THE VOICE OF BUSINESS IN NORTHERN MINDANAO

Tuesday, September 27, 2011

Philippine Markets: 27 September 2011

27 September 2011
USD/PhP:    43.87 + 0.29            PSEi:       3721.22           - 164.74
USD/JPY:    76.31             PFINC:             841.96           -   35.95
EUR/USD:    1.3531                  BDO:         46.25      -   2.25
GBP/USD:    1.5572                  BPI:          51.00      -   2.90
PDSTF3M:    3.9727                  MBT:          60.10            -   1.95
Prices as of  4:00pm                Source: Bloomberg, Reuters
PHILIPPINE MARKETS CLOSED DUE TO TYPHOON
‘Pedring’ slams Luzon; baby drowns

BRAVING ‘PEDRING’. Maintenance crew from the Department of Public Works and
Highways brave strong winds to clear Agham road in Quezon City of fallen
trees caused by Typhoon “Pedring”. Maximum winds of 140 kilometers per hour
with gustiness of up to 170 kilometers per hour have been recorded by the
Philippine Atmospheric, Geophysical and Astronomical Services
Administration (Pagasa). MATIKAS SANTOS/INQUIRER.net

MANILA, Philippines – Typhoon “Pedring” (international codename: Nesat)
slammed into the Philippines Tuesday, killing at least one person, a baby,
as it brought heavy rain and strong wind that blew away roofs, uprooted
small trees and toppled power lines.

The Philippines endures about 20 storms annually, many of them deadly, but
authorities warned that Pedring was one of the largest to hit the country
this year with its rain and wind path twice as big as average storms.

“This typhoon is very wide in diameter, about 650 kilometers [400 miles],
and covers most of [the main island of] Luzon,” Science Undersecretary
Graciano Yumul, who supervises the country’s weather bureau, told
reporters.

Pedring hit the northeastern side of Luzon before dawn, bringing maximum
sustained winds of up to 140 kilometers (87 miles) an hour and gusts
clocking in at 170 kilometers an hour.

The National Disaster Risk Reduction and Management Council said a baby
died when he fell into a swollen river in the eastern province of
Catanduanes.

Four other people were missing and there were fears the death toll would
rise throughout the day.
The agricultural provinces of Isabela and Aurora were the most heavily
affected initially, although storm alerts were also hoisted in over 40
other areas, including Metro Manila, the state weather bureau said.
The presidential palace announced the suspension of all classes and work
for government agencies in Manila and other affected areas.
Some roads around Manila, a sprawling megacity of more than 12 million
people, were impassable on Tuesday morning due to flooding and falling
debris, including branches that had been ripped off trees.

The Philippine Stock Exchange also suspended trading, while operations of
Manila’s main overhead railway system ground to a halt due to a power
outage, stranding passengers in the morning rush hour, officials said.

BDO UNIBANK, INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145

Palm oil offers new lifeline for Mindanao


BY MADELAINE FAYE D. CABRERA
Malaya Business Insight
THE Philippines is on the way to becoming a major player in the global palm oil industry, which is dominated by neighbors Malaysia and Indonesia.
In Mindanao, the Department of Environment and Natural Resources has identified at least 304,350 hectares as potential areas for oil palm tree plantations.
Local companies are slowly taking on the challenge after initial forays proved the profitability of the business.
Nakeen Corp., for example, a wholly owned subsidiary of A. Brown Energy and Resources Development Inc., is seeking to expand its plantation to 1,000 hectares by 2012.
Fernando S. Mercurio, operations manager of A. Brown Energy, said palm oil is emerging as a new lifeline for the island of Mindanao.
"And because of that, we plan to expand by 400 hectares more," he said.
The current 600-hectare plantation, which needed P174 million in investments, involves the cultivation of oil palm trees in Sitio Tingalan, Salawaga, Opol, Misamis Oriental.
"A total of 300 hectares has already been planted and our target is 50 hectares per month in planting," Mercurio said.
The area was formerly a ranch.
Nakeen’s application for an additional 400 hectares to be covered by a 25-year lease under the DENR’s Upland Agro-Forestry Program, is awaiting government approval.
"Those lands are found to be timberlands, so we are entering into an agreement with people’s organizations. The deal is called Community-based Forest Management Agreement involving three participants, namely, DENR, A. Brown and people’s agreement," Mercurio said.
Mercurio said A. Brown Energy aims to plant around 10,000 hectares to oil palm trees by 2015.
Manny Boniao and Dr. Rolly Dy of the University of Asia and the Pacific gave the encouragement to Walter Bwron, chairman of the Brown Group, to go into the business of palm oil production.
Dy, who has been studying the production of palm oil in Malaysia and Indonesia, said Mindanao has better climatic conditions, making it an ideal place for the crop.
"Mr. Brown saw it as a sunshine industry," Mercurio said.
Among the provinces in Mindanao, Surigao del Sur has the biggest potential for palm oil plantation with 93,790 hectares.
Bukidnon has 65,090 hectares; Zamboanga del Sur, 31.430 hectares; Surigao del Norte, 31,360 hectares; South Cotabato, 17,000 hectares; Misamis Oriental, 11,440 hectares; Agusan del Norte and Misamis Occidental, 10,370 hectares each; Maguindanao, 9,270 hectares; Zamboanga del Norte, 7,530 hectares; Agusan del Sur, 7,490 hectares; Davao Oriental, 6,220 hectares; Sultan Kudarat, 5,630 hectares; Lanao del Sur, 3,280 hectares; Davao del Norte, 2,070 hectares; Cotabato, 1,180 hectares; and Lanao del Norte, 830 hectares.
Palm oil is a basic ingredient in making soap, cosmetics, ointments, vitamins, and candles, and has plastic and oleo-chemical applications.
Its is used for cooking and baking.
Oil palm trees, which grow up to 30 feet tall and live for 25 years, bear small reddish fruits in large bunches called fresh fruit bunches (FFB).
"Fruiting starts three years from planting. The average weight of FFB is around 25 kilos," said Mercurio.
For A. Brown Energy’s projects, oil palm seedlings will be imported from Thailand and Papua New Guinea while farm inputs such as fertilizer and other inputs will be sourced from local suppliers, Mercurio said.
"We already made our order last August and we order every year. These by the way are germinated seeds. We ordered around 200,000 seeds in 2010. About 100,000 seeds arrived last September 15," he said.
A one-year-old seedling costs around P220.
At present, Philippine demand for palm oil is more than 67,000 metric tons a year and rising sharply, Mercurio said.
"The price of palm oil is getting better. I have noticed that the demand is high but unfortunately the supply is still low," he added.
The major player in the local palm oil industry are Filipinas Palm Plantations Industries Inc., Agusan Plantations Inc. and Kenram Philippines Inc.
The three processors are all located in Mindanao, with an aggregate production capacity of 78 metric tons per hour.

Biz group calls police to heighten security


THE Cagayan de Oro Chamber of Commerce and Industry Foundation Inc. (OroChamber) is calling on the police to heighten security in the city, in Misamis Oriental and in nearby areas.
OroChamber president Antonio Uy said there is a need to boost the local police forces following the kidnapping of businessman Manuel Boniao.
Five armed men on board a red Mitsubishi Adventure abducted Boniao, owner of Peoples Agri Service and Supply, inside his establishment in Barangay Gusa, Cagayan de Oro City, around 10:30 a.m. on September 19.
A robbery in Cogon, Cagayan de Oro City, meanwhile, ensued two days after the incident.
“If we are serious in promoting new investments to our area, then we have to do something to curb this peace and order problem,” Uy said.
“If the police are deficient in number, by all means it needs some augmentation,” he added.
Local residents and the business community are however advised to be vigilant at all times.
The OroChamber said owners of establishments should brief their security personnel to always ask for the identification cards (ID) of those who may want to talk to the owner.
CCTV facilities should also be put up in every business establishment in the area.
Freed
Police confirmed on Monday that kidnappers released Boniao on Saturday night, five days after he was abducted.
Cagayan de Oro City Police Office (Cocpo) chief Gerardo Rosales said he learned about Boniao’s release from former Balingasag, Misamis Oriental mayor Felix Borromeo.
Borromeo said Boniao was transported already to his house in Golden Village, Barangay Carmen, Cgayan de Oro City.
Rosales said he visited Boniao’s house to check but he failed to talk to the businessman.
“Borromeo talked to me, instead, because Boniao was resting. We still don’t have any idea on what really happened,” Rosales added.
The police chief said, “We will just wait when Boniao would be ready to tell everything.”
The police are focusing the investigation on the real owner of the red Mitsubishi Adventure that was used by the suspects.
Initial investigation showed that Abdul Hakim Grande, who was the first owner of the vehicle, sold it to Enrique Goltiao on September 15, four days before the kidnapping.
But Rosales said according to Goltiao, he also sold the vehicle through a middle man.
“Goltiao said he only knew the middle man in the name of alyas ‘Gogong’ so we are trying to identify who this Gogong is,” Rosales said. (Annabelle L. Ricalde)
Published in the Sun.Star Cagayan de Oro newspaper

Morning Brief: 27 September 2011

PHILIPPINES
NO TRADING AT PSE TODAY 
BSP places September inflation at 3.8 percent – 4.8 percent
Tetangco: PH on track to keeping annual rate below 5%

The Philippine central bank expects annual inflation in September to be between 3.8 percent and 4.8 percent, Governor Amando Tetangco said on Monday, with the figures based on the old 2000 inflation data series.

In August, annual inflation was 4.3 percent, slower from July’s 4.6 percent based on the 2000 base year series.

The index under the new data series with 2006 as the base year rose 4.7 percent, slowing from the previous month’s 5.1 percent.

Tetangco said the faster growth in prices of some food items and the price pressures created by the depreciation of the peso could have been offset by the benign movement in the costs of other commodities.

He added that with September inflation seen settling between 3.8 and 4.8 percent, inflation this year could still fall below the official limit of 5 percent.

Should the central bank’s inflation forecast for September materialize, inflation for the first nine months of the year would average between 4.2 and 4.4 percent.

Latest data from the National Statistics Office showed that inflation averaged at 4.3 percent in January to August.

“Price of vegetables and canned goods, and the peso’s movements appear to be the dominant price factors this month [September],” Tetangco told reporters.

The peso, which was on a generally appreciating trend until this month, was dragged by dampened outlook of portfolio investors on the global economy. Their sentiment was driven by the economic and fiscal woes confronting US and Euro zone economies.

A weaker peso makes imported goods more expensive in local currency terms, thus pushes domestic inflation.

Financial market players said the depreciation of the peso, which is now back to the 43-to-a-dollar territory after earlier hovering in the 42 level, was consistent with the movement of currencies of other emerging Asian economies.

Some foreign fund owners were pulling out capital, even those from better-performing emerging economies, and are holding on to dollars for safety amid an uncertain global economic picture.

Despite the additional price pressures from the weaker peso, the BSP said inflation is still expected to remain manageable throughout the year.

“Based on latest assessments, inflation expectations remain manageable over the policy horizon,” Tetangco said.

BSP said it would continue monitoring developments on the domestic and global fronts so that appropriate anti-inflation actions would be implemented immediately once price pressures become more significant.

“We [BSP] are watchful of global developments that may affect aggregate global demand, capital flows, and prices of international commodities,” Tetangco said.—With a report from Reuters
WORLD

Stocks Advance on Optimism Europe Will Act
By Rita Nazareth
U.S. stocks advanced, giving the Dow Jones Industrial Average its biggest increase in a month, amid speculation that European policy makers will act to prevent the region’s debt crisis from getting worse.
Bank of America Corp. and JPMorgan Chase & Co. (JPM) rose more than 4.5 percent as the European Central Bank was said to consider restarting covered-bond purchases along with further measures to ease monetary conditions. Berkshire Hathaway Inc. (BRK/A) Class B shares added 8.6 percent as the company plans a stock buyback. Boeing Co. (BA) rallied 4.2 percent as the delivery of the 787 Dreamliner ended more than three years of delays.
The Standard & Poor’s 500 Index added 2.3 percent to 1,162.95 at 4 p.m. in New York, after falling as much as 0.5 percent earlier. All 10 groups in the gauge advanced today. The Dow climbed 272.38 points, or 2.5 percent, to 11,043.86.
“You had some quasi-positive comments out of Europe,” Russ Koesterich, the San Francisco-based global chief investment strategist for the IShares unit of BlackRock Inc., said in a telephone interview. His firm oversees $3.66 trillion as the world’s largest asset manager. “The situation in Europe is a near term risk, but if the global economy muddles through, you’ll probably have room for a rally in stocks.”
The S&P 500 is down 12 percent since June 30 and headed for the biggest quarterly slump since 2008 on concern about a global economic slowdown. Stocks were having the worst quarter on record relative to U.S. Treasuries and gold, which could force investors to buy equities to rebalance their allocations, Marko Kolanovic, the New York-based global head of equity derivatives strategy at JPMorgan, wrote in a note last week.
$1 Trillion
Last week’s rout erased $1 trillion from U.S. equities amid concern Greek insolvency is inevitable and Europe can’t contain the damage. The S&P 500 last week was trading at 12.4 times earnings in the past 12 months, 4.4 percent below its average valuation at the lowest point during the last nine bear markets, according to data compiled by Bloomberg.
“Now is the time to be bullish, not the time to panic,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm manages $278 billion. “I don’t think we’re going into a recession. Europe will come up with something.”
ECB policy makers are likely to debate next week restarting their covered-bond purchases along with further measures to ease monetary conditions, a euro-region central bank official said.
Interest-Rate Cuts
The reintroduction of 12-month loans to banks will also be discussed at the ECB’s Oct. 6 policy meeting, said the person, who spoke on condition of anonymity because the information is confidential. Interest-rate cuts are likely to be discussed, though they are not on the current agenda, the official said. A spokesman for the Frankfurt-based ECB declined to comment.
Stocks briefly pared gains earlier after German Finance Minister Wolfgang Schaeuble said euro region governments have no intention of raising the European Financial Stability Facility’s volume above 440 billion euros. Equities rebounded after ECB Governing Council member Ewald Nowotny said there may be “good reason” to reintroduce loans with a maturity of more than six months.
“When you look at Europe, the solutions are not going to be implemented any time soon,” Stephen Wood, who helps oversee about $163 billion as the New York-based chief market strategist for Russell Investments, said in a telephone interview. “That means the market volatility is going to continue.”
The Morgan Stanley Cyclical Index of companies most-tied to economic growth increased 2.7 percent as Dow Chemical Co. and Caterpillar Inc. added at least 4 percent. The Dow Jones Transportation Average gained 2.2 percent. The KBW Bank Index increased 5.3 percent as all of its 24 stocks rose.
Biggest Gain
An index of financial shares had the biggest gain in the S&P 500 within 10 industries, rising 4.4 percent. Bank of America added 4.6 percent to $6.60. JPMorgan climbed 7 percent to $31.65, while Citigroup Inc. (C) jumped 7 percent to $26.72.
Berkshire Class B shares surged 8.6 percent to $72.09. Warren Buffett’s Berkshire Hathaway will repurchase shares for as much as 110 percent of their book value, saying the stock is undervalued after falling 17 percent this year. The growth of Berkshire’s cash hoard makes it harder to effectively invest the proceeds, Buffett told investors at the company’s annual meeting in April.
Buffett, the chief executive officer since 1970, in February touted Berkshire’s capacity to “play offense” in a crisis. He may have $20 billion at his disposal to buy shares if markets decline, said David Rolfe, chief investment officer of Berkshire investor Wedgewood Partners Inc.
‘Swing Big’
“He’s laid the groundwork to swing big and hard if you wake up some morning and something nasty is going on,” said Rolfe. “He’s going to be on the phone with his broker saying, ‘Buy the shares.’”
Boeing added 4.2 percent to $62.01. The twin-engine 787 is Chicago-based Boeing’s best-selling new jet ever, with 821 orders from 56 customers. Boeing is working to boost output to 10 a month by the end of 2013, a record for wide-body aircraft, after the setbacks increased costs, sent 787 inventory ballooning to $16.2 billion through June and upset airlines’ timetables for adding new routes.
Apple Inc. (AAPL) fell 0.3 percent to $403.17, trimming an earlier decline of as much as 3.2 percent. The company is cutting orders to vendors in the supply chain for its iPad tablet computer, JPMorgan said in a report. Several supply-chain vendors indicated in the past two weeks that Apple lowered fourth- quarter iPad orders 25 percent, the first such cut that analysts at JPMorgan’s electronic manufacturing services team in Hong Kong said they have ever seen.
Kodak Tumbles
Eastman Kodak Co. (EK) tumbled 27 percent, the biggest decline since January 2009, to $1.74. The camera maker drew down $160 million from its revolving bank line. The company is borrowing money after Chief Executive Officer Antonio Perez said last month that the patents Kodak is seeking to sell have generated interest from potential bidders. Kodak is trying to raise cash to continue funding inkjet printing and other digital businesses that it has projected will generate operating profits by 2013.
Stocks fell earlier today as figures from the Commerce Department showed that purchases of new houses in the U.S. declined in August to a six-month low as the biggest drop in prices in two years failed to lure buyers away from even less expensive distressed properties.
A malfunction kept the Dow from updating for 12 minutes after trading began at 9:30 a.m. New York time, a spokesman for the index’s owner said.
Crude Oil Advances in New York on Optimism Europe Debt Crisis Will Ease
By Ben Sharples
Oil advanced for a second day in New York on speculation that fuel demand will increase as Europe discusses plans to tame a sovereign debt crisis that has slowed its economy and roiled financial markets.
Futures climbed as much as 1.6 percent as equities rallied. The European Central Bank may debate covered-bond purchases and interest rate cuts, a euro-region central bank official said. The European Union accounted for 16 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy. U.S. crude stockpiles rose last week, an Energy Department report tomorrow may show.
Crude for November delivery gained as much as $1.31 to $81.55 a barrel in electronic trading on the New York Mercantile Exchange and was at $81.25 at 8:45 a.m. Sydney time. The contract yesterday rose 0.5 percent to $80.24. Oil has dropped 8.5 percent this month and 15 percent this quarter.
Brent futures for November settlement fell 3 cents to $103.94 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract closed at a premium of $23.70 to U.S. futures, compared with a record $26.87 on Sept. 6, based on front-month settlement prices.
U.S. crude stockpiles probably climbed 2.2 million barrels last week, according to the median of 11 analyst estimates in a Bloomberg News survey. Gasoline supplies rose 1 million barrels and inventories of distillate fuel, a category that includes heating oil and diesel, increased by 500,000 barrels, the survey showed.

Kidnappers free trader after payment of 'board and lodging'

CAGAYAN DE ORO CITY—A businessman kidnapped here on September 19 was released Saturday after payment of “board and lodging,” authorities said yesterday.

Chief Inspector Reynante Reyes, head of the Regional Special Operations Group (RSOG), said in a text message that Manuel Boniao was released past 7 p.m. on Saturday.

Reyes said kidnappers brought Boniao to his home on board a motorcycle. Mayor Vicente Emano confirmed Boniao’s family paid board and lodging expenses for his freedom. Board and lodging have become euphemisms for ransom.

Mayor Emano refused to divulge more details, saying police were investigating.
“We are happy that Boniao was released unharmed. The family has paid for the board and lodging of Boniao,” Emano said in a radio interview.

The Boniao family also refused to comment on the kidnapping but the family spokesperson, former Balingasag town Mayor Felix Borromeo, said Boniao has no idea where he was taken by his kidnappers as he was blindfolded during his captivity.

A family member, who requested anonymity, said Boniao’s captors also kept him in handcuffs all the time and that he was warned against talking to police and journalists.
In Mati City, Davao Oriental police said two members of the Abu Sayyaf were arrested in connection with the kidnapping of 20 people, mostly tourists, in an island resort in Palawan 10 years ago.

Supt. Jose Carumba, Southern Mindanao police spokesperson, identified the arrested suspects as Abdul Aziz Kunting, alias Robert Tan, and Akmed Kunting, alias Jason Tan.
A team of soldiers and policemen captured the two in Barangay Matiao past 2 p.m., Carumba said.

The arrests came as a result of a tip to police on the presence of the two suspects in the village.

Carumba said the two have been “moving around Southern Mindanao to elude arrest.”

The suspects allegedly took part in the Dos Palmas Resort kidnapping in Palawan on May 27, 2001, but “have gone inactive and laid low” after the kidnappings, Carumba said.

“The public has nothing to worry about” other Abu Sayyaf members rescuing the two, said Carumba. He, however, refused to say where the two suspects are being kept.

At least 22 soldiers and five hostages, including two Americans, were killed in the yearlong hunt for the Dos Palmas kidnappers. JB R. Deveza and Frinston L. Lim, Inquirer Mindanao
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