BAIPHIL Market Watch – 21 Jan 2019

Page 1 of 13

Go To Homepage

BAIPHIL

MARKET WATCH ~ FOSTERING STEWARDSHIP AMIDST FINANCIAL

INNOVATIONS ~

21 Jan

2019

Legend

Improvement / Up

Deterioration / Down

No Movement

FINANCIAL MARKETS AT A GLANCE

Currency Exchange1 Current Previous

USD/PHP 52.5150 52.4100

USD/JPY 109.7800 109.1400

USD/HKD 7.8434 7.8429

USD/CNY 6.7773 6.7735

EUR/USD 1.1363 1.1392

GBP/USD 1.2872 1.2981

PHP BVAL

Reference Rates2 Current Previous

30-Day 5.3200 5.4890

91-Day 5.6630 5.6680

180-Day 6.1030 6.1400

1-Year 6.2700 6.2040

3-Year 6.2840 6.2980

5-Year 6.3490 6.3580

10-Year 6.4820 6.4920

Domestic Stock Index3 Current Previous

PSEi 8,047.12 7,927.20

Total Market Cap (Php Tr) 14.190 14.009

Trade Value (Php B) 8.435 14.165

Stock Index4 Current Previous

NIKKEI 225 20,666.07 20,402.27

HANG SENG 27,090.81 26,755.63

SHANGHAI SE COMP 2,596.006 2,559.64

FTSE 100 6,968.33 6,834.92

DOW JONES 24,706.35 24,370.10

S&P 500 2,670.71 2,635.96

NASDAQ 7,157.228 7,084.46

Various5/6 Current Previous

Gold Spot (USD/oz) 1,282.11 1,292.29

Brent Crude (USD/bbl) 62.70 61.18

3-M US Treasury Yield 2.35% 2.36%

10-Y US Treasury Yield 2.78% 2.75%

30-Y US Treasury Yield 3.10% 3.08%

PHILIPPINES

✓ The Philippine peso depreciated against the US dollar for the third straight session on Friday as the weekly decline in the

number of jobless Americans supported the greenback. The local currency shed 10.5 centavos to close at P52.515:$1 from 52.410

on Thursday. “The peso weakened today after the initial US jobless claims data, which is the leading indicator of unemployment, came in

stronger than expected,” Land Bank of the Philippines market economist Guian Angelo Dumalagan said. Data from the US Labor

Department showed the number of Americans filing for jobless benefits dropped 3,000 to 213,000 for the week ending January 12.

https://www.gmanetwork.com/news/money/economy/681940/peso-weakens-on-us-jobless-claims-decline/story/

✓ The peso declined further against the dollar on Friday due to continued concerns over the UK’s exit from the European Union as

well as the partial US government shutdown. Trading volume thinned to $807.22 million from $932.22 million the previous day. A

foreign exchange trader said the peso slid further as the strong momentum for the dollar persisted. “We closed above the P52.50 level,

which is significant because it is a strong resistance level,” the trader said. He added that the peso moved lower again even as market

players piled up their remittance coverage for the weekend. “Optimism about world trade might have also weighed in,” Mr. Asuncion

added, citing the recent developments in the US-China trade talks.

https://www.bworldonline.com/peso-weakens-amid-uncertainty-over-brexit-us-govt-shutdown/

✓ The peso will likely weaken a tad against the dollar this week amid mixed geopolitical and economic signals abroad, as

investors await the release of gross domestic product (GDP) growth data. A market analyst said on Sunday that the dollar may

appreciate against the peso today on the back of safe-haven buying as fourth-quarter economic growth data from China is expected to

soften. “Speculations of a second Brexit referendum as well as optimism on the US-China trade talks are also expected to lift the dollar,

despite growing views of a pause in US policy tightening this year and last Friday’s mixed US data consumer sentiment and industrial

production,” the analyst added. Towards the end of the week, the dollar may move sideways with a downward bias, weighed down by a

potentially stronger fourth-quarter Philippine GDP growth report. UnionBank of the Philippines chief economist Ruben Carlo O. Asuncion

said in text message on Friday the peso might strengthen for a while if the economic data turns out better than expected. “But I expect

that the general trend is to weaken because of the trade balance,” he added.

https://www.bworldonline.com/peso-may-weaken-ahead-of-gdp/

BAIPHIL Market Watch – 21 Jan 2019

Page 2 of 13

✓ The main index ended Friday at a nine-month high as heavyweights continued to rally, returning above 8,000 and marking the

second straight day and third consecutive week of gains. The Philippine Stock Exchange index rose 1.51% or 119.92 points to close

at 8,407.12 — up 1.81% from Jan. 11’s 7,904.09 finish — while the broader all-shares index edged up 1.28% or 61.08 points to end

4,804.92. “Our index ended strong today after index heavyweights such as SM, SMPH, JFC rallied by more than two percent,” Timson

Securities, Inc. Trader Jervin S. De Celis in a mobile phone message on Friday, referring to SM Investment Corp’s 2.41% rise to P976

apiece; SM Prime Holdings, Inc.’s 2.87% climb to P39.40 and Jollibee Foods Corp.’s 3.77% surge to P324.80 each.

https://www.bworldonline.com/bourse-extends-gains-to-nine-month-peak/

✓ The Philippine stock market is seen to continue to trend higher, although at a slower pace compared to last week, as foreign

funds continue to flow into local equities, particularly blue-chip issues. Stock analysts say that the market’s movement this week will

be influenced by the release of the gross domestic product report for the last quarter of 2018 as well as developments in the US-China

trade talks. “The market is extremely strong right now with turnover value picking up dramatically as well as foreign inflows. For next

week, we may see it trade sideways as it climbs slowly which is the optimum situation,” said Eagle Equities Head of Research Christopher

Mangun. Online brokerage 2TradeAsia.com said investors should “anticipate healthy technical breathers and gradually position buy

entries on stocks poised to perform this year.” Top local online brokerage firm COL Financial recommends Nickel Asia Corporation noting

that, “while the relaxation of Indonesia’s ore export ban will likely continue to put a downward pressure on negotiated contract prices, we

believe that NIKL’s earnings could remain resilient given its ability to increase production volume and shift its focus to higher value ore.”

https://business.mb.com.ph/2019/01/20/ph-stocks-seen-to-trend-higher/

✓ Philippine stocks could “inch higher" to the 8,500 level up to the 10,000 level in the next 2 to 3 years fueled by continued

earnings growth, an analyst said Friday. With the given growth scenario, investors should continue to hold on to Philippine equities,

Atram Trust Corp president Deanno Basas told ANC. “If we're around 8,000 right now, if we pause around these levels, that should be

good for the market and as the earnings of the companies start coming out then that gives a good base for the market to continue inching

up higher,” Basas said. Meanwhile, a "much more moderate" peso depreciation this year is expected as the trade deficit and the

government’s infrastructure push cause a greater demand for the US dollar, he said.

https://news.abs-cbn.com/business/01/18/19/ph-stocks-seen-to-inch-higher-to-8500-level-analyst

✓ Stocks may trade sideways in the week ahead with a possible upward bias should economic growth figures come in better than

expected. The financials sector’s gain was mostly due to the heavy losses it posted in the previous week, as the Hanjin Philippines’ $412-

million default on five of the country’s largest banks caused investors to panic. The PSEi’s ascent was supported by an average turnover

of P11.2 billion for the week, alongside a net foreign buying figure of P1 billion. “The market is extremely strong right now with turnover

value picking up dramatically as well as foreign inflows. If this continues, we may see it back at 9,000 sooner than we think,” Eagle

Equities, Inc. Research Head Christopher John Mangun said in a weekly market report. Mr. Mangun noted that the PSEi, however, may

trade sideways as it slowly moves higher. “GDP numbers for the last quarter of 2018 is expected to come in [this] week and if it comes in

above expectations, then we may see it reflected in the market’s performance,” Mr. Mangun added.

https://www.bworldonline.com/stocks-to-trade-sideways-ahead-of-phl-gdp-data/

✓ Government securities on offer this week will likely fetch lower yields amid continued expectations of decelerating inflation. The

Bureau of the Treasury (BTr) is offering P20 billion worth of Treasury bills (T-bill) today, broken down into P6 billion each for the three-

and six-month instruments and another P8 billion in one-year papers. The BTr will also offer on Tuesday fresh 20-year Treasury bonds (T-

bond) amounting to P20 billion. “For the bills, we’re still expecting a downward bias in terms of the rates from the previous auction,” a

bond trader said in a phone interview last Friday. “For the 91-day, we’re expecting five basis points (bp) lower, then 10-20 bps lower for

the 182- and 364-day.”

https://www.bworldonline.com/t-bills-bonds-to-fetch-lower-rates/

✓ Yields on government securities (GS) traded on the secondary market fell across the board as both short- and long-tenored

papers saw strong demand last week. On average, GS yields went down by 25.66 basis points (bp) week-on-week, according to the

PHP Bloomberg Valuation Service (BVAL) Reference Rates as of Jan. 18 published on the Philippine Dealing System’s website. Carlyn

Therese X. Dulay, first vice-president and head of Institutional Sales at Security Bank Corp. (Security Bank), said last week’s yields

“adjusted lower.” “Heavy demand from market participants and end clients on short end securities after the successful treasury bill auction

last Monday caused yields to adjust accordingly for the rest of the curve,” she said. In last Monday’s auction of short-term debt papers, the

Bureau of the Treasury (BTr) borrowed P22.405 billion, higher than its initial P20-billion program, after the government upsized its award

and opened a tap facility for the for 364-day papers. Moreover, it opened an over the counter sale of the 91-, 182- and 364-day

instruments to government-owned and -controlled corporations.

https://www.bworldonline.com/yields-on-govt-debt-fall/

✓ The Bangko Sentral ng Pilipinas (BSP) said it has modified the calculation method for capital held by banks to better reflect

holdings of higher-quality instruments. Circular No. 1027 published on Friday amended the definition of capital under the Manual of

Regulations for Banks as well as the Manual of Regulations for Non-Bank Financial Institutions. The BSP defines capital as the “total of

the unimpaired paid-in capital, surplus, and undivided profits,” and that it is synonymous to unimpaired capital and surplus, combined

capital accounts, and net worth. The bank said deposits for stock subscriptions recognized as equity shall be added to capital. The BSP

said that the new circular will “ensure that capital is only composed of instruments that are of highest quality to absorb losses.”

https://www.bworldonline.com/bsp-revises-capital-calculation-method-for-banks/

✓ Banks in the country widely maintained lending criteria in 2018’s final quarter, although those that tightened such standards

outnumbered those who eased theirs, according to results of the latest Senior Bank Loan Officers’ Survey which the Bangko

Sentral ng Pilipinas (BSP) reported on Friday. Credit standards “broadly” steadied using the modal approach, which is based on the

biggest share of responses; but tightened under the diffusion index approach that showed the proportion of respondents that tightened

such standards exceeded that of those who eased them. About 71.1% of respondents indicated that they maintained credit standards for

loans to enterprises in the fourth quarter of 2018 from 77% in the third quarter, based on the modal approach. For household lending,

78.6% of respondents maintained overall credit standards based on the modal approach, but the diffusion index mode reflected a net

BAIPHIL Market Watch – 21 Jan 2019

Page 3 of 13

tightening of lending rules, particularly for housing, automobile and personal loans. Majority of respondents continued to see stable

demand for loans, although analysis using the diffusion index approach showed a net increase in demand across firm sizes and types of

household loans. About 76.7% of respondent banks said credit standards for commercial real estate loans steadied last quarter, although

there was a net tightening for the 12th consecutive quarter due to their perception of stricter financial system regulations and a

deterioration in the liquidity of their portfolio.

https://www.bworldonline.com/lending-standards-broadly-steady-in-q4-but-more-banks-tighten-criteria/

✓ BDO Unibank, Inc. was named the country’s “most reputable” bank in 2018, following a study conducted by Kantar TNS. The

research agency said according to the results of its 2018 Corporate Reputation study, BDO overtook Metropolitan Bank & Trust Co.

(Metrobank) and Bank of the Philippine Islands (BPI) as the “most reputable” lender in the Philippines in 2018. The study, which was

conducted among 800 class ABC respondents from the Greater Manila Area (GMA) and Metro Cebu, is a follow-up to a survey conducted

in 2008, which Metrobank topped. The corporate reputation model of Kantar TNS focuses on five dimensions — overall

reputation/renown, favorability, trust, success, as well as product and service quality.

https://www.bworldonline.com/bdo-rated-most-reputable-bank-in-kantar-study/

✓ State-run Land Bank of the Philippines (LandBank) said that the end-January deadline for Philippine Dealing System Holdings

Corp. (PDSHC) shareholders to sell their stake is the last and final extension. Alex V. Buenaventura, LandBank president and chief

executive officer, said that the offer price of P215 per share is final and only valid until January 31, 2019. Last week, the Philippine Stock

Exchange (PSE), which owns 20 percent of PDSHC, disclosed that LandBank lowered its offer price from P360 per share the government

lender gave in April 2018. According to Buenaventura, LandBank needed to lower its offer after PDSHC gave out P600 million in

dividends in June last year, which effectively reduced the fixed-income exchange’s net asset value to only P980.61 million. But despite

cheaper offer price, the LandBank chief is confident that PDSHC shareholders will sell their stake to the government. “We’re very

confident because from their reaction, about 43 percent [of the shareholders] responded positive,” Buenaventura told reporters. “We will

work from there, and we hope to get the majority.” LandBank plans to buy at least 66.67 percent of PDSHC.

https://business.mb.com.ph/2019/01/20/landbank-gives-final-deadline-for-pds/

✓ Rizal Commercial Banking Corp. (RCBC) said it priced its first peso “green bond” at 6.7315% per annum, with the proceeds to

be used to support projects that are environment-friendly and promote resiliency to climate change. In a regulatory filing on

Friday, the bank said it will offer P15 billion via 1.5-year “green bonds,” which will mature in 1.5 years. The public offer period will run from

Jan. 21-25. The bonds are expected to be listed at the Philippine Dealing & Exchange Corp. on or around Feb. 1. “The bank is grateful for

the overwhelming support from its institutional investors, with the books being more than three times oversubscribed from its announced

issue size of P5 billion, allowing an issue size of P15 billion,” RCBC Senior Executive Vice-President and Treasurer Horacio E. Cebrero III

was quoted as saying in the statement.

https://www.bworldonline.com/rcbc-prices-p15-billion-peso-green-bond-issue-at-6-7315/

✓ Bad loans held by thrift banks rose faster in November as lenders continued to grant more credit lines to borrowers, latest data

showed, while reserves for losses dwindled from a year ago. Non-performing loans (NPLs) of thrift banks rose by 14.5% to reach

P47.765 billion, coming from P41.715 billion soured debts tallied as of November 2017, according to the Bangko Sentral ng Pilipinas

(BSP). NPLs are debts left unsettled for at least 30 days beyond due date. These are considered as risky assets given lower chances for

borrowers to settle these balances, and would thus mean losses for lenders. The growth in NPLs outpaced the 8.6% expansion in loan

books, which grew to P913.977 billion from P841.283 billion granted a year ago. Past due loans, which combine all credit lines behind

payment schedule, surged by a faster 59.6% to hit P74.086 billion. Meanwhile, restructured loans – or balances enrolled for longer

repayment periods — dropped by roughly a fifth to P4.976 billion, central bank data showed.

https://www.bworldonline.com/thrift-banks-non-performing-loans-up-in-nov/

✓ The Philippines’ Balance of Payments (BoP) posted the biggest surplus in more than six years in December, which also marked

the second straight month of surfeit, the Bangko Sentral ng Pilipinas (BSP) reported on Friday, but it still ended 2018 with a

wider deficit than in 2017. BoP settled at a $2.442-billion surplus in December, the biggest monthly surfeit since the $3.182 billion

recorded in July 2012. That was 2018’s second monthly surplus since November’s $847 million, and was more than double the year-ago

$917 million. The BoP measures the country’s transactions with the rest of the world. A surplus means more money entered the

Philippines than what left, while a deficit means otherwise. It noted that the inflows were partly offset by national government payments for

its foreign exchange obligations.

https://www.bworldonline.com/december-bop-surplus-biggest-in-more-than-six-years/

✓ Prices of goods and services increased at a slower pace of 5.9 percent during the fourth quarter of 2018, the Bangko Sentral ng

Pilipinas (BSP) said Friday, citing a quarterly comparative view to inflation. The inflation print in October to December is slower than

the 6.2-percent average posted in the third quarter of the year, BSP Director Dennis Lapid said during the 4th Quarter 2018 Inflation

Report briefing in Manila. Average inflation settled above the 2018 inflation target range, but it eased during the fourth quarter of 2018.

“Year-on-year headline inflation moderated to an average of 5.9 percent in Q4 2018 from the quarter-ago average of 6.2 percent. This

brought the full-year average inflation rate to 5.2 percent, which is above the National Government’s (NG) target range of 3.0 percent ±

1.0 percentage point for the year,” the central bank said in a separate statement.

https://www.gmanetwork.com/news/money/economy/681882/inflation-eases-to-5-9-in-q4-2018/story/

✓ Senator Panfilo Lacson expressed hope on Friday that his colleagues will be firm with what they agreed upon on the proposed

2019 national budget as he expects “bloody and sweaty” bicameral conference committee meetings. “First hurdle is for the

senators to stand side by side and firm on what we have agreed both in plenary and in our informal discussions in the lounge,” Lacson

said. He said the next and bigger challenge is to convince their counterparts at the House of Representatives during the bicameral

conference meeting to lose major portions of their realignments. “While we may be on the same page on the P75 billion adjustment in the

NEP (National Expenditure Program) made by Sec. [Benjamin] Diokno, deleting the same in its present form will be contentious simply

because while they chopped it, they also redistributed the amount in a 'pork to pork' fashion,” he said.

https://www.gmanetwork.com/news/money/economy/681923/lacson-predicts-bloody-sweaty-bicam-on-2019-nat-l-budget/story/

BAIPHIL Market Watch – 21 Jan 2019

Page 4 of 13

✓ Budget Secretary Benjamin Diokno must man up and explain allegations of anomalies and doubtful practices before the House

of Representatives, Majority Leader Rolando Andaya said Friday. Andaya made the statement as the House Rules Committee invited

Diokno for the third time to appear as a resource person in the congressional hearing on allegations of questionable allocations and

practices at the Department of Budget and Management (DBM). “As DBM top honcho, Secretary Diokno should be man enough to

explain the anomalous allocations and questionable practices, which the House panel uncovered in the course of the investigation,” he

said. The third hearing is set on Monday, January 21.

https://www.gmanetwork.com/news/money/economy/681900/house-majority-leader-dares-budget-chief-diokno-to-man-up-and-explain-

alleged-anomalies/story/

✓ A group of physicians on Friday called on senators to fast-track the passage of the bill increasing tobacco tax to at least P60

per pack. During a medical forum attended by at least 30 physicians, the doctors pointed out that the hearing on the bill "remains elusive

despite sustained demand of health advocates and civil society organizations." Doctor Anthony Leachon urged Senate leaders, especially

Senator Sonny Angara, chairperson of the Committee on Ways and Means, to "spearhead" the passage of the proposed measure.

According to Leachon, imposing higher tax on tobacco products would reduce smoking rate as well as generate additional funds for the

government. The doctors then vowed to support lawmakers who would support and champion the measure in the May elections.

https://www.gmanetwork.com/news/money/economy/681896/doctors-urge-senators-to-fast-track-passage-of-bill-hiking-tobacco-tax/story/

✓ The House Committee on Energy will continue on Tuesday deliberations on the draft Substitute Bill proposing to use the

Malampaya fund to pay for the National Power Corporation’s (NPC) Stranded Contract Costs (SCC) and Stranded Debt. The draft

Substitute Bill consolidated House Bills No. 8082, 8327 and 8352, which intends to minimize the universal charge, thereby reducing

electricity rates. The universal charge is an imposition passed on to consumers to cover for NPC’s obligations. The bills propose that the

proceeds of the Net National Government share from the Malampaya fund will be remitted to a Special Trust Fund. The fund will be

managed by the Power Sector Assets and Liabilities Management Corp. (PSALM), which assumed all obligations of the NPC.

https://www.bworldonline.com/malampaya-fund-bills-due-before-energy-panel/

✓ The Bureau of Customs (BoC) released a 10-point priority plan for 2019 to improve operational efficiency, building on a year

when it surpassed its collection targets. For 2019, the bureau said it will focus on streamlining the organization, adopting new

technology and filling vacant positions. “These priorities are anchored on improving organizational efficiency, upgrading individual

proficiencies and strengthening institutional capabilities,” Customs Commissioner Rey Leonardo B. Guerrero was quoted as saying in a

statement sent over the weekend. It will seek to improve the performance of its information technology systems by automation and greater

integration, fill vacancies in the organizational chart and issue more promotions and rewards to BoC employees will be given to boost

morale. The bureau also intends to establish new offices and positions and consolidate overlapping or redundant functions.

https://www.bworldonline.com/customs-releases-plan-to-improve-efficiencies/

✓ Department of Agriculture (DA) Secretary Emmanuel Piñol has already identified four key investment areas as he expressed

optimism that the Duterte administration will finally give the go signal on his proposed P200-billion bond issuance. The four key

investment areas are FMR (farm-to-market road), solar irrigation, logistics, and easy access credit. Piñol is banking on the

administration’s plan to focus on agriculture sector this year. He cited a statement from the economic team that government will now focus

on agriculture. “The announcement by the economic managers that government will now focus on agriculture which they said dragged

down economic growth is a breath of fresh air for the sector which has long been asking for bigger budget allocation,” Piñol earlier said.

The country’s economic team is led by the Department of Finance, Department of Budget and Management, and National Economic and

Development Authority. “We’re still waiting for the go signal of the Department of Finance,” Piñol said.

https://business.mb.com.ph/2019/01/20/da-to-push-for-p200-b-bond-sale/

✓ The International Rice Research Institute (IRRI) called for preparations against the threat of the El Niño weather phenomenon as

being currently monitored by the state weather bureau. Weather bureau Philippine Atmospheric Geographical and Astronomical

Services Administration (PAGASA) said it is currently on its El Niño watch. Asked when El Niño could hit the country, Ana Liza Solis,

officer-in-charge of PAGASA’s climate monitoring and prediction section, said via text, “Short lived weak El Niño could last for five,

overlapping three months. As of now, around 80% chance to develop El Niño by end of January to February 2019. If this (does) not

happen, it will not sustain a fully developed El Niño. El Niño or not, as of December 2018, nine provinces in Mindanao experienced dry

spell while Ilocos Norte (had a) drought.”

https://www.bworldonline.com/irri-calls-for-govt-preparations-amid-monitoring-of-el-nio/

✓ Senator Aquilino Martin L. Pimentel III has filed a bill seeking to ban imports of solid waste. Senate Bill No. 2144, filed on Jan. 14,

provides a penalty of 12 to 20 years of imprisonment for importing any solid waste, as defined under the Ecological Solid Waste

Management Act or Republic Act No. 9003, into Philippine territory, including special economic zones. Under the law, solid waste refers to

the “discarded household and commercial waste, non-hazardous institutional and industrial waste, street sweepings, construction debris,

agricultural waste, and other non-hazardous/non-toxic solid waste.” The person or the firm responsible for the importation will also be

obligated to send back the solid waste to the port of origin. If the importer cannot be identified, the carrier will be responsible for returning

the solid waste to the port of origin or pay P500,000 in exemplary damages.

https://www.bworldonline.com/bill-filed-in-senate-barring-solid-waste-imports/

✓ The Insurance Commission (IC) believes some non-life insurance companies may not be able to meet the increased statutory

solvency requirements by the end of the year, and encouraged such firms to seek investors or merge with other companies. In a

speech during the IC anniversary banquet on Friday, Insurance Commissioner Dennis B. Funa said that compliance with the statutory and

regulatory solvency requirements is the “the most difficult of those challenges” the industry is currently facing, especially in regard to

minimum net worth and risk-based capital ratios. He said he is “concerned” that some non-life insurers are “still far off” from the P900-

million minimum required capital which was upgraded this year.

https://www.bworldonline.com/under-half-of-non-life-firms-still-far-from-meeting-capital-norms-ic/

BAIPHIL Market Watch – 21 Jan 2019

Page 5 of 13

✓ The Department of Trade and Industry (DTI) has released the new technical rules on steel products, imposing stringent product

testing, accreditation of foreign manufacturers, and slapping of surety bond for the conditional release of shipments to ensure

the standards and quality of this primary construction material. Department Administrative Order (DAO) No. 18-08 s. 2018 entitled

“The New Technical Regulations Concerning Deformed Steel Bars, Rerolled steel bars and Equal leg Angle Steel bars” cited the need to

strictly ensure that steel products whether locally manufactured or imported meet the specified safety and or quality requirements

prescribed by the Bureau of Product Standards. The new DAO took effect last January 6, 2019. The new DAO requires the all importers

shall submit a statement of confirmation (SOC), which states that the imported steel product was sourced from a steel manufacturer with a

valid PS License and that the manufacturer complies with specified requirements after undergoing inspection and verification. The SOC

must also contain the batch number and manufacturing date of the imported steel.

https://business.mb.com.ph/2019/01/20/dti-orders-stringent-rules-on-imported-steel-products/

✓ The Philippine Iron and Steel Institute (PISI) said it found several hardware stores south of Metro Manila selling substandard

reinforcing steel bars (rebar) during a recent market monitoring operation. The group said it submitted to the Department of Trade

and Industry’s Consumer Protection Group (DTI-CPG) the findings of the “test buy” operations it conducted particularly in Laguna, Cavite,

Batangas, and Mindoro Occidental. “We also recommended to the Bureau of Product Standards (BPS) to conduct an immediate audit and

issue show-cause orders to the manufacturers that produced and sold the substandard rebar,” said PISI President Roberto M. Cola in a

statement.

https://www.bworldonline.com/steel-industry-reports-proliferation-of-substandard-rebar/

✓ The Department of Energy (DOE) has laid down at least six conditions for it to firm up its go-signal on the establishment of the

propounded Wholesale Electricity Spot Market (WESM) in Mindanao grid as targeted around June this year. These required

parameters delve with: the setting up of systems and procedures; trial operations program (TOP); operationalization of the spot market;

trainings for WESM-Mindanao participants; approval of the price determination methodology (PDM) by the Energy Regulatory

Commission (ERC); and the certification of the new market management system (NMMS) or the more advanced trading platform of the

WESM. On systems and procedures, the energy department explained that this will entail setting in place the operational link between the

market operator Independent Electricity Market Operator of the Philippines (IEMOP) to that of system operator National Grid Corporation

of the Philippines (NGCP).

https://business.mb.com.ph/2019/01/20/doe-sets-conditions-on-planned-wesm-mindanao-establishment/

✓ The Department of Energy (DOE) on Friday assured power consumers in Iloilo City of uninterrupted electricity service despite

the ongoing franchise issues hounding the service area. Panay Electric Co.’s (PECO) 25-year congressional franchise is expiring on

Saturday, Jan. 19, 2019, and its franchise renewal is pending in Congress. “We are assuring our kababayans in Iloilo City, La Paz, Jaro,

and Arevalo that there will be no power disruptions due to the franchise issues that are to be resolved,” Energy Secretary Alfonso Cusi

said in a statement. “In the interim, PECO will remain as the power service provider in the area,” Cusi said. The power cooperative has

been the sole power distributor in Iloilo City for the past 95 years.

https://www.gmanetwork.com/news/money/companies/681910/panay-electric-vows-not-to-leave-iloilo-in-the-dark-despite-franchise-

issues-doe/story/

✓ The Panay Electric Company (PECO), which services Iloilo consumers, has been allowed to extend its operations until May this

year on the strength of a legally-binding certificate of public convenience and necessity (CPCN) issued to it by the Energy

Regulatory Commission (ERC). The Department of Energy (DOE) indicated that discussions had been carried out with PECO owners

and executives, warranting them to continue operations within the remaining duration of its CPCN which is until May 25, 2019. That has

been the legal ground resorted to by the DOE and the ERC following the expiration of franchise of the Iloilo power utility this January 19 –

and had also spared the distribution firm from threats of government takeover. In extending PECO services, Energy Secretary Alfonso G.

Cusi cited provisions of the Public Service Act and the Electric Power Industry Reform Act of 2001, the guiding laws and policies

governing the operations of power utilities in the country.

https://business.mb.com.ph/2019/01/20/peco-operations-extended-up-to-may/

✓ Pump prices of petroleum products are set for another round of increase next week, oil industry players said Saturday. In its fuel

forecast, Unioil said the prices per liter of diesel is expected to go up by P0.30-P0.40 and gasoline by P0.10. Another oil industry source

said the price of diesel will increase by P0.35-P0.40 per liter while gasoline will hike by P0.05-P0.10. The expected price adjustments

reflect the trading in the international market. Fuel price adjustments are usually implemented by domestic oil companies every Tuesday

of the week.

https://www.gmanetwork.com/news/money/companies/682020/fuel-prices-seen-to-go-up-next-week/story/

✓ The Sugar Regulatory Administration (SRA) said the prices of sugar fell immediately after the government announced its plan to

liberalize sugar imports. SRA Price Monitoring reports showed that domestic raw sugar has gone down from P1,693 per bag in

September 2018 to P1,575 per bag as of January 6, 2019, reflecting a 6.96 percent drop in roughly 3 months. The agency also denied

being restrictive on imports, having to clear for entry “so much” imported sugar in the span of five months last year. SRA Board Members

Roland Beltran (Millers Representative) and Dino Yulo (Planters Representative) said this in a joint statement to “allay the concerns of our

sugar farmers, millers, and workers” regarding the statement of Budget Secretary Benjamin Diokno on deregulating sugar importation. SRA, however, pointed out that while the farmgate or millsite prices of sugar have declined, retail prices remain high. This means the high

retail prices of refined sugar cannot be blamed on sugar farmers and millers. “The sugar industry – its farmers, mills and workers – are

partners of government. They provide investment, employment and revenue in the countryside,” Beltran and Yulo said.

https://business.mb.com.ph/2019/01/20/sugar-prices-fall-as-govt-plans-to-liberalize-importation/

✓ IBM has launched its technology education program that would prepare Filipino students for “new collar jobs” and making the

Philippines the second country in ASEAN, after Singapore and 10th globally, to replicate the P-TECH model (Pathways in

Technology Early College High). P-TECH will be piloted at the Taguig City University starting this school year. A memorandum of

agreement was signed by Taguig City Mayor Mayor Laarni L. Cayetano and IBM Asia Pacific CEO and Chairman Harriet Green, and IBM

Philippines President and country general manager Manager Aileen Judan-Jiao Aileen Judan-Jiao to implement the project in the city

BAIPHIL Market Watch – 21 Jan 2019

Page 6 of 13

university. P-TECH focuses on “very hands-on” information technology, math, science and engineering mentoring programs and early

exposure to industries to help students prepare for a career in technology. In a speech at the launch, IBM Asia Pacific CEO and chairman

Harriet Green emphasized that jobs that do not always require a traditional four-year college degree, but the right mix of in-demand

technical skills to work with and benefit from the very latest technology – from cloud and AI to cybersecurity, blockchain, and quantum

computing.

https://business.mb.com.ph/2019/01/20/ibm-launches-program-to-prepare-students-for-new-collar-jobs/

✓ Premiere Horizon Alliance Corp. (PHA) said it signed a memorandum of agreement with Sama Global Investment for a 250

million-euro or P15-billion funding facility for several projects, the company told the stock exchange on Friday. “The funds will be

invested by PHA in real estate, tourism hospitality, tourism and infrastructure construction, power generation, financial services and other

allied and related undertakings,” the company said. The facility will have a term of nine years with a fixed interest rate of 1.25% per

annum. “In 2021, Sama Global shall have the right to convert, in whole or in part, the 250 million-euro funding into an ownership of up to

60% in PHA in accordance with foreign ownership laws and regulations,” the company said. “The cornerstone of Sama Global’s

investment framework is its ability to see and seize opportunity and introduce future initiatives for its portfolio companies with the end in

view of improving overall value of these companies,” it said.

https://www.bworldonline.com/qatar-firm-funds-pha-for-p15-billion-convertible-to-60-stake/

✓ Cebuana Lhuillier, a Philippine financial service provider, said on Saturday that the data of 900,000 clients had been accessed

without authorization and that it had already alerted authorities to investigate the incident. The breach came as Philippine

investigators were looking into allegations by the country’s foreign minister last week that a privately contracted firm took away documents

and data from the Department of Foreign Affair’s passport database. Cebuana Lhuillier, whose services include pawning, remittance,

microinsurance, and business to business micro loan solutions, said some information like birthdays, addresses and sources of income,

were affected in the breach involving an email server used for marketing. “It’s just a very small portion of our clientele. The main server

containing all clients of Cebuana Lhuillier remains protected and uncompromised”, said Richard Villaseran, the company’s corporate

communications division head.

https://www.reuters.com/article/us-facebook-shares-fine/facebook-sheds-gains-after-report-on-potential-major-fine-idUSKCN1PC2EV?il=0

✓ The National Privacy Commission (NPC) on Saturday said it is now investigating the data breach incident reported by pawning

and remittance firm Cebuana Lhuillier, which affected thousands of its clients. Cebuana Lhuillier notified its clients through email

that it detected unauthorized downloading in one of its email servers. The company also revealed that around 900,000 clients' personal

information including name, birth date, email address, mobile number and in some cases, income information may have been exposed in

the incident. "This incident is now under investigation," Privacy Commissioner Raymund Liboro said in a statement. Liboro said

representatives from Cebuana Lhuiller went to the NPC on Friday, January 19, to seek assistance regarding a data breach involving their

email server. "At the meeting, they committed to submit a more detailed report regarding the data breach," he said.

https://www.gmanetwork.com/news/money/companies/682031/national-privacy-commission-probes-cebuana-lhuillier-data-breach/story/

✓ China Energy Equipment Co. Ltd. (CEEC) signed a memorandum of understanding (MoU) on Friday with the Department of

Information and Communications Technology (DICT) to become the fifth shared telecommunications infrastructure provider. In

a briefing after the signing ceremony, the Chinese company said it is confident in its ability to meet the government’s target of installing

50,000 common towers for use by telecommunications firms. CEEC Vice-President Huang Fei said the number of towers it will build will

rely largely on the orders it will receive from telco operators, he said CEEC has funding of around $4.4 billion for 50,000 towers. “They

can now go to the telcos and try to get business from them. And even just one business or telco will agree to have transaction with China

Energy, then the roll out will depend on the number of towers that they will try to build,” DICT Outgoing Chief Eliseo M. Rio, Jr. told

reporters.

https://www.bworldonline.com/china-energy-signs-common-tower-deal-with-dict/

✓ The rehabilitation receiver for Hanjin Heavy Industries and Construction Philippines, Inc. (HHIC-Phil) has buckled down to work,

aiming first to determine the viability of the shipbuilder’s plan to pay its creditors, suppliers and remaining workers. “Ang

mahalaga dito makuha natin ‘yung rehabilitation plan, ‘yung approval by the court (What is important here is that we get the rehabilitation

plan and court approval) because that is what we will be implementing maybe for months to come or for years to come,” Stafani C. Saño,

the receiver appointed by the Olongapo City court that put HHIC-Phil under rehabilitation last Monday, said in a telephone interview on

Friday. “Ang mahalaga ‘dun, kasama ang creditors sa pag-formulate and pag-implement ng plan (What is important there is that the

creditors are involved both in formulating and implementing the plan),” said the former Subic Bay Metropolitan Authority deputy

administrator.

https://www.bworldonline.com/hanjin-receiver-gets-down-to-work/

✓ At least two foreign companies have expressed interest to take over or invest in debt-riddled Hanjin Heavy Industries and

Construction Philippines, the Subic Bay Metropolitan Authority (SBMA) said Saturday. "Meron na rin pong mga lumapit sa akin na

two other foreign companies na tulungan silang lumapit sa (rehabilitation) receiver at sa Hanjin," SBMA Chairman Wilma Eisma said in an

interview. Asked to identify the two foreign firms, Eisma told GMA News Online she is not at liberty to disclose information. However, she

said, "They are not Chinese companies." According to the SBMA, Hanjin Philippines officials had revealed that the company owes

Philippine banks some $400 million on top of another $900 million owed to lenders in South Korea. Eisma said she hopes the negotiations

with a "white knight" will be completed before Hanjin is about to lay off 3,000 workers when it finishes its two last orders of ships.

https://www.gmanetwork.com/news/money/companies/682012/2-other-foreign-firms-eye-hanjin-sbma/story/

✓ Alliance Global Group Inc (AGI) said that it is preparing for the construction of its proposed sky train, while awaiting a Swiss

challenge in either April or May. “The project is now with NEDA (National Economic and Development Authority). We are hoping to do

the Swiss challenge by around April or May but we are already preparing the ground work,” AGI Chief Executive Officer Kevin Andrew L.

Tan told reporters. “We are preparing the bidding and of course we are now in coordination with various local government agencies so we

hope we can start construction by fourth quarter this year, and we hope to finish by third quarter of 2021,” Mr. Tan added. The P3.5 billion

project will link Metro Rail Transit Line 3’s Guadalupe Station to Megaworld’s Uptown Bonifacio township in Taguig City, cutting travel time

BAIPHIL Market Watch – 21 Jan 2019

Page 7 of 13

to five minutes for up to 100,000 commuters per day.

https://www.bworldonline.com/agi-preparing-to-build-train-line-to-uptown-bonifacio/

✓ Henry Sy, Sr., country’s richest man and the founder of the largest chain of shopping malls in the Philippines, passed away on

Saturday morning, Jan. 19. He was 94 years old. “It is with deep sadness that we inform you of the peaceful passing of our beloved

Chairman Emeritus, founder and Tatang, Mr. Henry Sy, Sr. this morning,” SM Investments Corp. (SMIC) said in a statement. Mr. Sy was

the chairman emeritus of SMIC, SM Prime Holdings, Inc., and BDO Unibank, Inc. at the time of his death. He was consistently named as

the Philippines’ richest man by Forbes magazine since 2008, with his wealth estimated at $18.3 billion as of September 2018. “We are

truly grateful for the outpouring of sympathy on the passing of our father, Henry Sy, Sr.,” a family representative said in a separate

message, requesting the public for privacy while they “reflect and finalize arrangements.”

https://www.bworldonline.com/sm-founder-henry-sy-sr-passes-away/

✓ Labor Secretary Silvestre Bello III on Saturday underscored late tycoon Henry Sy Sr.'s contribution to the Philippines'

workforce. "His biggest contribution is providing employment to millions of Filipinos! God bless his soul," Bello said in a text message. Sy,

the founder of SM Group, has passed away on Saturday morning. He was 94. "Henry Sy is the richest Filipino citizen (worth 18.5 Billion

US Dollars). He made his billions working hard first by selling shoes to build a current conglomerate of giant malls, real estate, banks,

financial services, insurance, retail, and a dozen of other businesses," Bello said. The Department of Labor and Employment (DOLE)

earlier said that SM Supermalls has regularized 11,660 last year.

https://www.gmanetwork.com/news/money/content/682048/henry-sy-s-biggest-contribution-is-providing-jobs-to-pinoys-labor-chief/story/

✓ Philippines Urban Living Solutions (PULS), Inc., the leading developer of innovative staff housing solutions and a subsidiary of

SM Investments Corporation (SMIC), is constructing its biggest dorm to date. In a statement, the firm said it broke ground on its

largest building which is envisioned to house “over 1,000 beds, green spaces, and never-before-seen amenities.” The 7-story dorm,

MyTown Los Angeles, is set to rise along Kalayaan Avenue, Makati City, going to C5, located just a few minutes’ walk from Uptown.

Moreover, the building is positioned alongside the BGC-Ortigas Link Bridge set to be completed by end of 2019. As it stands visibly in the

UpTown area along 8th Avenue, MyTown Los Angeles is expected to become a landmark in this part of BGC when it opens by 2020.

“Location is key as we’ll bring much-needed MyTown co-living spaces to Uptown with this project. Moreover, the building is less than 15

minutes away from Makati CBD, 10 minutes from Ortigas, and other MyTown buildings are just a 2 to 5-minute walk from MyTown Los

Angeles,” said PULS Chief Executive Mark Kooijman.

https://business.mb.com.ph/2019/01/20/sm-unit-to-build-its-biggest-dorm-yet/

REST

OF THE

WORLD

✓ World stock indexes jumped on Friday, with Wall Street posting a fourth straight week of gains, and the dollar had its first

positive week since mid-December as optimism increased that an end is in sight to the US-China trade conflict. Stocks were

boosted by a Bloomberg report that said China sought to raise its annual goods imports from the United States by more than $1 trillion in

order to reduce its trade surplus to zero by 2024. That followed a report on Thursday that US Treasury Secretary Steven Mnuchin was

considering lifting some or all tariffs imposed on Chinese imports. The Treasury denied Mnuchin had made any such recommendation.

While the equity rally lifted all major sectors, trade-sensitive industrials posted among the biggest S&P 500 sector gains, up 1.9 percent on

the day. The Philadelphia SE semiconductor index rose more than 2 percent and Germany's exporter-heavy DAX was up 2.6 percent.

https://www.gmanetwork.com/news/money/economy/682000/stocks-rally-on-trade-hopes-dollar-has-1st-weekly-gain-of-2019/story/

✓ Stocks have gotten a boost from optimism for U.S.-China trade talks, but earnings could take a bigger role in the week ahead,

when reports roll in from a diverse group of companies in tech, railroads, pharma, airlines and consumer products. Stocks

closed higher for a fourth week, amid talk the market may be getting overbought. The S&P 500 was up 2.9 percent for the week, to 2,670,

giving it a gain of 13.6 percent from the Dec. 24 closing low. Going into the week, strategists were wondering if the S&P could even hold

above the 2,600 level, a key area of resistance, but it punched through the level, ending the week above the band of resistance. “I think

the market had made even the pros frustrated. At this point, if you haven’t bought the market this year, it’s not the most prudent thing to

do to chase it today. At the same time, being short is frustrating,” said Scott Redler, partner with T3Live.com.

https://www.cnbc.com/2019/01/18/stocks-getting-a-bit-frothy-after-move-higher-could-pause-in-week-ahead.html

✓ Stocks rose on Friday as investors cheered potential progress in trade negotiations between China and the U.S. The Dow Jones

Industrial Average rose 336.25 points to 24,706.35, led by gains in UnitedHealth and Home Depot. The S&P 500 climbed 1.3 percent to

2,670.71, closing out of correction territory, as the materials and industrials sectors outperformed. The Nasdaq Composite advanced 1

percent to close at 7,157.23. The major averages jumped to their highs of the day after sources told CNBC that China had offered a six-

year increase in U.S. imports during recent trade talks. Bloomberg News reported on Friday that the deal would aim to reduce the annual

U.S. deficit to zero by 2024. Shares of Boeing and Caterpillar both closed more than 1.5 percent higher. Deere climbed more than 2.5

percent.

https://www.cnbc.com/2019/01/18/stocks-us-china-trade-talks-take-center-stage-shutdown-earnings.html

✓ Despite a slowing economy, China’s stock market has emerged as one of the best places in Asia to invest in due to its “very,

very attractive” valuation, according to global investment house Fidelity International. There have been more and more signs of a

slowdown in China’s economy, which is the largest in Asia and second-biggest globally. The country has been embroiled in a trade fight

BAIPHIL Market Watch – 21 Jan 2019

Page 8 of 13

with the U.S., which contributed to the more than 24 percent plunge in Chinese shares last year — their worst performance in a decade.

But when asked where is the safest place to put money in, Medha Samant, investment director for Asian equities at Fidelity International,

replied: “It’s really north Asia, it’s being led by China, we think.” Samant said she likes stocks in the new economy, as well as the

consumer and healthcare sectors. Her choice picks also include “very select old economy assets” for their value and potential for yield,

she said. Even though “the outlook is definitely more positive,” Samant said she acknowledges that there are still headwinds facing the

Chinese economy. So, investors should be selective, she added.

https://www.cnbc.com/2019/01/18/investing-fidelity-on-china-stock-market-valuation-chinese-economy.html

✓ As the World Economic Forum (WEF) in Davos approaches, a new survey of over 800 CEOs has revealed that global business

leaders see recession as their number one external concern for 2019. Threats to global trade and political instability ranked second

and third, respectively, according to the survey Thursday by the research group The Conference Board. The recession risk was touted as

the number one concern in Japan, China and Latin America but was only placed third by American executives. In the U.S. threats to

cybersecurity was listed as the source of greatest unease with new competitors second. Trade barriers between the U.S. and China have

created fears that a full-blown trade war could derail economies around the world. However, among the C-suite executives questioned in

China, trade troubles ranked second while in the United States it came as low as fourth.

https://www.cnbc.com/2019/01/18/recession-is-the-number-one-fear-for-ceos-in-2019-survey-says.html

✓ The United States is pushing for regular reviews of China’s progress on pledged trade reforms as a condition for a trade deal -

and could again resort to tariffs if it deems Beijing has violated the agreement, according to sources briefed on negotiations to

end the trade war between the two nations. A continuing threat of tariffs hanging over commerce between the world’s two largest

economies would mean a deal would not end the risk of investing in businesses or assets that have been impacted by the trade war. “The

threat of tariffs is not going away, even if there is a deal,” said one of three sources briefed on the talks who spoke with Reuters on

condition of anonymity. Chinese negotiators were not keen on the idea of regular compliance checks, the source said, but the U.S.

proposal “didn’t derail negotiations.”

https://www.reuters.com/article/us-usa-china-trade-exclusive/exclusive-u-s-demands-regular-review-of-china-trade-reform-

idUSKCN1PC2AG?il=0

✓ China has offered a six-year boost in imports during its ongoing talks with the U.S., officials familiar with the matter told CNBC.

Chinese officials made the offer during negotiations in Beijing earlier in January, Bloomberg News reported. China would increase its

annual import of U.S. goods by a combined value of over $1 trillion, the officials told Bloomberg, which was first to report on the import

boost offer. China pegged its proposal to buy more U.S. goods through 2024 to President Donald Trump’s hopes of being re-elected in

2020, the sources told CNBC. The U.S. had a trade deficit of $323 billion with China in 2018. This deal would aim to reduce that annual

trade difference to $0 by 2024, one of the officials told Bloomberg.

https://www.cnbc.com/2019/01/18/china-to-offer-path-to-eliminate-trade-imbalance-with-us-report.html

✓ US President Donald Trump said on Saturday there has been progress toward a trade deal with China, but denied that he was

considering lifting tariffs on Chinese imports. "Things are going very well with China and with trade," he told reporters at the White

House, adding that he had seen some "false reports" indicating that US tariffs on Chinese products would be lifted. "If we make a deal,

certainly we would not have sanctions and if we don't make a deal we will," Trump said. "We’ve really had a very extraordinary number of

meetings and a deal could very well happen with China. It’s going well. I would say about as well as it could possibly go. Chinese Vice

Premier Liu He will visit the United States on Jan. 30 and 31 for the next round of trade negotiations with Washington.

https://www.gmanetwork.com/news/money/economy/682055/trump-says-deal-could-very-well-happen-with-china/story/

✓ U.S. President Donald Trump will hold a second summit with North Korean leader Kim Jong Un in late February but will maintain

economic sanctions on Pyongyang, the White House said on Friday after Trump met Pyongyang’s top nuclear negotiator. The

announcement came amid a diplomatic flurry in Washington surrounding the visit of Kim Yong Chol, a hardline former spy chief, and

marked a sign of movement in a denuclearization effort that has stalled since a landmark meeting between Trump and the North Korean

leader in Singapore on June 12. “President Donald J. Trump met with Kim Yong Chol for an hour and a half to discuss denuclearization

BAIPHIL Market Watch – 21 Jan 2019

Page 9 of 13

and a second summit, which will take place near the end of February,” White House spokeswoman Sarah Sanders said. She said a

location would be announced later. The summit was announced even though there has been no indication of any narrowing of differences

over U.S. demands that North Korea abandon a nuclear weapons program that threatens the United States and Pyongyang’s demands

for a lifting of punishing sanctions.

https://www.reuters.com/article/us-northkorea-usa/trump-north-koreas-kim-to-hold-second-summit-in-late-february-idUSKCN1PC0EB?il=0

✓ The shutdown of the US government -- now in its record 28th day -- is becoming a drag on economic growth, the president of

the New York Federal Reserve Bank said Friday. John Williams, who also holds the influential vice chairmanship of the Federal

Reserve's policy committee, reportedly told a gathering the government work stoppage could shave as much as a full percentage point off

GDP growth in the first quarter. In an address delivered to a New Jersey banking association, Williams said the shutdown was among

"emerging headwinds to growth," according to his prepared remarks. He went on to estimate that the shutdown would reduce GDP growth

by half a percentage point, "maybe even a percentage point if it continues," but said that a rebound would come when it ends, according

to Bloomberg. Economists say that beyond lost pay for federal workers, the shutdown is impeding economic activity in systemic ways,

interrupting the issuance of permits, data collection, regulatory approvals, contract payment and the payment of aid and loans in various

sectors such as agriculture.

https://www.gmanetwork.com/news/money/economy/681990/us-shutdown-could-stunt-economic-growth-ny-fed-chief/story/

✓ The British government has insisted that cross-party talks to find a consensus on Theresa May’s Brexit plans have been

“constructive,” despite the refusal of Labour leader Jeremy Corbyn to engage in discussions with the prime minister unless she

categorically rules out the possibility of the U.K. leaving the European Union without a deal. As leader of the largest opposition

party in the Westminster Parliament, Corbyn has issued an order instructing his own MPs (Members of Parliament) that they should not

hold meetings with Conservative opponents unless that specific precondition is satisfied. But a Downing Street spokesperson told

reporters Thursday night that further government meetings with Labour lawmakers were expected Friday. After her narrow victory in a

parliamentary confidence vote late Wednesday, May had said she would be prepared to engage with opposition party leaders in a

“constructive” spirit, to find a way forward after her Brexit proposals were crushingly rejected earlier in the week.

https://www.cnbc.com/2019/01/18/brexit-row-erupts-as-opposition-party-rejects-theresa-may-talks.html

✓ German Chancellor Angela Merkel said on Saturday she would do all she could to make sure Britain leaves the European Union

with an agreement and, striking a conciliatory tone, she felt a responsibility to get an orderly solution. The rejection this week of

London’s deal with the European Union by British lawmakers has thrown the process into disarray with options ranging from a no-deal

Brexit in 10 weeks’ time to staying in the bloc. “I will work until the very last day to get a solution with a deal for Britain’s exit from the EU

and I will work towards having the best relationship,” Merkel said at a conservative party event in the northern city of Rostock. Merkel said

Germany respected Britain’s decision to leave, but added: “We have a responsibility to shape a divorce process so that people don’t

shake their heads at us in 50 years’ time and say why weren’t they in a position to make a compromise?”

https://www.reuters.com/article/uk-britain-eu-popcorn/popcorn-to-hand-eu-watches-brexit-show-but-frets-for-own-future-

idUSKCN1PC1T7?il=0

✓ Former British prime minister John Major urged Theresa May on Saturday to drop her “red lines” on Brexit or allow parliament

to find a way forward to avoid a damaging no-deal departure from the European Union in March. Major said he compromised on

key decisions on the Northern Irish peace process and the first Gulf War while prime minister between 1990 and 1997, and May should do

the same after her Brexit plan was rejected by a huge majority in parliament. “Her deal is dead and I don’t think honestly that tinkering with

it is going to make very much difference if any difference at all,” Major, who campaigned to stay in the EU ahead of the 2016 referendum,

told BBC Radio.

https://www.reuters.com/article/us-britain-eu-major/former-british-pm-major-urges-may-to-drop-brexit-red-lines-idUSKCN1PD08I?il=0

✓ Britain could remove most obstacles blocking a Brexit deal if it rolls back on a promise of leaving the European Union’s

customs union, the bloc’s Agriculture Commissioner said. Britain’s last-minute scramble to shape an EU exit after the deal Prime

Minister Theresa May agreed with the bloc was crushed in a parliamentary vote has stalled in a stand-off between May and opposition

Labour leader Jeremy Corbyn. “More mainstream UK politicians need to drop the fanciful rhetoric and start speaking the plain,

unvarnished truth,” Phil Hogan, a former Irish government minister and member of Prime Minister Leo Varadkar’s Fine Gael party, wrote

in Saturday’s Irish Independent newspaper.

https://www.reuters.com/article/us-britain-eu-major/former-british-pm-major-urges-may-to-drop-brexit-red-lines-idUSKCN1PD08I?il=0

✓ Britons would back Brexit again if asked to vote in a second referendum, the head of Eurotunnel said on Sunday. Jacques

Gounon told RTL radio the original 2016 vote for Brexit was largely motivated by “anti-immigration” feeling, which would come into play

again in any second plebiscite. “If there was a second referendum, I am convinced that it would again lead to a Brexit, perhaps with an

even bigger percentage,” he said.

https://www.reuters.com/article/us-britain-eu-eurotunnel/eurotunnel-boss-says-a-second-referendum-would-still-back-brexit-

idUSKCN1PE082

✓ Russia conducted another successful flight test of its new anti-satellite missile system last month, according to two people with

direct knowledge of a classified U.S. intelligence report. The anti-satellite missile flew for 17 minutes and 1,864 miles before

successfully splashing down in its target area. The latest revelation comes on the heels of the Pentagon’s 108-page missile defense

review, which marks the first overhaul of America’s missile defense doctrine in nearly a decade. The unclassified review, which singles out

emerging Russian, Chinese, North Korean and Iranian missile threats, also focuses on anti-satellite capabilities that “could threaten U.S.

space-based assets.” According to the missile review, “Russia is developing a diverse suite of anti-satellite capabilities, including ground-

launched missiles and directed-energy weapons, and continues to launch ‘experimental’ satellites that conduct sophisticated on-orbit

activities to advance counterspace capabilities.”

https://www.cnbc.com/2019/01/18/russia-succeeds-in-mobile-anti-satellite-missile-test-us-intelligence-report.html

✓ China is expected to report on Monday that economic growth cooled to its slowest in 28 years in 2018 amid weakening domestic

BAIPHIL Market Watch – 21 Jan 2019

Page 10 of 13

demand and bruising U.S. tariffs, adding pressure on Beijing to roll out more support measures to avert a sharper slowdown.

Growing signs of weakness in China — which has generated nearly a third of global growth in the past decade — are stoking worries

about risks to the world economy and are weighing on profits for firms ranging from Apple to big carmakers. Chinese policymakers have

pledged more support for the economy this year to reduce the risk of massive job losses, but they have ruled out a “flood” of stimulus like

that which Beijing has unleashed in the past, which quickly juiced growth rates but left a mountain of debt. With stimulus measures

expected to take some time to kick in, most analysts believe conditions in China are likely to get worse before they get better, and see a

further slowdown to 6.3 percent this year. Some analysts believe real growth levels are already much weaker than official data suggest.

https://www.reuters.com/article/us-china-economy-gdp/china-set-to-post-slowest-growth-in-28-years-in-2018-more-stimulus-seen-

idUSKCN1PE02Z

✓ The level of crude output from the U.S. will once again be a major factor this year, the International Energy Agency (IEA) said its

closely-watched report on Friday, with the energy giant on track to reaffirm its position as the world’s leading crude producer.

The IEA report comes shortly after OPEC and non-OPEC producers officially implemented a fresh round of supply cuts.

Alongside Russia and nine other nations, top oil exporter Saudi Arabia struck a deal with the rest of OPEC in December to keep 1.2

million barrels per day (b/d) off the market from the start of January. “While the other two giants voluntarily cut output, the U.S., already

the biggest liquids supplier, will reinforce its leadership as the world’s number one crude producer,” the Paris-based IEA said Friday. “By

the middle of the year, U.S. crude output will probably be more than the capacity of either Saudi Arabia or Russia.”

https://www.cnbc.com/2019/01/18/iea-report-us-will-reinforce-its-leadership-as-the-worlds-top-crude-producer.html

✓ BlackRock and Goldman Sachs Asset Management both plan to temporarily move some British-based fund managers to New

York in the event of a no-deal Brexit, two sources told Reuters. The portfolio managers would eventually be transferred to mainland

Europe to handle client accounts there once Britain and the European Union agreed a regulatory framework, they added. But neither of

the firms, who together employ more than 10,000 people in London, expects a chaotic exit that would force them to carry out the

emergency relocation, the sources said. A spokeswoman for BlackRock, which is the world’s biggest asset manager and manages around

$6.3 trillion, declined to comment on the plan but in an emailed response to Reuters said: “BlackRock maintains extensive regulatory

licenses and permissions across Europe and globally to ensure it can continue to serve its clients post-Brexit.”

https://www.reuters.com/article/us-eu-britain-blackrock-goldman-exclusiv/exclusive-blackrock-goldman-to-move-some-fund-managers-to-

u-s-if-no-deal-brexit-sources-idUSKCN1PC234?il=0

✓ Netflix shares swung lower Thursday as spending on original shows at the leading streaming television service weighed on

quarterly revenue and competition heated up. Shares sank nearly four percent to $339.70 in after-market trades that followed release

of earnings figures that showed the Silicon Valley company logged profit of $134 million on revenue of $4.2 billion in the final three months

of last year. That compared with a profit of $186 million on revenue of $3.3 billion in the same period the prior year. Netflix ended the year

with 139 million paying members worldwide, up 29 million from the start of the year. “The fact that investors reacted negatively to what

amounted to a strong performance indicates the extent to which Netflix has set a high bar,” said eMarketer media analyst Paul Verna.

https://www.gmanetwork.com/news/money/companies/681877/netflix-shares-slip-as-spending-weighs-on-profits/story/

✓ ProSiebenSat.1 Media believes that price increases by U.S. streaming giant Netflix could ease competitive pressures on the

German group’s core TV business and is bullish on growth at its e-commerce arm, CEO Max Conze said. Conze took the helm at

the Munich-based broadcaster last June but has had a rough welcome from investors who have sent its shares to seven-year lows on

doubts that he can revive its ailing free-to-air TV business. Asked about the recent price increase by Netflix, as well as the cash burn

reported in its latest results, Conze expressed hope that the U.S. streaming giants would move towards a model that seeks to target profit

as well as growth.

https://www.reuters.com/article/us-prosieben-media-strategy/prosieben-sees-pressure-easing-as-netflix-raises-prices-idUSKCN1PE0L0

✓ Apple and Amazon are among eight tech firms named in a complaint filed in Austria by non-profit organization noyb, which

cited their failure to comply with the European Union’s General Data Protection Regulation (GDPR). The action by noyb, chaired by

data privacy activist Max Schrems, also named Netflix, Spotify and YouTube, after it tested them by requesting private data the

companies hold about the user. “No service fully complied,” noyb said in its statement. The GDPR, implemented in May, gives users the

right to access their data and information about the sources and recipients of the data. Social networks must regain Europeans’ consent

every time they want to use their data in new ways, including for targeted advertising. The GDPR foresees fines of up to 4 percent of

global revenues for companies that break the rules.

https://www.reuters.com/article/us-europe-privacy/austrian-data-privacy-activist-files-complaint-against-apple-amazon-others-

idUSKCN1PC1FA?il=0

✓ Intel Corp operates mostly outside the Apple-sphere, and that is exactly why whatever it says next week about business in its

vital Chinese market matters so much for investors. Apple rattled global markets this month when the iPhone maker cut its revenue

outlook for the first time in 15 years, blaming factors like the US-China trade dispute and a slowdown in the Chinese economy. Upcoming

quarterly scorecards from Intel, Texas Instruments and other chipmakers, as well as Ford Motor Co, will shed light on whether Apple

made a convenient excuse for its own troubles or revealed a strengthening headwind faced by global companies that rely on China for a

big chunk of their sales.

https://www.gmanetwork.com/news/money/economy/682064/us-chipmakers-may-give-clues-on-china-hazard/story/

✓ The German government is considering banning Huawei from providing 5G equipment in the country saying security concerns

are of “high relevance.” The German Federal Foreign Office confirmed to CNBC an internal meeting about Huawei was held on

Thursday. “The security of the future 5G network is of high relevance to the Federal Government. The Federal Government will be guided

by this in connection with the establishment of a future 5G network,” The Federal Ministry of Economic Affairs and Energy told CNBC via

email. It added no decisions have been made at this point. German newspaper Handelsblatt first reported on Thursday that Chancellor

Angela Merkel’s administration is actively considering ways to exclude Huawei from the country’s 5G networks. The decision would mark

a shift from Germany, which has been less vocal than its Western allies, including the U.S. and the U.K., about Huawei security concerns.

https://www.cnbc.com/2019/01/18/huawei-5g-ban-in-germany.html

BAIPHIL Market Watch – 21 Jan 2019

Page 11 of 13

✓ Tesla Inc said on Friday it would cut thousands of jobs to rein in costs as it plans to increase production of lower-priced

versions of its crucial Model 3 sedan, sending its shares down as much as 10 percent. The company, which has struggled to

achieve long-term profitability and keep a tight lid on expenses, also said it expects fourth-quarter profit to be lower than the previous

quarter. Chief Executive Officer Elon Musk said the need for lower-priced versions of Model 3 will become even greater from July, when

the US tax credit again drops in half, adding $1,875 to its price tag, and again at the end of the year when it goes away entirely. The

phase-out of the electric vehicle tax break confronts Tesla with the choice of raising prices at the risk of losing customers or slashing costs

by thousands of dollars per vehicle, a herculean task for an automaker.

https://www.gmanetwork.com/news/money/companies/681989/tesla-cuts-jobs-as-it-looks-to-make-model-3-more-affordable/story/

✓ The co-chair of a committee set up by Japanese automaker Nissan Motor Co to examine the root cause of alleged financial

misconduct by ousted chairman Carlos Ghosn said he believed Ghosn may have had questionable ethical standards. Ghosn,

charged with three counts of financial misconduct, has been detained in Tokyo since his arrest on Nov. 19. Ghosn denies the charges

against him, which include understating his salary for eight years and temporarily transferring personal financial losses to Nissan’s books.

“Having read the report on the internal investigation, my initial impression was that the head of the company may have had questionable

ethical standards,” committee co-chair Seiichiro Nishioka told a briefing late on Sunday after the panel held its first meeting.

https://www.reuters.com/article/us-nissan-ghosn/ghosn-may-have-had-questionable-ethics-co-chair-of-external-nissan-probe-says-

idUSKCN1PE0HG

➢ Trade Finance Academy (Beginner) – 24 January 2019

➢ Trade Finance Academy (Intermediate) – 25 & 26 January 2019

➢ National Risk Assessment – 29 January 2019

➢ IT Security in Banking Operations – 29 & 30 January 2019

➢ Accounting for Non-Accountants with Financial Statements Analysis – 7 & 8 February 2019

➢ Advanced Excel Training for Bankers – 8 & 9 February 2019

➢ Third Party Risk Management – 15 February 2019

➢ Establishing Internal Controls in Banks – 16 February 2019

➢ Compliance with Operational Risk Management Guidelines – 22 February 2019

➢ Project Management Fundamentals – 1 March 2019

➢ Trade Finance Academy (Advanced) – 1 & 2 March 2019

➢ Macros Training for Bankers – 8 & 9 March 2019

➢ Establishing Internal Controls per BSP Cir. No. 871 – 9 March 2019

➢ Basics of Financial Math – 22 March 2019

➢ Leadership Effectiveness and Advancement Program (LEAP): An Upgrading Program for Supervisors and

First-Time Managers – 22 & 23 March 2019

➢ Basics of Fixed Income Securities – 23 March 2019

➢ Related Party Transactions – 29 March 2019

➢ Bond Duration: Other Fixed Income Securities (Tier 2, LTNCD) & Preferred Shares – 30 March 2019

➢ Know Your Money & Counterfeit Detection (Peso/US Dollar & Other Third Currencies) – 30 March 2019

➢ Enhanced Standards on Credit Risk Management – 5 & 6 April 2019

➢ Foreign Exchange Spot, Forwards and Swaps – 6 April 2019

➢ Interest Rate Swap / Currency Swap – 12 April 2019

➢ Trade Finance Academy (Expert) – 12 & 13 April 2019

➢ Forward Rate Agreements and Bootstrapping – 13 April 2019

➢ Signature Verification & Forgery Detection – 13 April 2019

➢ BSP Cir. No. 706 as Amended by BSP Cir. No. 1022, AMLA Law and the AML Risk Rating System –

26 April 2019

➢ Money Laundering & Terrorist Financing Prevention Program (MLPP): Practitioner’s Perspective –

03 May 2019

➢ Interest Rate Option and Futures – 4 May 2019

➢ Process Mapping as an Operational Risk Management Tool – 04 May 2019

➢ Financial Options – 18 May 2019

➢ Overview of Intelligent Automation and Robotic Process Automation – 24 May 2019

➢ How to Spot Fake Documents & Signature Verification – 08 June 2019

➢ Accounting for Non-Accountants with Financial Statements Analysis – 20 & 21 June 2019

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

BAIPHIL Market Watch – 21 Jan 2019

Page 12 of 13

REFERENCES

1 Reuters: https://www.reuters.com/finance/currencies

2 Philippine Dealing System: http://www.pds.com.ph/ 3 Philippine Stock Exchange: http://www.pse.com.ph/stockMarket/home.html

4 Reuters: https://www.reuters.com/markets/stocks 5 Bloomberg: https://www.bloomberg.com/markets/commodities

6 CNN Money: https://money.cnn.com/data/bonds/

OTHER REFERENCES / EXTERNAL LINKS

➢ Philippine Stock Exchange: http://www.pse.com.ph/stockMarket/home.html

BAIPHIL Market Watch – 21 Jan 2019

Page 13 of 13

➢ Philippine Dealing System: http://www.pds.com.ph/

➢ GMA News Online: http://www.gmanetwork.com/news/

➢ BPI Asset Management: https://www.bpiassetmanagement.com/

➢ Business World: http://bworldonline.com/

➢ Philippine Daily Inquirer: http://business.inquirer.net/

➢ Philippine Star: https://www.philstar.com/business/

➢ ABS-CBN News: http://news.abs-cbn.com/business/ ➢ Manila Bulletin: https://mb.com.ph/ ➢ Manila Standard: http://manilastandard.net/ ➢ Philippine News Agency: www.pna.gov.ph ➢ AutoIndustriya: https://www.autoindustriya.com/

➢ The Wall Street Journal: https://www.wsj.com/asia/

➢ Reuters: https://www.reuters.com/ ➢ Bloomberg: https://www.bloomberg.com/markets/ ➢ Business Mirror: https://businessmirror.com.ph/

➢ CNN Money: http://money.cnn.com/

➢ Bangko Sentral ng Pilipinas: http://www.bsp.gov.ph/

➢ Bankers Association of the Philippines: http://bap.org.ph/

➢ Bureau of Treasury: http://www.treasury.gov.ph/

➢ Philippine Statistics Authority: https://psa.gov.ph/

➢ Trading Economics: https://tradingeconomics.com/ ➢ South China Morning Post: http://www.scmp.com/ ➢ Japan Times: https://www.japantimes.co.jp ➢ The Japan News: http://www.the-japan-news.com ➢ Market Watch: https://www.marketwatch.com/ ➢ Asia Nikkei: https://asia.nikkei.com/ ➢ Straits Times: https://www.straitstimes.com/global

➢ Channel News Asia: https://www.channelnewsasia.com/

➢ CNBC: https://www.cnbc.com/

➢ The New York Times: https://www.nytimes.com/

➢ Gulf News: https://gulfnews.com/ ➢ KGFO: http://kfgo.com/news/

COMPILED AND PREPARED BY: TRISHA CASTELO, BAIPHIL Secretariat

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