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Friday, August 28, 2015

Second quarter GDP grew 5.6%, some notable improvements compared to the first quarter

2Q15 GDP growth reached 5.6%, faster than the first quarter’s revised GDP growth of 5.0%. Given the economy’s performance for the second quarter, GDP growth for the first half of the year reached 5.3%.

Although GDP growth for the second quarter was somewhat disappointing as it missed consensus growth expectations of 5.7%, there were some notable improvements compared to the first quarter.

  • Government spending growth accelerated to 3.9% from 1.7% in the first quarter as public construction jumped by 20.4% after falling by 24.6% during the first quarter
  • Consumer spending growth remained robust, accelerating to 6.2% in the second quarter from 6.0% during the first quarter. This is most likely partly attributable to the faster growth of OFW remittances during the second quarter as reflected by the acceleration of net primary income from abroad to 5.0% during the second quarter from 0.8% during the first quarter
  • Growth in investment spending or capital formation accelerated further to 17.4% from 11.6% during the first quarter as construction spending increased further by 13.1% from 6.7% q/q. The continuous growth in investment spending implies more sustainable economic growth going forward.
  • Exports surprisingly remained positive, growing by 3.7% during the second quarter as the 31.3% jump in the exports of services (largely through the BPO sector) more than offset the 3.0% drop in the exports of goods. This continues to show the resilience of the Philippine economy to the weakness in the global economy.

- COL financial

Tuesday, August 25, 2015

COL Market Update: Philippine market hit by contagion

Philippine Market hit by contagion
  • The PSEi is currently suffering from a major correction, triggered by the People's Bank of China's (PBoC) move earlier this month which led to the devaluation of the yuan.
  • As discussed previously, the Philippines is not expected to be a major loser of the devaluation of the yuan as the country is not very dependent on exports. We also enjoy a strong current account surplus, thanks to our resilient OFW remittances and our strong BPO sector. Nevertheless, the strength of the local economy doesn't spare us from contagion risk. Note that for the month of August, the stock markets of our closest peers Thailand and Indonesia are down by 8.8% and 13.1% respectively as their economies are expected to be hurt by the yuan devaluation. This in turn negatively affected sentiment for the Philippine stock market.
    • Although the Philippine market's ongoing sell-off is due to external factors, we as investors should make decisions based on what we see rather than what we think. Objectively speaking, the PSEi's technical picture has deteriorated significantly. Today, the PSEi broke its six and a half year uptrend line and two important support levels namely 7,272 and 6,950. The PSEi is also currently 17% off its April high of 8,136.
Some tips on coping with sharp market drops include the following:
1. Raise cash, don't use margin 
Rallies that take place in the short term should be viewed as opportunities to raise cash. This should help us avoid the risk of being forced to sell at the low or not having any cash to buy when stocks are already cheap. While selling right now can be emotionally painful in the short term, reducing exposure in the stock market during difficult times helps us mentally prepare to buy bargains as markets gradually bottom. 
2. Prefer peso cost averaging over lump sum investing 

When markets drop, it creates opportunities to buy bargains. This is especially true for markets such as ours which do not deserve to be sold-off based on fundamentals.  While we think 6,500 would be a good level to buy this market, there is no guarantee that the PSEi will bottom at the said level. Consequently, it would be more ideal to adopt a peso cost averaging strategy over the next six months instead of timing the perfect entry point when buying this market. 

One of the opportunities that will be created by the ongoing market sell-off is the opportunity to buy quality stocks that normally trade at expensive valuations when the market is not correcting. While there is nothing wrong with any of our existing stock picks, we might remove some to make way for other quality names that professional fund managers normally focus on because of size and liquidity. This is because we expect the said blue chip stocks to go up first when the PSEi recovers. Stay tuned as we make further announcements in the next few days or weeks regarding the market and our stock picks given the numerous changes happening globally.     

To download the full report, please click here.

Saturday, August 15, 2015

Bloomberg TV Philippines promises to boost Filipinos' financial literacy, economic contribution

Bloomberg TV Philippines, the first 24-hour business news channel in the country that starts airing in September, aims to boost its audience’s financial literacy, as well as their participation in the economy.

This is according to executives of Bloomberg Television, MediaQuest Holdings and its subsidiary Cignal TV during the trade launch on Wednesday night at the Makati Shangri-La.

Cignal became Bloomberg Television’s fifth local partner in Asia in March, when the two signed a multiple-year contract in Manila. As opposed to the Bloomberg Television channel that Cignal already carries, Bloomberg TV Philippines will have more local content.

According to Noel Lorenzana, president and chief executive officer of MediaQuest and TV5, the partner-companies envision Bloomberg TV Philippines as a means to promote business and financial literacy among Filipinos.

“I think Bloomberg will be the centerpiece of that,” he said.

Bloomberg Asia Pacific head of editorial Jeremy Custance said they want to deliver to the public an understanding of the goings-on in business.

“Because without the participation of the public, the economy and the country as a whole cannot be a success. And this is one of the major drivers for coming here and partnering with Cignal,” he said.

PLDT chairman Manuel V. Pangilinan said business news was increasingly becoming an important component of Philippine life. The new channel would also connect the Philippines and Filipinos to what was happening outside of the country.

“Because clearly, economic trends outside the Philippines will affect our economy,” he told reporters in an interview after the event. MediaQuest is part of the PLDT Group.

Viewers can expect intelligent, credible, and in-depth analysis of business and news topics through the shows that would be piloted next month, according to Media 5 president and chief operating officer Jane Basas.

MediaQuest’s free-to-air channel, TV5, is working with Bloomberg Television to run Bloomberg TV Philippines.

Cignal chief operating officer Oscar Reyes, Jr. said Bloomberg TV Philippines would be a world-class operation given that Cignal was now the number one pay TV provider in the country, while Bloomberg Television was a leading authority in business news.

He said Cignal aims to have 2.5 million households and 12.5 million viewers by the end of the year.

Bloomberg Television in turn is “a global powerhouse” with around 310 million viewers globally, as well as 16.5 million unique viewers online, he said.

Custance said the audience can be assured of a “very, very talented operation,” which will count on Cignal’s experience in producing TV content, and Bloomberg Television’s financial and business knowledge.

Content would be in the form of fast, accurate information for the business audience; interviews with key players at the heart of business decision-making; and insights about young entrepreneurs across the Philippines.

Among Bloomberg TV Philippines’ anchors and presenters are entrepreneur Quintin Pastrana; TV correspondent Shawn Yao; finance analyst and management specialist JP Ong; corporate lawyer and commercial arbitration specialist Jean de Castro; international business reporter Regina Lay; international trade expert, economist, and law professor Tony Abad; social entrepreneur Michael Alimurung; and marketing expert Rod Nepomuceno.

The 20 million smartphone users and 30 million Internet users in the Philippines would also be tapped by Bloomberg TV Philippines’ digital platforms. Website will provide access to news and commentary online, while its social media presence (@bloombergtvph on Twitter) would give netizens information wherever they are.

A Bloomberg TV Philippines app is also available for download, as well as a Philippine Stock Exchange game that would teach players how the market worked and enable them to graduate to real stock portfolio management.

Content released by Bloomberg TV Philippines will be carried by the Bloomberg Television global network, informing people around the world about the dynamism of the Philippine economy, Custance said.

“I wish them the best of luck,” Pangilinan said. “I think they’re a great business channel for the country. We’re bringing to our shores a great business news organization in the form of Bloomberg.”

Cignal subscribers can tune in to Bloomberg TV Philippines on channel 8 SD and channel 127 HD.

- Interaksyon

Saturday, August 1, 2015

SBS maiden share sale oversubscribed

BDO Capital & Investment Corp. President Eduardo V. Francisco told reporters the share sale is “several times” oversubscribed, allowing the company to price the IPO at a maximum P2.75 per share.

The offer period for the IPO began yesterday, while the shares will be listed on the PSE’s Main Board on August 10 under the ticker symbol “SBS.”

BDO Capital was tapped as the sole issue manager, lead underwriter and bookrunner.

“As of this moment, all the institutional shares have been allocated.

The only thing available are the shares for the brokers,” Mr. Francisco told an investor briefing late Monday.

“Even if the market falls, I don’t think these investors will back out,” he said.

Ten percent of the shares for sale are allocated for small investors, who trooped to the Philippine Stock Exchange building in Ortigas on Tuesday only to find IPO forms have run out, Mr. Francisco said.

“Yes, demand continues to be strong,” he said in a mobile phone message yesterday.

The second company to go public this year, SBS is selling up to 420 million primary common shares, comprising 35% of the company’s issued and outstanding shares.

The absence of other IPOs this year had whet demand for the tiny IPO, Lexter L. Azurin, head of research at Unicapital Securities, Inc., said in a phone interview.

“It’s a leading chemical distributor and the products they offer are pretty diversified. Earnings growth since 2012 has been consistent,” Mr. Azurin said.

SBS grew earnings by 66% to P100.17 million last year from P60.33 million in 2013, as revenues rose 18.7% to P933.08 million from P785.95 million.

The Sytengco family owns 93.2% of SBS. The IPO will leave the family with 60.6% of the company.

SBS Chairman and President Necisto U. Sytengco said the company is going public to lay the groundwork for succession.

“It’s always better to put it in proper place so there won’t be any problem in the succession. Probably, you can even hire your own children to come in or you can hire professional people to put them in place,” Mr. Sytengco said.

Incorporated on July 17, 2001 and formerly known as Sytengco Philippines Corp., SBS supplies over 3,000 chemical products to more than 1,800 customers in various industries: food ingredients, industrial, feeds and veterinary care, pharmaceutical, personal care and cosmetics.

- Business World Online