| Philippines may soon own vast gas-rich area The Philippines will gain 13 million hectares in additional territory, an area slightly smaller than Luzon, should the United Nations approve next year the government’s claim on a region off the coast of Isabela and Aurora, Environment Secretary Ramon Jesus Paje said on Monday. Paje said the undersea region, called Benham Rise, could turn the Philippines into a natural gas exporter because of the area’s huge methane deposits. Studies conducted by the Department of Environment and Natural Resources (DENR) for the past five years indicate large deposits of methane in solid form, Paje said after a Senate budget hearing. The government is only awaiting a formal declaration from the UN Convention of the Law of the Sea (Unclos) that Benham Rise is on the country’s continental shelf and therefore part of its territory, Paje said. Legal basis Once the Unclos establishes that Benham Rise is part of the Philippines, “we would have legal basis to enter into exploration agreements with private companies to explore… (the area’s) resources,” said Sen. Franklin Drilon, chair of the chamber’s finance committee. Drilon said a favorable Unclos declaration would mean “increasing our territory from present 30 million hectares to possibly 43 million” with the inclusion of Benham Rise. Discussion over Benham Rise generated excitement especially after Paje said that Philippine representatives were just awaiting one more meeting “to answer questions” before a special Unclos committee. Only claimant Paje said there was no reason for the Unclos committee not to issue a decision favorable to the country “since we are the only claimant, unlike in the western side (where the Spratly Islands are).” “We have submitted a claim under (Unclos) sometime in late 2008. We got a reply from the UN lately (asking us) to answer some questions. They intend to pass a resolution sometime in mid-2012 to approve our claim (that it is) part of the Philippine continental shelf,” Paje told reporters after the hearing. Records showed that the Philippines officially submitted a claim with the UN Commission on the Limits of the Continental Shelf in New York on April 8, 2009. BIR misses collection goal for first 7 months The Bureau of Internal Revenue missed its tax-collection target in the first seven months of the year, blaming the lower-than-expected volume of government securities traded in the market that led to a shortfall in taxes on the investment instruments. However, the BIR noted that tax collections in the first seven months of the year marked a significant increase from that in the same period last year. BIR Commissioner Kim Henares added that the full-year tax collection target of P940 could still be easily attained. In a statement, the tax bureau reported that it collected P531.79 billion in taxes from individuals and corporate taxpayers from January to July this year. This was short by 0.58 percent of the collection target of P534.9 billion set for the first seven months. Nonetheless, this was higher by nearly 14 percent from only P467.28 billion in the same period last year. “BIR performance continues to improve every month. This puts the target [for the full year] well within our reach,” Henares said in the statement. The BIR is the biggest revenue earner among line agencies. Henares said the BIR could have hit its target for the first seven months were it not for the lower volume of securities trading, a factor she said was beyond the tax bureau’s control. “The BIR has exceeded its collection of taxes where it has administrative control, but has fallen short in the collection of taxes that the government remits to us,” Henares said. Henares said that taxes remitted by the Bureau of the Treasury from its open-market operations in the first seven months of the year were short of expectation by P6.28 billion. On the other hand, she said collection of other taxes exceeded the targets by P2.3 billion. “The surplus generated by the BIR from collecting taxes from income and sales taxes, which amounted to P2.3 billion during the period, was not enough to cover the shortfall (in taxes from government securities),” Henares said. The BIR is tasked to help ensure the government keeps its budget deficit for this year at no more than P300 billion, which is lower than last year’s P314 billion. The government is not expected to have difficulty keeping the deficit within ceiling because the budget gap in the first half was only P17.23 billion. The lower-than-programmed deficit in the first half, which was way below the ceiling of P152 billion set for the six-month period, was attributed to underspending. |
| U.S. Stocks Erase Drop on Wave of Takeovers U.S. stocks rose, erasing last week’s drop, as $21.5 billion in takeovers and valuations near the cheapest level in two years helped the Standard & Poor’s 500 Index extend its best three-day rally since 2009. Motorola Mobility Holdings Inc. soared 56 percent as Google Inc. (GOOG) agreed to buy the company for about $12.5 billion in cash. Bank of America Corp. (BAC) rallied 7.9 percent on plans to exit the international credit-card business by selling its $8.6 billion card business in Canada to TD Bank Group and leaving the U.K. and Irish markets. Exxon Mobil Corp. (XOM) advanced 3.2 percent, pacing gains in energy companies, as oil climbed. The S&P 500 added 2.2 percent to 1,204.49 at 4 p.m. in New York and was up 7.5 percent in three days. The gauge traded at 12.9 times reported earnings on Aug. 12, near the lowest valuation level since 2009. The Dow Jones Industrial Average climbed 213.88 points, or 1.9 percent, to 11,482.90. “We’ve been putting money back in the equity market,” Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, said in a telephone interview. His firm manages $275 billion. “You’re dealing with oversold levels. I do expect to see more takeover deals. If we don’t go into a recession, we’ve made a low for the year. All the ingredients are there for some kind of bottom.” The S&P 500 fell 18 percent from the end of April through this year’s low on Aug. 8, when the index closed at 1,119.46. More than $2 trillion was erased from U.S. equity values in the last three weeks amid Europe’s debt crisis, signs the economy is slowing and S&P’s downgrade of the government’s credit rating. Treasuries Drop as Equities Advance After Three-Week Rally in U.S. Debt Treasuries dropped as stocks rose after a three-week rally in government bonds that pushed 10- and two-year note yields to record lows. U.S. debt gained $91.5 billion in value in the week after Standard & Poor’s lowered America’s credit rating on Aug. 5 from AAA. Yields tumbled after the Federal Reserve said on Aug. 9 that it would keep its target lending rate at almost zero at least through mid-2013. The Treasury Department reported today that foreign investors were net sellers of notes and bonds in June, reversing a buying trend that started in 2009. “It’s a risk-on day,” said David Coard, head of fixed- income trading in New York at Williams Capital Group, a brokerage for institutional investors. “There are some people out there who think Treasuries may be just a tad overdone without more evidence of profound weakness.” Yields on 10-year notes increased five basis points, or 0.05 percentage point, to 2.31 percent at 5:27 p.m. in New York, according to Bloomberg Bond Trader prices. The price of the 2.125 percent securities maturing in August 2021 dropped 14/32, or $4.38 per $1,000 face amount, to 98 13/32. The Standard & Poor’s 500 Index advanced 2.2 percent after three weeks of declines following the announcement of $21.5 billion in corporate takeover deals. The 10-year note yields decreased 30 basis points last week after two previous weeks of drops and touched a record low 2.0346 percent on Aug. 9. Two-year note yields were little changed today at 0.19 percent after dropping on Aug. 9 to the all-time low of 0.1568 percent. |
| Crude Futures Trade Near One-Week High as Japan’s Economy Beats Forecasts Oil traded near its highest in a week as advancing U.S. equity futures and better-than-forecast economic data from Japan allayed concerns that the global recovery has faded. Futures rose as much as 0.8 percent in London and 0.5 percent in New York after falling in each of the past three weeks. Japan’s economy shrank at an annualized 1.3 percent rate in the second quarter, compared with the median forecast for a 2.5 percent drop in a Bloomberg News survey of 25 economists. Reports this week may show the U.S. housing industry remained depressed in July and European growth eased last quarter. “The market is continuing to hold in the wider range, still seeking to consolidate after heavy losses in August,” said Andrey Kryuchenkov, an analyst at VTB Capital in London. “It’s unlikely we’ll see a pronounced rebound in crude prices here as fears over a global economic slowdown are still rife.” Crude for September delivery gained as much as 44 cents to $85.82 a barrel and was at $85.69 on the New York Mercantile Exchange at 1:24 p.m. London time. Brent oil for September settlement was at $108.25, up 22 cents, after rising as high as $108.80 a barrel on the London-based ICE Futures Europe. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
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Jonathan Ravelas
Chief Market Strategist
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Rhys Cruz
Junior Researcher
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