PH economic slowdown seen to persist through Q1 2021
The COVID-19 pandemic is likely to gnaw sharply on the Philippine economy until the first quarter of 2021 alongside a steeper global economic downturn and the tightening of global financing conditions, think tank Fitch Solutions said.
While Fitch Solutions does not expect an economic shock to the extent seen during the 2007-2008 global financial crisis, it said in a research note issued yesterday that this outbreak was likely to drag on the Philippine economy through the fourth quarter of this year and the first quarter of 2021.
Fitch Solutions thus sees the Philippine gross domestic product (GDP) coming in at its slowest pace since 2011. It has revised its Philippine GDP growth forecast this year to 4 percent from 6 percent, in line with downgrades to most other economies elsewhere in the world. The think tank noted how the Philippines would suffer from the COVID-19 pandemic through four channels: tourism, remittances, supply chain disruption and weakening of foreign direct investment (FDI) inflows.
“Indeed, tourism has all but stopped as of March, remittance flows will likely suffer given the global growth slowdown, supply chains have been affected across continents and FDI inflows will have dried up as businesses globally face short-term liquidity constraints,” Fitch Solutions said.
Asian shares advance after stimulus surge on Wall Street
BANGKOK — Shares advanced on Friday in Asia after Wall Street logged a third straight day of gains with the approaching congressional approval of a massive coronavirus relief bill.
Tokyo and Seoul jumped 1.2% and Shanghai added 0.6%, while stocks fell in Australia.
A man walks past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm in Tokyo Friday, March 27, 2020. Shares are mostly higher in Asia after stocks surged again on Wall Street with the approaching approval of a massive coronavirus relief bill by Congress. (AP Photo/Eugene Hoshiko)Wall Street appeared to shrug off miserable news on unemployment as the S&P 500 rose 6.2%, bringing its three-day rally to 17.6%. The Dow industrials have risen an even steeper 21.3% since Monday.Nearly 3.3 million Americans applied for unemployment benefits last week, easily shattering the prior record set in 1982, as layoffs and business shutdowns sweep across the country.Analysts said the market shot higher Thursday because the bad news on unemployment was expected. The gains earlier this week came as Capitol Hill and the Federal Reserve promised an astonishing amount of aid for the economy and markets, hoping to support them as the outbreak causes more businesses to shut down by the day.“There is no sugar coating these numbers — they are bad,” said Jamie Cox, managing partner for Harris Financial Group. “Markets have had several days to digest what everyone knew was coming; therefore, the market response to these numbers may differ than what people might expect.”Despite the big gains, the S&P 500 remains 22% below its February high and analysts expect more dire economic headlines, and market turbulence, in the days ahead.
Companies are also expected to report discouraging results in just a few weeks as earnings season begins. Very few have dared to issue forecasts capturing how big a hit the virus will inflict on their profits.
Late Wednesday, the Senate unanimously approved the $2.2 trillion plan, which includes direct payments to U.S. households and aid to hard-hit industries. The House of Representatives is expected to approve it Friday.
The prospect of a big financial shot in the arm for businesses and households helped offset some of the concerns about the steep job losses the economy is beginning to see due to the coronavirus.
It also reassured world markets.
BPI raises P33.9B from bond issue
Ayala-led Bank of the Philippine Islands (BPI) has raised P33.9 billion from a warmly-received bond offering that was completed before Metro Manila was locked down.
In a disclosure to the Philippine Stock Exchange on Friday, BPI said it had upsized the issuance by more than six times the base offer of P5 billion, due to strong demand from institutional investors as well as high-net-worth and retail clients.
The bonds – with a tenor of one and a half years and an interest rate of 4.05 percent per annum – have been issued and are now tradable on local fixed income platform Philippine Dealing & Exchange Corp. (PDEx).
“We thank our investors and clients who supported this bond offer despite the volatile market conditions caused by the COVID-19 situation. The issuance will help us deliver the financial services that our fellow Filipinos need during this difficult time,” said BPI treasurer Dino Gasmen.
BPI decided to close the offer period last March 6 or 11 days ahead of the original schedule on March 17 as the consolidated order book hit P42 billion despite being priced at the tightest end of the indicative pricing range.
The government locked down Metro Manila on March 15 and later on expanded the “community quarantine” to cover the whole of Luzon.
BPI Capital Corp. and ING Bank N.V., Manila Branch served as the joint lead arrangers of the bond offering. BPI Capital was sole selling agent, while ING was participating selling agent.
The bank’s offering was in line with BPI’s strategy to grow and diversify its funding sources.
PPA bans collection of additional port fees
MANILA, Philippines — The Philippine Ports Authority (PPA) has prohibited the collection of unauthorized additional port fees during the implementation of the enhanced community quarantine in Luzon.
PPA general manager Jay Santiago on Wednesday issued a memorandum preventing the imposition or collection of additional port charges and fees, including hazard fee, in the delivery of port services.
PPA advised all port stakeholders it has not granted any increase and additional port fees, cargo handling, pilotage, terminal and miscellaneous charges, including hazard fee, in its official port tariff following the enforcement of the enhanced community quarantine.
“Neither has PPA and its board granted such authority to impose additional charge or fee to any terminal operator, cargo handling operator, pilots and pilotage associations, private port operators, and other port service providers,” it said.
All port managers are directed to monitor the strict compliance of the issued notice and immediately stop the collection of unauthorized additional fees.
They are also instructed to report any violation of the order.
PPA said the memorandum was issued in response to a letter released by Lucena-based Quezon Harbor Pilots Association Inc. stating that it will be collecting P60,000 as additional pilots’ health hazard fee for every vessel they will be assisting in Quezon ports.
In its letter dated March 23, the pilots’ association in its letter dated March 23 said that pilots are exposed to the threat of COVID-19 and are considered as “front liners” in the port’s operation.They are also instructed to report any violation of the order.PPA said the memorandum was issued in response to a letter released by Lucena-based Quezon Harbor Pilots Association Inc. stating that it will be collecting P60,000 as additional pilots’ health hazard fee for every vessel they will be assisting in Quezon ports.In its letter dated March 23, the pilots’ association in its letter dated March 23 said that pilots are exposed to the threat of COVID-19 and are considered as “front liners” in the port’s operation.