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THE MORNING VIEW



News Briefs
July 17, 2019
Local Key Events
  • Semirara Mining and Power Corp (PSEI Ticker: SCC) has confirmed that the suspension on their coal trading activity has been put on hold by the Department of Energy (DoE) for a month or until the department has resolved their verified answer. This comes after the company requested for the DoE to lift the ban last week, which was imposed because of registration issues of one its buyers.
     
  • According to the Department of Transportation (DoT), the costs for the Mindanao Railway Project Phase 1 ballooned to P82.9 billion from an initial estimate of P35.9 billion. The Tagum-Davao-Digos alignment was assumed to have a flat terrain but was discovered to have a rolling terrain, requiring more infrastructure adjustments. The rail line will be temporarily downgraded to a single track and non-electric to speed up implementation. China is expected to finance up to 80-85% of the total project cost.
     
Local Indices
  • Local equities fell due to last-minute profit taking from Tuesday's 16-month high of 8,365.29. The PSEi closed at 8,263.57 (-1.21% DoD) with most sectors ending the day in the red. The mining & oil and financials sectors, meanwhile,  rose by 3.70% and 0.26%, respectively. Value turnover climbed to P10.49 billion, with net foreign buying increasing to P1.18 billion.
     
  • Local fixed income yields fell following the full awarding of 7-year Treasury bonds yesterday. Yields were driven down amid robust demand, with the Bureau of Treasury receiving bids totalling Php74.94 billion, over thrice the initial amount on offer. Yields fell 1.52 bps on average, led by the belly of the curve.
     
  • The Philippine Peso strengthened to an 18-month high, benefitting from hefty foreign inflows into the bullish stock market last Monday. The USD/PHP pair closed at 50.900 (-0.20% DoD).
US and Europe Indices
  • US equities retreated as Trump threatened tariffs on China. Investors hang onto expectations of a Fed rate cut despite strong retail sales, factory output, and housing data, but Trump's threat was a reminder that trade tensions remain unresolved. The DJIA ended at 27,335.63 (-0.09% DoD) while the S&P 500 closed at 3,004.04 (-0.34% DoD).
     
  • European equities moved higher as the Euro and Pound weakened against the Dollar, favoring exports. However, investors still remain cautious amid fears of a no-deal Brexit and await for a slew of earnings reports from major companies. The MSCI Europe closed at 131.11 (+0.36 DoD).
     
  • US Treasury yields rose as US retail sales reportedly increased by 0.4% MoM in June (cons. at 0.2% MoM). On average, yields rose by 1.37bps, with the 10Y note closing at 2.1026% (+1.39bps DoD.)
     
  • The US Dollar rose amid the stronger-than-expected US retail sales data which increased by 0.4% MoM in June. This trimmed expectations of a deeper interest rate cut later in July. The DXY closed at 97.3950 (+0.48% DoD).
Asia Pacific Index
  • Asian equities traded flat last Tuesday with investors remaining cautious despite positive US June retail sales and factory output in China as analysts believe this may not be sustainable given their GDP slowdown. The MSCI APxJ ended at 529.08 (+0.24% DoD).
Sources: BPI, Business World, PDI, Phil Star, Manila Bulletin, Reuters, Briefing, Bloomberg, CNN, Dow Jones, The Wall Street Journal, CNBC
 

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