BAIPHIL Market Watch – 4 April 2018 Page 1 of 10

Go To Homepage

BAIPHIL MARKET WATCH ~ Scaling New Heights In Banking Excellence ~

4 Apr 2018

Legend Improvement / Up Deterioration / Down No Movement

FINANCIAL MARKETS AT A GLANCE

PHILIPPINES

Financial Rates Current Previous

USD/PHP 52.0800 52.0350

30-D PDST-R1 3.3000% 3.3014%

91-D PDST-R1 3.0596% 3.3332%

180-D PDST-R1 3.1255% 3.4614%

1-Y PDST-R1 4.3879% 4.1329%

10-Y PDST-R1 5.9500% 6.7639%

30-D PDST-R2 2.5848% 3.3014%

91-D PDST-R2 3.0863% 3.0554%

180-D PDST-R2 3.1294% 3.1693%

1-Y PDST-R2 3.5397% 4.1329%

10-Y PDST-R2 5.9500% 6.7639%

Stock Index Current Previous

PSEi 8,048.72 8,039.45

Total Market Cap (Php Tr) 14.099 14.043

Trade Value (Php B) 6.111 4.551

PSEi Performers Last Price % Change

Top Gainers

Easycall Communications 32.00 18.52%

ATN Holdings, Inc. ”B” 0.66 10.00%

Imperial Resources, Inc. 2.55 8.51%

Top Losers

Philippine Trust Company 112.20 -8.78%

Philippine Banking Corp. 22.00 -7.95%

Concrete Aggregates Co 73.00 -6.29%

ASIA-PACIFIC

Stock Index Current Previous

NIKKEI 21,292.29 21,388.58

HANG SENG 30,180.10 30,093.38

SHANGHAI 3,136.63 3,163.86

STRAITS 3,412.15 3,430.76

SET 1,765.24 1,782.28

JAKARTA 6,229.01 6,240.57

Currency Exchange Current Previous

USD/JPY 106.4800 105.8200

USD/HKD 7.8487 7.8484

USD/CNY 6.2899 6.2804

USD/SGD 1.3112 1.3125

USD/THB 31.1900 31.2380

USD/IDR 13,763.50 13,752.50

REST OF THE WORLD

Stock Index Current Previous

FTSEuro First 300 1,445.81 1,452.31

FTSE 100 7,030.46 7,056.61

DAX 12,002.45 12,096.73

CAC 40 5,152.15 5,167.30

DOW JONES 24,033.36 23,644.19

S&P 500 2,614.45 2,581.88

NASDAQ 6,941.28 6,870.12 ,

Various Current Previous

EUR/USD 1.2275 1.2293

GBP/USD 1.4067 1.4046

Gold Spot (USD/oz) 1,332.20 1,339.40

Brent Crude (USD/bbl) 68.12 67.64

3-M US Treasury Yield 1.71% 1.68%

10-Y US Treasury Yield 2.78% 2.73%

30-Y US Treasury Yield 3.02% 2.97%

PHILIPPINES

Share prices on the Philippine Stock Exchange closed largely in green on Tuesday, helped by buying in select blue chip stocks to

offset early losses on trade war fears. The benchmark PSEi gained 9.27 points or 0.11 percent to 8,048.72 at the closing bell. The broader All Shares was up by 2.35 points or 0.04 percent at 4,843.86. “We saw buying in index stocks, the blue chips,” Eagle Equities Inc. president Joseph Roxas told GMA News Online. “This indicates that the market is getting stronger as investors see the current level as good buying opportunity,” Roxas noted. Investors took the opportunity to hunt for bargain blue chip stocks after the PSEi opened weak at 7,976.33 due to concerns of an impending trade war between China and the US, he said. Foreign funds bought P3.311 billion shares and sold P3.550 billion for a net selling position of P238.614 million. More than 2.336 billion shares valued at P6.110 billion, changed hands. Decliners led advancers, 104 to 98, and 45 issues were unchanged.

The Philippine peso softened against the US dollar on Tuesday, with the greenback buoyed by corporate demand. The local currency shed 4.5 centavos to close Tuesday at P52.080:$1 from Monday's close of P52.035. "We saw a lot of corporate demand so we traded higher today... We closed at the high today on suspected corporate demand," a foreign exchange trader from a local bank said in a phone

BAIPHIL Market Watch – 4 April 2018 Page 2 of 10

interview. "Corporate needs dollars -- importers, oil companies -- to pay dollar debts," the trader said. For the rest of the week, the trader said the market will be looking at the latest inflation figures. "With inflation going higher, it will be bad for the currency," the trader said.

The government raised P10 billion worth of reissued three-year Treasury bonds (T-bonds) yesterday as yields saw a minimal rise despite persistent concerns on domestic inflation and uncertainties in the global market. The Bureau of the Treasury made a full award of the reissued debt papers, which have a remaining life of two years and nine months. The decision came as offers reached P20.006 billion, double the amount which the government is eyeing to raise. The papers fetched a 4.632% average yield, just some five basis points higher than the 4.5838% rate at the secondary market prior to the auction. The yield on the three-year bonds was steady as trading at the secondary market closed. However, yesterday’s awarded rate inched up from the 4.25% coupon when the securities were first offered in January. “I think three years is a happy spot for the market given the offering [yesterday] and the bids submitted, so we made a full award,” National Treasurer Rosalia V. de Leon told reporters after the auction. “Still, inflation continues to be a persistent and nagging concern for the market,” the official said, noting that “unresolved issues” with the United States Federal Reserve are likewise weighing on sentiment. The Fed raised benchmark rates by another 25 basis points last month, with officials hinting that successive tightening moves are to be expected within 2018. Market players asked for rates ranging from 4.5-4.745% during Tuesday’s offering, which Ms. de Leon said was within her expectations. The full award followed the state’s decision to make a partial award of Treasury bills last Monday. Only P3.265 billion worth of three-month papers were accepted, versus a P15-billion program that includes six-month and one-year papers. Inflation has been on a steady ascent for three months, hitting a three-year peak at 3.9% in February amid rising fuel prices and higher commodity costs due to the tax reform law. The Philippine Statistics Authority will report March inflation data on Thursday. A BusinessWorld poll yielded a 4.2% median forecast for the month, which compares to the 3.8-4.6% estimate given by the Bangko Sentral ng Pilipinas. Sought for comment, a bond trader said investors likely crowded the three-year tenor as they prefer short-term placements given persistent market jitters. “I think we’re still facing the same concerns — domestic inflation and supply of debt. Given those two things, most players have been wanting to stay on the front end of the curve,” the trader said in a phone interview. “The Treasury is eyeing to raise P325 billion this quarter, there has to be discovery of price for that new supply.” Starting this month, the Treasury will be holding two auctions per week — one for T-bonds and another for T-bills — to reflect increased borrowing requirements for the quarter. The state plans to borrow P888.23 billion this year from local and foreign sources to fund its budget deficit, which is capped at 3% of the country’s gross domestic product.

The Philippines will reach upper middle income status "much earlier" than 2022 as programmed, with reforms laid out to drive faster growth in the economy, officials said Tuesday. Gross national income per capita, which reflects purchasing power, grew 6.7 percent in 2017, overshooting the 2.5-percent target. Food inflation for the year was "within target" despite picking up to 3.7 percent from 2.6 percent in the previous year, said National Economic Development Authority officer in charge Rosemarie Edillon. The Philippines can become a "high income" country by 2040 as programmed, she said. However, there was a net loss of 650,000 jobs last year, as the youth stayed in school to meet the expanded 12-year basic education program, Edillon said. The government's conditional cash transfer program, which requires recipients to keep their children in school, also reduced the number of minors working in agriculture, NEDA data showed. Most job losses were in agriculture. "The challenge is that this growth is inclusive, one that really lifts everybody up as in a rising tide," Edillon said. Edillon said the government's P8 trillion infrastructure program would generate more jobs this year.

The proposed six-month closure of Boracay will have no significant impact on the Philippine economy, but may have negative short-term effects on the island, the National Economic and Development Authority (NEDA) said Tuesday. In a press conference in Pasig City, NEDA National Policy & Planning Staff Director Reynaldo Cancio said closing the island for an environmental cleanup will not dent the macroeconomic prospects of the country. “The overall picture we see is that even if the ban extends up to, say, six months, at the macro level it’s not going to have a significant effect,” he said. “At the most, 0.1 percent of GDP (gross domestic product). That’s the current estimate,” Cancio noted. The Departments of Tourism (DOT), Environment and Natural Resources (DENR), and Interior and Local Government (DILG), recommended the total closure of the island for six months. President Rodrigo Duterte has called the island resort a “cesspool” and threatened to close it down. According to stakeholders of the island, a year-long closure of the island could result in at least P56 billion in foregone revenues and render as much as 36,000 people jobless. “The short-term impact could be significant for Malay. We cannot give the specific numbers,” NEDA Undersecretary Rosemarie Edillon said at the same briefing. Boracay is part of the municipality of Malay in Aklan province. Edillon noted the government will help those affected by the closure. “There will be a contingency plan for them. If there’s proper coordination, it doesn’t have to be that bad,” she said. “We are recommending that it be started during the lean season. We are also recommending that a number of these workers, those who can, can actually be involved in the cleanup drive,” she said. The government targets a 7.0 to 8.0 percent full-year economic growth for 2018.

Nine more infrastructure projects, including the proposed Bulacan Airport and the Subic-Clark Railway, are now for the approval of

President Rodrigo Duterte after securing the green light from the National Economic and Development Authority (NEDA) Investment Coordination Committee-Cabinet Committee (ICC-CabCom). In a press conference in Pasig City on Tuesday, NEDA Undersecretary Rolando Tungpalan said the NEDA-ICC approved nine infrastructure projects cumulatively worth P900 billion. “Nine projects have been approved by the ICC-Cabinet, moving up to NEDA Board via either ad referendum or NEDA Board meeting,” he said. Among the projects are the Subic-Clark Railway, the Bulacan Airport proposed by San Miguel Corp., and the construction of ten bridges across the Pasic River. Also included is the planned joint venture of the National Development Company to operate a food complex in Davao City. “You will see things more visible as we move on in the next couple of months,” Tungpalan noted, but did not give further details regarding the other projects. “The commitment is to finish the project five years upon project approval. All told, there is a commitment to get this substantially completed,” he said. Under the Build, Build, Build program, the government plans to spend over P8 trillion until 2022, largely funded by tax revenues. This year alone, the Philippines plans to roll out 76 big-ticket projects cumulatively valued at $35.5 billion or P1.1 trillion.

Removing the commercial function of the National Food Authority will help it focus on building the country's buffer stock of rice, an economic manager said Tuesday. The state grains agency's recent pronouncement that the buffer stock of the staple had dwindled renewed calls to revisit its functions. "We think there’s a need for structural change in the sector which is why we are pushing for more reforms in that sector. We want to focus on buffer stocking," National Economic Development Authority officer in charge Rosemarie Edillon said. The NFA accounts for only 8 percent of the market and is not big enough to influence prices, she said. "They have been trying to meet several objectives, which are conflicting. They buy at a high price and sell at a low price, it’s a recipe for running into debts," she said. "They did not actually follow the law of supply and demand. If you have this player, it actually serves as barrier for more investments in the sector," she said.

The government on Tuesday downplayed the drop in employment figures, attributing the decline to “policy reforms.” National Economic and Development Authority (NEDA) Undersecretary Rosemarie Edillon noted the drop in the Philippine employment rate was because more youth were enrolled in schools. “We are implementing the K to 12, and last year was the first year we implemented the Year 12 and, therefore, it brought ... again, a number of the youth outside the labor market because they are in school,” she said in a press

BAIPHIL Market Watch – 4 April 2018 Page 3 of 10

conference in Pasig City. For the whole of 2017, the unemployment rate was 5.7 percent from 5.5 percent in 2016. Recent data from the Philippine Statistics Authority (PSA) showed the employment rate at 94.7 percent in January, with the unemployment rate at 5.3 percent. “While the current unemployment rate has improved compared to previous decades, we are still behind the 5.1 to 5.4 percent target we have set in 2017,” Edillon said. Edillon noted that many of the unemployed youth returned to school, seizing the education opportunity as a result of the free tuition for state colleges and universities approved by Congress. “The most frequent answer ... was really because they are studying, they are in school,” she said.

Producer prices in the Philippines declined by 1.3 percent year-on-year in February of 2018, the same as a downwardly revised figure in a month earlier. It was the fourth straight month of drop in producer prices, as prices continued to fall for: food manufacturing (-3 pct vs -3.6 pct); rubber and plastic (-13.7 pct vs -13.5 pct); fabricated metal products (-15.5 pct vs -19.6 pct); chemicals (-15.5 pct vs -19.6 pct); transport equipment (-0.7 pct vs -2.7 pct) and footwear (-3.7 pct vs -4.7 pct). Meantime, prices rose less for: petroleum (5.1 pct vs 15.3 pct); electrical machinery (2.2 pct vs 2.5 pct) and machinery except electrical (2.5 pct vs 2.7 pct) while increased more for: basic metals (3.8 pct vs 3.2 pct); non-metallic mineral products (3.5 pct vs 2.9 pct) and miscellaneous manufactures (5.4 pct vs 3.7 pct). On a monthly basis, producer prices went up by 0.1 percent, after an upwardly revised 0.4 percent rise in January. Producer Prices Change in Philippines averaged 2.76 percent from 1999 until 2018, reaching an all time high of 17.50 percent in January of 2001 and a record low of -10 percent in March of 2013.

Higher electricity rates are expected within the Manila Electric Co. (Meralco) franchise area this month on higher spot market prices and power supply constraints. Meralco head of utility economics Lawrence Fernandez said there were very strong indications that spot market prices would register significant increases during the March supply month which would be reflected in the April generation charge. “The supply month started with yellow alert due to a constraint on the supply of Malampaya natural gas which, in turn, forced some gas-fired plants to reduce output or go on forced outage,” he said. A yellow alert means there were not enough reserves to cover the largest running generating unit at the time, but does not necessarily lead to power outages. Fernandez said one unit of the Malaya power plant was activated on Feb. 26 to March 1, on March 5 to 10, and on March 12 to 14, which indicated the need to add to the reserves in the Luzon grid. The 650-megawatt (MW) Malaya Thermal Power Plant (TPP) in Rizal—which runs on diesel—was designated as a must-run unit (MRU) by the DOE to address supply deficiency when operating power plants in the grid suddenly bog down or become unavailable. “As a result, we have observed daily average prices in the spot market stayed above P5.50 per kilowatt-hour (kwh) in the first two weeks of the supply month, even spiking to P8 per kwh several times,” Fernandez said. Several power plants were on scheduled maintenance during the March supply month. These facilities include the 50-MW Unit 3 of the Angat hydropower plant for an annual overhauling until July 29; the 300 MW Calaca Unit 2 for a scheduled maintenance until March 15; the 315-MW Masinloc Unit 2 for an annual overhauling until March 2; the 460-MW Quezon Power Philippines Ltd. Co. (QPPL) plant which is on planned outage until March 12; and the South Luzon Thermal Energy Corp. (SLTEC) plant which is on planned outage until March 6. The 316-MW Unit 2 of GNPower went on unplanned outage as well, but will be on maintenance outage until March 25. Last month, electricity rates increased by P0.97 per kwh, but Meralco only charged P0.85 per kwh in customer bills to mitigate the impact of the rate hike on consumers. The remaining P0.12 per kwh, on the other hand, will be reflected in the April billings.

The Securities and Exchange Commission (SEC) has eased financial reporting requirements for small businesses as part of a continuing government effort to facilitate entrepreneurship. “The Commission, in its meeting held on 22 March 2018, approved the adoption of the Philippine Financial Reporting Standards (PFRS) for Small Entities as part of SEC’s rules and regulations on financial reporting,” according to SEC Memorandum Circular No. 5, series of 2018, dated March 26, that was published in a newspaper on Thursday last week and posted on the regulator’s website. Adoption of the PFRS for Small Entities, in turn, prompted revision of Section 2 of Securities Regulation Code (SRC) Rule 68, or the general guide to financial statement preparation. Prior to the release of the new guidelines, the SEC had required small and medium enterprises (SMEs) to observe uniform financial reporting standards that simplified the principles in the full PFRS for recognizing assets, liabilities, income and expenses. “The changes in effect made easier and (simpler) the reporting of small enterprises,” SEC Chairperson Teresita J. Herbosa said in a mobile phone message when sought for explanation, citing SEC General Accountant Emmanuel Y. Artiza. “The Financial Reporting Standards Council came out with said framework as one of ease-of-doing-business initiative as recommended by the Association of (Certified Public Accountants) in Public Practice.” The new framework this time distinguished medium-sized entities as those with total assets of more than P100 million to P350 million or total liabilities of more than P100 million to P250 million. The PFRS for Small Entities will now apply to businesses with total assets or liabilities of P3 million to P100 million, that are required to file financial statements under Part 2 of SRC Rule 68, are not in the process of filing their financial statements for the purpose of issuing any class of instruments to the public and are not holders of secondary licenses. The new rules will not apply to small businesses which have operations or investments that are based or conducted in another country. These should instead use the full PFRS or PFRS for SMEs. The circular also exempted from mandatory adoption of the PFRS for Small Entities those small businesses that are subsidiaries of a parent company reporting under the full PFRS or PFRs for SMEs, are subsidiaries of a foreign parent moving towards International Financial Reporting Standards (IFRS) or IFRS for SMEs, and joint ventures of associates that form part of a group reporting under the full PFRS or PFRS for SMEs, among others. Should a small business breach the prescribed threshold in terms of total assets or total liabilities and thus fall under a different classification, its annual financial statement should be prepared based on the higher framework, the circular read. The SEC may consider other cases as valid exceptions from the mandatory adoption of PFRS for Small Entities. “If a small entity that uses the PFRS for Small Entities in a current year breaches the floor or ceiling of the size criteria at the end of that current year, and the event that caused the change is considered ‘significant and continuing,’ the entity shall transition to the applicable financial reporting framework in the next accounting period,” according to the circular. If such event is not considered “significant and continuing,” the entity can continue to use the same financial reporting framework it currently uses, according to the circular. Management will determine what is “significant and continuing” based on the relevant qualitative and quantitative factors; but in general, a fourth or more of the consolidated total assets is considered significant. The SEC requires entities meeting the prescribed criteria to apply the PFRS for Small Entities for the annual period beginning on or after Jan. 1, 2019, although the regulator will allow early application of the new reporting rules.

The Department of Transportation (DOTr) on Tuesday reaffirmed its commitment to change the sorry state of the country’s public

transportation as it launched the Public Transport Modernization Expo. “They say the measure of a country’s progress is the state of its public transportation, and today, we are affirming our commitment to change the sorry state of public transportation in the country,” Transportation Secretary Arthur Tugade said. “Today, we will show you the future. Today, we will show you what progress looks like,” he said. The expo opened at the Philippine International Convention Center (PICC) Forum in Pasay City, in line with the Duterte administration’s goal of modernizing public utility vehicles (PUVs). The event showcases prototypes of modern PUVs and the public transport modernization program’s benefits to commuters and operators by providing an adequate, comfortable, safe, and environment-friendly public transportation. At the expo, various prototypes of PUVs are on display, including five low-floor Public Utility Buses (PUBs), twenty jeepneys, and three electronic-tricycles. The expo is led by officials of the DOTr and Land Transportation Franchising and Regulatory Board (LTFRB) Chairman Martin B. Delgra III, and Land Transportation Office (LTO) Assistant Secretary Edgar Galvante. Tugade said the expo aims to encourage all

BAIPHIL Market Watch – 4 April 2018 Page 4 of 10

stakeholders to keep an open mind about the PUV Modernization Program. He said the exhibit will offer a peek into what modern road public transportation looks like. The PUV Modernization Program is a transformational large-scale initiative and flagship project of the Duterte administration, which envisions a restructured, well-managed, and environmentally sustainable transport sector.

Senator Joel Villanueva expressed readiness Tuesday to sponsor a bill that would end unjust contractualization following the statement of Labor Secretary Silvestre Bello III that an executive order would not be enough to totally ban the illegal practice. Villanueva said the Senate committee on labor, employment and human resources development is now preparing its committee report on the matter. “I agree that a law is necessary to end unjust contractualization. We are now on the final stage of preparing our committee report for plenary action,” he said. Villanueva said the committee was banking on the inputs of the Department of Labor and Employment but the representatives who attended the Senate hearings did not provide a clear position on the matter. “One important factor that we are considering is the inputs of DOLE, since we believe that their inputs will ensure that what we legislate is operationable since they are responsible for the implementation of the proposed law,” he said. “Unfortunately, while DOLE attended the committee hearings, they have not submitted a clear position on the issue,” he added. Villanueva said an executive order on contractualization “is important because we have to consider the real position of the implementing agency on this matter.” “We expect the EO to provide the framework and guidance for the implementation of a national policy on contractualization,” he said. “We cannot legislate based on news items or without knowing the clear position of the executive on this matter. We want to ensure that what we are legislating is useful and effective,” he added. Senior Deputy Executive Secretary Menardo Guevarra said Monday the government cannot meet the demand of labor groups for a total ban on contractualization because such would need legislation. "An executive order is meant only to supplement or give implementing details of what the law provides, but it cannot add or subtract or substantially alter what the law provides. That is really more for Congress to do," he said. Ending contractualization was one of President Rodrigo Duterte's promises during the 2016 election campaign.

The NAIA Consortium is calling for the government to fast-track the review of the proposed rehabilitation of the Ninoy Aquino International Airport, saying it wants to start the project within the year. “We hope the government can expedite the approval process so we can start re-building our gateway and giving passengers an experience they only enjoy when abroad,” Jose Emmanuel Reverente, NAIA Consortium spokesperson, said in an emailed statement on Tuesday. Made up of seven companies listed on the Philippine Stock Exchange, the consortium submitted its unsolicited proposal in February. The group consists of Aboitiz InfraCapital Inc., AC Infrastructure Holdings Corp., Alliance Global Group Inc., Asia’s Emerging Dragon Corp., Filinvest Development Corp., JG Summit Holdings Inc., and Metro Pacific Investments Corp. The consortium has tapped the operator of Singapore’s Changi airport as technical partner in the project. “Clearly, NAIA is a lifeline for the countryside. Tourism is one of the ways the government can achieve its goal of making the country’s growth more inclusive,” Reverente said. “The bigger and better NAIA is, the better for everybody all over the country,” he said. Once the consortium gets an original proponent status, other competitors may opt to match its proposal under a Swiss challenge. “If we want air transport to create more economic wealth and generate more jobs, we have to expand, upgrade and improve NAIA now, not later,” Reverente said. Another unsolicited proposal was submitted by Megawide Construction Corp. and its consortium partner Bangalore-based GMR Infrastructure Ltd. to rehabilitate NAIA at a cost of $3 billion.

A Korean company is proposing to undertake the expansion and modernization of Port Irene in Cagayan, the head of the Cagayan Economic Zone Authority (CEZA) said. CEZA administrator and CEO Raul Lambino said Fairbridge Overseas Development Inc., through a local unit, expressed interest to modernize Port Irene in a proposal that includes dredging its harbor and reinforcing its pier to allow large cargo and cruise vessels to dock. “This is a breakthrough proposal, for it is at no cost to the government. It will mark the beginning of the development of Port Irene to its full potential,” he said. Port Irene is considered as the jewel of the Cagayan Economic Zone and Freeport but poor port conditions and inadequate infrastructure have set back its development. Lambino said Port Irene has not operated at full capacity because its harbor is shallow and narrow, and thus, it has so far failed to take advantage of being along the Northern Pacific’s major international shipping lanes. Fairbridge is in the industry of freight transport brokerage and other supporting transport services. The firm’s proposed modernization includes dredging of the navigational channel, upgrading of existing piers and wharves, and reinforcing the one-kilometer concrete breakwater and repairing its storm-damaged portions. Lambino said Fairbridge would get the sea sand dredged from the harbor and its periphery and use the harbor for its business. He said Fairbridge also intends to contract local labor for the manufacture of building materials made out of sea sand for its mass housing project and for the importation and local sale of the product. Since taking over as CEZA administrator in July last year, Lambino has eyed the rehabilitation of Port Irene as the “key in realizing the freeport’s potential as a regional transshipment hub for goods in East Asia and the Northern Pacific.” Lambino earlier reported that CEZA had already finished the upgrade required by the Civil Aviation Authority of the Philippines on the Cagayan North International Airport (CNIA) in Lal-lo. CEZA said CNIA received recently its first commercial flight from Macau, a 100-seater Royal Air aircraft, and is expected to go into full operation next month.

BPI Family Savings Bank is eyeing to double its retail lending portfolio this year, banking on the positive economic growth. “We are

expecting high double-digit growth,” BPI Family Savings Bank senior vice president and retail lending group head Joaquin Ma. Abola told reporters in a media roundtable in Makati City on Tuesday. Abola, however, declined to disclose specific numbers on its retail lending growth prospects for the year. He said the country’s positive economic growth prospects in light of the recently-enacted tax reform law and the government’s massive infrastructure spending will drive the bank’s consumer lending business. The government has said that the Tax Reform for Acceleration and Inclusion (TRAIN) law will benefit 99 percent of income tax payers, with those earning P250,000 a year exempted from paying income tax. Abola said BPI Family’s faster turnaround or processing of loan applications is another factor. BPI Family Savings is the country’s largest thrift bank in terms of assets—amounting to P265.011 million as of September 2017.

GT Capital Holdings, Inc. secured fresh debt to participate in the stock rights offer of Metropolitan Bank & Trust Co. (Metrobank),

which will use the funds for its business operations and expansion. GT Capital Chief Financial Officer Francisco H. Suarez said in a briefing on Tuesday the company has raised P25 billion in new loans as of March to solely fund its participation in the rights offer of Metrobank. The holding firm of George S.K. Ty, the country’s sixth richest man, currently owns 36.09% of Metrobank, one of the country’s largest banks in terms of assets, deposit base, and equity. In January, GT Capital said it intends to subscribe to at least its full rights entitlement in Metrobank’s stock rights offer. The lender is using proceeds of up to P60 billion to sustain above-industry loan growth across various segments and increase ownership in credit card provider Metrobank Card Corp., a joint venture with ANZ Funds Pty. Ltd. The offering will close today. GT Capital is spending as much as P112 billion this year, with bulk of the increase in the capital expenditure budget taking into account its participation in the planned P60 billion stock rights offer of Metrobank. Real estate arm Federal Land, Inc. plans to launch five to six projects this year after rolling out only four projects in 2017 due to delays in securing permits and licenses. Toyota Motor Philippines Corp. aims to end the year with 70 dealerships, with upcoming sites in Tuguegarao, Isabela; San Jose del Monte, Bulacan; and Subic Bay. Two new dealerships were opened in Silang, Cavite and Calapan, Oriental Mindoro in the first quarter of 2018. GT Capital reported a 29% rise in core net income to P15 billion last year from P11.7 billion in 2016 on the back of a 19% increase in revenues to P239.8 billion from P202.1 billion. Including

BAIPHIL Market Watch – 4 April 2018 Page 5 of 10

extraordinary items, consolidated net income slipped 3% to P14.2 billion from P14.6 billion. Shares of GT Capital were unchanged at P1,150 apiece on Tuesday.

Sun Life of Canada (Philippines) Inc. remains to be the No. 1 life insurance company in the Philippines, according to a report released

by the Insurance Commission. Sun Life sustained its leadership for the seventh consecutive year after attaining the highest total premium income in 2017 of P32 billion. “This milestone is one we attribute to our clients, whose trust and support inspire us to keep improving and innovating,” Sun Life of Canada (Philippines) Inc. president Alex Narciso said. “We also have our advisors, employees and partners to thank, for it is through their hard work and passion that we are able to touch the lives of more Filipinos.” The previous year saw the Sun Life Group of Companies growing its client base to over three million, while its advisory force is now over 11,000 strong. “We are on track to realizing our RI5E PH vision of having five million clients by 2020,” Sun Life Philippines CEO and country head Riza Mantaring said. “We are happy to see a growing appreciation for financial planning among Filipinos and this is a big step towards ensuring a brighter future for themselves and our country as a whole.”

Phoenix Petroleum Philippines Inc. has increased its market share to lead the country’s independent oil sector, the company said

on Tuesday. The company’s market share rose to 6.2 percent in 2017 from 5.7 percent a year earlier, based on data from the Department of Energy, Phoenix Petroleum assistant vice president Socorro Cabreros said in a regulatory filing on Tuesday. The Department of Energy’s Oil Supply/Demand Report 2017 shows that Phoenix Petroleum improved the most in market share to be the fastest-growing independent oil company, topping the other independent oil players in the country, according to the Phoenix Petroleum. “We are proud to be an emerging major in the industry today, after having started just over 15 years ago in Davao City,” Phoenix Petroleum president and CEO Dennis Uy said. In 2017, Phoenix Petroleum posted a net income of P1.79 billion, up 65 percent from P1.09 billion in 2016. Revenue stood at P44.43 billion, up 45 percent on the back strong fuels business as sales volume increased by 17 percent to 1.76 billion liters. Phoenix Petroleum operates 530 retail stations nationwide and serves a number of commercial and industrial accounts in power, marine, manufacturing, transportation, aviation, and other industries. The company has ventured into other revenue streams when it acquired Petronas Energy Philippines and Philippine FamilyMart and marked its entry into liquefied petroleum gas (LPG) and convenience store retailing. Phoenix established its trading arm PNX Petroleum Singapore Pte Ltd. in September 2017 to enhance the group’s petroleum efficiencies and get a foot in the regional market. Early this year, Phoenix entered into a joint venture with TIPCO Asphalt of Thailand and PhilAsphalt to form Phoenix Asphalt Philippines Inc. to manufacture, market, and distribute asphalt in the country.

Ayala Land, Inc. (ALI) secured the highest credit rating for its proposed P10-billion fixed-rate bond issuance, according to a local

debt watcher. In a statement issued Tuesday, the Philippine Rating Services Corp. (PhilRatings) said it assigned a PRS Aaa rating to ALI’s bond issuance, given the company’s strong financial capacity, well-diversified portfolio, and positive outlook. A PRS Aaa rating is the highest on the debt watcher’s credit rating scale, indicating that a company has an “extremely strong” capacity to meet its financial commitments. ALI’s bond issuance also has a stable outlook, which means that the rating is not likely to change in the next 12 months. “The ratings were assigned given the following key considerations: continuously growing profitability, coupled with healthy cash flow generation and high cash reserves; sound capitalization, with a manageable debt level and mix; well diversified portfolio, with a sizable and strategic landbank… and sustained healthy outlook for the economy and real estate industry,” PhilRatings said. ALI’s P10-billion issuance forms part of its P50-billion debt securities program approved by the Securities and Exchange Commission in March 2016, which the company can offer over a period of three years. So far, ALI has already issued P32 billion in bonds from the program. The listed property developer looks to use the proceeds of the offer to partially finance various projects in Aseana City in Parañaque, City Gate in Makati, Cloverleaf Mall and Vertis Mall, both in Quezon City; as well as the redevelopment of the northern portion of the Ayala Triangle Gardens in Makati. ALI is planning to raise up to P25 billion from a mix of retail bonds, corporate notes, and bilateral loan deals this year. Its board of directors has already approved a P20-billion fund-raising activity through retail bonds to be listed on the Philippine Dealing and Exchange Corp. The remaining P5 billion will comprise of debt paper issuances with a tenor of up to five years, to be offered to eligible institutions for the refinancing of ALI’s short-term loans. This year, the company said it will be spending P110.8 billion in capital expenditures, 21% higher than what it spent in 2017. At the same time, ALI also plans to launch P125 billion worth of projects. ALI’s net income attributable to the parent rose 21% to P25.3 billion in 2017, supported by a 14% increase in revenues to P122 billion. Shares in ALI gained 60 centavos or 1.46% to close at P41.60 each at the stock exchange on Tuesday.

Revenues generated by the City of Dreams Manila grew by a third in 2017, following an improvement across all gaming and non-

gaming segments within the integrated resort and casino for the year. In a disclosure to the stock exchange, Melco Resorts (Philippines) Corp. (MRP) said City of Dreams Manila booked $649.3 million in revenues last year, higher than the $491.2 million it delivered in 2016. Adjusted property EBITDA (earnings before interest, tax, depreciation, and amortization) rose to $235 million, up by 46% year on year, due to higher casino revenues. For the gaming segment, rolling chip volume grew by 68.4% to $11.5 billion, with expected wins dipping to 3.1% from 3.4% in 2016. Mass market table games had a hold percentage of 29.6%, higher than the 28% in 2016, supporting a 24.8% increase in table drops to $686.9 million. Gaming machines also saw a 36% climb in revenues to $3.04 billion, with win rates at 5.8%. Meanwhile, non-gaming revenues were up by 11% to $116.3 million for the year. The non-gaming segment includes luxury hotels offering around 950 rooms across NUWA Manila, Nobu Hotel Manila, and Hyatt City of Dreams Manila. The casino complex also features specialty restaurants and bars. The earnings report for City of Dreams Manila was included in the regulatory filing submitted by Melco International Development Limited to the Hong Kong Stock Exchange last March 29. Melco International is the largest shareholder of Melco Resorts & Entertainment Limited, which in turn is the largest shareholder in MRP.

Port operator International Container Terminal Services, Inc. (ICTSI) and its flagship operation at the Manila International Container

Terminal (MICT) have once again been nominated in the AFLAS (Asian Freight, Logistics and Supply Chain Awards), honoring the best in the world of freight and logistics. ICTSI joins other top global port operators in vying for the coveted title of Best Global Container Terminal Operator, while the MICT is nominated for the Best Container Terminal in Asia (Under 4m TEUs) category. The award is organized by Hong Kong-based Asia Cargo News, one of the more prominent and important shipping and logistics publications. Determined by votes cast by more than 15,000 port stakeholders from around the world, the 2018 AFLAS recognizes companies and organizations which demonstrate leadership as well as consistency and dedication to service quality, innovation, customer relationship management, and reliability. Since its takeover of the MICT 30 years ago in 1988, ICTSI consistently invested in the terminal – increasing annual capacity five-fold, expanding and improving infrastructure and cargo handling fleet, and automating processes and systems – making it the largest and most modern in the country today at par with the world’s best. ICTSI also brought in the global standards and best practices to its other international and domestic terminals and operations, which now span 31 terminals in 18 countries, spread across six continents. Through the years, ICTSI has also received local and international awards and been cited corporate governance, financial administration, CSR and stakeholder engagement, and communications.

BAIPHIL Market Watch – 4 April 2018 Page 6 of 10

Aboitiz Power Corp. (AboitizPower) is entering the solar rooftop business and has put up a new company that is considering projects in Luzon and Visayas this year, the power generation and distribution company told the stock exchange. “We have been in the power industry for more than 80 years. This gives us a wealth of knowledge and technical capability that we can share to our customers who want to go into solar,” said AboitizPower President Antonio R. Moraza in a statement. The new company, named Aboitiz Power Distributed Energy, Inc. or APX, is looking at completing several projects in 2018, “with a target to integrate it closely with the group’s exist ing open access customers,” the parent company said. AboitizPower said APX is aimed at further expanding the group’s renewable energy portfolio under its renewable energy brand Cleanergy. “The positive response from customers affirms our view that distributed energy technology such as rooftop solar complements existing products and services that the AboitizPower group provides,” said APX General Manager Jose Rafael M. Mendoza in a statement. AboitizPower’s foray into solar energy came in 2016 with its 59-megawatt peak (MWp) San Carlos Sun Power, Inc. (Sacasun) project San Carlos City, Negros Occidental. The company said it has 1,272 MW of net sellable capacity, together with its partners, through its Cleanergy brand. AboitizPower’s renewable energy plants include its geothermal, run-of-river hydro, and large hydropower facilities all over the country. The company said it is pushing for a balanced mix strategy by maximizing the Cleanergy brand while taking advantage of the reliability and cost-efficiency of thermal power plants. APX’s planned integration with AboitizPower’s open access customers comes as competition in the business segment is heightened by the continued suspension of rules that are meant to allow retail electricity suppliers to serve those whose average monthly consumption is 750 kilowatts or less. In 2017, AboitizPower reported a 2% rise in net income to P20.4 billion, as its bottom line was affected by its decision to halt operations of Aseagas Corp. The company’s core net income grew 13% to P23.3 billion in 2017.

Integrated construction and real estate developer D.M. Wenceslao & Associates Inc. said Tuesday it is looking at securing contracts

for some of the government’s infrastructure projects. “We are an ‘AAAA’ general contractor, one of less than 20 in the country, and are in a position to take advantage of the government’s massive infrastructure program, especially in our core areas of horizontal infrastructure and construction, foundation works and marine construction,” D.M. Wenceslao chief executive officer Delfin Angelo Wenceslao said in a statement. A quadruple “A” license given by the Construction Industry Authority of the Philippines signifies that a contractor has met the requirements to qualify for foreign contracts. Wenceslao did not disclose specific projects the company is looking at but said it has several construction projects now in Bay Area’s Aseana City in Parañaque City. “We also have our own projects in Aseana which will be a central business district in the coming years within the huge development encompassing the Entertainment City, Mall of Asia, the Senate and various other developments,” he said. He noted that the company helped the government reclaim 2.04 million square meters in the Manila Bay area. The company intends to stage an initial public offering on the Philippine Stock Exchange this year.

ASIA-PACIFIC

Japanese stocks fell on Tuesday, led by tech firms and makers of electronic components after U.S. tech stocks tumbled overnight on

resurgent trade war fears, while Monex jumped after saying it might buy cryptocurrency exchange Coincheck. The Nikkei ended 0.5 percent lower, at 21,292.29. The broader Topix dropped 0.3 percent to 1,703.80.

China stocks ended lower on Tuesday, amid resurgent trade war fears after Beijing unveiled retaliatory trade measures against the United

States. At the close, the Shanghai Composite index was down 0.8 percent at 3,136.63, while the blue-chip CSI300 index declined 0.6 percent to 3,862.48. The smaller Shenzhen index ended down 0.78 percent and the start-up board ChiNext Composite index was weaker by 1.46 percent. China has increased tariffs by up to 25 percent on 128 U.S. products, from frozen pork and wine to certain fruits and nuts, escalating a dispute between the world’s biggest economies in response to U.S. duties on imports of aluminum and steel.

Hong Kong stocks reversed earlier losses to edge higher on Tuesday, led by gains in consumer goods makers, although caution

prevailed amid escalating trade tensions after Beijing unveiled retaliatory trade measures against the United States. At close of trade, the Hang Seng index was up 0.3 percent at 30,180.10, while the Hang Seng China Enterprises index closed up 1.2 percent to 12,136.67. Trading was thin as investors remained cautious amid escalating trade tensions between the world’s largest economies and a selloff on the Wall Street.

Oil prices inched up on Tuesday as rising Russian output and expectations of a reduction in Saudi Arabian crude prices were offset

by a potential slowdown in U.S. production. U.S. WTI crude futures CLc1 were at $63.2 a barrel at 0117 GMT (9.17 p.m. ET), up 18 cents, or 0.3 percent, from their previous settlement. Brent crude futures LCOc1 rose to $67.84 per barrel, up 20 cents, or 0.3 percent, after it fell more than 2 percent on Monday. Greg McKenna, chief market strategist at futures brokerage AxiTrader, said traders were wary of the fact that the market was still holding large amounts of long positions which will need to be sold off at some stage. “That makes prices vulnerable to bad news,” he said, pointing to rising Russian production and a likely drop in Saudi physical crude prices. Brent reached a 2018 high of $71.28 in January but has since struggled to pass that level. Two rallies last week ran out of steam just above $71. There was also pressure coming from the physical market, where top exporter Saudi Arabia is expected to cut prices for all crude grades it sells to Asia in May. This came amid rising supplies. Top producer Russia pumped 10.97 million barrels per day (bpd) of crude in March, up from 10.95 million bpd in February, official data showed, an 11 month high. One of the key price drivers going forward will be crude output from the United States C-OUT-T-EIA, which has risen by almost a quarter since mid-2016 to 10.43 million bpd, overtaking Saudi Arabia’s and coming in just shy of Russia’s. A dip in drilling activity for new production could imply that the relentless rise in U.S. production could be tapering off toward the middle of the year. “Production data released on Wednesday (in the United States) will offer a fresher clue on which direction prices are going,” Ma Kun, general manager of Energy and Chemicals at Bank of China International Futures said. Weekly official Energy Information Administration (EIA) data, which includes production figures, is due to be published on Wednesday.

BAIPHIL Market Watch – 4 April 2018 Page 7 of 10

Corporate Japan expects to see only minimal inflation in a year and barely any change in the next three to five years, a central bank survey showed on Tuesday, highlighting yet again the difficulty the Bank of Japan faces in reaching its elusive 2 target percent inflation. Companies surveyed by the Bank of Japan expect consumer prices to have risen 0.8 percent a year from now, unchanged from their projection three months ago. Firms also expect consumer prices to have risen by an annual 1.1 percent three years from now and 1.1 percent five years ahead, also unchanged from three months ago. The BOJ deployed a massive stimulus program in 2013 in the hope of shocking consumers out of their deflationary mindset and boosting corporate and household inflation expectations. After failing to make much headway on price growth, the BOJ revamped its policy framework in 2016 to one better suited to a long-term battle against deflation, although its results have been modest. Japan’s economy has expanded for eight quarters, the longest continuous expansion since a 12-quarter stretch of growth between April-June 1986 and January-March 1989 around the height of Japan’s economic bubble. But this record run of growth has been slow to translate into higher consumer prices. The nationwide core consumer price index, which includes oil products but excludes volatile fresh food costs, rose 1.0 percent in February from a year earlier, matching the median estimate, data last week showed. However, a narrower measure of consumer prices that excludes fresh food and energy rose an annual 0.5 percent in February, highlighting the snail’s pace of underlying inflation. The tankan surveys will be among factors for the BOJ board to scrutinize when it meets for a two-day rate review ending on April 27. The meeting will be the first to include the BOJ’s two new deputy governors. Prime Minister Shinzo Abe appointed Masazumi Wakatabe, an academic known as vocal advocate of aggressive monetary stimulus, to one of the posts. Masayoshi Amamiya, a career central banker, was appointed two the second deputy governor post. Governor Haruhiko Kuroda was reappointed, which suggests the BOJ will maintain policy continuity. However, there is some uncertainty over whether Wakatabe’s appointment will shift the policy board toward additional easing given the difficulty in meeting the central bank’s price target. The inflation expectations come after Monday’s BOJ tankan survey of business confidence showed big manufacturers’ sentiment worsened for the first time in two years on worries about a rising yen and trade friction with the United States.

The Reserve Bank of Australia left the cash rate unchanged at a record low of 1.5 percent at its April 2018 meeting, as widely

expected. While saying the economy is projected to grow faster in 2018 supported by positive business conditions and stronger exports, policymakers viewed household consumption remains a continuing source of uncertainty. Interest Rate in Australia averaged 4.58 percent from 1990 until 2018, reaching an all time high of 17.50 percent in January of 1990 and a record low of 1.50 percent in August of 2016.

Indonesia’s parliament on Tuesday approved Perry Warjiyo’s nomination to be central bank governor, succeeding Agus

Martowardojo whose term ends in May, deputy speaker Taufik Kurniawan said. Warjiyo, currently a Bank Indonesia deputy governor, was endorsed by parliament’s financial commission last week. A. Hafisz Tohir, the commission’s deputy chairman, told parliament on Tuesday that Warjiyo should focus on guarding the rupiah exchange rate as part of broader efforts to maintain macroeconomic stability. At last week’s hearing, Warjiyo pledged to direct monetary policy to support both economic growth and stability. Warjiyo has a doctorate in monetary and international economics from Iowa State University.

REST OF THE WORLD

European stocks closed lower Tuesday amid a selloff in tech shares and escalating trade tensions between the US and China. The DAX

30 dropped 94 points, or 0.8%, to 12,002; the FTSE 100 declined 26 points, or 0.4%, to 7,030; the CAC 40 slipped 15 points, or 0.3%, to 5,152; and the IBEX 35 retreated 51 points, or 0.5%, to 9,550. Meanwhile, the FTSE MIB recovered from earlier losses and finished up 99 points, or 0.4%, at 22,510.

The three major U.S. stock indexes ended higher after a choppy session on Tuesday as investors looked forward to earnings season

while the S&P 500 pushed above a key support level and Amazon.com shares jumped on bets that criticism from President Donald Trump would not translate to policy changes. Traders said they were heavily focused on technical levels after investors fled on Monday when the S&P 500 breached its 200-day moving average. The benchmark index pushed above that support level just ahead of the last hour of trading on Tuesday and stayed higher for the rest of the session. Wall Street analysts expect S&P 500 earnings to increase 18.4 percent for the first quarter, according to Thomson Reuters data. The Dow Jones Industrial Average rose 389.17 points, or 1.65 percent, to 24,033.36, the S&P 500 gained 32.57 points, or 1.26 percent, to 2,614.45 and the Nasdaq Composite added 71.16 points, or 1.04 percent, to 6,941.28. Advancing issues outnumbered declining ones on the NYSE by a 2.98-to-1 ratio; on Nasdaq, a 1.86-to-1 ratio favored advancers. Volume on U.S. exchanges was 7.14 billion shares, compared to the 7.31 billion average for the last 20 trading days.

The New York Federal Reserve will launch a benchmark U.S. rate on Tuesday to potentially replace Libor, and market participants

hope it will prove more reliable after a long and complex switchover. The New York Fed will begin publishing the Secured Overnight Financing Rate (SOFR), the first step in a multi-year plan to transition more derivatives away from the London interbank offered rate (Libor), which regulators say poses systemic risks if it ceases publication. Analysts have struggled to explain a recent jump in Libor, which has reached nine-year highs USD3MFSR=X even as bank credit quality is seen as solid. Increased short-term Treasury issuance and declining demand for credit due to tax reforms are deemed the most likely factors. A decline in interbank lending has reduced the robustness of the rate, which is sometimes estimated rather than based on actual transactions. SOFR is based on the overnight Treasury repurchase agreement market, which trades around $800 billion in volume daily. “It’s going to be based on a very, very robust set of transactions. I don’t think a lot of the issues and unknown volatility around Libor is going to exist,” said Blake Gwinn, an interest rate strategist at NatWest Markets in Stamford, Connecticut. “Instances like what we’ve been going through this past month where it’s not even a clear cut bank credit issue or a dollar funding issue per se. It’s kind of got everybody scratching their heads trying to figure out why it’s doing what it’s doing,” Gwinn said. DIFFICULT TRANSITION A move away from Libor, however, is expected to be gradual and complicated. One issue is that there is not yet a market for term loans such as one and three months, as in Libor. “It’s hard to imagine a way they could come up with a similar calculation for a term rate and that’s the big difference between whether or not people would be comfortable adopting SOFR as a straight replacement for Libor,” said

BAIPHIL Market Watch – 4 April 2018 Page 8 of 10

Thomas Simons, a money market economist at Jefferies in New York. It will take time to develop liquidity in derivatives based on the rate. The CME Group will launch futures trades based on SOFR on May 7, while major dealers will enable swaps trading on the rate this year. Investors will also need to adjust to the day to day volatility of the repurchase market, where rates typically increase ahead of monthly and quarterly closings. “A lot of folks have not really followed the repo market and some of the intramonth variations particularly closely,” said Brian Cabana, head of short rates strategy at Bank of America Merrill Lynch in New York. “On a day to day basis it will be more volatile, but smoothing out over a three month time horizon it should be similarly volatile,” Cabana said.

German retail sales unexpectedly declined by 0.7 percent month-on-month in February of 2018, after a downwardly revised 0.3

percent drop in January and missing market consensus of a 0.6 percent rise. It is the third straight month of fall in retail trade. Year-on-year, retail sales increased by 1.3 percent, after an upwardly revised 2.5 percent rise in the preceding month and below estimates of a 2.2 percent gain. Retail Sales MoM in Germany averaged 0.02 percent from 1994 until 2018, reaching an all time high of 4.50 percent in December of 2006 and a record low of -6.10 percent in January of 2007.

The Trump administration on Tuesday raised the stakes in a growing trade showdown with China, announcing 25 percent tariffs on

some 1,300 industrial technology, transport and medical products to try to force changes in Beijing’s intellectual property practices. The U.S. Trade Representative’s office unveiled a list of mainly non-consumer products representing about $50 billion of estimated 2018 imports that would nonetheless hit supply chains for many U.S. manufacturers. The list ranges from chemicals to TV sets, motor vehicles and electronic components. Publication of the tariff lists starts a public comment and consultation period expected to last around two months, after which USTR said it would issue a “final determination” on the product list. It has scheduled a May 15 public hearing on the tariffs. The announcement drew a swift threat of retaliation from the Chinese embassy in Washington. “As the Chinese saying goes, it is only polite to reciprocate. The Chinese side will resort to the WTO dispute settlement mechanism and take corresponding measures of equal scale and strength against U.S. products in accordance with Chinese law,” the embassy said in a statement. The USTR target list follows China’s imposition of tariffs on $3 billion worth of U.S. fruits, nuts, pork and wine to protest new U.S. steel and aluminum tariffs imposed last month by U.S. President Donald Trump. The standoff between the world’s two largest economies has sparked market fears that they could spiral into a trade war that could crush global growth. The USTR tariff list conspicuously excluded many consumer electronics products such as cellphones and laptop computers assembled in China and also did not include clothing and footwear, drawing a sigh of relief from retailers who had feared higher costs for American consumers. It did include Chinese-made flat-panel television sets and many electronic components, including light-emitting diodes increasingly used in lighting products. It also targeted vehicles such as motorcycles and electric cars, aircraft parts and electrical gear. USTR Robert Lighthizer had said the tariff list was developed using a computer algorithm designed to choose products that would inflict maximum pain on Chinese exporters, but limit the damage to U.S. consumers. The largest categories of U.S. imports from China were communications equipment, totaling $78 billion in 2017, with computer equipment second at $58.6 billion, according to U.S. Census data compiled by the Congressional Research Service. China ran a $375 billion goods trade surplus with the United States in 2017, a figure that Trump has demanded be cut by $100 billion. But USTR said the China tariffs announced on Tuesday were proposed “in response to China’s policies that coerce American companies into transferring their technology and intellectual property to domestic Chinese enterprises.” The agency added that such policies “bolster China’s stated intention of seizing economic leadership in advanced technology as set forth in its industrial plans.” China has denied that its laws require technology transfers and has threatened to retaliate against any U.S. tariffs with trade sanctions of its own, with potential targets such as U.S. soybeans, aircraft or heavy equipment. A USTR official said the tariff list targeted products that benefit from China’s industrial policies, including the “Made in China 2025” program, which aims to replace advanced technology imports with domestic products and build a dominant position in future industries. The state-led 2025 program targets 10 strategic industries: advanced information technology, robotics, aircraft, new energy vehicles, pharmaceuticals, electric power equipment, advanced materials, agricultural machinery, shipbuilding and marine engineering and advanced rail equipment. Many products in those segments appear on the list, including antibiotics and industrial robots. U.S. business groups reacted cautiously, saying they agreed with Trump’s efforts to stop the theft of U.S. intellectual property, but questioning whether tariffs were the right approach. “Tariffs are one proposed response, but they are likely to create new challenges in the form of significant added costs for manufacturers and American consumers,” National Association of Manufacturers President Jay Simmons said in a statement. U.S. Senator Marco Rubio said in a letter to Lighthizer and Treasury Secretary Steven Mnuchin that he was glad to see “bold” action against China. “These necessary actions constitute an important break with the appeasement of previous administrations, and provide an opportunity to chart a new course for America’s relationship with this strategic competitor,” Rubio wrote.

Compliance with Operational Risk Management Guidelines – 06 April 2018 Robotic Process Automation (RPA) Overview: Designing an Operating Model – 06 April 2018 BSP Cir. 706 as Amended by BSP Cir. No. 950, AMLA Law, and the AML Risk Rating System – 13 April 2018 Related Party Transactions – 20 April 2018 A Regulatory Perspective on Trust Activities and Administration (2 Days) – 20 & 27 April 2018 BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law, and the AML Risk Rating System (Board of

Directors) – 27 April 2018 Updated Guidelines on Sound Credit Risk Management (Includes Cir 908: Agricultural Value Chain Financing

Framework and BSP Cir 941: Amendments to the Regulations on Past Due and NPLs – 27 & 28 April 2018 Macros Training for Bankers – 27 & 28 April 2018 "Implementing Sound Internal Controls and Validation Process for the ICAAP of Banks" (Guiding Principles of

BSP Circular 639 and 871) - 2 Days – 28 April & 05 May 2018 Overview of Outsourcing Framework (Knowing the Essentials When Outsourcing) – 04 May 2018 Basic Course on Corporate Governance for Savings and Loan Associations, Rural Banks and Cooperatives –

04 & 05 May 2018 Identity Theft: How To Effectively Combat It – 05 May 2018 People Risk Management – 11 May 2018 Updated Guidelines on Sound Credit Risk Management (Includes Cir. 908: Agricultural Value Chain Financing

Framework and Cir. 941: Amendments to the Regulations on Past Due and NPLs) – 11 & 12 May 2018 Counterfeit Detection – 12 May 2018 Process Mapping as an Operational Risk Management Tool – 19 May 2018 Basic Leadership and Effective Supervision Seminar (BLESS Program) for Bank Supervisors – 24 & 25 May

2018 RA 10173 Data Privacy Act - Aligning Info Security Compliance to ISO 27001.2013 – 25 May 2018 Signature Verification & Forgery Detection – 26 May 2018 How to Spot Fake IDs and Money Mules – 26 May 2018 BSP Cir. No. 706 as Amended by BSP Cir. No. 950, AMLA Law, and the AML Risk Rating System – 01 June

2018

BAIPHIL Market Watch – 4 April 2018 Page 9 of 10

Accounting for Non-Accountants with Financial Statements Analysis – 07 & 08 June 2018 Training the Bank Trainers – 07 & 08 June 2018 Beyond Compliance: Managing Technology and Cyber Security Risk (Highlighting BSP Cir. No. 982: Enhanced

Guidelines on Information Security Management) – 08 June 2018 Supervisory Expectations on the ICAAP – 08 June 2018 Advanced Excel Training for Bankers – 15 & 16 June 2018 Macros Training for Bankers – 13 & 14 July 2018

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

APRIL 1-15

4 Freddie G. Villadelgado – Former President

6 Salvador R. Serrano – Former President

7 Dolores A. Santiago – Associate Life Member

7 Agerico G. Agustin – China Bank Savings, Inc.

7 Heubert U. Motio – Secretariat

8 Concesa N. Veneracion – Sumitomo Mitsui Banking Corp.

10 Minda L. Cayabyab – Philippine Savings Bank

13 Marita Socorro D. Gayares – Bank of the Philippine Islands

13 Herminigilda P. Manuba – CARD Bank, Inc.

CAPITULATION - Capitulation is when investors give up any previous gains in stock prices by selling equities, to get out of the market. Capitulation involves extremely high volume and sharp declines. It also usually involves panic selling. The term is a derived from a military term which refers to surrender. You can think of it as ripping your computer off the desk, hurling it across the room and throwing the mother of all tantrums... but really it’s another way of saying that you can't bear the losses anymore in a particular security or market and you are going to cut your losses and sell. When markets or a particular stock sells off in heavy volume, many investors are tempted to abandon ship and sell their stakes as well, or capitulate. That only exacerbates the losses.

BAIPHIL Market Watch – 4 April 2018 Page 10 of 10

DISK LATENCY - Disk latency is the delay between the time data is requested from a storage

device and when the data starts being returned. Factors that effect disk latency include the rotational latency (of a hard drive) and the seek time. A hard drive with a rotational speed of 5400 RPM, for example, will have almost twice the rotational latency of a drive that rotates at 10,000 RPM. The seek time, which involves the physical movement of the drive head to read or write data, can also increase latency. Disk latency is why reading or writing large numbers of files is typically much slower than reading or writing a single contiguous file. Since SSDs do not rotate like traditional HDDs, they have much lower latency.

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

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

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

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

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

Go To Homepage