01:04.1
We begin with the markets. Asia is set to follow Wall Street's rebound as traders focus in on tech earnings.
01:10.1
Look at that board. Everybody raising out of the gates.
01:12.5
Japan, Australia, all the way to South Korea are all firmly in positive territory with the KOSPI Index leading gains up by 1.1%.
01:20.7
Futures for Hong Kong also rising in early trade.
01:23.9
We're also watching the currency markets.
01:26.0
For the Aussie, dollar is flat after a six-day slump, its longest losing streak in 11 months as commodity prices tumbled.
01:34.1
The greenback is flat as we speak.
01:36.3
Now, oil. Speaking of commodities tumbling, oil fell to five-week lows this morning as traders weigh U.S. political turmoil.
01:43.8
Now, flipping the board, U.S. equity futures are, as you can see, a little changed in early trade with the Nasdaq set to go down by a quarter of 1%, the S&P by a tenth when trading resumes tonight.
01:56.0
Now, flipping the board, U.S. equity futures are, as you can see, a little changed in early trade with the Nasdaq set to go down by a quarter of 1%, the S&P by a tenth when trading resumes tonight.
02:26.0
Now, flipping the board, U.S. equity futures are, as you can see, a little changed in early trade with the Nasdaq set to go down by a quarter of 1%, the S&P by a tenth when trading resumes tonight.
02:26.5
Now, flipping the board, U.S. equity futures are, as you can see, a little changed in early trade with the Nasdaq set to go down by a quarter of 1%, the S&P by a tenth when trading resumes tonight.
02:26.9
Now, flipping the board, U.S. equity futures are, as you can see, a little changed in early trade with the Nasdaq set to go down by a quarter of 1%, the S&P by a tenth when trading resumes tonight.
02:28.0
Now, flipping the board, U.S. equity futures are, as you can see, a little changed in early trade with the Nasdaq set to go down by a quarter of 1%, the S&P by a tenth when trading resumes tonight.
02:35.2
and where every senior can retire with dignity.
02:41.0
All of this is to say, building up the middle class will be a defining goal of my presidency.
02:49.3
So in the next 106 days, we have work to do.
02:53.9
We have doors to knock on, we have people to talk to, we have phone calls to make, and we have an election to win.
03:05.2
So, are you ready to get to work?
03:10.3
Do we believe in freedom?
03:13.4
Do we believe in opportunity?
03:16.9
Do we believe in the promise of America?
03:21.2
And are we willing to fight for it?
03:24.9
And when we fight, we win.
03:28.2
God bless you all, and God bless the United States of America and Joe Biden.
03:35.2
Freedom! Freedom! I can't move! Freedom!
03:39.4
Freedom! Freedom!
03:44.9
Now, volatility slumped as dip buyers emerged and traders braced for tech earnings.
03:50.1
With results from Tesla and Apple Inc. on deck this Tuesday,
03:53.8
traders are expecting corporate profits to boost U.S. equities.
03:56.7
Now, looking at the board, the S&P 500 climbing 1.1% to start the week.
04:01.3
That is the most since early June.
04:04.5
Well, the Nasdaq 1.0.
04:05.3
The Nasdaq 1.0 added 1.5, a gauge of the magnificent 7, climbing about 2.5,
04:09.3
led by Gates and Tesla and Nvidia,
04:11.4
while the Russell 2000 of smaller firms added 1.7,
04:14.7
which really tells us that this rally is broadening out just beyond outside the tech.
04:21.0
The Dow Jones Industrial, as you can see, also back in positive territory,
04:24.8
breaking a two-session skid since hitting an all-time closing high last Wednesday.
04:31.5
Right now, I think the markets are expecting,
04:35.2
I think they're expecting a Trump victory in November.
04:37.6
I think they're expecting a September rate cut.
04:41.1
I think we're seeing slowing economic growth,
04:44.8
and that's starting to come through in economic data.
04:47.6
So all of those things are kind of same old, same old.
04:52.3
And I think that's what you're kind of seeing in the market.
04:55.1
You saw some sell-off, obviously, last week as a result of, you know,
05:00.6
largely negative economic indicators.
05:03.2
But on a positive note,
05:05.2
small caps bounce back under the idea that that is going to be conducive to rate cuts.
05:11.2
And so those things, I think, start to play out more broadly in the second half of the year.
05:18.8
In highlights from Corporate America AMC Entertainment Holdings,
05:22.2
saying it has reached a sweeping restructuring deal with creditors
05:26.2
that will let it delay repayment of the more than $1.6 billion of debt
05:30.0
for several years, buying it time to execute a turnaround.
05:34.7
we're also watching Barbie maker Mattel confident in its path as a stand-alone business
05:39.3
after Reuters citing people with knowledge of the matter
05:42.1
reporting that the toy maker has been approached with a buyout offer
05:45.7
by the private equity firm El Caterton.
05:48.7
We're also watching Boeing,
05:50.0
which dominated the first day of deal-making at the Farnborough International Air Show,
05:54.5
sealing an estimated $12.6 billion in aircraft sales
05:58.2
at the aviation industry's biggest event of the year.
06:02.8
the bulk of McDonald's U.S. restaurants,
06:04.6
will extend the burger chain's $5 meal deals
06:07.3
in a bid to attract budget-strapped diners.
06:11.2
Now, we have this just in from the disclosures front.
06:14.8
Cebu Pacific celebrating their agreement for up to 152 A321neo aircraft order
06:22.2
with Airbus and Pratt & Whitney.
06:24.9
We mentioned this, the Farnborough International Air Show for the Boeing story.
06:29.8
Well, Cebu Pacific and Airbus plus Pratt & Whitney
06:33.7
held an official ceremony.
06:34.6
The ceremony to commemorate the binding Memorandum of Understanding
06:37.9
that was signed for Cebu Air's purchase of up to 152 A321neo aircraft
06:43.5
for an estimated value of $24 billion,
06:46.8
that is 1.4 trillion pesos,
06:49.6
based on list prices that is, for all intents and purposes,
06:53.3
the largest aircraft order in Philippine aviation history.
06:57.4
Of course, Pratt & Whitney is an RTX business
07:00.2
listed at the New York Stock Exchange.
07:04.6
this firm orders for up to 102 A321neo
07:07.5
plus 50 A320neo family purchase rights.
07:12.0
Cebu Air has selected Pratt & Whitney engines
07:14.0
to power the future aircraft.
07:15.9
So we actually reported this earlier the month already,
07:19.9
but now they're finally sealing it
07:21.6
with a special agreement commemoration
07:24.9
held at the Farnborough International Air Show.
07:31.2
President Ferdinand Marcos Jr. gets a standing ovation
07:33.5
after he finally...
07:34.6
took a stand on the controversial offshore gaming industry.
07:38.4
Towards the end of his over 80-minute State of the Nation address yesterday,
07:41.6
Marcos announced a complete ban on Pogos.
07:44.5
Pia Gutiérrez with the highlights of the President's speech in this report.
07:50.0
President Ferdinand Marcos Jr. finally breaking his silence on Pogos
07:54.5
by announcing the complete ban on all Philippine offshore gaming operations
07:58.6
during his third State of the Nation address on Monday.
08:02.1
The grave abuse and disrespect to our systems,
08:04.6
shine of the national security.
08:34.0
The President of the United States.
08:34.6
I hereby instruct Paggor to wind down and cease the operations of Pogos by the end of the year.
08:44.9
The announcement comes amid calls from various groups to ban Pogos,
08:48.8
which have been embroiled in a host of controversies such as financial scamming, money laundering, prostitution, human trafficking, kidnapping, torture and even murder.
08:59.6
The DOLA, in coordination with our economic managers, shall use the time between now and then to find new jobs for our countrymen who will be displaced.
09:19.6
This will solve many of the problems that we are encountering.
09:24.5
It will solve many of the problems that we have been encountering.
09:28.3
But it will not stop.
09:29.6
It will solve all of them.
09:32.8
To solve all the problems that we have been suffering under, all officials, law enforcers, workers in government, and most of all, the citizenry,
09:45.4
must always be vigilant, principled, and think of the health of the nation.
09:50.7
Also in his speech, the President touted his administration's bloodless anti-legal drug strategy,
09:56.4
which he says has led to the confiscation of...
09:59.6
millions worth of illegal drugs and the arrest of thousands of drug personalities.
10:04.4
Our bloodless war on dangerous drugs adheres and will continue to adhere
10:09.9
to the established eight E's of an effective anti-illegal drug strategy.
10:16.6
Extermination was never one of them.
10:19.2
The President in his speech also made the assurance that his administration is working to bring down the prices of food
10:25.8
and addressing the effects of climate change.
10:29.6
welcomed the decision for the Philippines to host and have a seat at the Loss and Damage Fund,
10:34.0
which he hopes will help countries like the Philippines, who are most affected by climate change.
10:39.1
This welcome development shall complement all our other climate adaptation and mitigation measures
10:44.4
and give us a strong voice to access the needed financial assistance for climate-related initiatives and impacts.
10:52.2
As the administration works to stabilize the country's power supply,
10:56.3
the President called on Congress to undertake a study of the Epirus.
10:59.6
Marcus Jr. also vowed to increase the wages of government workers.
11:04.0
For our government, they have a medical allowance as an additional benefit for the next year.
11:18.5
And not only that, they also have a payment for the salary they will get from the four tranches.
11:26.2
He also announced additional benefits for public school teachers...
11:29.6
whom he called the foundation of the country's education system.
11:33.3
Clearly, of course, the quality of our education rests on the quality of our teachers.
11:40.0
And so, as we build and upgrade schools, so too must we uplift and upskill our teachers,
11:47.0
whose competence and trademark Filipino patience, determination, and compassion
11:52.1
will be at the core of our national learning recovery.
11:56.1
Marcus Jr. also issued this directive...
11:59.6
as he admitted that the quality of the country's education system needs to be vastly improved.
12:13.5
Marcus Jr. also vowed to increase by a thousand percent
12:16.9
PhilHealth's coverage for the treatment of breast cancer and other diseases,
12:21.3
the construction of mobile hospitals and specialty clinics,
12:24.7
the continued funding for feeding programs,
12:26.6
and policies to protect PWDs
12:29.6
and the mental health of Filipinos.
12:31.6
The President, meanwhile, thanked OFWs and vowed that the administration is working for their protection.
12:37.6
Pia Gutierrez, ABS-CBN News.
12:43.6
For his views on what the President said and didn't say in his third State of the Nation Address,
12:47.6
former Finance Secretary Gary Tevez now joins us live today.
12:51.6
Hi, Mr. Secretary. Welcome back to Market Edge. Good morning.
12:55.6
Good morning, Mimi. Thank you for inviting me.
12:58.6
I hope we can help you.
13:00.6
Mr. Secretary, first, I want to ask what your response is,
13:04.6
your thoughts are to what the President said in his State of the Nation Address.
13:08.6
What did he hit and what did he miss?
13:12.6
The hits included his concern about inflation in response to the recurring survey of Pulse Asia
13:22.6
that it is the number one national concern, urgent and important.
13:28.6
And then, of course, there are some areas for improvement which we can discuss along the way.
13:37.6
There were quite a lot of indications that he wanted to accomplish,
13:44.6
but it looks like quite a number.
13:47.6
And this is a product of most State of the Nation Addresses, Mimi,
13:53.6
because the process is getting inputs from the departments,
13:56.6
and it's not easy for the speechwriter to leave out some of the departments.
14:02.6
They might feel offended.
14:04.6
But what might happen and what probably will happen
14:09.6
is that the President will probably ask the Cabinet and convene LEDAC
14:15.6
and prune this down because this has budgetary or fiscal implications
14:20.6
if we were to accomplish all what he said.
14:23.6
So there has to be some degree of confidence.
14:26.6
So, priority, especially on inflation, education and health,
14:31.6
and other important components in this address.
14:36.6
But Mr. Secretary, that's precisely what you think.
14:39.6
In your commentary, Year 2 Review, PBBM's Hits and Misses,
14:43.6
you don't think the President holds enough LEDAC meetings.
14:46.6
You want him to hold this every month.
14:49.6
Yes, that is a miss, I would say, and an area for improvement.
14:53.6
I hope and I wish the President would be able to convince
14:56.6
and convene LEDAC at least once a month.
14:59.6
President Ramos used to convene it once a week.
15:03.6
And there's a correlation.
15:06.6
More things will be accomplished, especially the legislative measures.
15:11.6
There will be synchronization between the House accomplishment
15:15.6
and the Senate accomplishment,
15:17.6
especially related to the three most important concerns.
15:21.6
And also, it is a vehicle for monitoring
15:25.6
the national budget,
15:27.6
that the utilization of the funds
15:30.6
is really directed to the most important concerns.
15:33.6
So this is, again, stressing an important point
15:37.6
that LEDAC is really very important for the President
15:40.6
and for the President to communicate this with the people
15:44.6
every time they finish their LEDAC meetings.
15:49.6
And the agenda should only be confined
15:52.6
to those three most important concerns,
15:54.6
plus education and health.
15:56.6
All honors will be under other matters.
15:59.6
So, Mr. Secretary, what do you think,
16:01.6
given where we are today,
16:03.6
what are the three most important concerns
16:05.6
that the country faces?
16:07.6
Aside from inflation, obviously.
16:09.6
Yes, inflation, jobs and underemployment,
16:13.6
and quality of wages.
16:16.6
I would like to add, again, education and health
16:19.6
because these are important in being able to improve
16:23.6
the overall productivity of our people.
16:27.6
And especially education,
16:30.6
because education, quality education,
16:33.6
is associated with economic growth and progress.
16:36.6
In your article, Year 2 in Review,
16:40.6
you talk about the President's new appointees.
16:43.6
At this point, we have, of course,
16:46.6
Agriculture Chief Francisco Tularell Jr.
16:48.6
from the private sector.
16:49.6
And for education, you've got Senator Sonny Angara.
16:53.6
Just very quickly, sir,
16:54.6
what do you think is the most important thing,
16:56.6
the first order of business,
16:58.6
that the new education chief should tackle?
17:00.6
Because the President made special mention of this,
17:02.6
the marching order,
17:04.6
to boost the learning recovery program.
17:11.6
my wish is really to provide more support
17:17.6
for the malnutrition concern.
17:21.6
And that's why I was happy
17:23.6
that the President also mentioned
17:25.6
about the need to emphasize
17:28.6
on giving support to the first 1,000 days
17:31.6
from the inception of the child,
17:33.6
as well as the early childhood.
17:36.6
And then, of course,
17:38.6
we need support to the K-12 program,
17:42.6
especially also the tail end,
17:44.6
providing more AI-oriented
17:47.6
and technical courses for them
17:49.6
so that they can be better prepared for jobs
17:52.6
if they're not able to pursue
17:54.6
higher levels of education.
17:56.6
The voucher program is also very important
17:59.6
to allow some children
18:01.6
to be able to move to private schools
18:05.6
because there are not enough public schools
18:08.6
available at the moment, no?
18:11.6
Actually, Secretary Gary,
18:14.6
it's very interesting how the President talked
18:16.6
about the first 1,000 days,
18:17.6
all the way to the very start,
18:20.6
pregnant women getting benefits.
18:22.6
So that by the time that they're growing
18:24.6
their baby in their wombs,
18:25.6
these babies are healthy
18:27.6
by the time they're birthed.
18:29.6
I was looking at some numbers earlier.
18:32.6
When you talk about how malnutrition stunts growth,
18:35.6
it's appalling when you think about the numbers.
18:38.6
In 2015, 33.4% of Filipino children
18:42.6
aged five years old and younger
18:45.6
were actually stunted.
18:47.6
Thirty-three percent, one in every three children,
18:50.6
Filipino children,
18:52.6
So imagine the long-term impact of that
18:55.6
to the kind of workforce that we build.
18:57.6
You know, everybody's talking about
18:58.6
a demographic sweet spot.
19:00.6
If we have stunted kids entering the workforce,
19:02.6
that's not a demographic sweet spot.
19:04.6
We might be looking at a demographic
19:05.6
ticking time bomb, right?
19:08.6
So that's why it's really important
19:11.6
because if you think about it,
19:15.6
in the 60s, we didn't have this K-12,
19:18.6
but the quality of our education
19:20.6
was good or better.
19:22.6
Of course, we had a smaller population at that time.
19:24.6
And we were second to Japan
19:26.6
in terms of economic progress.
19:28.6
So I think it's really at the low end,
19:31.6
the first 1,000 days in the early childhood,
19:34.6
that to me would be the most important focus
19:37.6
of the President and of this government.
19:40.6
Mr. Secretary, two important topics
19:43.6
that I think the President did not mention,
19:45.6
and I want to get your thoughts
19:46.6
on why you think he did not mention it.
19:47.6
One is the ITBPM industry.
19:49.6
I remember during the pandemic years,
19:51.6
it was the ITBPM in Pogos
19:53.6
who served as the two strong pillars
19:56.6
Why no mention of ITBPM
19:58.6
in the last SONA he did talk about?
20:00.6
You know, how the Philippines
20:01.6
is an economic powerhouse of exporting talent
20:04.6
for this industry.
20:05.6
Why do you think he left this one out
20:07.6
this time around?
20:08.6
I really don't have an idea, frankly.
20:12.6
Maybe, again, it's quite difficult
20:15.6
to really write the SONA
20:18.6
and figuring out what are the best things to put there.
20:21.6
But the other thing that should have been emphasized also
20:25.6
is how we can generate more foreign exchange,
20:28.6
because the peso has been deteriorating.
20:32.6
It's not bad per se,
20:34.6
but we don't want free fall.
20:36.6
At the same time,
20:38.6
we need to make sure we have sufficient foreign exchange
20:42.6
to be able to import our raw material requirements
20:47.6
because these are needed
20:48.6
by the manufacturing and industrial sector.
20:51.6
Although this is controversial,
20:53.6
but this has a lot of potential
20:54.6
and provided it's really responsible mining.
20:58.6
If mining was not really taken up during the SONA,
21:04.6
but it has a lot of potential.
21:06.6
If you look at the situation in Indonesia today,
21:09.6
it generates a lot of foreign exchange,
21:12.6
especially because they focus on high value added mining.
21:18.6
and generating a lot of foreign exchange.
21:20.6
So, I guess in the fine-tuning exercise, Mimi,
21:26.6
a lot of this will have to be condensed
21:29.6
by fine-tune reduced
21:31.6
and making sure that they're consistent
21:34.6
with our fiscal consolidation program
21:37.6
because if all of these things were to be funded,
21:40.6
I guess we'll run into a large deficit.
21:43.6
So, the fine-tuning exercise
21:47.6
will be extremely important.
21:49.6
And this is where the doubt will come into the picture.
21:54.6
another thing that the President didn't mention
21:56.6
that many of the business groups had hoped to hear about
21:58.6
would be the Department of Water Resources and Management.
22:02.6
Water Resources and Management.
22:06.6
Actually, I am not really that inclined
22:08.6
about too many departments, Mimi.
22:11.6
I guess my thoughts will have to be fine-tuned
22:14.6
on really what's practical.
22:16.6
But every time we come up with a new department,
22:19.6
we'll have to ask how much additional resources
22:22.6
will have to be provided to the department.
22:24.6
Is there a trade-off?
22:26.6
Or before doing so,
22:27.6
can we really consolidate some departments?
22:30.6
Again, we go back to fiscal resources, no?
22:34.6
Can we afford additional departments along the way, no?
22:40.6
And Mr. Secretary on Infrastructure,
22:42.6
the President said,
22:43.6
as we enter the midterm,
22:45.6
our infrastructure development remains sustained,
22:48.6
strategic, and on schedule.
22:52.6
I'm not sure if it's on schedule.
22:55.6
Even those that have been assigned
22:58.6
or are being done by the private sector,
23:01.6
some of these are encountering difficulties.
23:03.6
The most difficult has been the right-of-way problem, no?
23:08.6
A number of private sector establishments
23:10.6
that are engaged in these infrastructure activities
23:14.6
are having problems.
23:15.6
They are having difficulties because of changes
23:18.6
or difficulties associated with implementing this project.
23:23.6
Some of them will have to be diverted
23:25.6
because of complaints from land owners.
23:28.6
So project costs become more expensive.
23:31.6
And then later on,
23:32.6
the project proponents will have to ask for a compensation
23:37.6
for these additional problems associated with right-of-way.
23:41.6
So I think that the big challenge
23:44.6
and the focus of the government
23:46.6
is really to make the private sector more encouraged
23:49.6
by allowing them and removing these obstacles
23:53.6
so they can focus on helping the government.
23:56.6
And the government,
23:58.6
which can of course handle some of these projects,
24:01.6
can allocate these resources to education and health.
24:04.6
That's their main responsibility.
24:06.6
The private sector will take care of the infrastructure program,
24:10.6
at least most of them.
24:12.6
The commercial viable infrastructure projects.
24:16.6
One of the things that could help fund these projects
24:19.6
is a big cash cow for the government
24:21.6
would be the POGOs.
24:23.6
And the president dropped a bombshell yesterday
24:25.6
saying that effective today, he says,
24:28.6
the POGOs will be banned,
24:30.6
giving the PADCOR until the end of this year
24:32.6
to wind down all operations of POGO players,
24:35.6
even those I imagine that the PADCOR considered legal POGOs.
24:39.6
Mr. Secretary, do you agree?
24:41.6
Is this a big hit?
24:43.6
Clearly it was a big hit among the attendees of the address.
24:47.6
He was given a standing ovation.
24:49.6
They were chanting BBM, BBM.
24:51.6
But do you agree from a finance perspective
24:54.6
that this is a big hit?
24:56.6
Is that a categorical hit?
24:58.6
Yes, that it's a big hit?
24:59.6
It's a correct move?
25:00.6
Or is it qualified?
25:01.6
Are there certain strings attached to that move?
25:05.6
I don't know the figures very well.
25:09.6
I'm having trouble.
25:11.6
There are two conflicting figures, Mimi.
25:13.6
One coming from the private sector
25:15.6
that the effect of this represents about 0.2% of the economy,
25:22.6
which roughly would be about 40 billion.
25:25.6
And then I would estimate that the net benefit
25:28.6
will still be in favor of a ban.
25:31.6
So I'm hoping that the balance will be close to zero.
25:38.6
But at the same time,
25:40.6
there's of course another component
25:42.6
that will have to be asked.
25:44.6
Are we adhering to the rule of law here?
25:47.6
I mean, would the termination of the POGO
25:52.6
affect those that are legal,
25:54.6
whose contract is still live up to December of this year?
25:59.6
Those are the fine-tuning exercise
26:01.6
that will have to be done,
26:03.6
that we have to respect the rule of law here.
26:06.6
There's a contract.
26:08.6
And I think the president really means
26:11.6
that there will no longer be any extension
26:14.6
or a renewal of this contract
26:16.6
if that is a total ban. Fine.
26:18.6
But then those are the things that need to be fine-tuned.
26:21.6
In the same way that I've asked before that,
26:24.6
you know, all of this Swiss list,
26:26.6
how much will this cost?
26:27.6
Additional cost to the government, no?
26:30.6
Will it lead to more deficit and borrowing?
26:32.6
These are the fine-tuning exercises
26:34.6
that will have to be done.
26:37.6
Before we get to the end of the interview, sir,
26:40.6
I wanted to get your take on the economic status.
26:43.6
In your article, Year 2 in Review,
26:45.6
you talk about as one of the areas for improvement,
26:48.6
ramping up investment promotions
26:50.6
and diplomatic initiatives.
26:52.6
The president yesterday said of the economic status,
26:55.6
in spite of the headwinds that we have faced,
26:58.6
we stayed the course.
26:59.6
And as a result, he said,
27:01.6
we have Green Lane certified around 100 projects
27:04.6
with a total investment of about 3 trillion pesos.
27:07.6
This is across the sectors of RE,
27:09.6
digital infrastructure, food security and manufacturing.
27:13.6
What are your thoughts on how the president
27:15.6
is attracting investors into the country?
27:18.6
Is he succeeding?
27:19.6
We have heard of pledges,
27:21.6
but these are, you know, paper gains
27:23.6
until these pledges actually materialize.
27:26.6
Well, first, let's look at the data.
27:29.6
We're referring to the BSP,
27:32.6
Banko Central Data,
27:34.6
inflows for direct investment,
27:36.6
amounted to, in that paper,
27:41.6
as against the pledges of about maybe $19 billion.
27:47.6
This is an opportunity, Mimi,
27:49.6
but we have to work on these opportunities
27:51.6
by asking our ambassadors,
27:53.6
commercial attaches,
27:58.6
and work with these potential investors
28:00.6
as well as with the conglomerates.
28:02.6
Try to do some matching
28:04.6
because some of them can be,
28:06.6
translated into joint ventures initially
28:08.6
and eventually, of course,
28:10.6
the foreign investors can do it on their own.
28:13.6
So this is very important
28:15.6
and the president tried to pave the way
28:17.6
by talking to these investors.
28:20.6
The follow-through is very important.
28:22.6
The execution, the supervision,
28:24.6
and monitoring would be very important.
28:27.6
So this has to be translated from the additional,
28:30.6
from the three what additional amounts
28:32.6
can be expected for, let's say,
28:37.6
So that the foreign investments
28:39.6
can supplement the domestic capital
28:41.6
which altogether will allow us
28:44.6
and more employment opportunities.
28:46.6
So the follow-through will be extremely important, Mimi.
28:49.6
And Mr. Secretary,
28:51.6
on a more personal note,
28:54.6
do you have your own sauna story?
28:56.6
When you were a member of the cabinet
28:58.6
during Mrs. Arroyo's time,
29:00.6
what was your own sauna experience,
29:02.6
helping build the script for the sauna,
29:05.6
giving inputs at least to the sauna,
29:07.6
what you were most excited about?
29:09.6
If you have a personal experience or story
29:11.6
that stands out for you, sir?
29:14.6
Quite a number of them would be extremely funny
29:19.6
because the president that I serve
29:23.6
was an extremely hardworking president.
29:27.6
And he would really go into details.
29:29.6
I remember very well,
29:31.6
I tried to do some exercise
29:34.6
just a day or two before sauna.
29:38.6
She would call me for some details
29:40.6
which I couldn't answer right away.
29:42.6
So I had to stop.
29:44.6
So it really depends on how aggressive
29:48.6
and how thoughtful the president would be.
29:52.6
But it's really a different exercise
29:55.6
because from their point of view,
29:58.6
they need to say something
30:00.6
that would be helpful.
30:01.6
Of course, from where I was
30:04.6
of the former Secretary of Finance,
30:06.6
I would be concerned about
30:07.6
can all of this be handled
30:09.6
by the resources that we have?
30:13.6
So those are the things
30:14.6
that we need to work on.
30:16.6
But as I said earlier,
30:18.6
a lot of this needs to be fine-tuned again
30:21.6
when the president and the cabinet,
30:23.6
as well as the DOC,
30:24.6
would finally say,
30:25.6
what can we really do
30:26.6
given the resources that we have?
30:28.6
Are we going to borrow?
30:30.6
Another thing that I would like to convey
30:33.6
to Mimi is the increasing involvement
30:36.6
or possible involvement of the military
30:39.6
because of the South China Sea conflict.
30:42.6
Will this mean that there will be additional
30:45.6
resources needed by the military?
30:48.6
Will the defense expenditure increase?
30:50.6
If so, will some of the priority projects
30:54.6
Or will we engage on more borrowing,
30:58.6
So those are the things
30:59.6
that need to be resolved
31:01.6
by the cabinet and the president.
31:02.6
As well as the DOC.
31:03.6
You know, it's really true,
31:06.6
The devil is indeed in the details.
31:08.6
And on that note,
31:09.6
thank you very much,
31:11.6
for joining us for the Insights
31:12.6
and the Inside Look
31:14.6
at what goes on in the preparation
31:16.6
for the State of the Nation Addresses.
31:17.6
Thank you again, sir,
31:18.6
for the time and insights.
31:20.6
We'll see you soon.
31:21.6
Thank you very much, Mimi.
31:24.6
Now, President Marcos'
31:25.6
Third State of the Nation Address
31:28.6
from business leaders
31:29.6
and economic managers
31:30.6
following his report
31:32.6
of the Philippine economy
31:33.6
as well as his plans
31:34.6
for the remainder of his term.
31:36.6
from Jackie Pascual.
31:40.6
gave President Marcos'
31:41.6
Third State of the Nation Address
31:43.6
positive reviews,
31:44.6
particularly the ban on Pogos.
31:46.6
This comes amid mounting calls
31:48.6
to shut the doors
31:51.6
to many illegal activities.
31:53.6
That's a very popular decision
31:56.6
that it must be taken away.
31:59.6
What we were just saying
32:01.6
is that those with licenses
32:03.6
should be paid out.
32:04.6
And I think end of year
32:06.6
is a good payout.
32:09.6
but the reality is
32:11.6
this is the business
32:14.6
the kind of people
32:19.6
has been affected.
32:20.6
Economic managers,
32:21.6
including Secretary Frederick Gou,
32:23.6
who is Special Assistant
32:26.6
and Economic Affairs
32:27.6
and Trade Secretary
32:29.6
say they don't see
32:32.6
Many foreign direct investments
32:34.6
have anything to do
32:37.6
has better governance,
32:38.6
better procedures,
32:39.6
more transparent procedures,
32:45.6
the business sector
32:47.6
for predictability,
32:49.6
and good governance.
32:50.6
The Labor Department
32:53.6
who may be displaced
32:55.6
It's not that many
33:01.6
who may be affected
33:30.6
and other economic
33:32.6
expressed optimism
33:33.6
on the President's
33:34.6
various statements
33:39.6
of doing business
33:41.6
That's the complaint
33:56.6
the yellow alert,
34:01.6
Transport projects
34:04.6
especially airports,
34:18.6
economic managers
34:22.6
with the economic
34:35.6
protesters voiced
35:04.6
Marcos supporters
35:54.6
The Economic and Development Authority says the decline in poverty incidents marks a progress toward the Marcos administration's goal of reducing poverty rate to a single digit of 9% by the end of the president's term in 2028.
36:07.6
The agency also vowing to continue making sure that food is available, accessible and affordable for Filipinos.
36:14.6
Speaking of affordability, the Philippine Trade Department is set to remove some items from the list of commodities with suggested retail prices or SRP.
36:25.7
Among the products included are salt, bottled water and some liquid condiments as well as processed milk and coffee refills.
36:32.9
Trade Undersecretary Amanda Nogales clarifies that while these products are going to be removed from the SRP list, government will still monitor prices of these goods.
36:41.9
Meanwhile, a supermarket group believes government should...
36:44.6
...should just totally remove the SRP scheme which is a pricing strategy used by manufacturers to suggest a recommended price for their products to retailers.
36:54.5
Kahit na review mo lang in 3 months, di ba? Tingnan mo lang. Pwede naman sabihin na, sige, tingnan natin in 3 months.
36:59.5
Kung gumalaw at tumaas at mag-uso ang mga manufacturers, distributors and retailers, hindi balik natin, di ba? Pwede naman eh.
37:10.6
Now, here's a look at the other stories we're tracking in the newsroom today at 11.
37:14.6
This morning, the Philippine Central Bank will be holding a press conference on its digitalization initiatives.
37:20.3
We'll also be covering updates on Typhoon Karina which continues to drench parts of Luzon.
37:25.1
It's also enhancing the southwest monsoon, bringing showers to practically the whole country and it's expected to leave the Philippine area of responsibility by Thursday.
37:36.8
Time for a quick break but stay tuned when we return.
37:39.3
The numbers at the Philippine Stock Exchange with JP Colette of China Bank Capital after.
37:44.6
The State of the Nation Address yesterday.
37:46.9
Market Edge will be right back.
38:01.4
You're still watching Market Edge.
38:03.3
The headlines, President Ferdinand Marcos Jr. orders a total ban on Pogos.
38:09.5
Stateside, U.S. Vice President Kamala Harris gets the backing of former House Speaker Nancy Pelosi.
38:14.5
Her campaign also raising a record $81 million in just 24 hours.
38:23.3
And the Director of the U.S. Secret Service rejecting calls of House lawmakers for her to step down.
38:33.3
Philippine shares matched the gloomy weather on Monday falling by over 1% as locals sold off head of President Ferdinand Marcos Jr.'s annual address to the nation.
38:42.1
As you can see there, it was...
38:45.4
So it's really the foreigners buying in and the locals selling.
38:48.7
The PSEI kicking off from 67.12 today.
38:51.5
The gloomy weather continues this morning but not the market sentiment because as we speak,
38:57.1
the market is already trading firmly in positive territory.
39:00.5
We're about 11 minutes into trade for the day.
39:02.2
The index is up by nearly half of 1%.
39:04.7
29 points at 67.41.
39:07.3
All sub-indices in the green except for one, the property sector, which is down by 1.1%.
39:13.1
Joining us now for...
39:14.5
More on the markets is J.P. Colette, Managing Director at China Bank Capital.
39:19.2
Thank you so much for taking our call.
39:21.3
Good morning, Mimi.
39:22.2
It's a pleasure to be here.
39:23.9
Just very quickly, I mentioned the property sector is the only sub-index that's in the negative territory firmly down by 1.1%.
39:31.0
Do you think this has anything to do with the President saying that, effective immediately, all POGOs are banned?
39:38.3
That is certainly the case, Mimi.
39:40.8
What particularly stood out in yesterday's sauna?
39:44.5
And what everyone will remember is the total ban on POGOs.
39:48.6
Now, the economic impact of that is expected to be minimal as POGOs contribute only around 0.2% of GDP.
39:58.5
But that said, the near-term effects will be most felt by the property sector.
40:04.6
And it's not just the offices, really.
40:07.1
It's also residential.
40:08.6
I mean, condominiums.
40:09.8
I remember at one point, some locals were blaming these POGOs.
40:14.5
They're blaming the employees for crowding out the local players because there was so much demand.
40:18.7
The prices of condominium units were just skyrocketing.
40:22.1
So, are we expecting prices, I mean, rental prices of these units or residential spaces to drop as well?
40:31.3
I think certain real estate companies are particularly exposed to the fallout.
40:37.1
We might see increased supply of office spaces and residential units.
40:43.5
Particularly those POGOs or landowners who want to quickly unload.
40:49.7
And that would have a downward pressure on rents and property prices in certain locations.
40:56.5
So, moving out of the POGO conversation, I wanted to ask you, with the PSEI falling 1% on Monday,
41:04.5
do you take that as a signal that the index after two...
41:07.5
Four weeks, rather.
41:09.1
Four weeks of steady upward movement, rather.
41:13.5
Upward movement, that the index might be entering or nearing overbought levels at 6,700.
41:19.3
Is this index already priced to perfection, as what they say?
41:24.9
Not yet priced to full perfection.
41:28.2
But I think it has had a good run recently.
41:31.6
I mean, if we reckon it from the year-to-date low last month, the index is already up almost 9%.
41:40.2
So, that's already a very good return.
41:43.5
But even at 6,700, the index, of course, is still very cheap.
41:50.6
It's only trading at around 11.33 times the expected earnings in 2024.
41:56.9
And the forward PE ratio for 2025 is only around 10.2 times.
42:02.6
That said, we do expect some volatility.
42:06.3
And investors should use any pullbacks to position for interest rate cuts.
42:12.3
Which you think will come by next month?
42:17.2
So, for the BSP, I think Governor Remolona has clearly telegraphed that we should expect something by August.
42:26.4
As for the Federal Reserve, the probability is that it will be in September.
42:33.0
That we're ahead by a month.
42:34.2
That's not going to hurt the forex greatly.
42:38.2
There will be some pressure on the forex.
42:42.3
Considering that the difference is probably only a month,
42:46.9
the loss in the interest rate differential between the BSP policy rate and the Federal Reserve policy rate should quickly normalize.
42:57.3
So, any pressure on forex might be temporary.
43:02.8
When you talk about the rate cut narrative that's been, you know, the expectation alone boosting markets from time to time,
43:10.6
I wonder, is it a case of...
43:13.2
You know, a rising tide lifts all boats.
43:15.1
And in this case, a falling rate lifting all boats.
43:17.9
Or, do you see early losers from rate cuts?
43:21.1
Certainly, the banks are saying, we're not going to lose.
43:23.0
Even if we lose out on the margins, we're going to gain with volume.
43:27.4
So, are you seeing any particular sector that could take a hit when the central bank starts cutting?
43:34.9
Well, interest rate cuts should generally be favorable to equities.
43:39.4
Lower borrowing costs will promote economics.
43:42.3
Economic activity, improve earnings, and also lead to better valuations.
43:48.6
So, in that sense, it would lift a lot of boats.
43:52.7
But I think some boats will rise higher than others, so to speak.
43:57.9
And I would focus on quality REITs, select real estate companies, and yes, major banks.
44:06.7
And I would also add to that mix, certain conglomerates, just because they've been so heavily...
44:12.3
discounted by the high interest rate environment.
44:15.8
One more quick update here.
44:18.4
Let me just refresh the page.
44:20.8
The index, steady, up by a third of 1%, 22 points.
44:26.6
What is your year-end target, JP?
44:29.0
I wonder, and have you had to reprice it?
44:32.4
Maybe before that, Mimi, since we spoke of how the market is behaving today relative to yesterday,
44:39.3
you may find this interesting.
44:42.3
My team and I looked at the saunas from 2010 to 2023.
44:48.5
So, there are 14 saunas in all in that sample.
44:52.0
And what we found was that if you bought the index at the closing of the trading day of the sauna
45:01.3
and sold it at the close of the trading day following the sauna,
45:09.1
there is a 79% probability that you will gain.
45:12.3
And the average gain is around 0.75%.
45:16.6
But interestingly, if you held on until Friday and you close...
45:22.9
and you sell at the close of the last trading day of the sauna week,
45:27.5
there is a 71% probability that you would gain.
45:32.0
But the gain is much higher, 1.35%.
45:35.0
So, something to note for short-term traders.
45:39.0
That is really interesting.
45:41.0
What does that tell us?
45:42.3
That the saunas tend to make investors happy?
45:47.3
It's hard to say, you know, because there are also a lot of factors at play.
45:52.6
But just looking at the statistics, right, there is a potential trade there.
45:57.8
But of course, the actual outcome this year, who knows, may turn out differently.
46:02.5
But I'll let you know, Mimi, how the trade today and trade on Friday turns out.
46:07.8
But in the meantime, where do you see the trade ending by the end of this year?
46:12.6
So, at 67.12, which was the close yesterday, I said the index is very cheap.
46:22.0
Our base case is that the index will reach around 7,100 this year.
46:28.8
But rather than buy the index, I would recommend stock selection to build a resilient portfolio with good upside.
46:38.0
7,100 by the end of this year.
46:41.2
That would be a 10%.
46:42.3
10% increase from the 6,400 closing that we had last year.
46:46.0
Pretty good, considering we've had four years of negative returns.
46:49.6
But you did say it's going to be a stock picker's market.
46:52.2
So, talk to us about the stock that you're picking for your blind item.
46:56.5
You like the stock.
47:01.7
If I may begin to put a little context.
47:04.7
So, I was asked by some friends recently.
47:07.7
They said that they want to invest in the stock market.
47:12.3
And they want to lose sleep over it.
47:13.9
So, can I recommend a particular stock?
47:16.5
Now, of course, I said that picking any stock has its risks.
47:21.0
But this blind item, I think, well, I have a lot of confidence in.
47:26.0
It is the most valuable company in its industry.
47:30.2
It has very strong fundamentals and consistent profitability.
47:34.2
It is currently underappreciated by the market because of the high interest rate environment weighing down on the overall.
47:42.3
But I think the stock price should re-rate as interest rates decline and as consumer spending improves.
47:50.9
So, I would take advantage of any dips to accumulate this stock.
47:55.6
And how much upside are we talking about for this stock?
47:59.3
At the price, you know, the entry price, I'm thinking of there is a potential 20 to 25 percent gain over the next probably 12 to 16 months.
48:12.3
12 to 25 percent upside in 12 to 18 months.
48:15.1
On that note, JP, pleasure to speak with you.
48:17.6
Thank you so much for the time.
48:18.6
We'll see you soon.
48:20.9
Have a good week ahead.
48:23.1
Now, an education advocacy group urging the government to invest in early education for children as Filipino students continue to lag behind their Southeast Asian peers.
48:33.1
Now, in 2022, the Program for International Student Assessment showed the Philippines ranked sixth from the bottom in reading and mathematics and third from the bottom in science.
48:42.0
In terms of reading, Manila is only ahead of Cambodia and Southeast Asia.
48:47.8
The Philippine Business for Education says that to address these issues, the government should allocate the education budget more strategically.
48:56.3
They are really focusing on essentials.
48:58.9
So, I learned because I also went there last April, last March.
49:06.0
And learning from there, they really invest in early childhood education.
49:09.6
As early as three months old.
49:12.0
A child, a baby can actually go to institutions they call mamnons.
49:18.5
These are essentially early childhood care centers where children already start, you know, interacting, doing social interaction, learning.
49:29.4
There is structured play.
49:31.6
And then they're served nutritious food.
49:33.8
And that's something that we see is also lacking in the Philippines.
49:37.5
One out of four five-year-olds suffer from nutrition.
49:41.1
And malnutrition.
49:43.2
And that stunting, that malnutrition, once that occurs, the damage to a child's cognition is already irreversible.
49:54.5
So, even as early as that, you know, our education problems start as early as early childhood.
50:03.6
They also really prioritize and really invest in really good materials.
50:11.1
Teachers who are able to teach.
50:15.7
Of course, she was referring to the system in Vietnam.
50:19.2
In the meantime, PBED also asked, adding that reforms in education could also be achieved by devolving key decisions within the sector.
50:27.9
It's really to also make sure or to try to really look at which areas, which aspect of education delivery and decision making can be devolved or can be decentralized.
50:40.1
Because with such a system, it's not just about education.
50:41.0
It's such a really massive education system of 28 million learners, close to a thousand teachers.
50:46.2
Decisions made at the national level in terms of like what specific subjects to teach for electives, for example, or what books to use and procuring them is just going to take so long.
50:58.0
And if we are looking at this massive reform to happen fast, decisions should be made and there should be flexibility to be made on the ground.
51:05.5
And even as specific as decisions that could be made in the classrooms.
51:11.0
And in the schools by principals themselves.
51:16.2
Time now to zip through the top headlines from major business papers.
51:19.8
Let's start with business world.
51:21.1
The Banco Central's Monetary Board has approved $3.9 billion in public sector foreign borrowings in the second quarter to fund the government's general budget financing and the financing and refinancing of assets.
51:32.6
This is 43% higher year on year.
51:36.5
And from business, Mayor of the Philippine Energy Department reporting a total of $400 million.
51:41.0
This is the first quarter of the year that is thanks to government's energy management program.
51:48.5
This program reduces government-wide electricity and fuel consumption by at least 10% through strategic energy efficiency and conservation measures.
51:57.4
From the Philippine Star, Philippine Agri Chief Francisco T. Laurel Jr. confident that achieving President Marcos' campaign promise of bringing down the price of fries to 20 pesos per kilo is still possible.
52:08.8
He said the department is doing its best.
52:11.0
To figure out and implement ways to achieve the goal.
52:16.0
Now here's a quick look at the flash business headlines from overseas.
52:19.1
U.S. Vice President Kamala Harris wrapping up efforts to consolidate support from powerful Democrats for her nascent presidential bid.
52:27.0
Less than a day after President Joe Biden's stunning exit from the race, Harris appeared to have a clear path to the nomination.
52:33.5
Former House Speaker Nancy Pelosi, who helped nudge Biden towards the exit, also endorsed Harris.
52:38.3
The Vice President took over Biden's campaign.
52:41.0
She's renamed Harris for President, giving her access to its 95, rather 96, million dollar war chest.
52:48.3
Harris must also choose a running mate, win back voters who drifted from Biden and gird for expected attacks from rival Donald Trump.
52:57.2
Over in China, Central Bank cut the seven-day reverse repo rate, a key short-term policy rate, to 1.7% from 1.8.
53:04.1
This as it seeks to prop up growth, free up liquidity and credit after lack of short-term stimulus from a major...
53:11.0
Communist Party meeting disappointed investors.
53:13.7
Chinese banks shortly followed the move by lowering their main benchmark lending rates, making it less costly to borrow for mortgages and other loans.
53:21.6
The People's Bank of China last lowered the seven-day rate by 10 basis points back in August of last year, along with cutting the one-year benchmark rate.
53:32.8
Nvidia reportedly working on a version of its new flagship AI chips for the China market that would be compatible with current U.S. export controls.
53:41.2
The AI chip giant in March unveiled its Blackwell chip series, which is due to be mass-produced later in the year.
53:48.3
Reuters reports Nvidia will work with Inspur, one of its major distributor partners in China, on the launch and shipments of the chip initially set for the second quarter of next year.
53:57.6
Washington tightened its controls on exports of cutting-edge semiconductors to China last year, seeking to prevent breakthroughs and supercomputing that would aid China's military.
54:07.7
Meanwhile, Google Parent Alphabet expected to report a nearly 14%.
54:11.2
In quarterly revenue today, its fourth straight quarter of double-digit growth,
54:15.9
Rosy Outlook on Alphabet's second quarter report is driven by steady demand for its AI-powered cloud computing services and an uptick in the advertising market.
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Moving on, the CEO of Delta Air Lines seeing flight disruptions lasting for another few more days following last week's massive IT outage that snarled flights around the world.
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The Atlanta-based carrier has canceled over 4,000 flights this Friday last week,
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stranding thousands of customers.
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Across the country, about 60% of the most critical applications that Delta uses are Microsoft Windows-based.
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And finally, Warner Bros. offering to match Amazon's bid for National Basketball Association or NBA TV rights.
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The company said it submitted paperwork to the league indicating its intentions.
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The NBA is on the verge of signing a new $76 billion 11-year deal with current broadcaster ESPN and two new partners, Comcast's NBC and Amazon.
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The e-commerce firm has agreed to pay about $1.8 billion every year.
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And for those who tried to guess a blind item, this is a stock pick of J.P. Collette.
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20-25% upside in share price in the next 12-18 months.
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This stock is, drumroll please, this is SM Prime Holdings.
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Do let us know if you got that. Do tweet us at ANC Alerts.
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In the meantime, that's it for the show.
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I'm Michelle L. Thank you all so much for watching.
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Stay safe and stay with ANC.
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Thank you for watching.
