at $68 million. While the settlement does not mean an end to legal headaches faced by Takata Corp. or its car maker clients, the resolution could help the embattled Japanese air bag maker's efforts to search for a financial sponsor by removing one litigation uncertainty. Shares of Takata, which was not named as a plaintiff in the case, jumped 20 percent in Tokyo on Friday. Takata has been searching for more than a year to find a financial sponsor to pay for costs to replace its inflators which are at the centre of the auto industry's biggest-ever recall. US auto components maker Key Safety Systems (KSS) and private equity fund Bain Capital are trying to strike a rescue deal worth around ¥200 billion with Takata's steering committee and its automaker customers. The settlement highlights the knock-on effect of the recalls, which began around 2008 and covers around 100 million inflators around the world used in vehicles made by 19 automakers. Takata's inflators can explode with excessive force and unleash metal shrapnel inside cars and trucks, and are blamed for at least 16 deaths and more than 180 injuries worldwide. "This is a settlement between us and our customers," said a Tokyo-based spokeswoman for Mazda. Lawsuits against Honda Motor Co., Ford Motor Co. and Nissan Motor Co. have not been settled, lawyers said. Takata declined to comment on the settlement. The four automakers who settled said in a joint statement they agreed to the deal "given the size, scope and severity of the Takata recall," but did not admit fault or liability. The automakers said the settlements, if approved by a Florida judge, will be overseen by a court-appointed administrator. The settlement includes an outreach program to contact owners; compensation for economic losses including out-of-pocket expenses; a possible residual distribution payment of up to $500; rental cars for some owners; and a customer support program for repairs and adjustments, including an extended warranty. In January, Takata agreed to plead guilty to US charges of criminal wrongdoing and to pay $1 billion to resolve a federal investigation into its inflators. The majority of the air bag-related fatalities and injuries have occurred in the United States. Automakers have recalled 46 million Takata air bag inflators in 29 million US vehicles. By 2019, automakers will recall 64 million to 69 million US inflators in 42 million vehicles, regulators said in December. Most inflators have not been fixed.

China's economy will likely expand around 6.8 percent in the second quarter of 2017, the State Information Center said in an

article published in the state-owned China Securities Journal on Saturday. The State Information Center is an official think tank affiliated with the National Development and Reform Commission, the country's top economic planning agency. It forecast consumer inflation in the world's second largest economy of around 1.4 percent and expected an increase of about 6.5 percent in producer price inflation in the second quarter from the same period a year earlier. "Overall, China's economy will remain stable but with a slightly slowing trend," the think tank said in the paper. China's economy grew 6.9 percent in the first quarter from a year earlier, slightly faster than expected, supported by a government infrastructure spending spree and a housing market that has shown signs of overheating. The think tank said it had seen contradictions between government policies to fend off financial risks and reduce corporate finance costs. "Strengthening financial regulations has weakened the effect of monetary policy to a certain extent," it said, suggesting that a prudent and neutral monetary policy may actually manifest itself as a tightening bias when implemented. The State Information Center also said that steady growth of the economy may be inhibited due to worsening labor and debt conditions amid deepening cuts in excess industrial capacity. China is aiming to expand its economy by around 6.5 percent this year, Premier Li Keqiang said during the annual meeting of parliament in March.

China will lift a two-year suspension on foreign funds raising money in the country to invest overseas as early as June, people

familiar with the matter said, a sign that Beijing is getting less anxious about capital outflow pressures. Some industry executives said the expected resumption of the Qualified Domestic Limited Partnership (QDLP) program may mean that an official crackdown on capital outflows and a weakening of the dollar have provided the authorities with more policy flexibility. The Shanghai Municipal Government Financial Services Office, which runs the QDLP scheme, did not respond to requests for comment, while the State Administration of Foreign Exchange (SAFE), which controls the capital account, did not immediately respond to a request for comment. The QDLP program allows foreign fund managers to raise money within a set quota from high net-worth Chinese investors through a wholly-owned onshore fund management company and invest the cash overseas. Launched in 2013, QDLP was one of a handful of controlled schemes that allowed Chinese to invest money overseas. It was subsequently informally suspended in 2015 after the stock market crashed and lost around 40 percent of its value. The licenses and accompanying quota had previously been issued in batches, with authorities expected to issue the long-awaited next round in coming weeks, said two people briefed by regulators on the matter. One of these people said authorities will, however, be a "little cautious" granting only around half a dozen licenses, these people said. The quota will also be lowered from $100 million per manager during the previous batches to between $50 million and $75 million this time round, one of these people and a third individual briefed on the matter said. That could amount to between $300 million to $450 million in fund flows abroad. The sources said SAFE must ultimately sign-off on lifting the suspension. But SAFE may be more comfortable doing so after the


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yuan rose 1 percent against the dollar this year after falling 6.5 percent in 2016. China's foreign exchange reserves also rose in April for a third straight month, as stringent capital controls and a pause in the dollar's rally helped staunch outflows. On Friday, SAFE said China's cross-border capital flows were stabilizing and improving. Some foreign managers such as insurance giant Allianz and Dutch manager Robeco have positioned for the relaxation in curbs since late last year.. The opening-up of the QDLP quota, though small, will also expand the range of investment options global private banks can offer their wealthy clients in China, industry officials said. Reuters reported in 2015 BlackRock Inc became the first traditional asset manager to receive the QDLP license, joining a handful of other global funds, including Man Group Plc and Och-Ziff Capital Management Group. QDLP funds are private, meaning data is not publicly available on assets or performance, but industry insiders say they have seen strong demand as wealthy Chinese scrambled to hedge their exposure to the falling yuan by investing offshore. A growing number of foreign financial institutions, including Aberdeen Asset Management, U.S. hedge fund Bridgewater Associates and Vanguard, have recently set up stand-alone money-management firms in China as Beijing further deregulates the mainland fund industry. Previously, foreign asset managers looking to distribute investment products in China had to operate through minority-owned joint ventures with domestic firms, but Beijing has been gradually loosening the reins.

Singapore state investor Temasek Holdings pared its stake in Industrial and Commercial Bank of China (ICBC) to 8.43 percent

from 9.12 percent, as part of a rebalancing of its portfolio in China's largest bank. In a statement on Friday, Temasek said it remained confident in Chinese banks. "As a long term investor, it is usual for Temasek to rebalance its portfolio from time to time," the investor said. "We remain confident in China and its banking sector, and continue to hold significant positions in Chinese banks." A filing made by Temasek to the Hong Kong bourse showed that Temasek had sold 600 million H-shares of the bank at an off-exchange average price of HK$5.023 ($0.65). Temasek, one of the world's biggest state investors, has a large exposure to financials and owns stakes in Chinese banks and Standard Chartered PLC. Earlier this week, Singapore sovereign wealth fund GIC Private Limited, which invested in UBS Group AG to support it during the 2008/09 global financial crisis, cut its stake in the Swiss bank at a loss, partly because of changes in the lender's strategy and business. However, it said it would retain its profitable stake in Citigroup Inc.

Hong Kong has announced the second set of mortgage-tightening measures in a week to cool a property market that has broken

records, taking aim at borrowers with multiple loans and whose income sources come from outside the city in an attempt to reduce banks’ credit risks. Starting immediately, banks must allocate a larger risk weighting toward their assessment of credit worthiness, while cutting the amount of allowable loans on residential and commercial properties, according to a statement by the Hong Kong Monetary Authority (HKMA). The move comes as the city’s end-March property prices and transactions surpassed a September 2015 peak by 4.5 per cent, the HKMA said, citing data by the Rating & Valuation Department. The city’s de facto central bank has unveiled eight rounds of tightening measures since 2014. “The long term sustainability of the interest margins on mortgage lending has been under growing pressure,” said the HKMA’s chief executive Norman Chan Tak-lam. That means “less capital can be generated from this line of business, weaking the ability” of banks “to cope with a possible market downturn,” he said. The authorities have focused on using prudential measures such as caps on loans, and adjusting the debt-servicing ratios and stamp duties. Residential mortgage loans totaled HK$1.119 trillion (US$144 billion) at the end of 2016, equivalent to 5 per cent of the banking system’s assets, a level that is considered low by international standards, according to Fitch Ratings. Housing affordability is one of the gravest issues facing Hong Kong’s incoming chief executive Carrie Lam Cheng Yuet-ngor, who has pledged to take strong measures to address the issue. The government in November 2015 imposed a 15 per cent stamp duty on second-time borrowers, while the HKMA last week ordered banks to reduce loans to developers. The amount of loans allowed for residential property less than HK$10 million in value will be cut to 50 per cent of their value for borrowers with outstanding mortgages from 60 per cent, while lending to homes exceeding HK$10 million will be cut to 40 per cent from 50 per cent with immediate effect. Companies that are buying homes for corporate use will have their loan amounts cut to 40 per cent of value, from 50 per cent. The measures come a week before two residential complexes with almost 1,800 units are due to be released for sale by Cheung Kong Property Holdings in Tsuen Wan and K&K Property in Kai Tak. “The government wants to send a signal to the market that further actions will be taken to cool the red-hot market,” said Alvin Cheung Chi-wai, associate director at Prudential Brokerage. “The rule has little impact on cash-rich investors who need not borrow too heavily when they buy their second or third homes. But those who cannot afford their first homes will not be hit.” For car parks, commercial or industrial properties, the allowable loans are cut to 30 per cent, from 40 per cent, the HKMA said. A distinction has also been made on borrowers who mostly derive their income from outside Hong Kong, cutting their debt servicing ratio by 10 percentage points to 40 per cent for first-time borrowers, and 30 per cent for borrowers with prior mortgages. For corporate purchases, the ratios are cut by 10 percentage points to a flat 30 per cent for first-time borrowers as well as those with prior mortgages. The move is likely to deter property developers from slapping high price tags on properties, said Cheung. “Elevated property prices are a major source of risk for Hong Kong’s banks, and have been for a number of years,” said Sherry Zhang an analyst at Moody’s Investors Services, who estimates that bank lending to construction, property development and investment accounted for 24 per cent of the city’s loans at the end of 2016. “While most of the loans are to large developers with good credit ratings and there are strict rules on the types of mortgages banks can offer, what is a concern is the fact that developers also lend via their financing vehicles to individuals who are unable to get mortgages from the banks,” she said. “This was something the HKMA was trying to address with last week’s tightening measures, and these new measures are a continuation of that.” Prospective home buyers are likely to become more cautious and take their time in digesting how the new rules affect them, said Ricacorp Properties in a statement. Already, signs of an immediate impact are noticeable as the number of viewing appointments have already dropped 7.6 per cent to 1,455 this weekend, Ricacorp said. Still, first-time borrowers made up 90 per cent of overall property market transactions in recent months, according to an estimate by JLL’s senior research manager Ingrid Chen. “Investors who are still eager to enter the market, even after the stamp duty and the latest tightening, are generally cash-rich, and are unlikely to be too affected” by the latest rules, she said.

UAE Exchange Group, a global remittance and foreign exchange business, aims to spend between $250 million and $300 million

on acquisitions to build its global market share, its chief executive said. The group aims to increase its share of the $575 billion global remittance industry to more than 10 percent by 2020, from 6.75 percent currently, Promoth Manghat said. "The group is exploring multiple bolt-on acquisition opportunities as well as strategic investments in remittances and payments space with a specific focus on fintech (and) digital," Manghat said. Exchange houses and other traditional payment processors such as banks are facing a challenge from fintech companies, which can increasingly transfer payments at more competitive rates. UAE Exchange's majority shareholders bought Travelex in January 2015 for £800 million ($1.1 billion). Manghat said UAE Exchange was working with unidentified boutique firms and banks to advise it on two to three potential acquisitions in 2017. Global remittances to developing countries fell for a second year in a row in 2016 to $429 billion, a trend not seen in three decades, according to World Bank data, due in part to low oil prices and weak economic growth in the Gulf and Russia taking a toll on remittances to Asia. UAE Exchange saw around 8 percent growth in outflows from the United Arab Emirates in the first quarter of 2017, and full year growth is likely to be stronger than in 2016, said Manghat. Growth was driven by its largest markets – India, Pakistan, Bangladesh and Philippines, he said. In addition to tepid economic growth, the region's exchange houses have been battling against moves by some banks to close their accounts, usually citing compliance concerns. "De-risking continues to be a challenge for the industry," Manghat said. "Banks are an important link in the chain and we can't cash money or intermediate payments without them." Mounting compliance and administration costs prompted major UAE exchange houses to raise fees


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for remitting money last month. UAE Exchange raised its pricing in the range of 5 to 7 percent, said Manghat, adding that industry remittance costs for the UAE were still lower than the global average.

REST OF THE WORLD

European shares rose on Friday, timidly recovering from heavy losses suffered this week after political turmoil fuelled worries

over U.S. President Donald Trump's stimulus plans, denting appetite for riskier assets. The pan-European STOXX 600 index rose 0.4 percent by 0823 GMT, but was down 1.2 percent on the week, its biggest weekly loss since early November. Britain's FTSE and euro zone blue chips were also up by around 0.4 percent. While gains were spread across all sectors, financials - among the most hit by this week's sell-off - gave the biggest boost to the STOXX with heavyweight banks UBS, Banco Santander and UniCredit up between 0.6 and 1.4 percent. Among the biggest movers was airport retailer Dufry , up 6.5 percent after luxury group Richemont bought a 5 percent stake in the company. Hikma shares fell 3.8 percent after the drugmaker trimmed its revenue forecast to account for the delay in its U.S. generic drug launch. This week's losses have pulled the STOXX down from 21 month highs hit after a run driven by big inflows into Europe, solid economic data and surprisingly strong corporate earnings. With 80 percent of European companies having reported so far, 65 percent of them have beaten expectations and 8 percent have met them, according to I/B/E/S data. After the latest company updates, however, first-quarter earnings growth is seen at 19.4 percent, slightly below the over 20 percent previously forecast. Easing fears about the euro zone's stability after the defeat of an eurosceptic candidate in the French presidential vote earlier this month also supported the recent rally. On the same front, some investors welcomed the latest developments in Greece where lawmakers approved further austerity measures overnight, making more progress towards unlocking bailout funds. "No doubt averting another Greek crisis or at least another stand- off between the Greek government and its creditors should help stocks," London Markets trader Markus Huber said. Athens stocks were up 0.6 percent. Elsewhere, companies with exposure to Brazil such as Casino, Telefonica and Telecom Italia steadied following losses in the previous session triggered after a bribery scandal hit the country's president, darkening the outlook for structural reforms there.

U.S. stocks rose but closed below their session highs on renewed concerns about Donald Trump's presidency, after two new

reports related to a federal investigation into possible coordination between Russia and Trump's election campaign. A senior White House adviser is a significant person of interest in the law enforcement investigation of possible Russian ties, the Washington Post reported on Friday, citing people familiar with the matter. Separately the New York Times reported that Trump told Russian officials at the White House that firing FBI Director James Comey relieved "great pressure" from the ongoing probe. The Times report cited a document summarizing the meeting. "I'm sure some of (the move) is related to that, and the fact that Trump is going to be out of the country and nobody's quite sure what he's going to do," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago. He added, however, that the market did not seem too concerned as the major indexes were still in positive territory. "We've got two days now to wring our hands about what might happen," he said. Trump left on Friday for his first foreign trip since taking office, which the White House hopes will shift the focus away from domestic controversies. While Wall Street ended higher it failed to fully regain all the ground lost in Wednesday's big selloff after reports earlier this week that Trump tried to interfere in the federal investigation. Investors have been closely following events in Washington as they worry whether Trump will be able to fulfill campaign promises for fiscal stimulus and tax reform. Many investors saw the policy promises as a key reason for the post-election rally. The Dow Jones Industrial Average was up 141.82 points, or 0.69 percent, to 20,804.84, the S&P 500 had gained 16.01 points, or 0.68 percent, to 2,381.73 and the Nasdaq Composite had added 28.57 points, or 0.47 percent, to 6,083.70. But all three indexes clocked losses for the week with the Dow and S&P falling 0.4 percent and Nasdaq off 0.6 percent. All of the 11 major S&P industry sectors ended the day higher. Industrials showed the biggest percentage gain with a 1.36 percent jump while Energy rose 1.24 percent. Oil company shares were boosted by a 2 percent increase in oil futures related to growing expectations that OPEC and other producing countries will agree at a meeting next week to extend crude output cuts. Some market participants said that for much of the session, they turned their focus to strong quarterly earnings from companies such as Autodesk Inc and Deere & Co. Software developer Autodesk jumped 14.7 percent and was the biggest percentage gainer on the S&P after reporting better-than-expected quarterly revenue. Deere hit an all-time high of $122.24 and closed up 7.3 percent at $120.90 after the farm and construction equipment maker posted a better-than-estimated quarterly profit. Deere helped lift Caterpillar Inc 2.2 percent. General Electric Co was the S&P's top driver with a 2.4 percent rise. Advancing issues outnumbered declining ones on the NYSE by a 3.13-to-1 ratio; on Nasdaq, a 1.75-to-1 ratio favored advancers. The S&P 500 posted 26 new 52-week highs and 8 new lows; the Nasdaq Composite recorded 81 new highs and 58 new lows. About 7.03 billion shares changed hands on U.S. exchanges in line with the average volume for the last 20 sessions.

Oil prices rose on Friday, closing out a second week of gains on growing expectations that OPEC and other producing countries

will agree next week to extend output cuts. Brent crude LCOc1 settled up $1.10, or 2.1 percent, at $53.61, the highest settlement for the international benchmark since April 18. U.S. benchmark crude oil CLc1 rose 98 cents to $50.33, the highest close since April 19. U.S. crude gained 5.2 percent for the week, while Brent rose 5.4 percent. The Organization of the Petroleum Exporting Countries (OPEC) and other producers including Russia are scheduled to meet on May 25. They are expected to extend output cuts of 1.8 million barrels a day until the end of March 2018. The OPEC-led group is trying to reduce a global crude glut that has been slow to balance out due to weak demand and rising production elsewhere, particularly the United States. An OPEC panel is considering even deeper supply cuts to try to boost prices. Many investors remain concerned about high global inventories, and supply data from around the world shows that drawdowns of global inventories have slowed or even reversed. U.S. crude production has climbed 10 percent since mid-2016 to 9.3 million barrels per day as shale producers have taken advantage of higher prices to boost activity. Energy services firm Baker Hughes said U.S. drillers added oil rigs for an 18th week in a row, the second-longest streak on record. U.S. drillers added eight oil rigs in the week to May 19, bringing the total count to 720, the most since April 2015. On Thursday, official data showed OPEC leader Saudi Arabia's crude exports rose 275,000 bpd in March from February and its stockpiles increased. U.S. President Donald Trump will arrive on Saturday in Saudi Arabia, where state oil company Saudi Aramco is set to sign investment deals with several U.S. companies. Iran holds its first round of presidential elections this weekend. Commerzbank wrote Friday that if President Hassan Rouhani remains in office, it


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should encourage Western investment and boost Iranian oil production. If the winner is Ebrahim Raisi, a critic of Iran's nuclear deal with the West, the bank said new sanctions "would then very likely be imposed ... which could reduce the oil supply from Iran." On Friday the U.S. Commodity Futures Trading Commission said money managers cut their net long U.S. crude futures and options positions in the week to May 16 to their lowest level since November. It was the fourth consecutive week of declines as U.S. crude has struggled to maintain prices much higher than $50 a barrel since a mid-April sell-off.

Euro zone consumer confidence rose less than expected in May, a European Commission flash estimate showed on Friday. The

Commission said consumer confidence in the 19 countries sharing the euro rose 0.3 points to -3.3 in May against April. Economists polled by Reuters had expected a rise of 0.6 points to -3.0. In the wider European Union of 28 countries, consumer confidence rose 0.1 point to -3.3.

European Union officials are preparing for talks on Britain's exit from the bloc to begin on June 19 but expect confirmation of the

date only after the British election on June 8, EU sources said on Friday. The European Commission will conduct the negotiations with London on behalf of the remaining 27 EU governments. Their ministers will meet on Monday to confirm the mandate they are giving to the Commission's chief negotiator, Michel Barnier. Prime Minister Theresa May formally told the EU in March that Britain was leaving after a referendum last June. A tight two-year countdown to departure on March 30, 2019, has been made slightly tighter by May calling the election last month in a bid to strengthen her hand in the talks. Her ruling Conservative Party is tipped to win the election with an increased majority. EU officials refuse to discuss even basic practicalities for the talks with London before the vote - in part in retaliation for Britain's refusal to sign off on some EU budget amendments, citing a pre-election "purdah", or freeze on decision-making. "The 19th (of June) is tentative, because Britain cannot confirm anything until after the elections," one official involved in the Brexit negotiation process said. "The 19th is ... the earliest date they can envisage." Barnier told his Commission bosses at the start of May that in the withdrawal talks, the EU would focus on securing citizens' rights, financial issues and borders, and he hopes for a deal on these issues between October and December. If that timetable holds, the EU would be ready to start discussing the shape of its future trade relationship with Britain and a transition period leading to it between December 2017 and spring 2018, Barnier said, according to minutes of the commissioners' weekly college meeting on May 3. Barnier said he would propose to his British counterpart that the discussions take place in four-weekly cycles. The first week would be devoted to preparations by the 27 governments and the European Parliament and the second to an exchange of documents with Britain. The third week would be for negotiations themselves -- EU officials expect the British to come to Brussels for the week -- and the fourth to report the results to the 27 governments and the European Parliament and prepare the next round of talks. There would be five thematic negotiation teams on the EU side in the first phase that is to last until agreement is reached on the key points on Britain's withdrawal from the EU.

The European Union is expected to propose that clearing of euro denominated securities should be moved from London to the

continent after Brexit, Euronext (ENX.PA) chief executive Stephane Boujnah said on Friday. The European Commission is due next month to propose a draft law on regulating foreign clearing houses, which stand between the two sides of a trade to ensure its orderly completion. "If the decision is taken to relocate clearing of euro denominated within the European Union, then clearly we will make sure it has the best impact for the Euronext market and Euronext players," Boujnah said during an earnings conference call. "I believe this option is likely to prevail." Rival London Stock Exchange's (LSE.L) LCH clearing house clears most euro denominated interest swaps, a common derivative contract used by companies across the EU to insure themselves against adverse moves in borrowing costs. Industry bodies and policymakers in Britain have warned that a forced relocation of clearing would split pools of trading that currently offer efficiencies. A top European Central Bank official said on Thursday that euro zone central banks must consider "action" to maintain control of euro denominated clearing outside the EU after Brexit. Boujnah said 40 to 70 percent of trading in euro denominated assets is done in London and this will become an anomaly after Britain leaves the EU in 2019. "We should expect one way or the other to have relocation of a significant part of trading and clearing of euro denominated assets." Euronext said it was already helping its biggest customers, such as euro zone banks with operations in London, about what to do after Brexit. "Their expectations are that they will need to clear more business in the euro zone than previously," said Lee Hodgkinson, Euronext's head of markets and global sales.

Greek lawmakers approved pension cuts and tax hikes on Thursday sought by the country's lenders to unlock vital financial aid,

as angry demonstrators protested outside parliament over new austerity, the latest since the country plunged into crisis seven years ago. The leftist-led government hopes that legislating the measures, four days before euro zone finance ministers meet in Brussels, will convince its lenders to release a 7.5 billion euro (6.44 billion pounds) bailout tranche and grant it further debt relief. It is now up to the lenders to make good their promises, Prime Minister Alexis Tsipras told journalists. "We deserve and we expect from Monday's Eurogroup a decision regulating debt relief which will correspond to the sacrifices of the Greek people," he said, referring to a meeting of euro zone finance ministers on Monday. Lenders have agreed in principle to debt restructuring but not on details. Shortly before the measures were approved just before midnight, some protesters hurled petrol bombs and firecrackers at police guarding the legislature. They responded with tear gas. Greece has seen its national output shrink by a quarter since it was first forced to seek external financial aid in return for spending cutbacks in 2010. The government, sagging in opinion polls, hopes a conclusion by lenders of its reforms progress, coupled with a restructure to bring down a mountain of overhanging debt, will allow Greece to be included in the European Central Bank's asset-buying programme and return to bond markets in the coming months. Athens needs aid to repay debt maturing in July. It agreed to adopt more austerity, which will be implemented in 2019 and 2020, to convince the International Monetary Fund to participate financially in its latest 86 billion euro bailout. To sweeten the pill, Tsipras has promised to offset the new measures with tax relief also legislated on Thursday. It will be implemented only if Greece meets its fiscal targets. New austerity has drawn brickbats from the opposition, which has accused Tsipras of costly foot-dragging. "You've become the best advertisement for austerity in Europe," opposition Conservative leader Kyriakos Mitsotakis said, addressing Tsipras. Greece has received about 260 billion euros in bailout aid since 2010 in exchange for reforms and deep spending cuts that plunged the economy in recession. The loans have helped balloon its debt, now at 179 percent of GDP despite a 2012 haircut. The IMF has been reluctant to join Greece's current bailout, saying it wants assurances that its debt will be sustainable. Euro zone finance ministers will discuss these issues on Monday and assess Greece's bailout progress following the parliamentary approval of the reforms.

U.S. President Donald Trump was hit on Friday by embarrassing leaks that a senior adviser was a "person of interest" in a probe

of possible collusion with Russia during last year's election campaign and that Trump had boasted to Russian officials of firing the man heading the investigation. The reports, emerging just as Trump jetted off to Saudi Arabia on his first foreign trip as president, were likely to extend the turmoil engulfing his administration since the May 9 firing of former FBI Director James Comey. The Washington Post, citing sources familiar with the matter, did not identify the senior Trump adviser except to say that the person of interest was close to Trump, a Republican who entered the White House four months ago. U.S. law enforcement uses the term "a person of interest" to mean someone who is part of a criminal investigation but not arrested or formally accused of a crime. The person may be cooperating or have information of use to investigators. Separately the New York Times reported that Trump boasted to Russian officials at a White House


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meeting last week that firing Comey relieved "great pressure" the president faced from a law-enforcement probe into Russian meddling in the 2016 election. "I just fired the head of the FBI. He was crazy, a real nut job," Trump said, according to the Times, which cited a document summarizing the meeting and read to it by an unnamed U.S. official. "I faced great pressure because of Russia. That's taken off." Trump met Russian Foreign Minister Sergei Lavrov and Russia's ambassador to Washington in the Oval Office the day after Trump fired Comey, who was in charge of the Russia election probe. The Times said the document was based on notes taken from inside the Oval Office. Reuters was not immediately able to verify the accuracy of that account. Comey, who has not spoken publicly in the 10 days since he was fired, will testify in an open session of the U.S. Senate Intelligence Committee, which is investigating possible Russian meddling in the 2016 election. Committee leaders said on Friday he would appear sometime after the U.S. Memorial Day holiday on May 29. "I am hopeful that he will clarify for the American people recent events that have been broadly reported in the media,” the committee chairman, Republican Richard Burr, said in a statement announcing the appearance. Public approval of Trump has dropped to its lowest level since his inauguration, according to a Reuters/Ipsos poll released on Friday. The May 14-18 opinion poll found that 38 percent of adults approved of Trump while 56 percent disapproved. The remaining 6 percent had "mixed feelings." U.S. stocks immediately pared gains after the reports but still closed higher for a second straight day. Earlier this week, investors dumped stocks in response to reports that Trump in February had asked Comey to stop investigating his former national security adviser, prompting accusations the president may have tried to hamper the probe. "As the president has stated before - a thorough investigation will confirm that there was no collusion between the campaign and any foreign entity," White House spokesman Sean Spicer said in a statement in response to the Post report. After days of political tumult in Washington, the Justice Department announced the appointment on Thursday of a special counsel to look into Russian interference in the 2016 election and possible collusion by the Trump campaign. The Times report added to the impression given by Trump himself in a television interview last week in which he said the Russia issue was a factor in firing Comey. The White House has given different versions of the reasons for the dismissal. Asked about the Times report, Spicer said of the former FBI chief, "by grandstanding and politicizing the investigation into Russia's actions, James Comey created unnecessary pressure on our ability to engage and negotiate with Russia." "The investigation would have always continued, and obviously, the termination of Comey would not have ended it," Spicer said, adding that the real story was the leaks of "private and highly classified conversations." Democrats, who have compared the widening scandal to the Watergate break-in and cover-up that brought down Republican former President Richard Nixon in 1974, were quick to pounce on the latest reports. Democratic Senator Edward Markey called them "seismic revelations" and questioned whether the United States might be heading into a constitutional crisis. "This is an inflection point in the entire Russia collusion investigation," he told MSNBC. "It makes it very clear that what Donald Trump was trying to do was to end the Russian investigation." "This is what OBSTRUCTION looks like: 'I faced great pressure because of Russia. That’s taken off,'" Democratic Senator Patrick Leahy said on Twitter. Republican Representative Scott Taylor told CNN there was "no question" that Trump had "some stumbles this week." But he added: "I haven't lost my confidence in the president to be our president, I just haven't." Before the latest reports, the White House had hoped to shift attention away from the political firestorm in Washington to foreign policy as well as the president's ambitious pro-business economic agenda in Congress. Trump's trip, which also includes stops in Israel, Italy and Belgium next week, has been billed by the administration as a chance to visit places sacred to three of the world's major religions while giving him time to meet with Arab, Israeli and European leaders. Trump, who has embraced what he describes as an "America First" approach to U.S. foreign policy and international trade, is expected to be welcomed warmly by leaders in Saudi Arabia and Israel. Lingering questions over his views on the Iran nuclear deal, commitment to NATO security and scepticism of the Paris climate agreement, however, could generate tension at meetings with European counterparts in Brussels and Sicily.

BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System – 26 May 2017 Counterfeit Detection – 27 May 2017

Solving Problems in the Workplace: Creative Problem Solving & Decision Making – 02 & 03 June 2017

Macros Training for Bankers – 08 & 09 June 2017

BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System (Cebu City) – 09 June 2017

Signature Verification and Forgery Detection – 10 June 2017

BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System – 16 June 2017

BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law and the AML Risk Rating System – 07 July 2017

How to Spot Fake IDs and Money Mules – 29 July 2017

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

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


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MAY 16-31

16 Leilani D. Capule - DBP

17 Clarito F. Reyes - BNP Paribas

20 Yolanda V. Diola - Associate Life Member

23 Maela D. Laqueo - PBCom

23 Susan A. Uranza - Past President

23 Juan de Zuñiga, Jr. - Honorary Member

24 Linley V. Julian - PCHC

27 Marites J. Claro - PNB Savings Bank

28 Carlota A. Bacani - ANZ Bank

28 Emmanuel C. Geronimo - ChinaBank Savings Inc

29 Zenaida S. Librea - Asia United Bank

30 Isabelita M. Papa - Asia United Bank

31 Ronnie D. Fallega - CARD Bank Inc

CHARTERED FINANCIAL ANALYST (CFA) - A CFA is a professional designation given by the CFA Institute, formerly AIMR, that measures the competence and integrity of financial analysts. Candidates are required to pass three levels of exams covering areas such as accounting, economics, ethics, money management and security analysis. To become a CFA charterholder, a candidate must meet four requirements. First, a candidate must have 48 months of qualified work experience in the investment industry as determined by the CFA Institute. Second, a candidate must pass all three levels of the CFA Program in order. Each exam is six hours long. Third, a candidate must become a member of the CFA Institute and pay annual dues. Lastly, a candidate must sign off annually that he is following the CFA Institute Code of Ethics and Standards of Professional Conduct. Failure to adhere to the ethics and standards is grounds for possible lifetime revocation of the CFA charter.

What is the difference between a “flock” and a “gaggle” of geese?

Any group of birds, goats, or sheep can be referred to as a flock, but each feathered breed has its own proper title. Hawks travel in casts, while it’s a bevy of quail, a host of sparrows, and a covey of partridges. Swans move in herds, and peacocks in musters, while a flock of herons is called a siege. A group of geese is properly called a gaggle, but only when they’re on the ground. In the air they are a skein.

REFERENCE COMPILED AND PREPARED BY: RESEARCH AND INFORMATION COMMITTEE FY 2016-2017

BPI Asset Management Business World Philippine Daily Inquirer Philippine Star GMA News ABS-CBN News Bulletin Today PSE

Reuters Bloomberg CNN Wall Street Journal Investopedia Brainy Quotes Goodreads Corsinet- Trivia

Director: Maria Teresita R Dean (ChinaBank Savings) Chair: Sheryll K. San Jose (Equicom Savings Bank) Member: 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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