BAIPHIL Market Watch – 27 February 2017

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BAIPHIL MARKET WATCH

27 Feb

2017

Legend Improvement / Up Deterioration / Down No Movement

FINANCIAL MARKETS AT A GLANCE

PHILIPPINES

Financial Rates Current Previous

USD/PHP 50.2200 50.2300

30-D PDST-R1 2.4214% 1.9968%

91-D PDST-R1 2.4268% 2.2465%

180-D PDST-R1 2.9577% 2.9107%

1-Y PDST-R1 3.0464% 2.5634%

10-Y PDST-R1 4.3125% 4.9214%

30-D PDST-R2 2.4214% 1.9766%

91-D PDST-R2 2.4268% 2.2474%

180-D PDST-R2 2.9536% 2.9107%

1-Y PDST-R2 2.5602% 2.5594%

10-Y PDST-R2 4.3289% 4.9107%

Stock Index Current Previous

PSEi 7,258.99 7,335.56

Market Cap (Php Trillion) 12.383 12.474

Total Value (Php Billion) 6.401 7.275

PSEi Performers Closing % Change

Top Gainers

LMG Chemicals Corp 8.17 12.38%

Apex Mining Co Inc A 2.22 11.56%

Seafront Resources Corp 2.50 6.84%

Top Losers

Chemical Industries 165.60 -13.25%

Discovery World Corp 2.09 -11.06%

Imperial Resources 4.20 -10.06%

ASIA-PACIFIC

Stock Index Current Previous

NIKKEI 19,283.54 19,371.46

HANG SENG 24,020.05 24,086.65

SHANGHAI 3,253.43 3,251.38

STRAITS 3,117.03 3,121.31

SET 1,564.59 1,566.47

JAKARTA 5,385.91 5,365.55

Currency Exchange Current Previous

USD/JPY 112.7600 113.3500

USD/HKD 7.7603 7.7611

USD/CNY 6.8703 6.8808

USD/SGD 1.4071 1.4184

USD/THB 34.9700 35.0000

USD/IDR 13,335.00 13,353.00

REST OF THE WORLD

Stock Index Current Previous

FTSEuro First 300 1,468.71 1,475.10

FTSE 100 7,243.70 7,301.15

DAX 11,804.03 11,978.73

CAC 40 4,845.24 4,907.49

DOW JONES 20,821.76 20,810.38

S&P 500 2,367.34 2,362.82

NASDAQ 5,845.31 5,876.63

Various Current Previous

EUR/USD 1.0560 1.0552

GBP/USD 1.2465 1.2543

Gold Spot (USD/oz) 1,255.90 1,238.25

Brent Crude(USD/bbl) 55.99 57.02

3-M US Treasury Yield 0.50% 0.50%

10-Y US Treasury Yield 2.32% 2.39%

30-Y US Treasury Yield 2.96% 3.02%

PHILIPPINES

The country’s stock barometer slipped below the 7,300-mark on Friday as investors pocketed gains from a four-day run-up against a backdrop of sluggish regional markets. The Philippine Stock Exchange index lost 76.57 points or 1.04 percent to close at 7,258.99. Regional markets were weighed down by tumbling metal prices. Value turnover for the day amounted to P6.4 billion. Foreign

buying was modest at P54 million. Market breadth was also negative. Advancers, numbering 71, were overshadowed by 113 decliners. Fifty-one stocks were unchanged. In recent weeks, the stock market had seen profit-taking whenever the index breached the 7,300-level. The stock market had been seen traversing a consolidation phase while digesting the recent stream of fourth quarter 2016 earnings.

Semirara tumbled by 5.37 percent even after 2016 results were slightly ahead of consensus estimates. Its net profit last year rose by 42 percent to P12.04 billion on record-high coal sales and contribution from its new power plant. DMCI, Ayala Corp., PLDT, JG Summit, Metrobank, EDC and Security Bank all fell by over 1 percent. Metrobank saw a 2.89-percent decline in net profit last year to P18.1 billion due to slower-than-expected growth in interest earnings, lower profit from sale of foreclosed assets and higher loan loss provisioning. URC,

BDO, GT Capital, Globe and ICTSI also contributed to the day’s decline. BDO posted a record high net income of P26 .1 billion in 2016, up by 4.4 percent and in line with its earnings goal for that year. Outside of the PSEi, RRHI also took a hit, declining by 1.43 percent. Both SM Prime and Metro Pacific slightly made gains. Citigroup said in a research on Friday that emerging market fund flows had benefited from the

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recent market rally. This asset class attracted a total inflow of $8.5 million over the past seven weeks. Technology and commodity stocks remained the most “underweighted” sectors or those where investors pare their positions relative to the benchmark index.

The Philippine peso traded sideways against the Dollar with an upward bias, closing at Php 50.22 due to U.S President Donald

Trump indicating China as the "grand champion of currency manipulation".

In the local fixed income market, prices of government securities rose as U.S President Donald Trump's tax reform may take

effect next year. On average, yields fell by 3.03 bps.

The Philippine economy is expected to grow above 7% this year, hitting the higher end of the government’s target band, on the back of aggressive spending on infrastructure projects. “For 2017, our full-year average forecast range of 6.5%-7.5% largely hinges on the realization of the government’s infra spending plans. The multiplier ef fect that will result from the planned infra spending will support

GDP (gross domestic product) growth above the 7% level,” the research arm of the Metropolitan Bank & Trust Co. (Metrobank) sa id in its “Economic Weather Report First Quarter 2017 Outlook & Forecasts” released on Thursday. The bank’s range of GDP estimates was the same as the government’s official 6.5%-7.5% economic growth target band for 2017.The Philippine economy’s growth slowed in the last

quarter of 2016 to 6.6% compared to the preceding quarter’s downward-revised 7%, but higher than the 6.5% recorded in the fourth quarter of 2015.This brought 2016 growth to 6.8%, which fell within the government’s 6-7% target for 2016 and higher than the revised 5.9% in 2015. The growth was the highest since the 7.1% recorded in 2013.Consumption spending will remain solid this year on the back of strong

inflows from overseas Filipino worker (OFW) remittances backed by a stronger dollar.Data from the Bangko Sentral ng Pilipinas (BSP) reveal that cash sent home by Filipinos based in the US amounted to $864.068 billion in December 2016, a third of the $2.559 billion in total remittances during the period.The December remittances brought the full-year tally to a record $26.9 billion, up 5%, its fastest rise

since the 7.2% recorded in 2015, while beating the central bank’s 4% growth forecast for last year.Meanwhile, Metrobank Researc h noted that the agricultural sector is expected to recover this year after output declined 1.1% in 2016. The industry and services sectors, meanwhile, will continue on their robust growth track.“Risks to the domestic economy nevertheless remain amid the effects of the still

diverse global economic growth and impact of financial market volatilities,” it said.Meanwhile, average inflation for 2017 is expected at 3.1% “with a further upside bias” due to a weaker peso and a recovery in global commodity prices.“The forecast is still with an upside bias on the assumption of even higher imports coming from the government’s massive infra spending plan,” Metrobank Research said.This estimate

compares with the Bangko Sentral ng Pilipinas (BSP) 3.5% upward-revised inflation forecast for the year, and falls within the government’s official 2-4% target band.Meanwhile, the bank’s research arm expects the central bank to raise both the benchmark overnight reverse repurchase rate and lending rate by 50 basis points within the year “amid rising inflationary pressure and subsequent Fed rate hikes.”The

BSP left policy settings unchanged at 3.5% for the overnight lending rate, 3% for the overnight reverse repurchase rate and 2.5% for the overnight deposit rate during its first policy review for 2017 on Feb. 9, while the reserve requirement for banks was also kept unchanged.Metrobank Research also noted that a central bank move to raise borrowing costs may happen as soon as its term deposit

facility (TDF) “has siphoned off the excess liquidity in the market.”The bank expects the peso to continue to weaken in 2017, ending the year at P51.30 to the dollar amid uncertainty surrounding the Fed’s possible rate moves, US President Donald J. Trump’s fiscal and economic policies as well as political noise in the euro zone.“Furthermore, the government’s plan to ramp up infrastructure spending is

seen to add to the depreciation pressure. The greater demand for the US dollar on even higher imports (on the back of increased imports of capital goods, most especially materials and equipment for construction) will bring the peso beyond the P50:$1 level,” it said, noting that the country’s solid economic fundamentals will mitigate the peso’s sharp drop.

The government’s representatives will be meeting with delegates from the European Union (EU) in September for the second

round of free trade agreement (FTA) talks. “We are looking sometime around September. No definite date but that is our estimate,” said National Economic and Development Authority (NEDA) Deputy Director-General Rosemarie G. Edillon in a phone interview last week. The

first round of discussions was held in Cebu two weeks ago with Philippine and EU delegates making sure their definition of terms are in sync.“Between now and the next round, there will be an exchange of e-mails so hopefully we can have just one draft for the FTA,” said Ms. Edillon. According to the undersecretary, the Philippines and the EU have separate drafts, which they plan to consolidate into a unified FTA

by the third round of discussions.“Our group is on trade and services. Our group has a text. EU has a text. So we need just one text. All this will have to be ironed out by the third round,” said Ms. Edillon.“When it comes to tariffs, we’re looking at preferential tar iffs, but that has to do with the schedule of commitments. We are not there yet,” said Ms. Edillon as she commented on specifics of the first round of

discussions. According to Ms. Edillon, the second round of discussions will be held “somewhere in the EU” with the government sending representatives from various government agencies and the Department of Trade and Industry (DTI) as the chief negotiator.The EU was the country’s fourth largest trading partner last year with Philippine imported goods amounting to $6.422 billion and exported goods amounting

to $6.780 billion, bringing the balance of trade to $13.203 billion in 2016, data from the Philippine Statistics Authority (PSA) showed.Ms. Edillon added that NEDA still has to come up with specific targets for trade with the EU.In 2015, the Philippines’ main expor ts to the EU were office and telecommunication equipment, machinery, food products, and optical and photographic instruments, data from DTI

showed. Meanwhile, the main exports of the EU to the Philippines in 2015 were transport equipment, machinery, food products, chemicals, and electronic components.

The Bureau of Internal Revenue (BIR) said it has set its regional offices a quota of one case a month filed against tax law violators in order to assure the public that the agency is doing its job. In a briefing at Malacañang, BIR Commissioner Caesar R. Dulay said he has ordered the bureau’s Regional Investigation Divisions to “exert extra effort” and have at least one Run After Tax Evaders

(RATE) case filed a month as long as “it’s defensible and justified.”“I do not believe that there are no violations in your region,” Mr. Dulay said. “They have to know that we are on top of all these complaints and we’re acting on these complaints.”Mr. Dulay did not elaborate on the “seven or eight” cases that will soon be filed against tax evaders but assured that BIR “cannot stop” in catching them. “We have to

continue with our law enforcement activity,” he said.The RATE program is an initiative of the BIR and the Department of Finance to investigate and charge persons or entities suspected of evading taxes.It was also designed to encourage voluntary compliance for taxpayers.Offenses covered by the program include non-payment of taxes, non-filing of tax returns, “deliberate” under-declaration of

income by more than 30% per return, hiding income and assets, and non-remittance of withholding taxes, the BIR’s Web site said. According to the BIR official, there are about 400 pending RATE cases filed before the Justice department.Meanwhile, Mr. Dulay also said that his agency is “confident” it will hit the P1.829 trillion collection target in 2017 even without the Finance department’s tax reform

package, on condition that staff positions in the bureau are filled.“If we can go into massive hiring mode, then we’ll most probably hit that,” he said.In a speech early this month, the Commissioner said the collection target this year can be exceeded, if the BIR gets a good start in hiring under competitive salary arrangements, which are expected to yield better staff and mitigate corruption.The BIR has a pending

proposal to Congress seeking the bureau’s exemption from the Salary Standardization Law, as a measure to help address the agency’s underperformance against revenue targets.

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The Department of Information and Communications Technology (DICT) could start putting in place its planned national

broadband project within the first half of the year, pending the go signal from President Rodrigo R. Duterte. DICT Secretary Rodolfo A. Salalima said the newly created department submitted to the President “about two weeks ago” the blueprint for the nationwide-broadband system which, if pursued, would provide connectivity to areas not served by commercial telco players. “We’re asking the

President’s approval if the blueprint is okay with him so we can add more flesh into the plan and start implementing it,” Mr. Salalima told reporters late last week .The DICT expects a national broadband system to be up and running within the term of the President which ends in 2022. “We can start this year, maybe by the first half. Once the President says proceed, then we will start,” the DICT chief added. The

broadband network plan which the agency submitted to Malacañang is a “working physical infrastructure” -- which the government intends to use to reach parts of the countryside not serviced by commercial telcos. Since the system is “hybrid” however, the infrastructure could be rented out and “services of the telcos, including their physical components, may also be tapped as part of that broadband plan whatever is

more cost-efficient for the government.”Mr. Salalima earlier said the department submitted to the Office of the President on Oct. 3 a proposal detailing three options for the national broadband network: the first option is putting up a “purely physical infras tructure in the countryside, where the services of a telco will be needed; the hybrid option two -- which he personally recommended and the DICT decided

to submit; and the third option is for the government to become a third-party operator.The DICT expects to complete the implementation of the broadband plan in “three to five years,” although availability of existing government assets like the right-of-way of the National Grid Corp. of the Philippines (NGCP) could fast track the project.“It could start running in a year even if it’s not yet complete ... but at least

there’s already a broadband,” Mr. Salalima added.Assuming that the government will start its national broadband network project -- to serve the requirements of government and areas in the countryside unreached by the telcos -- from scratch, the cost could come in anywhere between P77 billion and P200 billion.The project, flagged by DICT as one of its priorities, follows the $329.5-million National

Broadband Network deal with China’s state-owned Zhong Xing Telecommunications (ZTE) Corp., which was abandoned in 2007 due to a corruption scandal.A national broadband plan is expected to address public demand for faster and affordable Internet.Mr. Salalima said there are already a lot of possible partners, funders, service providers, and suppliers expressing interest in the project.In November, he

noted that the “two biggest” Chinese firms have approached the DICT for the project. The Philippines continues to lag the Asia-Pacific in terms of Internet connection speed. The latest Akamai report showed the Philippines ranked second to last among economies in the region, recording a 4.2 megabits per second (mbps) average connection speed in the July to August period, only higher than India’s 4.1

mbps -- the slowest among the 15 economies measured in the Asia-Pacific. Globally, South Korea recorded the fastest average connection speed with 26.3 mbps.Internet service in the Philippines is also one of the most expensive in the world, averaging $18 (P840)/mbps compared to the global average of $5 (P230)/mbps.

The Bangko Sentral ng Pilipinas has shuttered a rural bank in Iloilo due to insolvency, the second so far in 2017. In a bulletin,

state-run Philippine Deposit Insurance Corp. (PDIC) said the Monetary Board, the BSP’s highest policy-setting body, on Feb. 23 prohibited

Rural Bank of Barotac Viejo (Iloilo) Inc. from doing business. As designated receiver, the PDIC last Feb. 24 took over the rural bank as well as its affairs, assets, branches and records. Rural Bank of Barotac Viejo (Iloilo) had two branches: one each in Jaro, Iloilo City as well as Concepcion, Iloilo. The PDIC was also ordered to liquidate the bank. “Under Section 13 of Republic Act No. 3591 (or the PDIC charter), as

amended by RA 10846, a bank that has been placed under liquidation shall in no case be reopened and permitted to resume banking business,” the PDIC said. “Furthermore, Section 12 [of the PDIC charter] expressly provides that banks closed by the Monetary Board shall no longer be rehabilitated,” the PDIC added. “Moreover, all assets of the bank are deemed to be in custodia legis in the hands of the

receiver and may not be subject to attachment, garnishment, execution, levy or any other court processes,” according to the PDIC. In January, the BSP closed down Countryside Cooperative Rural Bank of Batangas. Last year, the BSP shuttered 22 lenders, including 21 rural banks and thrift bank GSIS Family Bank.

BDO Unibank Inc., the banking arm of the SM group, chalked up a record high net income of P26.1 billion in 2016, citing strong

results across its core businesses. This matched the bank’s earnings guidance for the year and marked a 4.4 percent increase from the

P25-billion net profit posted in 2015. Customer loan portfolio increased by 16 percent to P1.5 trillion, while total deposits ros e by 15 percent to P1.9 trillion on the sustained growth in the bank’s low-cost deposits, BDO disclosed to the Philippine Stock Exchange on Friday. Net interest income went up by 15 percent to P65.6 billion, attributed to the good quality of growth in the loan portfolio. Meanwhile, fee-based

income grew by 15 percent to P22.2 billion, with insurance premium contributing P8 billion. BDO said its efforts at diversifying its income stream started to bear fruit. These fee income sources compensated for the decline in trading gains to P4.8 billion. Overall, gross operating income settled at P107.2 billion. The bank’s operating expenses advanced by 27 percent to P70.1 billion, primarily reflecting the

consolidation of One Network Bank (ONB) and BDO Life Insurance. Excluding these, operating expenses would have risen only by 11 percent. The bank set aside P3.8 billion in provisions for the year even as gross non- performing loan (NPL) ratio held steady at 1.3 percent while NPL cover remained high at 139 percent.

The Metrobank group’s thrift bank arm Philippine Savings Bank booked a 4.25 percent growth in net profit last year to P2.45

billion on higher core earnings. This translated to a return on average equity of 12.5 percent, the bank disclosed to the Philippine Stock

Exchange on Friday. The increase in net profit was attributed by the bank to higher core income, composed of net interest margin and fees and commissions, which rose by 11.6 percent to P10.8 billion last year. PSBank president Vicente Cuna Jr. said: “2016 was a good year for PSBank. Aside from strengthening our core business, the bank was also conferred with several new and back‐ to‐ back recognitions

from local and international award‐ giving bodies, acknowledging our ability to come up with innovative product offerings and provide exceptional end‐ to‐ end customer experience. Such recognitions drive us to continue to provide the best banking experience to our clients with products and services that are simple and reliable.” The bank’s total loan portfolio expanded by 11.4 percen t to P129.2 billion, mainly

driven by the significant increase in auto and mortgage loans. Despite the expansion of its loan portfolio, PSBank kept its net non‐performing loans (NPL) ratio in check at 1.1 percent of total loans, with NPL coverage at 88.6 percent. On the funding side, total deposits grew by 17.9 percent to P158.39 billion, with low-cost funds increasing by 19.1 percent. PSBank ended last year with total resources of

P196.9 billion, rising by 16.3 percent. The bank’s core or tier 1 and total capital adequacy ratios stood at 11.1 percent and 14.1 percent, respectively. Both are above the minimum required level set by the Bangko Sentral ng Pilipinas.

The Metrobank group’s thrift bank arm Philippine Savings Bank booked a 4.25 percent growth in net profit last year to P2.45 billion on higher core earnings. This translated to a return on average equity of 12.5 percent, the bank disclosed to the Philippine Stock Exchange on Friday. The increase in net profit was attributed by the bank to higher core income, composed of net interest margin and fees

and commissions, which rose by 11.6 percent to P10.8 billion last year. PSBank president Vicente Cuna Jr. said: “2016 was a good year for PSBank. Aside from strengthening our core business, the bank was also conferred with several new and back‐ to‐ back recognitions from local and international award‐ giving bodies, acknowledging our ability to come up with innovative product offerings and provide

exceptional end‐ to‐ end customer experience. Such recognitions drive us to continue to provide the best banking experience to our clients with products and services that are simple and reliable.” The bank’s total loan portfolio expanded by 11.4 percent to P129.2 billion, mainly

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driven by the significant increase in auto and mortgage loans. Despite the expansion of its loan portfolio, PSBank kept its net non ‐performing loans (NPL) ratio in check at 1.1 percent of total loans, with NPL coverage at 88.6 percent. On the funding side, total deposits

grew by 17.9 percent to P158.39 billion, with low-cost funds increasing by 19.1 percent. PSBank ended last year with total resources of P196.9 billion, rising by 16.3 percent. The bank’s core or tier 1 and total capital adequacy ratios stood at 11.1 percent and 14.1 percent, respectively. Both are above the minimum required level set by the Bangko Sentral ng Pilipinas.

Sy family-led China Banking Corp. is planning a P15-billion capital build-up to fund its expansion program while improving the

bank’s stock trading liquidity. The new capital will be raised by selling new shares to existing shareholders, the bank disclosed to the

Philippine Stock Exchange. The stock rights offering, which will be taken out of the unissued portion of China Bank’s authorized capital stock, has been approved by the bank’s board of directors. The exercise will still be subject to approval by regulatory agencies. China Bank has appointed its investment house China Bank Capital Corp. as issue manager, joint bookrunner and domestic underwriter for this

issuance. Ricardo Chua, president and chief executive officer of China Bank, said: ” 2017 marks the 10th anniversary of the acquisition of Manila Bank to become China Bank Savings (CBS), followed by the acquisition of Plantersbank in 2014 and its full integration into CBS in 2015, and return to full year profitability of CBS in 2016. It also marks the 10th anniversary of our Manulife bancassurance partnership. Last

year also marked the first full year of China Bank Capital as a subsidiary, with a stronger presence in capital markets.” “With a strong foundation, China Bank is in a good position to pursue further its strategic direction of becoming an even more significant p layer in key market segments and a stronger partner for our customers, as we continue to deliver better returns to our shareholders. This capital raising

will give us the ammunition to execute our strategy,” he said. The bank’s core strategy is aimed at expanding its market posi tion by growing risk-weighted assets with a focus on small and medium enterprise and consumer segments while also extending the depth and breadth of its retail distribution. The disclosure added that the directors agreed that the rights issue would help increase the visibil ity of China Bank

with investors and improve the trading liquidity of its common shares in the exchange. It was added that the major shareholders of the bank – referring to the Sy family which controls the largest conglomerate SM Investments Corp. – have expressed support for the stock rights offer.

The Philippine Stock Exchange saw a 3-percent increase in net profit last year to P701.54 million, driven mostly by the expansion

in listing income and a tight lid on expenses. Operating revenues rose by 4 percent to P1.26 billion while operating expenses dipped by

1.5 percent to P601.91 million, the local bourse said in a press statement on Friday. Listing-related income – which accounted for 44.2 percent of operating revenues – rose by 15.6 percent. This increase was attributed to four initial public offerings and 39 additional follow-on offerings done at the local bourse. The four companies that debuted on the stock exchange last year were death solutions provider Golden

Haven, oil firm Pilipinas Shell, cement-maker Cemex Holdings Philippines and pizza chain operator Shakey’s Pizza Asia Ventures Inc. Service fees from the Securities Clearing Corp. of the Philippines also rose by 10 percent while revenue from data feed also increased by 12.5 percent with the increase in both market data subscribers and income from subscription. PSE’s trading-related income, on the other

hand, dipped by 2.2 percent as total value turnover for the year declined by 10.3 percent to P1.93 trillion. “Our revenues were affected by the volatile markets as it kept our trading income muted,” said PSE president and chief executive officer Hans Sicat. “But the decline in this revenue segment was more than offset by the multiple offerings we had, which picked up in the second half of 2016.” “This year, we

believe we would have a healthy IPO and secondary offerings pipeline which could support the growth of listing-related revenues,” said Sicat. With the approval of the dollar-denominated securities and PPP (public-private partnership) listing rules, Sicat said the SE had effectively diversified its product for various types of offerings to take place in the market. “We are also hoping that trading activity wi ll pick

up in the coming months,” Sicat added.

ASIA-PACIFIC

Japanese stocks fell on Friday, with investors staying on the sidelines as a lack of clarity over U.S. economic policies under President

Donald Trump and political uncertainty in Europe weighed on sentiment. The Nikkei 225 fell 0.5 percent to 19,283.54. The benchmark index however gained 0.3 percent on the week. The broader Topix index shed 0.4 percent to 1,550.14, while the JPX-Nikkei Index 400 declined 0.4 percent to close at 13,893.04.

China stocks were largely unchanged on Friday, reversing earlier losses, as reform hopes underpinned the market, with the main

indexes up for the third straight week thanks to improving risk appetite. The blue-chip CSI300 index was unchanged at 3,473.85 points,

while the Shanghai Composite Index added 0.1 percent to 3,253.43 points. For the week, CSI300 gained 1.5 percent, while SSEC climbed 1.6 percent. The main indexes dropped for most of the day as resources shares dragged, but reversed losses in the afternoon after centrally-owned state companies jumped on reform hopes, with China United Network Communications advancing 8.1 percent to a 6-

week high. The director of China's state assets regulator Xiao Yaqing said on Friday that the country should further deepen mixed-ownership and supply-side reforms, the official Shanghai Securities News reported. "Market sentiment remains optimistic and the upward trend is not yet broken," said Wu Kan, head of equity trading at Shanshan Finance. "The upcoming National People's Congress, and the

first-quarter earnings season will keep investors excited." Reflecting rising risk appetite, China's outstanding margin loans have risen for four consecutive days to exceed 900 billion yuan ($131.00 billion), as investors appear more willing to use borrowed money to buy stocks. Banks fell 0.3 percent, as news of Guo Shuqing, governor of China's eastern Shandong province, becoming China's new top banking

regulator added to uncertainty to a sector facing increasing deleveraging pressure. Sector performance was mixed. Losses were led by material stocks, while transport plays stood out with a 1.8 percent gain. S.F. Holding, founded by billionaire entrepreneur W ang Wei, surged by the 10 percent trade limit to a near four-month high, surpassing China Vanke and Midea Group to become the largest stock by

market value on Shenzhen Stock Exchange Japan's SoftBank Group Corp (9984.T) is close to finalizing an investment in U.S. office-sharing startup WeWork, in a deal

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expected to be worth over $3 billion, CNBC reported on Monday. The investment under discussion is a $2 billion primary tranche of funding, followed by a secondary round worth more than $1 billion, CNBC reported, citing a source. SoftBank may increase the size of the

secondary investment to nearly $2 billion for a total investment of almost $4 billion, CNBC added. If the deal closed, We Work, which provides shared workspaces largely to start-up companies, would be valued at more than $20 billion. SoftBank and WeWork declined to comment. Led by founder Masayashi Son, SoftBank has made a string of surprising acquisitions and investments over the past months,

most recently an all-cash deal to buy asset manager Fortress Investment Group (FIG.N). Son is steering SoftBank, a diverse company that holds stakes in U.S. carrier Sprint (S.N), Chinese e-commerce giant Alibaba (BABA.N) and other firms, towards cutting-edge tech investments as the telecoms services markets mature. As part of that gameplan, SoftBank bought UK chip designer ARM Holdings,

Britain's most valuable technology company, for $32 billion, and announced with Saudi Arabia the planned creation of an inves tment fund that could grow up to $100 billion. Son also promised a $50 billion investment and 50,000 new jobs in the United States after meeting U.S. President Donald Trump in early December. Some of SoftBank's moves have caused concern among analysts, as it is wrestling wit h a

heavy debt pile. China's coal imports from North Korea eased last month after new U.N. Security Council sanctions curbing the isolated country's

sales of the fuel abroad came into effect, as Russia, Mongolia, Australia and Indonesia raised shipments, data showed on Friday. January imports eased 13 percent from a year earlier to 1.45 million tonnes. They were down 28 percent from December, January's volume accounted for almost 20 percent of the latest U.N. annual sales quota of 7.5 million tonnes or $400.9 million, whichever is s maller, on North

Korea's biggest export. The imports came before Beijing's decision on Saturday to ban coal shipments entirely after Pyongyang tested an intermediate-range ballistic missile in its first direct challenge to the international community since U.S. President Donald Trump took office. North Korea was China's biggest supplier last year of high-grade anthracite coal, used mainly by the country's steel mills, with imports

reaching 22.4 million tonnes, up 14.5 percent compared with 2015.Analysts have said steel mills will likely be forced to buy more expensive domestic anthracite or seek alternatives further afield from Russia or Australia, driving up costs. Coal shipments from Mongolia [COA-MNCN-IMP] rose 154 percent to 3.12 million tonnes, the fourth highest on record, as traders took advantage of its signific ant price

advantage over Australian coal. Australian imports [COA-AUCN-IMP] were up 70.8 percent from a year earlier at 7.27 million tonnes. Australian Newcastle spot prices [GCLNWCPFBMc1] fell sharply from about $93 per ton at the end of December to about $83 by the end of January.

China's securities regulator is considering offering a shortcut for some of the country's largest technology companies to list their

shares, allowing them to jump a long line of applicants and boost domestic bourses, according to six people with knowledge of

the proposals. The sources said companies being considered for the shortcut could include Alibaba Group's (BABA.N) Ant Financial affiliate, the world's most valuable financial technology company; Zhong An Online Property and Casualty Insurance, and security software maker Qihoo 360 Technology Co. Ant Financial, valued at $60 billion at its most recent funding round last year, is expected t o be one of

2017's largest initial public offerings (IPOs). While Ant hasn't specified a preferred listing venue, analysts and bankers have previously said the deal will likely take place in Hong Kong, given the line in the mainland. China has been losing out to the New York Stock Exchange (NYSE) and Nasdaq on key technology listings, so more IPOs at home could mean millions of yuan in revenue for Chinese investment

banks, who dominate domestic stock issuance. There are about 700 companies waiting for a green light from the China Securities Regulatory Commission (CSRC) to go public in Shanghai or Shenzhen. Though the regulator has increased the pace of approvals in recent months, that still leaves a typical 18-month wait or longer before companies are able to raise funds, making the domestic market

unattractive to fast-growing technology companies in need of funds to fuel their expansion. In September the CSRC tweaked the rules to let companies in some impoverished Chinese regions skip the line, sharply reducing the vetting period for those issuers. In January, companies in the Xinjiang Uyghur Autonomous Region that borders Russia and Mongolia were among those benefiting from faster

approvals. The sources said the CSRC had held talks with the technology companies for months, but no final decision had yet been reached on whether to allow the faster approval.

China for the first time became Germany's most important trading partner in 2016, overtaking the United States, which fell back to third place behind France, data showed on Friday. German imports from and exports to China rose to 170 billion euros ($180 billion) last year, Federal Statistics Office figures reviewed by Reuters showed. The development is likely to be welcomed by the German

government, which has made it a goal to safeguard global free trade after U.S. President Donald Trump threatened to impose tariffs on imports and his top adviser on trade accused Germany of exploiting a weak euro to boost exports. German Vice Chancellor Sigmar Gabriel has even suggested that the European Union should refocus its economic policy toward Asia, should the Trump administration pursue

protectionism. "Given the protectionist plans of the new U.S. president one would expect that the trade ties between Germany and China will be further strengthened," Germany's BGA trade association said in response to the shift. Neighboring France remained the second-most important business partner with a combined trade volume of 167 billion euros. The United States came in third with 165 b illion euros.

In 2015, the United States became the top trading partner for Germany, overtaking France for the first time since 1961 thanks to an upturn in the U.S. economy and a weaker euro. Separately, Germany's Committee on Eastern European Economic Relations said on Friday it expected exports to Russia will probably rise at least 5 percent this year, their first increase in years given Western sanctions.

REST OF THE WORLD

Europe's stocks benchmark fell more than 1 percent on Friday while German and French indexes slid by their most in nearly 5 months

as jitters in the bond markets over political risk looked to have spilled over into equities. Futures on the European bluechips index fell 1.4

percent with traders pointing to a bout of selling in the afternoon session as a reason that exacerbated earlier weakness in stock markets. Banks and commodity-related sectors led losses across Europe following a slump in metals prices overnight, subdued forecasts from the likes of BASF and weak results from Standard Chartered and Royal Bank of Scotland. The STOXX 600 was down 1.2 percent in afternoon

trading and was poised for its third straight session of losses. "Political uncertainty is the only explanation. The French-German government

BAIPHIL Market Watch – 27 February 2017

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bond spread is widening," an equity sales trader at a European bank said. European banks, the sector most sensitive to bond spreads, fell more than 2 percent while the basic resources slid more than 3 percent. Both sectors have been among the biggest beneficiaries of the

"reflation rally" that has lifted world stocks to record highs and which has favoured shares of companies more geared to growth and inflation.

U.S. stocks opened lower on Friday, dragged down by a drop in financial and energy stocks and as investors assessed if the "Trump rally" had gone too far too soon. The S&P 500 is up more than 10 percent since the U.S. election, while the Dow notched a rec ord high for a tenth straight session on Thursday, spurred by U.S. President Donald Trump's promises of tax reforms, reduced regulations and

increased infrastructure. But, with Trump giving scant detail on his plans – including one on Thursday to bring millions of jobs back to the United States – markets have traded in a tight range. The benchmark S&P 500 index has not registered a move of at least one percent in either direction since Dec. 7. "Investors have embraced this oversimplified fundamental story of Trump's impact on the financ ial market and

you're starting to see that narrative unravel a bit," said Aaron Clark, portfolio manager at GW&K Investment Management. "The market will come to realize that a lot of these pro-growth policies might get pushed to the end of this year or next year and you might have this buyer's remorse for the market." U.S. Treasury Secretary Steven Mnuchin said on Thursday that any policy steps would probably have only a

limited impact this year. Investor will likely get more clarity on Trump's plan on Tuesday, when he addresses a joint session of Congress. At 9:41 a.m. ET (1441 GMT) the Dow Jones industrial average was down 47.05 points, or 0.23 percent, at 20,763.27. The S&P 500 was down 8.6 points, or 0.36 percent, at 2,355.21. The Nasdaq Composite was down 27.24 points, or 0.47 percent, at 5,808.26. Eight of the 11 major

S&P sectors were lower, with the financial index's 1.06 percent fall leading the decliners. Bank of America fell 1.35 percent and weighed the most on the S&P, while Goldman Sachs' 1.43 percent drop pulled down the Dow.

British Prime Minister Theresa May's Conservatives secured a landmark victory in a parliamentary by-election on Friday, boosting her hand ahead of upcoming Brexit negotiations as her rivals suffered damaging poll setbacks. The Conservatives captured the north western region of Copeland that Labour have held since 1935, the first by-election gain for a governing party for 35

years and a result which piles pressure on the opposition's under-fire socialist leader, Jeremy Corbyn. Meanwhile in the central English seat of Stoke-on-Trent, Paul Nuttall, leader of the populist anti-EU UK Independence Party, failed to overturn a Labour majority despite almost 70 percent of the city's voters backing leaving the bloc at last year's referendum, casting doubt on his future too. The two results

point to May's tightening grip on political power following the Brexit vote, and will be used as evidence that her strategy of pursuing a clean break with the EU has stemmed rising right-wing populism without denting her ability to take votes from an increasingly left-wing Labour Party. Although Labour avoided the worst-case scenario of two defeats, Corbyn is likely to face renewed criticism. Many lawmakers worry

his leadership is damaging their fight for a "softer" Brexit, with closer ties to the EU's single market, whi le his leftist agenda is making the party unelectable before a 2020 national election. "The simple truth of the matter is seven years into opposition the Labour Party is going backwards, not going forwards," academic and polling expert Michael Thrasher told Sky News. "Their vote share is falling in by-elections

where they should be causing the Conservatives problems, and they're not." Despite long-running unrest within the upper ranks of his party, Corbyn is unlikely to face a fresh leadership challenge because he retains strong support among the grassroots Labour members who re-elected him last year after a botched coup. "To win power to rebuild and transform Britain, Labour will go further to reconnect with

voters, and break with the failed political consensus," Corbyn said in a statement after the result. Banks based in Britain will struggle to access European markets once Brexit is completed so they will probably have to relocate

some operations to the continent, Bundesbank board member Andreas Dombret said on Friday. Banks are likely to lose their passporting rights and any arrangement that seeks to create a substitute is likely to be fraught with risk, leaving market access in persistent limbo, Dombret added. "So it seems that the prospects for EU market access through the UK look rather dim," Dombret said in London. "I

expect London to remain an eminent global financial center," Dombret added. "Nevertheless, I also expect a number of UK-based market participants to move at least some business units in order to hedge against all possible outcomes of the negotiations."

U.S. President Donald Trump's first budget proposal will spare big social welfare programs such as Social Security and Medicare from any cuts, Treasury Secretary Steven Mnuchin said in an interview broadcast on Sunday. Mnuchin said Trump would also use a major policy speech to a joint session of Congress on Tuesday night to preview some elements of his sweeping plans to cut taxes for the

middle class, simplify the tax system and make American companies more globally competitive with lower rates and changes to encourage U.S. manufacturing. Speaking on Fox News Channel's "Sunday Morning Futures" program, Mnuchin, who has acknowledged that tax reform is his top policy priority, said the budget plan would not seek cuts to federal benefits programs known as "entitlements." "We are not

touching those now. So don't expect to see that as part of this budget, OK," Mnuchin said of the programs, according to a transcript provided by Fox. "We are very focused on other aspects and that's what's very important to us. And that's the president's priority." Trump during his election campaign promised not to cut Social Security, Medicare healthcare for seniors nor Medicaid healthcare for the poor.

Preservation of these programs, coupled with a middle-class tax cut, would aid the retirees and working class Americans who make up a significant portion of Trump's political base. In a transcript of the Fox News Channel interview, Mnuchin said Trump will be "touching on tax reform" in his speech. Mnuchin said the plan would cut the number of tax brackets and "create a level playing field for U.S. companies to

be able to compete in the world." But Wall Street, which has sent stocks to record highs on anticipation of Trump's tax cut plans, has grown impatient and could react negatively to a lack of substantive details about the plan in Trump's speech, financial analysts said. With both chambers of the U.S. Congress in Republican hands, Trump has the potential to enact major elements of his legislative agenda. But

divisions with the Republican Party over the approach on Obamacare and taxes could prove to be an obstacle. Some Republican lawmakers have urged Trump to lay out more specifics on his policy plans, saying that more White House engagement is needed to build momentum in Congress for his agenda.

22316: Organizational Resilience - Moving from Continuity to Resiliency – 8 March 2017 EQ and Leadership for Bankers – 17 March 2017 Compliance with Operational Risk Management Guidelines – 17 March 2017 Related Party Transactions – 17 March 2017 Signature Verification & Forgery Detection – 18 March 2017 Personal Equity and Retirement Account (PERA) – 24 March 2017 Basic Course on Corporate Governance for Board of Directors (Commercial & UniBanks) – 24 & 25 March 2017 Fraud Risk Management – 25 March 2017 Establishing Internal Controls per BSP Cir. No. 871 – SEMINAR TWO – 25 March 2017 BSP Supervisory Process and CAMELS Rating – 7 April 2017

BAIPHIL Market Watch – 27 February 2017

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IT Security and Auditing – 8 April 2017 A Regulatory Perspective on Trust Activities and Administration – 20 & 21 April 2017 Training the Bank Trainers – 21 & 22 April 2017 Process Mapping as an Operational Risk Management Tools – 22 April 2017 How to Spot Fake IDs and Money Mules – 29 April 2017 RA 10173: Data Privacy Act – Aligning Information Security Compliance to ISO 27001:2013 – 6 May 2017 Understanding Bank Regulations for Bank Products – 6 & 13 May 2017 Bank’s Taxation – Advanced – 20 May 2017 Counterfeit Detection – 29 May 2017

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

FEBRUARY 16-28

17 Lorna Leah G. Bongcayao - ANZ Bank

18 Rodelio S. Romblon - Philippine Postal Savings

19 Marlyn M. Marudo - Rizal Bank Inc

21 Irene DL Arroyo - PDIC

22 Aristeo A. Dequito - CARD SME Bank

23 Lourdes B. Dijan - CARD Bank

23 Domingo B. Gavino, Jr. - ING Bank NV

26 Mary Jane A. Perreras - CARD SME Bank

26 Elmore O. Capule - BSP

BAIPHIL Market Watch – 27 February 2017

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STOP-LIMIT ORDER- A stop order is an order to buy or sell a security when its price surpasses a particular

point, thus ensuring a greater probability of achieving a predetermined entry or exit price, limiting the

investor's loss or locking in his or her profit. Once the price surpasses the predefined entry/exit point, the

stop order becomes a market order.

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