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BAIPHIL Market Watch – 25 January 2017

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BAIPHIL MARKETWATCH

25 Jan

2017

Legend Improvement / Up Deterioration / Down No Movement

FINANCIAL MARKETS AT A GLANCE

PHILIPPINES

Financial Rates Current Previous

USD/PHP 49.8100 49.8700

30-D PDST-R1 2.0196% 2.0214%

91-D PDST-R1 2.0454% 2.0233%

180-D PDST-R1 2.2000% 2.4196%

1-Y PDST-R1 2.6607% 2.2245%

10-Y PDST-R1 4.8696% 5.0625%

30-D PDST-R2 2.0196% 2.0214%

91-D PDST-R2 2.0454% 2.0233%

180-D PDST-R2 2.2000% 2.4196%

1-Y PDST-R2 2.6607% 2.2371%

10-Y PDST-R2 4.8696% 4.4112%

Stock Index Current Previous

PSEi 7,370.65 7,374.35

Market Cap (Php Trillion) 12.475 12.471

Total Value (Php Billion) 7.886 5.608

PSEi Performers Closing % Change

Top Gainers

Concrete Aggregates Corp 110.00 13.99%

Vitarich Corp 1.98 10.61%

Chemical Industries of the Philippines

157.90 10.42%

Top Losers

Central Azucarera de Tarlac 15.60 - 8.34%

Liberty Flour Mills, Inc 72.05 - 5.76%

Ginebra San Miguel, Inc 12.16 - 5.74%

ASIA-PACIFIC

Stock Index Current Previous

NIKKEI 18,787.99 18,891.02

HANG SENG 22,949.86 22,901.89

SHANGHAI 3,142.55 3,136.77

STRAITS 3,041.95 3,011.08

SET 1,578.82 1,568.55

JAKARTA 5,292.09 5,260.17

Currency Exchange Current Previous

USD/JPY 113.8500 113.4000

USD/HKD 7.7571 7.7569

USD/CNY 6.8590 6.8575

USD/SGD 1.4208 1.4289

USD/THB 35.2420 35.2900

USD/IDR 13,322.00 13,349.00

REST OF THE WORLD

Stock Index Current Previous

FTSEuro First 300 1,429.32 1,425.49

FTSE 100 7,150.34 7,151.18

DAX 11,594.94 11,545.75

CAC 40 4,830.03 4,821.41

DOW JONES 19,912.71 19,799.85

S&P 500 2,280.07 2,265.20

NASDAQ 5,600.96 5,552.94

Various Current Previous

EUR/USD 1.0726 1.0761

GBP/USD 1.2532 1.2520

Gold Spot (USD/oz) 1,210.30 1,219.00

Brent Crude(USD/bbl) 55.44 55.37

3-M US Treasury Yield 0.49% 0.47%

10-Y US Treasury Yield 2.47% 2.40%

30-Y US Treasury Yield 3.06% 2.99%

PHILIPPINES

The local equities index declined by 0.05% as market players took the opportunity to book profits. Foreign selling of $16.52 million

dragged the market. The Philippine peso strengthened as lower US Treasury yields dampened the dollar. Comments that the greenback was “too strong” also

contributed to the dollar correction. The USD/PHP fell by 0.12%, closing at 49.810. The local fixed income market was down, mirroring the movement of US Treasuries. The Yield of the 5-year government paper with

coupon of 4% auction today was 3.95%. Yields declined by an average of 0.57 of a basis point. The government yesterday made a full award of fresh five-year Treasury bonds (T-bonds) after banks swarmed the offer amid

excess liquidity in the system, but settled for higher yields amid persisting uncertainties offshore. The Bureau of the Treasury raised P15 billion as planned from its offer of five-year T-bonds maturing on Jan. 26, 2022 at Tuesday’s auction. The securities were met with strong demand as total tenders reached P35.603 billion, more than twice the government’s offer. The average rate of the five-year

bonds was quoted at 3.876%, 63 basis points (bps) higher than the 3.246% fetched for reissued seven-year T-bonds with a remaining life

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of four years and 10 months awarded at a May 17, 2016 auction. During that offering, the government also fully awarded the reissued 2021 debt notes. The coupon rate for the fresh issuance, however, reached 4%, higher than the 3.8417% quoted for the five-year bonds in the

secondary market at noon time yesterday before the auction. At the close of trading yesterday, the bonds fetched a yield of 3.8333%. The Treasury bureau said in a statement issued after the auction that the coupon rate of the bonds was aligned with market expectations as the rate took its cue from “global adjustments.” Sought for comment, a bond trader interviewed by phone after Tuesday’s auction said higher

yields sought by banks at yesterday’s offering were within market expectations due to global uncertainties brought about by unclear policies from US President Donald J. Trump, as well as the Federal Reserve’s plan to raise rates anew this year. “I was expecting the market to request for higher rates again [yesterday] but the market was comfortable with how the Bureau of the Treasury handled the auc tion. It was

well within expectations, rates didn’t go beyond 4%. Currently we are seeing some repositioning on the belly and long end,” the trader said. The trader also noted that markets are still awash with funds, which was likely the cause of yesterday’s oversubscription. “The market still has excess liquidity, market players are still awash with cash, so the excess funds that they weren’t able to invest, they invested in

yesterday’s auction. But the market was looking at higher rates to invest them,” the trader said. “We would likely continue following developments abroad, particularly on Donald Trump’s policies that are still not clear... We have to look at it and we’ll like ly also look at data coming out in the US, and of course, as it is, markets are still expecting the Fed to hike rates by at most, three times this year,” the trader

noted. Markets are still on a wait-and-see mode after the 45th US President failed to provide details on his planned fiscal stimulus for the world’s largest economy in his inaugural speech last Friday. However, the trader noted that Mr. Trump was somehow able to provide some clarity after he withdrew from the Trans-Pacific Partnership trade deal and reaffirmed his vow of trimming taxes and easier regulations on

Monday. The trader added that markets are also on the lookout for the Federal Open Market Committee (FOMC) meeting next week, where markets are expecting that the US central bank to leave rates unchanged at 0.50-0.75%. “But investors would more or less want to hear forward guidance on what to expect during the next meeting on March, June, September and December FOMC meeting as there will

be economic projections and Fed Chair Janet [L.] Yellen will speak during those meetings,” the trader noted. The government p lans to borrow up to P180 billion from the domestic market this quarter through offerings of P90 billion apiece in Treasury bills and T-bonds.

Foreign banks entering the Philippines are looking to ride on the government’s infrastructure push as they expand their presence here, a central bank official said, offering fresh sources of capital that can be tapped for big-ticket projects. Bangko Sentral ng Pilipinas (BSP) Deputy Governor Nestor A. Espenilla, Jr. said growing interest among foreign players to enter the local market was likely

fuelled by the country’s mounting infrastructure needs, with banks seeing this as an opportunity to expand their lending businesses. “Most of the [foreign] branches, they’re looking for institutional business. Actually, what they are eyeing is infrastructure. Malaki ang play ng infra

(There’s good business in infrastructure), so they want to go into that,” Mr. Espenilla said in a recent interview. To date, nine foreign

lenders have secured the central bank’s nod to set up shop in the Philippines over the last two years following the passage of Republic Act 10641 that lifted the limit on the number of offshore players allowed to operate in the local banking system. Budget Secretary Benjamin E. Diokno has said that the Duterte government eyes to spend as much as P9 trillion over the next six years on public infrastructure, which in

turn would help boost economic growth while improving the ease of doing business here. BSP Governor Amando M. Tetangco, Jr. said in a Jan. 10 speech that six more foreign banks have expressed interest in coming to the Philippines, which he said signalled confidence in the local financial system despite heightened uncertainty in the global markets. Separately, Mr. Espenilla said non-Asian banks have also

inquired about possible buy-in deals with local banks. He added that these foreign banks are opting for “strategic partnerships” with local players for them to be able to immediately tap a huge network of clients here. “They are looking to buy into a big bank...because they want to have a strong partner because of the local knowledge. The fact is, our big domestic banks are already established, they’re very hard to

battle in the Philippines,” the BSP official said. The nine lenders that have secured the BSP’s approval are Taiwan’s Cathay United Bank, Yuanta Commercial Bank Co. Ltd., First Commercial Bank, and Hua Nan Commercial Bank Ltd.; Japan’s Sumitomo Mitsui Banking Corp.; South Korea’s Industrial Bank of Korea, Shinhan Bank, and Woori Bank; and the Singapore-based United Overseas Bank Ltd. Japan’s

biggest lender, the Bank of Tokyo-Mitsubishi UFJ, Ltd., bought a 20% stake in mid-sized lender Security Bank Corp. last year, boosting the local firm’s capital by P36.9 billion. Currently, the operations of newly opened foreign bank branches here have been concentrated on servicing their nation’s clients, particularly for corporate lending. But Mr. Espenilla said these offshore banks may find room to compete in

terms of infrastructure lending: “Local banks have SBL (single borrower’s limit), so there’ll be a space there.” The SBL is intended to cap the credit exposure to a single client to a maximum of 25% of a bank’s net worth, as mandated by the BSP on its supervised en tities. The ceiling includes loans and securities underwritten by universal banks and investment houses that were unsold after 90 days. From 2010 to

2016, the BSP allowed construction firms and service providers to borrow up to 25% of a bank’s net worth for public -private partnership (PPP) projects outside the SBL in order to support infrastructure development. This leeway was not extended by the BSP anymore given new borrowing channels now available, Mr. Espenilla said. “We didn’t extend the [relaxed] SBL for the PPPs because there’s enough.

There are foreign banks coming in,” the central bank official pointed out. Mr. Espenilla said banks may choose to offer syndicated loans to corporations, where a group of banks pool their loanable funds for a borrower.

The Philippine economy is expected to have picked up steam in the fourth quarter of last year, underpinned by strong domestic consumption and sustained government spending, a Reuters poll showed. Economists forecast the Philippine gross domestic product expanded a seasonally adjusted 1.6 percent in the fourth quarter from the previous quarter, accelerating from 1.2 percent in July-

September. For annual growth, the poll produced a median of 6.5 percent in the fourth quarter, weaker than the 7.1 percent rise in the September quarter, probably due to the waning impact of election spending, but still enviable by Western standards. Spending in the run-up to Christmas, buoyed by a rise in remittances, likely kept domestic consumption robust. That plus higher state expenditure may have

offset the impact of weak exports and a contraction in farm output, analysts say. Forecasts from five of 14 analysts who gave quarter-on-quarter estimates ranged from 1.5 to 2.1 percent. Philippine President Rodrigo Duterte's economic managers have predicted full-year 2016 growth to hit the top end of the government's 6-7 percent target.

President Rodrigo Duterte on Tuesday urged Southeast Asian leaders to work towards inclusive growth, as the world grapples

with an anti-establishment wave. Duterte said the Philippines would aid small businesses and work towards closer cooperation with the

Brunei-Indonesia-Malaysia-Philippines sub-region to bring the fruits of an expanding economy closer to the poor. "We will work together with ASEAN member states and partners to ensure that the trajectory of inclusive growth will always remain on the upswing," said Duterte during the ASEAN Committee on Business and Investment Program launch in Malacanang. The Philippines is hosting the ASEAN

meetings this year, on the 10-member regional bloc's 50th anniversary. "Under the Philippines' chairmanship, ASEAN will continue on this road towards greater progress and prosperity." Anti-establishment movements last year have led to Britan's decision to leave the European Union and real estate Donald Trump's shock win in the US presidential elections.

The Department of Transportation (DOTr) is asking relevant companies to pre-qualify and bid for the operations and maintenance

(O&M) of five regional airports under the public-private partnership (PPP) scheme. In an emailed statement, the PPP Center said the

DOTr on Tuesday published an invitation to pre-qualify and bid for the airport projects covering the Bacolod-Silay, Davao, Iloilo,

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Laguindingan and New Bohol (Panglao) airports. The five airports were previously bundled into a single project. In 2014, the PPP Center said it was intending to bid out the O&M of five regional airports as a single PPP project. The National Economic and Development

Authority (NEDA), however, deemed it best to unbundle the airport project and forged the new terms and conditions late last year. "The bidding of the five airports will be conducted through the two-stage/two-envelope system under the Build-Operate-Transfer (BOT) law," the PPP Center said. This means that bidders will first be pre-qualified according to the legal, technical, and financial requirements set by the

DOTr and the Civil Aviation Authority of the Philippines (CAAP). "Only bidders that are pre-qualified can proceed to the next stage of the bidding process, where they will submit their technical and financial proposals which will be evaluated by the Pre-Qualification, Bids and Awards Committee," the PPP Center said. Interested bidders may buy the invitation documents for P300,000.00, including the invitation to

pre-qualify and bid, Project Information Memoranda, and Instruction to Prospective Bidders. The companies that pre-qualified under the previous administration were:

Filinvest-Jatco-Sojitz Consortium (composed of Filinvest Development Corporation, Japan Airport Terminal Co. Ltd, and Sojitz

Corporation)

GMR Infrastructure and Megawide Consortium (Megawide Construction Corporation, and GMR Infrastructure Singapore Pte.

Limited)

Maya Consortium (Aboitiz Equity Ventures Inc. and VINCI Airports SAS)

Philippine Airports Consortium (Metro Pacific Investments Corporation and Philippines Airport Management Company)

SMHC-IIAC Airport Consortium (San Miguel Holdings Corporation and Incheon International Airport Corporation)

"The DOTr clarified that previously pre-qualified bidders in the bundled projects are also considered pre-qualified in the unbundled projects, provided that there are no changes in their legal, technical, and/or financial capacity," according to the PPP Center.

Despite failing short of meeting collection goals in previous years, the Bureau of Internal Revenue (BIR) is optimistic about

hitting its P1.829-trillion target this year in support of the administration's plan to ramp up spending on public infrastructure.

"Remember, the plan from the secretary of Budget is that the government will go into a massive infrastructure spending. With that kind of spending, automatically we foresee an increase in collection this year," BIR Commissioner Caesar Dulay told reporters in a press conference at the BIR head office in Quezon City. "We are quite bullish in terms of our outlook for 2017," the commissioner s aid. The

bureau collected P157.29 billion in November 2016, up 15.34 percent from P136.37 billion a year earlier, with collections in the first 11 months reaching P1.454 trillion – up 9.6 percent. In December, Dulay said the bureau likely registered a 5.05 percent collection growth. "We are definitely seeing an improvement from the July collection up to the end of the year. As we mentioned, for November we have 15

percent growth rate and for December 5.05 percent," he said. The collection goal this year was set by the Cabinet-level Development Budget Coordinating Committee (DBCC), taking into consideration the bureau's collection performance previous months. Based on the BIR's below-target performance in the first half of 2016, the administration's economic managers slashed the bureau's full-year target to

P1.62 trillion from the P2.03 trillion set by the Aquino administration. Asked if the BIR will adjust or reduce its 2017 target depending on the fate of the comprehensive tax reform program in Congress, Dulay said, "We will try to cope up with the target regardless of the tax reform package." Now pending in Congress, the tax reform package proposed by the Department of Finance seeks to reduce both the pers onal

and corporate income taxes while imposing higher and additional excise taxes on transport and fuel products. "If the tax reform package is passed then we will ask our tax administrators to implement the collection process involving that tax reform law," Duly said.

The Bureau of Internal Revenue said Tuesday it was hiring as many as 11,000 employees this year to improve its tax collection efforts. The BIR is also urging Congress to effectively lift salary caps by exempting the agency from the Salary Standardization Law, Commissioner Cesar Dulay said. Dulay said the BIR's current 9,000 employees are handling the workload of 21,000 people. Unattractive

salaries make the BIR a "last option" for job seekers, said Jesus Clint Aranas from the agency's legal group. Entry-level accountants for example are paid only P14,000 in the agency, when they could be earning more elsewhere, he said. Dulay said the BIR would likely hit its P1.829-trillion collection target this year, with revenues up 15 percent in November and 5 percent in December. He said the BIR was

"bullish" on collections this year. Finance Secretary Carlos Dominguez is "non-committal" on proposals to declare a tax amnesty. Agriculture Secretary Emmanuel F. Piñol said legislation to impose a two-tiered tax system on cigarettes will bring hardship to

tobacco farmers who are still reeling from the previous tax hike. “The DA (Department of Agriculture) supports the position of a unified

tax scheme,” Mr. Piñol said in a text message over the weekend, adding that he will direct the National Tobacco Administration (NTA), one of its attached agencies, to explain its position. Mr. Piñol was reacting to reports that the NTA had expressed support for House Bill 4144, which seeks to impose a higher sin tax on cigarettes and amend provisions of the Republic Act of 10351 or the Sin Tax Reform Law of

2012. Last week, a group of tobacco farmers called on the Senate to consider the effects of the said bill. “Our position is that we hope the old law is maintained without adding the new tax from 4144. We want the old law to mature before they make another one. They already are taxing cigarettes a lot,” said Philippine Tobacco Growers Association (PTGA), Inc. President Saturnino C. Dis tor in a phone interview

last week. “We are affected because every time cigarette prices rise, demand falls,” Mr. Distor added. In a petition published in a newspaper last week, the PTGA, with the Federation of Free Farmers (FFF) said that revenue the government derived from tobacco hit P100 billion in 2015, from P32 billion recorded in 2012. This, according to the farmer groups, has the tobacco sector “giving more than our

fair share” as it accounts for around two-thirds of total sin tax collections. Data from the NTA, as cited by the groups, also showed that local tobacco production dropped to 51.95 million kilograms in 2015, down 19.81% from 2012 levels. Mr. Distor also said Congress is trying to pass House Bill 4144 without due consultation with farmers. “We were never consulted. I only found out about the bill on second reading,”

Mr. Distor added. Under HB 4144, packs of cigarettes will be taxed P32 or P36 depending on price, with a 5% increase in tax every year. Meanwhile, the current Sin Tax Reform Law of 2012, which took effect in 2013, provides that packs of cigarettes, regardless of net retail price, will be taxed at a single rate of P30.00 with an annual 4% upward adjustment thereafter. ABS party-list representative Eugene

Michael B. De Vera who filed the measure said that lawmakers had to “strike a balance” between the need to discourage cigarette smoking, raise government revenue, and look after the welfare of the tobacco industry. Mr. De Vera also noted that under Republic Act 7171 and Republic Act. 8240, tobacco planters have a 15% share out of the collection of the tobacco excise taxes. “So any increase in

tobacco excise taxes benefits the tobacco planters,” Mr. De Vera said in a text message last week.

The more than two million jobs created last year will help sustain a gross domestic product (GDP) growth of at least 7-percent in the medium term such that the Philippines would be able to entice more foreign investors, according to Metrobank Group’s Firs t

Metro Investment Corp. (FMIC). “Latest economic data released by the government indicate that the Philippine economy is firmly on track along a 7 percent or higher growth path,” FMIC said in its January 2017 The Market Call report prepared jointly with the University of Asia and the Pacific capital market research. For instance, “the 2.1 million new jobs in 2016 will likely support the trend of 1.1 million Filipinos

annually moving out of poverty between 2012 and 2015 into 2016 and beyond,” FMIC said. “This, together with higher peso value for OFW remittances, will ensure a solid base of 7 percent and above-growth in consumer spending, which accounts for more than 70 percent of GDP,” it explained. This year, the government targets GDP growth of 6.5-7.5 percent before further expanding by 7-8 percent annually next

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year until 2022. The government’s target for 2016 was 6-7 percent and economist polled by the Inquirer last week said they expected full -year GDP expansion to hit the higher end of the target. The government will announce the fourth-quarter as well as full-year 2016

economic performance on Thursday. FMIC nonetheless said that “investment spending should remain as the main growth driver as we expect continued double-digit growth in capital goods imports, similar to the construction sector.” FMIC said it expected the construction industry to be buoyed up by aggressive infrastructure spending by the government and private residential and commercial construction that

have shown a recent pick-up. For 2017, the Duterte administration has programmed to spend P850 billion or 5.3 percent of the GDP on hard infrastructure, en route to bringing the infrastructure spending-to-GDP ratio to more than 7 percent by 2022. Given the plan to ramp up infrastructure spending, FMIC said foreign direct investments (FDIs) would resume to take a faster pace in 2017 as Philippine economic

numbers continue to impress foreign investors, especially the Japanese, Chinese, South Koreans and Taiwanese. “These Asian investors will offset any slowdown of US and eurozone [including UK] investments should they continue to focus on non-economic issues,” FMIC added. The government targets to generate $7 billion in FDIs this year. The latest Bangko Sentral ng Pilipinas data showed that FDI inflows

from January to October last year reached $6.22 billion. Separately, UK-based Oxford Economics said it expected the Philippine economy to have had expanded by 6.9 percent last year “largely on the back of robust domestic demand—private consumption and investments were particularly strong this year,” said Beatrice Tanjangco, its country economist for the Philippines. But for this year, Tanjangco said

Oxford Economics forecast GDP growth to exceed 6 percent, but not necessarily reach 6.5-7.5 percent. “The absence of external stimuli such as an election should entail more moderated growth,” Tanjangco explained. “We hesitate making further revisions to our forecast upward on account of the uncertainty expected in 2017, and the expectation of further tightening of monetary conditions around the world

as well as potentially slower global trade. Private consumption is expected to remain robust and some stimulus from the government is expected as they roll out an impressive infrastructure program, but delays on projects might hold-off the latter’s upside risk.” Tanjangco nonetheless pointed out that at this point, it would be good to note that growth above 6 percent would still put the Philippine economy well

above its peers in the region as it was still quite strong. As for French financial firm Natixis, economist Trinh Nguyen said they expected fourth-quarter economic expansion to have had slowed to 6.5 percent year-on-year compared with the third quarter’s better-than-expected 7.1 percent due to “a widened trade deficit and slower investment.”

The European Chamber of Commerce of the Philippines (ECCP) said that the new Investment Priorities Plan (IPP) will help

address certain “pressing issues” on the investment process, given the high cost of doing business here compared to other

ASEAN countries. ECCP President Guenter Taus outlined specific concerns that need to be addressed to improve business conditions in the Philippines, noting how preferred incentives of the IPP 2017-2019 reflect similar priorities of the business chamber. The IPP 2017-2019 is awaiting the approval of President Rodrigo R. Duterte. Submitted to Malacañang in late December, the IPP aims to make development

inclusive, providing incentives intended to drive progress across regions. “We are encouraged seeing the IPP and its provisions, showing resolute commitment to encourage and bring in investors to the Philippines,” he said in an e-mail to BusinessWorld last week. Commenting on the final copy of the draft, Mr. Taus cited the need to address issues in certain key sectors like telecommunications, construction,

infrastructure development, climate change and energy efficiency. “In the area of telecommunications, the opening up of this sector to more industry players as well as multinational prospects is much needed as this will help provide consumers with fast, reliable and stable internet at competitive price,” he said. Among the preferred activities listed under the new IPP are strategic services. These cover a wide variety of

services from the design of integrated circuits to state-of-the-art engineering, procurement and construction. Under strategic services, incentives will be given to “new players” that establish connectivity for fixed and mobile broadband services. “Only new players may qualify for registration,” the IPP read. PLDT, Inc. and Globe Telecom, Inc. -- which are in the middle of their own expansion plans -- currently

dominate the market. The government has been looking for a third player to challenge the duopoly and possibly make telco services more affordable. Apart from being named a priority in the new IPP, the infrastructure industry could attract more investment if it eliminates a rule by the Philippine Contractors Accreditation Board (PCAB) that currently favors domestic contractors over foreign ones, in terms of the

flexibility of their licensing schemes. “With regard to construction, PCAB issue must be addressed and abolition (of the requirement that foreign firms be licensed separately for each project) would probably encourage much needed investment in needed technologies in order to guarantee that necessary infrastructure projects are being realized,” he said. “We also believe tourism is one of the most important

sectors with the highest potential to create inclusive growth, through employment generation and economic development in remote areas across the archipelago. However, much infrastructure development is badly needed to achieve the ambitious goal of achieving 6.5 million tourist arrivals this year.” He also said that the government should be true to its word and ratify the Paris agreement in mid-2017, which

would formally include the Philippines in the global movement to cut down carbon emissions in order to lessen the risk of climate change. Mr. Taus added that energy efficiency technologies, which are among preferred activities under the new IPP, could be further incentivized through an expanded list of technologies exempted from import duties for PEZA locators; and expansion of the measure nationwide level to

cover all manufacturing activities, even those that are not located in PEZA zones. He also said noted the need to ensure institutionalizing energy efficiency and conservation and the nationwide coverage of incentives for the installation of technology in support of energy efficiency and conservation. “Furthermore, we are of the opinion that the IPP incentives and penalties need to be in line with the energy

efficiency bills supported by the Department of Energy (DoE) and developed during the 16th Congress,” he said. The European Union is one of the largest investors in the Philippines. Net foreign direct investment (FDI) rose 86.98% in 2015 to $330.64 million, according to central bank data. However, preliminary figures show that net FDI fell 31.23% in the first 10 months of 2016 to $142.19 million. Presidential

Spokesperson Ernesto C. Abella said in a text message yesterday that the process to approve the IPP is “ongoing.” He later clarified that the “Philippine Development Plan must be approved first.” If approved, the 2017-2019 IPP will count as “preferred” investment the following areas: manufacturing including agri-processing; agriculture, fishery and forestry; strategic services; infrastructure and logistics including

local government unit public-private partnerships; health care services including drug rehabilitation; mass housing; inclusive business models; environment and climate change; innovation drivers; and energy.

The Philippines has made the biggest jump ahead of the planned banking sector integration across Southeast Asia, Fitch Ratings said, even as it noted that moves in the region are still far from hitting the goal of a unified financial framework in the next three

years. “Member countries of the Association of Southeast Asian Nations (ASEAN) have made slow and uneven progress toward regional banking-sector integration,” the debt watcher said in a statement sent yesterday. The credit rater was referring to the planned ASEAN Banking Integration Framework (ABIF) that is programmed to be in place by 2020. The ABIF, first endorsed in December 2014, seeks to

allow qualified ASEAN banks (QABs) to “operate freely” across member economies. Under the framework, the Philippines and the rest of the so-called ASEAN-5 -- Indonesia, Malaysia, Singapore and Thailand -- should have at least one bilateral deal signed by 2018 before full integration two years later. But Fitch believes progress towards integration will likely be slow, saying: “Further moves are likely to remain

gradual and full regional financial integration looks like a very distant goal.” The Philippines has made notable adjustments in line with the integration plan, Fitch said, but noted that, region-wide, the developments have been “slow to get off the ground.” Fitch cited the passage of Republic Act No. 10641 in 2014, which liberalized the local banking sector by lifting the previous limit of 10 foreign banks operating in the

Philippines at any given time. “The Philippines has taken the biggest steps toward banking-sector liberalization, removing the cap on foreign ownership of banks in 2014,” the statement read, noting that local lenders have remained generally healthy. “The larger Philippine

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banks have sufficient access to capital and have little immediate need to sell major stakes to foreign investors, but foreign banks have established their own subsidiaries and branches in the country,” the debt watcher added. Nine foreign banks have secured the approval

from the Bangko Sentral ng Pilipinas (BSP) in the last two years to do business here, with at least six more offshore lenders setting sights on the Philippines, BSP Governor Amando M. Tetangco, Jr. said in a recent speech. In March 2016, Mr. Tetangco signed a bilateral deal with Bank Negara Malaysia former Governor Zeti Akhtar Aziz -- the Philippines’ first agreement under the ABIF -- with the goal of allowing

three QABs from either country to operate in the other jurisdiction. The BSP chief said talks with the Bank of Thailand and Otoritas Jasa Keuangan of Indonesia are also under way with the goal of working them out within this semester, right before Mr. Tetangco ends his second term as central bank governor on July 2. Fitch said that the Philippines stands to gain from the entry of new foreign players, as it

opens up new sources of funding. “Entry by foreign banks is likely to support investment and economic growth in the near term by helping to fund much-needed infrastructure investment.” The Philippine government plans to spend “aggressively” on infrastructure up to 2022 in a bid to help spur economic growth to as fast as 8% annually from this year’s 6.5-7.5% target and slash poverty rate to 16% from 21.6% in

2015.

Security Bank Corp. (Security Bank) is looking to sustain the growth in its lending business at around 20% this year to accommodate borrowers in key economic sectors, according to the bank’s chief executive, with the government also focused on

spending on the country’s infrastructure. “Security Bank will be looking to sustain its loan growth at around mid-20% as we continue to support key sectors such as power, infrastructure, food manufacturing, wholesale and retail trade, among others,” Alfonso L. Salcedo, Jr., president and chief executive officer of Security Bank, told BusinessWorld in an e-mail when asked for the bank’s growth prospects in

terms of its lending activities. The bank’s total loans and receivables in the January to September period last year reached P268.2 billion, up 24% from the P216.9 billion raked in the same period in 2015. Both of the listed lender’s corporate and commercial loans in the first nine months ended September 2016 rose 20% year on year, while the bank’s retail lending business accelerated during the period on the back

of a growth of more than 80% year on year in both its auto and home loans. “Infrastructure spending by the government will be a bright spot in 2017. This will have sizeable multiplier effects on our economy. As such, the banking industry is looking forward to another vibrant year,” Mr. Salcedo noted. The current administration under President Rodrigo R. Duterte is looking to allot as much as P9 trillion over the

next six years for government-funded infrastructure projects. Mr. Salcedo added that Security Bank’s collaboration with Bank of Tokyo-Mitsubishi UFJ Ltd. (BTMU) “will play a key role in supporting project finance deals in the country in the medium term.” Security Bank secured the central bank’s approval of its partnership with BTMU last Feb. 24, 2016. Last April 1, the country’s sixth largest lender in asset

terms completed its partnership deal with BTMU, with Security Bank receiving the P36.9 billion capital infusion from Japan’s largest bank that gave it a 20% stake in the local lender. In the third quarter of 2016, the bank’s capital stood at P96 billion, with its total capital adequacy ratio at 21.0%, while its common equity Tier 1 ratio was at 18.4%.

Aboitiz-led Union Bank of the Philippines, Inc. (UnionBank) expects its overall growth for 2016 to beat 2015’s performance with

the lender’s bottom line in the first nine months of last year positioned to be the bank’s biggest leap, its top executive sa id. “As of the third quarter, we are poised to deliver the highest income that we’ve ever achieved,” Edwin R. Bautista, UnionBank president and chief operating officer, told BusinessWorld in an interview with asked for his overall growth prospects for the bank last year. The country’s tenth

largest bank in asset terms as of end-June 2016 saw a triple digit growth in its net income in the nine months ended September last year at P8.1 billion, soaring by 122% from the P3.7 billion recorded in the same period of 2015, driven by the lender’s robust customer acquisition. Mr. Bautista said 2016 “would be a very good year” for the bank in terms of income compared to its performance in 2015. “Third quarter pa

lang (As of the third quarter) we already exceeded the whole year of 2015, so it can only get better,” Mr. Bautista said. The listed lender raked in P6 billion in net income at end-2015, slipping by 28.4% from the P8.4 billion it booked in 2014 on the back of more expenses that year amid an industry-wide decline in trading gains, even though its core businesses grew during the period, according to the bank’s

annual report uploaded on its Web site. Asked how UnionBank’s fourth-quarter performance was, Mr. Bautista said: “We haven’t announced it, but there’s no reason why it will be worse than the first three quarters [of 2016.]” Asked for the ratio of the bank’s client portfolio, Mr. Bautista said that more than half of UnionBank’s customer revenues is comprised of retail customers while the rest are made

up of commercial and corporate. He noted that the bank is “strong” in all three segments, but noted that the consumer segment was its “biggest source of business from a revenue standpoint” for 2016 as it occupied a large margin last year.

The Ayala Foundation announced Tuesday it was helping build a drug rehabilitation center in Marawi City, becoming the latest conglomerate to support President Rodrigo Duterte's anti-narcotics campaign. The 70-bed facility called Siyapen, the Maranao word for "care," will be built over four months until April this year. Located near a mosque, the center will enable easy access to spiritual

counselling, the foundation said in a statement. Ayala Foundation chairman Jaime Augusto Zobel de Ayala said the firm was "responding to the national government's call for private sector support in addressing the drug problem." Ayala Corp. rivals Megaworld and DMCI have helped fund construction of a rehabilitation center for up to 10,000 drug dependents, which opened at an army reservation in Nueva Ecija

province in November. San Miguel Corp. President Ramon Ang has also pledged financing for future centers, as well as a hospital for

soldiers. The President met with the country's tycoons over dinner in Malacanang last week to clear "wrong perceptions" on his war on drugs.

With another prospective acquisition, the Ayala group indicated that it is further reinforcing its investment platform on renewable

energy (RE) ventures. According to AC Energy Holdings President John Eric T. Francia, the company is currently negotiating for a new deal on RE acquisition, which it targets to conclude “in the next few weeks.” Expanding the company’s RE portfolio, he qualified, is part of the reinforcement plans on their investment path for clean energy technologies, primarily arrays of renewable energy developments that

could either be wind, hydro, or other technologies. “We’re still on active lookout for potential acquisitions…we’re just finalizing stuff and you’ll know it soon,” he told reporters. Francia was also asked on what is the specific technology for this targeted asset buy-in, but he was tight-lipped when pressed by media for details. Notably, the latest announcement from the company on this sphere is the 75-megawatt

wind farm development in South Sulawesi, Indonesia – entailing project funding of $150 million. The company subsequently announced that it opted out from prospective hydropower ventures that it should have carried to implementation phases with partner Sta Clara International Corporation. Moving headway with its targeted 2,000MW capacity by year 2020, the Ayala group has unyieldingly s et that it

will be pursuing developments both on conventional and RE technologies. The company has its own portfolio of wind power projects in the country – the 52-MW Bangui and 81MW Caparispisan wind farms in Ilocos Norte. Conversely, the company is now advancing to various construction phases its coal-fired power projects that it had cast on blueprint with GNPower. And particularly for its Dinginin power project

in Bataan, this is targeted for completion with a new partner in Aboitiz Group.

STI Education Services Group, Inc. (STI ESG), a subsidiary of listed STI Holdings, is planning to raise P3 billion from its proposed

maiden bond issue which has been given the second highest Issue Credit Rating of PRS Aa by Philippine Rating Services Corporation (PhilRatings). Obligations rated PRS Aa are of high quality and are subject to very low credit risk. The obligor’s capacity to meet its financial commitment on the obligation is extremely strong. PhilRatings has likewise assigned a Rating Outlook of Stable to STI

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ESG’s credit rating for this proposed debt issue. A Stable Outlook means the rating is likely to be maintained in the next 12 months. PhilRatings said STI ESG’s rating reflects the firm’s ample cash flows, with minimal reliance on debt, and the stable demand for its

business. It also considered STI ESG’s position as an established educational institution with the ability to adapt to shifts in the industry and its consistently improving revenues. STI ESG operates educational institutions which provide Senior High School (SHS), tertiary, lower tertiary non-degree and post-graduate programs. It was one of the pioneer schools in the Philippines which allowed students and even

working professionals to learn more about Information Technology or IT. At present, STI ESG has 32 colleges that are company-owned and 32 colleges that are franchised. Apart from colleges, STI ESG likewise operates 12 Educational Centers (ECs). With the recent implementation of the SHS Program in 2016, STI ESG was able to capitalize on its nationwide presence to be able to adopt and implement

the SHS Program. To date, all 76 STI schools have been granted permits to offer the SHS program by the Department of Education (DepEd). In terms of financial performance, STI ESG’s consolidated revenues were on a consistent upward trend historically. From P1.6 billion in 2012, total revenues went up to P2.4 billion in 2016. The bulk of revenues were accounted for by tuition and other school fees,

comprising 80.7 percent to 87 percent of total.

ASIA-PACIFIC

Japanese stocks declined on Tuesday as U.S. President Donald Trump's protectionist policy stance rattled investors while banks led the

losses on sliding U.S. and global bond yields. The Nikkei average fell 0.6 percent to 18,787.99 while the broader Topix dropped 0.6

percent to 1,506.33. Bank shares shed 2.3 percent, posting the biggest fall among the Tokyo Stock Exchange's 33 industry subindexes, while exporters also were knocked by the yen's rise to near two-month highs.

China's main share index ended at a fresh two-week high on Tuesday, but pared some of its earlier gains as small-cap stocks

weighed. Trading remained thin as investors were reluctant to stake out fresh positions ahead of the country's biggest holiday starting this week. The blue-chip CSI300 index was unchanged at 3,364.45 points, while the Shanghai Composite Index gained 0.2 percent to 3,142.55 points. Sentiment was also affected by renewed debt worries after Beijing reported a significantly larger fiscal deficit in 2016. The

fiscal deficit was larger than the government targeted, as the world's second-largest economy has relied on government spending to stabilise economic growth in the past year, raising concerns about China's mounting debt load. Most sectors remained largely unchanged. Gains were led by cyclical stocks, in particular banks and energy shares.

Hong Kong stocks rose on Tuesday, led by a solid resources sector as a weaker U.S currency stemming from President Donald

Trump's protectionist stance reduces costs to firms for raw materials imports. An index tracking resources stocks advanced 4.1

percent. Mainland miners also put up a solid performance after futures contracts of coke rallied around 3.7 percent at the close. The benchmark Hang Seng index added 0.2 percent, to 22,949.86 points, while the Hong Kong China Enterprises Index gained 0.3 percent, to 9,759.26 points. Shares were also bolstered by its earnings upgrade with the company forecasting interim profit to rise over 45 percent.

Linus Yip, strategist at First Shanghai Securities Ltd, said that Trump's protectionist stance and consequent lowering of the dollar are lending some support to resource stocks, but he remained cautious about the hurdles on capital inflows to Hong Kong from an expected uptick in U.S.

Most Southeast Asian stock markets eked out gains on Tuesday, as investors weighed the possible effects of U.S. President

Donald Trump formally withdrawing the United States from the Trans-Pacific Partnership (TPP) trade deal. Fulfilling a campaign

pledge, Trump signed an executive order pulling the U.S. out of the 12-nation TPP, distancing it from its Asian allies, even as China's influence in the region rises. Trump, who wants to boost U.S. manufacturing, said he would like to cut corporate taxes, but warned American manufacturers of penalties if they moved production outside the country. Singapore rose as much as 0.5 percent, hitt ing a 14-

month high, with financials accounting for more than half of the gains. The financial sector was boosted by the city state's biggest lender by market-cap, DBS Group Holdings, which climbed as much as 1.7 percent to touch a 17-month high. Singapore's all-items consumer price index (CPI) in December rose 0.2 percent from a year earlier, official data showed on Monday. The consumer price index rose for the first

time in more than two years, according to Thomson Reuters Datastream. In other markets, Vietnam edged higher, rising as much as 0.6 percent to hit a 16-week high, driven by gains in financials and utilities. Indonesia rose more than half a percent with financials and telecom stocks leading the gains.

Oil climbed on Tuesday as a weaker U.S. dollar and production cuts announced by OPEC and other producers buoyed the

market, but an increase in drilling activity in the United States is likely to keep a lid on prices. Brent crude, the international

benchmark for oil prices, rose 30 cents to $55.53 a barrel by 0147 GMT. U.S. West Texas Intermediate (WTI) crude futures added 27 cents to $53.02 a barrel. The dollar wallowed near seven-week lows, pressured by concerns about the impact of U.S. President Donald Trump's protectionist trade stance. A weaker dollar makes greenback-priced commodities cheaper for importers holding other currencies. Ministers

representing members of the Organization of the Petroleum Exporting Countries and non-OPEC producers said at a meeting in Vienna on Sunday that of the almost 1.8 million barrels per day (bpd) they had agreed to remove from the market starting on Jan. 1, 1.5 million bpd had already been cut.Bernstein Energy said global oil inventories declined by 24 million barrels to 5.7 billion barrels in the fourth quarter of

last year from the previous quarter. Still, this amounts to about 60 days of world oi l consumption. Iraq's oil minister said on Monday that most oil majors working on its territory were participating in oil output reductions agreed as part of the deal. The reduction in supply by oil majors is being offset by an increase in U.S. production. U.S. drillers added the most rigs in nearly four years, data from energy services

company Baker Hughes showed on Friday, extending an eight-month drilling recovery. The country's oil production has risen by more than 6 percent since mid-2016, though it remains 7 percent below the 2015 peak. It is back to levels seen in late 2014, when strong U.S. crude output contributed to a crash in oil prices.

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Australia and New Zealand said on Tuesday they hope to salvage the Trans-Pacific Partnership (TPP) by encouraging China and

other Asian nations to join the trade pact after US President Donald Trump kept his promise to pull out of the accord. The TPP, which the United States had signed but not ratified, was a pillar of former US President Barack Obama's pivot to Asia. Japanese Prime Minister Shinzo Abe has touted it as an engine of economic reform, as well as a counter-weight to a rising China, which is not a TPP

member. Fulfilling a campaign pledge Trump signed an executive order in the Oval Office on Monday pul ling the United States out of the 2015 TPP agreement and distancing the United States from its Asian allies. Australian Prime Minister Malcolm Turnbull said he had held discussions with Abe, New Zealand Prime Minister Bill English and Singaporean Prime Minister Lee Hsien Loong overnight about the

possibility of proceeding with the TPP without the United States. "Losing the United States from the TPP is a big loss, there is no question about that," Turnbull told reporters in Canberra on Tuesday. "But we are not about to walk away ... certainly there is potential for China to join the TPP." Obama framed TPP without China in an effort to write Asia's trade rules before Beijing could, establishing US economic

leadership in the region as part of his "pivot to Asia." China has proposed a counter pact, the Free Trade Area of the Asia Pacific (FTAAP) and has championed the Southeast Asian-backed Regional Comprehensive Economic Partnership (RCEP). The TTP, which has been five years in the making, requires ratification by at least six countries accounting for 85 percent of the combined gross domestic product of the

member nations. Australia helped open the possibility of China, the world's top exporter, joining a revised deal. "The original architecture was to enable other countries to join," Australian Trade Minister Steven Ciobo told the Australian Broadcasting Corporation on Tuesday. "Certainly I know that Indonesia has expressed interest and there would be scope for China if we are able to reformulate it." Japan has led

the push for the partnership, which also includes Brunei, Canada, Chile, Malaysia, Mexico, Peru and Vietnam. "There is no change to our view that free trade is the source of economic growth," Japanese Economy Minister Nobuteru Ishihara told reporters. When asked whether Japan would be open to negotiating a bilateral trade pact with the United States, Ishihara said it was still uncertain whether US trade

officials would start negotiating for such deals. Trump took office as the 45th president of the United States on Friday and pledged to end what he called an "American carnage" of rusted factories and crime in an inaugural address that was a populist and nationalis t rallying cry. He vowed to bring jobs back by renegotiating what he called bad multilateral trade deals in favor of bilateral deals, with his first move

scrapping the TPP. The US president made comments critical of Japan's auto exports to the United States and the dearth of US auto exports to Japan, which poses a threat to Japan's influential car industry. "We have no tariffs on US cars," Trade Minister Hiroshige Seko said on Tuesday. "In addition, we do not take any other discriminatory measures against US car imports." Australia's Turnbull said there

was still a possibility "that US policy could change over time on this, as it has done on other trade deals," noting some Republican Party members of congress have been "strong supporters." New Zealand trade minister Todd McClay said he had talked with a number of TPP-member ministers when he attended the World Economic Forum in Davos last week and he expected they would meet over the coming

months. "The agreement still has value as a FTA (Free Trade Agreement) with the other countries involved," McClay said in an emailed statement to Reuters.

Japanese manufacturing activity expanded in January at the fastest pace in almost three years as export orders surged, suggesting that overseas demand is not as weak as some economists and business leaders had feared. The Markit/Nikkei Japan Flash Manufacturing Purchasing Managers Index (PMI) rose to a seasonally adjusted 52.8 in January from a final 52.4 in the previous

month. The index remained above the 50 threshold that separates expansion from contraction for the third consecutive month and showed that activity expanded at the fastest since March 2014. "The Japanese manufacturing sector started the New Year on a strong footing," said Amy Brownbill, economist at IHS Markit, which compiles the survey. "The rise in total incoming new orders was driven in part by a

sharp increase in international demand, as new export orders rose at the quickest rate in over a year." The preliminary index for new export orders rose to 53.2 from a final 51.1 in December, indicating the fastest gain in 14 months. The flash index for new orders, which measures both domestic and external demand, rose to 54.1 from 53.2 in the previous month, the highest in 13 months. Some economists have

expressed concern about Japan's economic outlook because its exports could suffer if U.S. Pres ident Donald Trump adopts protectionist trade policies. Trump took office only last week, and there is still a lot of uncertainty about the specific economic policies he will pursue. The flash PMI index offers evidence that global trade is picking up, which is a benefit for Japan's export-focused economy.

South Korea's consumer confidence fell to 93.3 in January of 2017 from a downwardly revised 94.1 in the previous month. It is the

lowest value since March of 2009, as consumers saw their current living conditions (87 compared to 89 in December) and future living

standards (93 from 91) worsening due to political uncertainties after President Park scandal. Also, consumers were more pessimistic about current domestic economic conditions (51 from 55) while became more optimistic for their future outlook (67 from 65).

REST OF THE WORLD

European stocks rose as commodity producers led an advance in cyclical shares, while those deemed more immune to the economy trailed. The Stoxx Europe 600 Index added 0.3 percent at the close, with its gauge of miners climbing to the highest level since July 2014. The FTSE 100 Index closed little changed, with the pound falling as investors bet a Supreme Court defeat for U.K. Prime

Minister Theresa May won’t derail the start of a process to leave the European Union. The S&P 500 and Nasdaq set record highs on Tuesday in a broad rally led by financial and technology stocks. The advance comes

as quarterly earnings season heats up and investors become optimistic that clarity on President Donald Trump's economic policies will be forthcoming. Trump signed two executive orders on Tuesday to move forward with construction of the controversial Keystone XL and Dakota Access oil pipelines, rolling back key Obama administration environmental actions in favor of expanding energy infrastructure. He

also met with chief executives of the Big Three U.S. automakers to push for more cars to be built in the United States. Profi ts of S&P 500 companies are estimated to have risen 6.7 percent in the latest quarter, marking the strongest growth in two years, according to Thomson Reuters I/B/E/S. Despite stalling in recent weeks, the post-election rally has contributed to somewhat lofty valuations. The S&P 500 is

trading at about 17 times forward 12-month earnings, according to Thomson Reuters Datastream, compared with the 10-year median of

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14.2. The Dow Jones Industrial Average rose 112.86 points, or 0.57 percent, to 19,912.71, the S&P 500 gained 14.87 points, or 0.66 percent, to 2,280.07 and the Nasdaq Composite added 48.01 points, or 0.86 percent, to 5,600.96. Advancing issues outnumbered

declining ones on the NYSE by a 2.84-to-1 ratio; on Nasdaq, a 2.56-to-1 ratio favored advancers. About 6.96 billion shares changed hands in U.S. exchanges, above the 6.16 billion daily average over the last 20 sessions.

The European Union Parliament's chief Brexit negotiator said Britain's decision to make a clean break from the EU was an opportunity to reform Europe and avoid a further breakdown in ties between its remaining member states. Former Belgian Prime Minister and member of the European Parliament Guy Verhofstadt also said the election of U.S. President Donald Trump, and what he

views as Washington's move toward more protectionism, is a wake-up call for the EU. "The Brexit discussion is a good opportunity not only to discuss and negotiate a new agreement, a new partnership with Britain, but also to fix that now it is time to have a real government in Europe," Verhofstadt said in an interview with Reuters in New York while promoting his new book: "Europe's Last Chance." In June, Britons

voted 52-48 percent to leave the EU, triggering a change of government leadership and the appointment of Theresa May as Prime Minister. On Jan. 17 May said Britain will leave the EU's single market when it exits the European Union. She wants to start the process by the end of March. However, Britain's Supreme Court will rule on Jan. 24 on whether parliament must first agree to triggering Article 50, which

formally starts Britain's two-year divorce process. Verhofstadt said it was "far too early" to speculate on the impact for Britain, or the City of London, Europe's biggest financial center. "It is clear the transition needs to be limited in time. I have seen temporary things become eternal," Verhofstadt said, adding: "What is far more important is a clear triggering of 50, a clear proposal by the British government and

how they see the partnership in the future." "We have to see if they ask for a free trade agreement. It could be something different," he said. Verhofstadt is working to get Parliament a seat at the negotiating table rather than be consulted before and after each round of talks. "We have to conclude before the European elections of 2019," he said, reiterating that Britain will not be able to choose policies allowing it

to fare better by being outside of the EU instead of being a full member. Rather than retreat and fracture, Europe should create a political and defense union, and unify its common market across more industries and service sectors, Verhofstadt said. "It is a wake-up call," he said, driven by "Brexit, and amplified by the elections in the United States."

U.S. home resales fell more than expected in December as the supply of houses on the market dropped to levels last seen in

1999, but the housing market recovery remained intact against the backdrop of a tightening labor market. The National Association

of Realtors said on Tuesday existing home sales decreased 2.8 percent to a seasonally adjusted annual rate of 5.49 million units. In addition to the lack of properties to purchase, rising home prices and mortgage rates also likely sidelined some buyers last month. The drop in sales followed three straight months of increases and probably does not signal impending housing weakness, with the labor mar ket near

full employment and the economy strengthening. November's existing sales pace was revised up to 5.65 million units, which was the highest since February 2007, from the previously reported 5.61 million units. Economists had forecast sales declining 1.1 percent to a 5.52 million-unit pace in December. Sales increased 3.8 percent to 5.45 million units in 2016, the highest since 2006 when the housing market

peaked. Last month, the number of homes on the market fell 10.8 percent from November to 1.65 million units, the lowest level since December 1999. Supply was down 6.3 percent from a year ago and has now declined for 19 straight months on a year-on-year basis. The dearth of inventory amid rising household formation could put pressure on homebuilders to ramp up construction. Homebuilding is currently

running just above a 1.2 million-unit rate. The NAR estimates housing starts and completions should be in a 1.5 million to 1.6 million range to alleviate the chronic shortage. At the same time, the fixed 30-year mortgage rate increased 43 basis points in December from November to an average of 4.20 percent, according to data from mortgage finance firm Freddie Mac. That was the highest since

April 2014. Mortgage rates could rise further as the Federal Reserve has forecast three rate hikes this year. The U.S. central bank raised its benchmark overnight interest rate in December by 25 basis points to a range of 0.50 percent to 0.75 percent.

U.S. President Donald Trump on Tuesday signed an executive order directing that the permitting process and regulatory burden for domestic manufacturers should be streamlined to reduce what he called "the incredibly cumbersome, long, horrible" process. "Sometimes it takes many, many years and we don’t want that to happen. If it's a 'no,' we'll get a quick 'no.' If it's a 'yes,' it's like, let's start

building," he said. Among a total of five actions signed by Trump in an Oval Office ceremony, he also signed orders to expedi te environmental review and approval of high-priority infrastructure projects, to accelerate the Keystone XL and Dakota Access pipeline projects and to decree that any pipelines intended for the United States should be built in the country. He said: "We will build our own

pipeline. We will build our own pipes, as we used to in the old days."

Counterfeit Detection – 04 February 2017

Seven Basic Quality Tools – 04 February 2017

RA. 10173: Data Privacy Act – Aligning Information Security Compliance to ISO 27001:2013 – 11 February 2017

BSP Cir. No. 706, AMLA Law, RA 10365 and the AML Risk Rating System – 17 February 2017

ISO 22316: Organizational Resilience - Moving from Continuity to Resiliency – 18 February 2017

Solving Problems in the Workplace: Creative Problem Solving & Decision Making – 23 & 24 February 2017

Excel Training for Bankers – 23 & 24 February 2017

Accounting for Non-Accountants with Analysis of Financial Statements – 03 &

04 March 2017

EQ and Leadership for Bankers – 17 March 2017

Compliance with Operational Risk Management Guidelines – 17 March 2017

Related Party Transactions – 17 March 2017

Signature Verification & Forgery Detection – 18 March 2017

Understanding Bank Regulations for Bank Products – 18 & 25 March 2017

Training the Bank Trainers – 24 & 25 March 2017

Fraud Risk Management – 25 March 2017

Establishing Internal Controls per BSP Cir. No. 871 – SEMINAR TWO – 25

March 2017

IT Security and Auditing – 8 April 2017

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

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

JANUARY 15-31

19 Irene S. Quintana - UCPB

23 Gloria C. Sinlao - Sumitomo Mitsui

23 Rebecca S. Torres - BDO

24 Thelma M. Idaba - Northpoint Development

27 Marilyn G. Yuchenkang - ChinaBank

29 Alex V. Buenaventura - One Network

BENCHMARK BOND - is a bond that provides a standard against which the performance of other

bonds can be measured. Government bonds are almost always used as benchmark bonds. Also

referred to as "benchmark issue" or "bellwether issue". More specifically, the benchmark is the latest

issue within a given maturity. For a comparison to be appropriate and useful, the benchmark and the

bond being measured against it should have a comparable liquidity, issue size and coupon.

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

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

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

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

DISCLOSURE: The BAIPHIL Market Watch (BMW) is for informational purposes only. The content of the BMW is sourced from third party websites and may be subject to change without notice. Although the information was compiled from sources believed to be reliable, no liability for any error or omission is accepted by BAIPHIL or any of its directors, officers or

employees, and BAIPHIL is not under any obligation to update or keep current this information