Friday, May 30, 2014

UK to count prostitution, drugs when measuring GDP


LONDON — Britain is putting a price on vice.


Prostitution and the import, manufacture and consumption of illegal drugs like crack cocaine and heroin will be included in the official estimates of the country’s economy, the national statistics agency said Friday.


Some of these activities, like prostitution, are legal in certain European Union countries, and comparable figures are needed. All member states need the same standard because they are used to assess a member state’s contribution to the EU budget.


The new estimates also simply seek to get a more realistic picture of the economy — warts and all. At the moment, the only illegal activities included in Britain’s GDP are estimates on alcohol and tobacco smuggling.


“As economies develop and evolve, so do the statistics we use to measure them,” said Joe Grice, the chief economic adviser to the Office of National Statistics. “These improvements are going on across the world and we are working with our partners in Europe and the wider world on the same agenda.”


Illegal drugs and prostitution are already measured in Estonia, Austria, Slovenia, Finland, Sweden and Norway, the ONS said in a report.


In Britain, they would add approximately 10 billion pounds ($16.7 billion) to gross domestic product in 2009, the ONS said. That remains a very small portion of the overall GDP, which now stands at 1.5 trillion pounds.


Nonetheless, calculations may prove challenging.


To measure prostitution, statisticians will have to tabulate up the value of things like brothel rental, condom sales, makeup and the clothing of sex workers.


For illegal drugs, the ONS will examine production and sales of crack cocaine, powder cocaine, heroin, cannabis, ecstasy and amphetamines. Growing drugs will be classed as “production,” buying them for home use, “expenditure,” while selling them as “income”.


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British economy accelerates into recovery





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Weekly Futures Recap With Mike Seery


We've asked Michael Seery of SEERYFUTURES.COM to give our INO readers a weekly recap of the Futures market. He has been Senior Analyst for close to 15 years and has extensive knowledge of all of the commodity and option markets.


Michael frequently appears on multiple business networks including Bloomberg news, Fox Business, CNBC Worldwide, CNN Business, and Bloomberg TV. He is also a guest on First Business, which is a national and internationally syndicated business show.


Gold Futures


Gold futures in the August contract finished down for the 5th straight trading session finishing lower by 45 dollars this week at 1,245 an ounce continuing its bearish trend trading below its 20 and 100 day moving average as I remain bearish gold prices as I think there’s a high probability of a retest of 1,200 and if that level is broken look at a re test near the contract low of 1,180 as prices look very bearish in my opinion. You have to ask yourself at this time would you rather own gold or stocks as investors are choosing to sell their gold and are buying stocks and it seems like on a daily basis. The problem with gold right now is everybody’s buying the S&P 500 which hit another all-time high today as there is a very little interest in purchasing gold at the current time especially with bond yields continuing to move lower as the money is going into bonds and stocks and out of gold. Gold futures are still higher by about $60 in the year 2014 but traded as high as 1,390 earlier in the year and has given back much of this year’s gains that it had and I do think the trend continues to the downside and if you took my original recommendation place your stop above the 10 day high minimizing risk in case the trend does change. Gold is famous for having large washout days meaning it will sell off $50 in one day and volatility will spike as I said in yesterday’s blog & I sense one of those days is coming as the trend seems to be getting stronger.

TREND: LOWER

CHART STRUCTURE: SOLID


S&P 500 Futures


The S&P 500 hit all-time highs once again along with the transports this week as the Vix or fear index is at a 7 year low as the S&P 500 traded up another 20 points this week at 1917 as Apple Computer was also up $20 this week currently trading at 635 a share which is propelling the rest of the equity markets higher as the trend seems to be getting stronger and stronger and I’m still recommending a long position in this market .The S&P 500 is trading far above its 20 and 100 day moving average telling you that the trend is higher and with the 10 year note trading at 2.45% which is also propelling stock prices higher as companies are able to borrow large amounts of money at practically nothing while increasing dividends while also buying back their shares decreasing their float therefore increasing earnings per share. I love this market to the upside for one reason because the market has very little volatility and continues to grind higher with solid chart structure to continue to play this to the upside.

TREND: HIGHER

CHART STRUCTURE: SOLID


Crude Oil Futures


Crude oil futures in the July contract finished the week down about $1.50 closing around 102.70 a barrel after hitting 1 year highs earlier in the week. The crude oil market is trading above its 20 & 100 day moving average continuing its bullish trend in recent months as economies around the world are improving as well as the U.S stock market hitting new all-time highs on a daily basis helping support crude oil prices. We have entered the strong demand season for unleaded gasoline as there will be a lot of drivers on the road increasing demand which could propel prices back up to last August highs of around 112 a barrel. If you are looking to take advantage of this recent dip in crude oil prices I would remain a buyer as long as prices stay above the 10 day low of 101 a barrel which is about $1.75 away or $900 risk per contract.


Orange Juice Futures


Orange juice futures are trading below their 20 day but above their 100 day moving average going out this Friday afternoon in New York at 157.25 after settling last Friday at 158.40 as there is currently no trend so I’m sitting on the sidelines in this market waiting for better chart structure to develop as prices have been going sideways to lower in recent weeks. All of the fundamental news has already been baked into the prices as investors realize that the U.S had a poor crop due to greening disease and the drought in central Brazil which also cut production but the market is looking for some fresh news to push prices in one direction or another, however in my opinion I still believe orange juice prices are headed higher, however as a trader I don’t want to trade markets that are choppy because they are very difficult to be successful in so look for another market that is trending.

TREND: SIDEWAYS

CHART STRUCTURE: SOLID


Coffee Futures


Coffee futures in New York are sharply lower this Friday afternoon trading down 445 points at 177.50 a pound trading down for the week continuing its short term down trend as prices spiked to a low of 170.80 on Tuesday as I have been recommending a long position in this market between 165 – 170 so currently I’m still sitting on the sidelines waiting for the opportunity to arrive. A large coffee exporter named Ipanema Coffee is suggesting that yields could drop by as much as 40% as there are small beans in the cherries which could spike up prices if they are correct on their assessment as the numbers will be coming in the next couple of weeks as in the beginning of the season we were expecting 53 million bags then down to 43 million bags due to the severe drought and anything lower than 43 million bags would be bullish this market and I do expect volatility to rise here in the next couple of weeks. Prices have been going sideways to lower in the last couple of weeks because of the fact that we have very little fresh fundamental news on crop size but that will change quickly so continue to look to be a buyer at 165 – 170 level as you will never pick a bottom in coffee but I do not think prices are headed back down 140 as this whole rally started at 125 as there was significant damage done as I talked to many producers down in Brazil and this was no joke as this was one of the worst droughts in history. Coffee prices are trading below their 20 day moving average in the right near their 100 day moving average which has not happened in more than 4 months telling you that the trend is mixed at the current time as I’m laying in the weeds waiting for an entry.

TREND: LOWER

CHART STRUCTURE: IMPROVING


Soybean Futures


Soybean futures in the November contract are down $.09 currently trading at 12.32 a bushel and I’m bearish this market as I do think prices will catch up with corn prices to the downside and I was recommending to sell at any price around the 12.50 level while making sure that you place your stop loss above the most recent high of 12.80 risking around $.45 from today’s price level or $2,200. The weather continues to be excellent as we could produce a 3.6 billion crop which would be a record with carryover levels increasing dramatically but we are still very early as we are still in May but I remain bearish the entire grain sector. Soybeans have been in a bull market for several years as we had back-to-back poor crops due to hot dry conditions so in my opinion having 3 poor crops in a row is very difficult and has not happened since the Dust Bowls of the 1930s so I’m thinking that this year will be an excellent crop pushing prices lower and I’m staying short unless prices break above 12.80 bushel.

TREND: MIXED

CHART STRUCTURE: SOLID


Cotton Futures


Cotton futures in the July contract are trading below their 20 and 100 day moving average hitting a 4 month low this week as I’ve been recommending a short position when prices broke below 89.70 as the trend has gotten stronger to the downside currently trading at 85.70 unchanged for the trading week and if you took that recommendation continue to put your stop above the 10 day high which currently stands at 90.66 which is around 500 points away at $2,500 per contract. The chart structure in cotton at the current time is very poor however when the breakout occurred the chart structure was very tight allowing you place a tight stop, however prices have dropped pretty dramatically here in the last several days as I do think there’s a possibility that prices go down to 80 here in the next week or so as many the commodity markets have turned negative due to the strengthening U.S dollar. If you did not take that trade recommendation I would sit on the sidelines and wait for better chart structure to develop or wait for a possible kickback in price to reenter on the short side as the trend is lower as growing conditions in the South are excellent at the current time.

TREND: LOWER

CHART STRUCTURE: POOR


If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com


Corn Futures


Corn futures in the December contract finished lower 3 out of the last 4 trading days continuing its bearish trend hitting a 3 month low breaking support as excellent weather conditions in the Midwest are currently pressuring corn prices. Corn futures are trading below their 20 and 100 day moving average and if you took my recommendation when prices broke 4.87 I would continue to place my stop at the 10 day high which currently stands at 4.83 a bushel risking about $.25 or $1,250 per contract from today’s price levels. There is a lot of bearish news concerning corn prices because of the fact that we could have 14 billion back to back crops which has never been seen before plus extremely small cattle herds reducing demand for corn and I continue to think there’s a high possibility that corn prices will be under $4 a bushel come October if Mother Nature allows. Planting should be about 100% percent completed as of this weekend as traders keep a close eye on weather patterns but currently the 7 to 10 day forecast has mild temperatures with adequate rain but the real volatility in this market will start in June as that’s when the hot & dry temperatures start to arrive in the Midwest.

TREND: LOWER

CHART STRUCTURE: SOLID


Wheat Futures


If wheat could talk it would bark as that’s how much of a dog this market has become as prices have fallen dramatically in recent weeks due to improving weather in the Great Plains causing a sharp decline as prices still remain bearish in my opinion. Wheat futures are trading below their 20 and 100 day moving average finishing lower for the 8th consecutive trading session dropping a full dollar in 3 weeks as ample rain is forecast for key producing wheat regions sending prices to three-month lows. Wheat prices are right at support near 6.60 in the December contract and if that level is broken you could head all way back down to the 6.20 – 6.00 level as the grain market has certainly broken down in recent weeks except for the oat market which I was recommending a short position and has skyrocketed about $.50 in the last week hitting 2 month highs as that trade was stopped out while waiting for another trend to develop. Wheat futures traded as low as 5.80 a bushel in late 2013 as it was a big bear market and then turned on a dime starting the new year rallying all way up to 7.60 so we are right in the mid-range as we enter the volatile summer season but if weather conditions continue to be good look for lower wheat prices.

TREND: LOWER

CHART STRUCTURE: POOR


Lean Hog Futures


Lean hog futures in the July contract finished down around 400 points for the trading week to settle in Chicago at 120.25 a pound and I’ve been recommending a short position when prices broke to a 4 week low of 121.12 placing your stop loss above the 10 day high at 125.50 risking around 450 points or $1,800 per contract as the chart structure is starting to improve as I think a possible double top at the 129 level has been achieved. The next major level of support is down at the 116 level and the spike bottom at 112.70 and I do think there’s a possibility that we retest that level here in the next couple of weeks as the hog chart looks vulnerable as many of the commodities have started to selloff. Lean hog futures are trading below their 20 day but still above their 100 day moving average telling you that the trend currently is mixed but short term trend is lower.

TREND: LOWER

CHART STRUCTURE: IMPROVING


Feeder Cattle Futures


Feeder cattle prices rallied around 450 points this week in Chicago hitting all-time high prices at 197.80 a pound in the August contract as the problem remains the same with the lowest herds in 60 years as cattle farmers are leaving the business and getting into grain farming which is a systemic problem which will be here for years to come in my opinion. This has been one of the strongest trends in the last several years as prices continue to move up and prices have not hit a 2 week low in 5 months and that tells you how strong this market continues to be and I still recommend a long position in this market as corn prices were down another $.04 hitting 11 week lows propelling prices even higher. If the corn market produces a 14 billion crop & continues to move towards the $4 level you would have to think that feeder cattle prices will continue to move higher as the next possible stop is 2.10 – 2.20 my opinion.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT


TRADING RULES


1 — If you follow this rule you will have a chance of being successful over the course of time, if you don’t follow this rule you will be sure to lose your money quickly. This rule is simple Do Not OVERTRADE EVER for this is an easy way to lose all your capital quickly. My definition of over trading is risking too much money on any given trade, for example if you are trading a $100,000 dollar account and you place a gold trade today you should limit your loses to 2% of the account value which in this case is $2,000 which allows you to be wrong on many trades and still be around to play another day. In futures and option trading you will have losing trades that is for certain so make sure you manage those losses and move on to another trade.


2 — Trade with the short term trend, as the saying goes in futures trading the trend is your friend. Sometimes you will be a market that is trending higher and then has a false breakout to the upside and then suddenly sells off causing you a 2% loss on your equity and you say to yourself that was a bad trade and should I do something different on my next trade. If it was up to me I would continue to buy strength and sell weakness because in the long run commodity trading is about percentages of success in the long run, and if you go with the path of least resistance more often than not you will have the probabilities of success on your side. I define a trend as a commodity hitting a 20 day high or low as a trendy market, if the market is in a consolidation stay away from it and find something that is trending up or down and go in that direction remembering the money management rules of 2% maximum loss if you are wrong.


3 — This rule is extremely important and I witness it being abused constantly creating tremendous loses that are sometimes difficult to come back from. Never add to a losing position because if the position continues to go against you and now you have added even more contracts which are all losing money your account will suffer loses much more than 2% and in some case adding positions and never getting out of a losing trade has wiped peoples trading accounts down to zero because of 1 or 2 bad trades. Remember always play for another day you will have losing trades and the good traders manage losses and move on to the next possible trade.


If you are looking for a futures broker feel free to contact Michael Seery at 800-615-7649 and he will be more than happy to help you with your trading or visit www.seeryfutures.com


SEERY FUTURES ACCEPTS CANADIAN COMMODITY ACCOUNTS


There is a substantial risk of loss in futures, futures option and forex trading. Furthermore, Seery Futures is not responsible for the accuracy of the information contained on linked sites. Trading futures and options is Not appropriate for every investor. My opinion in this blog are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any futures or option contracts.


Michael Seery, President

Seery Futures

http://ift.tt/1fGCqDc

Twitter–@seeryfutures

Phone #: (800) 615-7649

mseery@seeryfutures.com



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PSEi continues to weaken








The local stock barometer slumped for a second day in a row Friday after a softer-than-expected first-quarter Philippines gross domestic product (GDP) growth report.


The Philippine Stock Exchange index (PSEi) shed 29.02 points or 0.44 percent to close at 6,647.65.


The market was weighed down most by the industrial counter while the financial, services and mining/oil counters also dipped. The holding firm and property counter, on the other hand, posted a modest gain.


Value turnover for the day amounted to P16.34 billion. There were 66 advancers, which were edged out by 98 decliners, while 52 stocks were unchanged.


Investors sold down shares of AEV (-4.07 percent) alongside BPI and Jollibee, which both fell more than 3 percent. MPI, AC and AP slipped more than 2 percent while ALI, ICTSI, PLDT, AGI and EDC lost over 1 percent. URC and Meralco also contributed to the decline.


On the other hand, those that bucked the downturn were JGS (+5.79 percent) alongside Megaworld (+3.75 percent) while SMIC and SM Prime advanced more than 2 percent.


On Thursday, it was reported that Philippine GDP grew by 5.7 percent year-on-year, still above trend growth rate but way below the 6.4-percent market consensus.


“GDP surprise results will increase volatility in the near term with a downward bias as the market will look to test supports of recent months,” DA Market Securities said. The brokerage said the weak US GDP result for the first quarter would also contribute to selling pressure. The next support levels were seen at 6550 and 6400.


“We expect the market to test the sturdiness of these support levels, after which the market will most likely enter into wide-ranged consolidation that may span weeks,” it said.


But DA Market said the outlook on local equities remained bullish for the long term. Doris C. Dumlao



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Investors in poorest provinces need perks

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Amid moves to rationalize the fiscal incentives being granted by the government to investors, foreign businessmen want “generous” tax perks retained for those who would pour capital and create jobs in the country’s poorest provinces.


During the recent House hearing on the various bills seeking the rationalization of fiscal incentives, representatives of the European Chamber of Commerce of the Philippines (ECCP) and the American Chamber of Commerce of the Philippines (AmCham) told legislators that “generous incentives should be provided for domestic as well as export projects in the poorest provinces, as determined by Neda [National Economic and Development Authority].”


While retaining the perks for investors in undeveloped areas, foreign businessmen are amenable to scrapping the incentives on sectors that are now profitable.


“At a minimum, it is time to end redundant and costly fiscal incentives for mature industries, as proposed first in 1995,” ECCP and AmCham said.


The foreign business groups also said that only strategic or high-value projects in terms of investment cost, employment and technology transfer should be made eligible for generous fiscal incentives, subject to the approval of the President.



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MVP eyes investor in tollroad unit

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Manuel V. Pangilinan-led Metro Pacific Investments Corp. is in talks to sell up to a 20-percent stake in its tollroad unit as it seeks financial support for possible big-ticket expressway projects it may bag under the government’s public private partnership (PPP) program.


Metro Pacific chief financial officer David Nicol said at the sidelines of the company’s stockholders’ meeting that they were in talks with two financial investor groups from Europe and China on the sale of a stake in Metro Pacific Tollways Corp., which the company took private last year.


Metro Pacific Tollways operates the 90-kilomter North Luzon Expressway and the 14-km Manila-Cavite Expressway, which serves about 270,000 vehicles a day.


Metro Pacific is readying a bid for the June 2 deadline for the 47-kilometer Cavite-Laguna Expressway PPP, estimated to cost about P35.4-billion. Nicol said a decision to bring in a partner would depend on whether the company would win the Cavite-Laguna Expressway PPP.


“They are long-term equity investors,” Nicol said, adding that a deal could be concluded in the third quarter if Metro Pacific decided to sell.


Nicol said it made more sense to tap an investment group rather than raise funds in the capital markets given that the tollroad business was currently undervalued by third-party financial analysts and the timing was less than ideal.


He said analysts currently valued the company’s tollroad business at P48 billion but Nicol said they valued Metro Pacific Tollways closer to P80 billion after factoring in expansion phases, including the P18-billion Metro Manila connector road linking NLEx with the South Luzon Expressway of rival San Miguel Corp.


“We think we can [bring in a partner] at a price that is way above what analysts are valuing us today,” Nicol said. Metro Pacific Tollways owns a controlling stake in Manila North Tollways Corp., which operates NLEx. Manila North Tollways already tapped the bond market in the first quarter for a P7-billion bond sale.


MNTC is raising fresh funds for the construction of the North Luzon Expressway-Segment 10 that will link the MacArthur Highway in Valenzuela City to the C-3 Road in Caloocan City.



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Factual errors? Contact the Philippine Daily Inquirer's day desk. Believe this article violates journalistic ethics? Contact the Inquirer's Reader's Advocate. Or write The Readers' Advocate:


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With new indices, Asean may spur equity trade


In a bid to boost the visibility of Southeast Asian equity products, the Asean Exchanges—a group of bourses supporting regional integration—has rolled out three new indices broadly covering the growing Asean market.


The three new tradable Asean indices are the FTSE Asean All-Share Index, FTSE Asean Stars Index and FTSE Asean All Share Ex-Developed Index.


In a statement, Asean Exchanges said the new expanded index series would increase the visibility and transparency of Asean and create a wider variety of stocks for all Asean markets.


Constituents of seven bourses in six Southeast Asian countries—Thailand, Malaysia, Singapore, Indonesia, Philippines and Vietnam, which has two bourse—make up the series.


FTSE Asean All-Share index is the broad headline benchmark representing up to 95 percent of investable market capitalization in the region. This represents the performance of large, mid-cap and small-cap Asean companies.


FTSE Asean Stars Index will comprise the 30 “most exciting” companies of each Asean country based on their market capitalization and liquidity.


FTSE Asean All-Share ex-Developed Index represents the performance of all the developing countries in the FTSE Asean All-Share Index except Singapore, which has the most sophisticated market in Southeast Asia.


The group said the indices would be the “building block towards creating broader benchmark indices, meaningful sectors indices and new Asean products that will bring more Asean tradable opportunities for investors and enhance liquidity among the exchanges.”


The members of Asean Exchanges are Bursa Malaysia Berhad, HoChiminh Stock Exchange, Hanoi Stock Exchange, Indonesia Stock Exchange, Stock Exchange of Thailand (SET), Singapore Exchange and Philippine Stock Exchange.


“Asean, one of the fastest growth regions of the world, is an exciting capital market … Investors will have a one-point access to an aggregated and comprehensive Asean content,” said SET president Charamporn Jotikasthira.


Other existing indices are FTSE Asean Sector Indices, calculated at industry, supersector and sector levels using the industry classification benchmark and FTSE/Asean 40 Index, which represents the performance of the largest companies in the Asean markets.


The seven Asean Exchanges have a combined market capitalization of about $2 trillion with more than 3,600 companies listed on their exchanges.





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Economic growth still impressive, says HSBC


The Philippine economy’s performance in the first quarter, which fell short of all expectations, was still impressive and would likely prove to be a one-time slump in the country’s climb.


British bank HSBC in a note to investors said the economy’s main growth driver—household consumption—would remain strong, thanks to remittance flows and the country’s young population.


“Optimism is riding high in the Philippines and the slower-than-expected growth rate in Q1 2014 will not dampen the mood,” HSBC said late Thursday.


The government this week reported that the economy grew by 5.7 percent in the first quarter of 2014, slower than the 6.3-percent expansion of the previous three-month period. The growth was also lower than all analyst and government projections, and the slowest since the fourth quarter of 2011.


Effects of Supertyphoon “Yolanda” (international codename: Haiyan), which proved to be more severe than initially expected, was the main culprit for the slowdown in the growth. Private sector investments were also sluggish, failing to keep up with the government’s higher spending for infrastructure and other social projects.


Despite the disappointing performance, the Philippines was still “stronger than it looks,” the bank pointed out.


HSBC said slow global demand for the country’s exports also held growth down in the period. A report on Friday showed the economy of the United States, which is the Philippines’ largest trading partner, shrank by 1 percent in the January to March period.


The country also had to deal with two major natural disasters, namely Yolanda and the 7.2-magnitude earthquake in Visayas in October, HSBC noted. Given these challenges, HSBC said economic growth was “still rather impressive.”


“Growth … was still above trend, reflecting sticky household consumption and gradually rising investment,” HSBC said.


“Private consumption has consistently contributed about four percentage points per quarter to year-on-year growth in the past two years,” the bank said. This was thanks to “sticky” remittance inflows and strong demographic transitions, which fuel demand for key goods such as food and garments, the bank added. Paolo G. Montecillo





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Louis James: Are You Ready for an Early Shopping Season?


The Gold Report: Jeff Clark, senior precious metals analyst at Casey Research, recently wrote in an article titled "Time to Admit that Gold Peaked in 2011?" that countered a chart making the rounds showing gold matching its 1980 inflation-adjusted dollars peak in 2011. The chart implies we should expect a decade or more of lower prices. Aside from the fact that John Williams of Shadow Government Statistics might have a problem with how inflation was calculated, how are gold's fundamentals different today than they were in 1984?


Louis James: The fact that things are different today than in the 1980s is a really good point. The argument over methodology almost doesn't matter. Even if it were true that the gold price of 2011 matched the inflation-adjusted gold price of 1980, that wouldn't mean that gold has to go down the way it did in 1980. There wasn't a near collapse in the banking sector back then. There wasn't the Lehman Brothers upset. The government did not triple the money supply. We're dealing not with apples and oranges, but apples and whales.


TGR: If history is not a map for the future, is John Williams correct that we are getting ready for hyperinflation?


LJ: History never repeats itself, but it does rhyme. I agree with John Williams. On a fundamental level, profligate governments around the world have been spending beyond their means, and eventually they have to pay the piper. The longer they put it off, the bigger the bill gets. Is it all going to unravel this year? I don't know, but it's impressive that someone as cautious as John Williams seems to think that it will. But whether it happens this year or next, it doesn't really matter as long as you're investing with a long-term view.


TGR: In hindsight, a lot of people have targeted last December as the bottom of the gold market. Do you look at those sorts of things in the rearview mirror?


LJ: On January 6, I published a statement to the effect that both Doug Casey and I thought our market would turn upward in 2014. On February 3, I said in print that the bottom was in December. I wasn't willing to say that until the upturn was reasonably clear, but if we wait too long to take the plunge, it's of no use; when it's obvious to everyone, you lose much of the upside. Those of us who started buying in January and bought aggressively in February have benefited enormously. We were actually able to issue some profittaking calls in March before the market started correcting again.


TGR: What gold number are you using to evaluate whether a company can be profitable for the rest of 2014?


LJ: I have two numbers I keep in my head: spot and the three-year trailing average. It used to be cautious to use the three-year because gold prices were rising and the averages were lower than spot. Now the three-year is $200 above spot, so there are serious perception and credibility issues with using it in print. But I do still look at the three-year, because the low gold prices we have now will not last.



"Pretium Resources Inc. is at the top of my potential takeover list."



Right now, the price of gold is flirting with cost of productionit's not sustainable. Some companies are using three price scenarios in their feasibility studies: a base case near spot, a scenario at significantly lower prices and another at significantly higher prices. Today, that more optimistic scenario is often the three-year trailing average. I like this approach; I want to see that they have a project that works right now. I want to see that if gold goes lower for a while, they're not going to dry up and blow away in the wind. And I want to see if gold goes higher, how much higher my return will be.


TGR: Are you investing based on the fundamentals of the macro gold and silver market or based on the challenges and opportunities of the individual companies?


LJ: The macro picture sets the stage, but it doesn't help you pick a stock. I'm very much looking at the individual companies.


TGR: It has been a tough couple of years for junior mining companies. Some haven't made it. Is it easier to spot the good ones than it used to be because there are fewer of them?


LJ: Yes and no. The field has not been cleared that much at all; many penniless companies have gone into hibernationa few have even left the field and become medical marijuana companiesbut the oft-predicted tsunami of bankruptcies has not appeared. On the other hand, if you see a company that's got the goods that was previously trading at two or three times its current priceand has the cash to keep advancingit's not a bad bet that it will rebound with the market. It doesn't even have to hit a new high to make you a bunch of money.


Because there are many opportunities today to buy companies that have already produced extraordinary discoveries, there are far fewer grassroots-type projects in our portfolio. It's not that we don't like early-stage explorationthose companies actually have the most explosive upside potentialbut that with so many less risky, quality plays on sale, it's just too tempting to go with the safer bets.


TGR: One of the big takeovers that has been in the news lately is the bidding war over Osisko Mining Corp. (OSK:TSX). Is that setting the stage for a lot more merger and acquisition (MA) activity?


LJ: It was a wakeup call. Industry observers were wondering when the MA was going to start heating up. During the downturn, there was evidently a mindset that there was no hurry: Why pay X today when they might be able to pay 0.75X in a month or two? Since the market appears to have bottomed in December, that logic is now reversed. With the bidding war over Osisko, more companies may now feel that they have to step up the tempo, or risk losing out.


TGR: What companies are most attractive in this kind of environment?


LJ: Each company will go after assets that meet their own profile of quality and budget.


One company at the top of my potential takeover list is Pretium Resources Inc. (PVG:TSX; PVG:NYSE), Bob Quartermain's company in British Columbia that has one of the biggest, high-grade deposits in the world. There are very few million-ounce-plus deposits that are such high grade. This one has more than 10 million ounces (10 Moz) of Measured, Indicated and Inferred ounces. It's the sort of project that produces robust margins, such as the very robust 35.7% internal rate of return in the company's preliminary economic assessment (PEA).


This has to be a very interesting target for potential shoppers like Goldcorp Inc. (G:TSX; GG:NYSE), which lost the bidding war for Osisko, and now has about $3 billion burning a hole in its pocket.


TGR: Is it more attractive to companies that are in the area already?


LJ: You might think so, but there isn't much production in northwest British Columbia. The area is prolific for discoveries, but there are few producing assets at the moment.


To continue the thought of what else Goldcorp might want to buy, now that someone else grabbed Osisko, another top pick that fits the bill is Rubicon Minerals Corp. (RBY:NYSE.MKT; RMX:TSX). It has a high-grade depositnot as large, nor as high-grade, as Pretium's, but it's substantial and it's only seven kilometers from the head frame at Goldcorp's Red Lake gold mine. It doesn't get any more in your backyard than that.


TGR: It looks as if Rubicon's share price is down quite a bit from last year. It's essentially on sale.



"Balmoral Resources Ltd. has several years of very successful drilling."



LJ: Yes, indeed. This current pullback can be a blessing; it creates an opportunity for those late to the game.


But it's not just Rubicon; most stocks in our sector have retreated significantly since their March highsthough still they remain well above December's lows. It's definitely a shoppers' market.


TGR: Where else are you seeing potential?


LJ: Another pick along the lines of "large, high-grade discovery in hand and cashed up" is Continental Gold Ltd. (CNL:TSX; CGOOF:OTCQX). Its primary asset is a large, high-grade gold discovery in Colombia. It had more than 5 Moz in all categories when we first bought, and just upped that to more than 7 Moz, and I think it may soon have a shot at the 10 Moz mark.


Some investors are a little uncomfortable with Colombia, which has opened up a great deal, but remains a challenging place to work. That's not unreasonable, but the country has proven itself to be a jurisdiction where people can work if they do things right. At the end of the day, it comes down to margin; will it pay for all that's necessary and still produce a great return? Continental has the goods.


TGR: What else is interesting you right now?


LJ: Another one of my favorites is less on the radar: Dalradian Resources Inc. (DNA:TSX). Dalradian has a large, high-grade deposit in Northern Ireland. It's not a mining jurisdiction that a lot of people are familiar with, but that doesn't make it a bad mining jurisdiction. In fact, the government there has permitted Dalradian to go underground for bulk sampling, which means the company has an exploration mining permit and will soon be blasting tunnels. If locals were afraid of the project, it would have never gotten that permit.


The political risk that is assigned to this story is overdone. It's worth more than the market is giving it. It's very high-grade, more than 10 gram per ton (10 g/t) material. Parts are up in the 20 g/t area. Very exciting potential margins, and the market doesn't seem to get it yet. The proof will be in the pudding soon enough.


TGR: How about a long-term play?


LJ: Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX) does not have a resource in hand, but it has several years of very successful drilling. It may, in fact, be on to two completely different, large, high-grade deposits, one gold and one nickel-copper-platinum-palladium. Shares are way up on spectacular drill results, so I wouldn't chase the stock, but I do expect more of the same from this summer's exploration program.


TGR: When might it have an NI 43-101?


LJ: Hard to say, with both deposits still in their early days and wide open. Balmoral could have a first stab at estimating a gold resource on its Martiniere gold discoveries, but that could be premature. Fortunately, Balmoral doesn't need to raise money to keep drilling, but if the stock keeps going up, I wouldn't be surprised to see the company raise more while it can do so with minimal dilution.


TGR: Mexico is another country that you've covered quite a bit. What do you think about Mexico after the new mining tax?


LJ: I still like Mexico, but it has indeed just become a more expensive jurisdiction for miners to operate in. There's a chance that the special tax on precious metals mines may get struck down on constitutional grounds. That case is being made in Mexico.


Meanwhile, it means a company needs to have that much richer of a project. That's a good segue into Almaden Minerals Ltd. (AMM:TSX; AAU:NYSE), which just came out with a PEA with an acceptable rate of return. Not a spectacular one, but a decent 20+% rate at current metals priceseven with the new tax in place. That's a good example of a project that is rich enough to pay for all kinds of sinseven sins of the government.


TGR: Did you like Almaden's PEA better than the market liked it?


LJ: I did. The fact that the stock didn't soar on that PEA says that people were not deeply undervaluing it, but it didn't tank either. The stock has performed in step with the sector. Gold has dropped, Almaden has dropped. However, there are new exploration results with game-changer potential on the way.


TGR: What are your thoughts about silver compared to gold?



"Almaden Minerals Ltd.'s new exploration results with game-changer potential are on the way."



LJ: There are vibes about silver volatility being at near-decade lows and that always precedes a surge. I'm not sure the numbers actually bear that out, other than to say, generally speaking, that low prices precede high prices because markets are cyclical. If we're at a cyclical low, it's not rocket science to say it's going to go up.


That having been said, there are so many new uses for silver out there, I see very strong demand, particularly in solar panel use, which is rising and rising.


My way of looking at it is that silver and gold always move together. Sometimes the ratio stretches. Sometimes it contracts. But they always move together. If you're a gold bull, you have to be a silver bull.


On top of that, silver is an industrial metal, while gold is primarily a safe-haven metal. If the economy is successfully reflated by the governments of the world, then demand for silver rises. You have a safer bet on silver than gold in that respect. If, on the other hand, government efforts to save the collapse of the global economy are unsuccessful, then industrial demand may fall off, but the precious metal safe-haven demand will pick up. Where gold goes, silver goes also. It's a win-win metal.


TGR: Are there some silver companies that you like a lot?


LJ: Many gold companies also produce other metals, like silver or copper. They like to use the term "gold equivalent," or AuEq. Our favorite gold-equivalent is when the "Eq" is silver. Some of the companies we've mentioned already, like Pretium, have been mining electrum, a gold and silver alloy.


Regarding silver companies, I was very happy to see that Fortuna Silver Mines Inc. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) and First Majestic Silver Corp. (FR:TSX; AG:NYSE; FMV:FSE), both picks of ours, reported net income last quarter. I'm happy with any miner that has been able to eke out a profit, given the belt tightening that has gone on. That means these companies bit the bullet, did what was necessary and delivered for shareholders. I'm very pleased with them.


TGR: You called this shopping season. Are the discounts steeper and is the quality as good as it used to be?


LJ: I don't worry about such comparisons; I'm looking for, and happy to find, something that is legitimately undervalued. The company should have great management. Its flagship project should have a net present value multiple over the company's enterprise value (or a clear shot at that), cash in the bank to advance, and be delivering excellent exploration or development results. Then the stars are aligned and it goes on my shopping list.


When will we see payday? As above, it could be this is the yearDoug Casey thinks sobut regardless you should come out well if you buy value on sale.


And it could happen very quickly: If the Ukraine situation pushes Russia and the Western countries into an economic tit-for-tat that sends the dollar over the edge, it could trigger the proverbial "it." You don't want to be short when the train is leaving the station.


TGR: Thank you for your time, Louis.


Louis James is at Casey Research, where he's the senior editor of the International Speculator, Casey Investment Alert and Conversations with Casey. Fluent in English, Spanish and French, James regularly takes his skills on the road, evaluating highly prospective geological targets, visiting explorers and producers at the far corners of the globe and getting to know their management teams.


Want to read more Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see recent interviews with industry analysts and commentators, visit our Streetwise Interviews page.




DISCLOSURE:


1) JT Long conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an employee. She owns, or her family owns, shares of the following companies mentioned in this interview: None.


2) The following companies mentioned in the interview are sponsors of Streetwise Reports: Pretium Resources Inc., Continental Gold Ltd., Balmoral Resources Ltd., Almaden Minerals Ltd. and Fortuna Silver Mines Inc. Goldcorp Inc. is not associated with Streetwise Reports. Streetwise Reports does not accept stock in exchange for its services.


3) Louis James: I own, or my family owns, shares of the following companies mentioned in this interview: Pretium Resources Inc., Continental Gold Ltd., Dalradian Resources Inc., Balmoral Resources Ltd. and Almaden Minerals Ltd. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.


4) Interviews are edited for clarity. Streetwise Reports does not make editorial comments or change experts' statements without their consent.


5) The interview does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer.


6) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their families are prohibited from making purchases and/or sales of those securities in the open market or otherwise during the up-to-four-week interval from the time of the interview until after it publishes.


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Local stock index falls some more

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MANILA—The local stock index slumped for a second day in a row on Friday after a softer-than-expected first quarter Philippine gross domestic product growth report.


The Philippine Stock Exchange index shed 29.02 points or 0.44 percent to close at 6,647.65.


The market was weighed down most by the industrial counter while the financial, services and mining/oil counters also dipped. The holding firm and property counter, on the other hand, posted a modest gain.


Turnover for the day amounted to P16.34 billion.


There were 66 advancers against 98 decliners while 52 stocks were unchanged.


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Filinvest Development Corp. allots P38-B for capex

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MANILA—Filinvest Development Corp. has allocated P38 billion for capital expenditures this year, mainly to finance its real estate ventures.


In a statement on Friday, FDC president and chief executive Josephine Gotianun-Yap said the company was “investing for medium-term growth,” after consolidated gross revenues rose 17 percent to P34.8 billion and net income grew 11 percent to P6.5 billion last year.


Two-thirds of this year’s capex or about P25 billion would be spent on projects of subsidiaries Filinvest Land Inc. and Filinvest Alabang Inc. According to FDC, a “more significant portion” of the capex “will be used for recurring income investment properties, while the balance will be for trading assets, with a portion to be used for land-banking.”


Allotted P9 billion was the construction of FDC Utilities Inc.’s 405-megawatt (MW) power plant in Misamis Oriental. This coal-fired facility is poised to be the biggest plant in Mindanao when operations start in 2016.


The remaining P4 billion will be infused into the banking, hotel and sugar businesses.


For EastWest Bank, capex will be used to expand its branch network to 400 by yearend from 376 to date. “EastWest Bank is expected to see its network become more mature and productive as it is already at the apex of its aggressive store expansion program in 2014,” Gotianun-Yap said.


As for the subsidiary FDC Hotels Inc., capex will go to the ongoing development of the 192-room, five-star Crimson Resort and Spa in Boracay.


“These investments will drive earnings growth for the next five years,” Gotianun-Yap said.



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Thursday, May 29, 2014

Hong Kong stocks up 0.23 percent by lunch








HONG KONG–Hong Kong shares ended the morning session 0.23 percent higher on Friday following another record close for Wall Street.


The benchmark Hang Seng Index added 52.11 points to 23,062.25 by the break on turnover of HK$26.53 billion (US$3.42 billion).



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Clark Field seen to be next Global City


Clark Field in Pampanga may become the next Bonifacio Global City as local developers increasingly look outside of Metro Manila for more office space to fill the rising demand of the business process outsourcing (BPO) industry which, in turn, is brought on by soaring business confidence in the Philippines, according to CBRE Philippines.


“Investor confidence in the Philippines continues to be strong, reinforced by recent events held in the country,” said Rick M. Santos, chair and chief executive of the real estate consultancy firm.


Santos was referring to the recent visit of United States President Barack Obama, the holding of this year’s World Economic Forum on East Asia in Manila, and the recent upgrade on the country’s credit rating by Standard & Poor’s.


“Investors from China, Hong Kong, Japan, Singapore, (South) Korea, US and Europe are anticipated to expand in emerging markets, with the Philippines as one of the top destinations,” Santos said.


He added that political instability in other countries, like Thailand, had helped influence more investors to consider the Philippines for their operations and expansion plans.


“The Philippines is in a good spot,” he said.


In particular, Santos said, what used to be the largest American military base outside of the United States may develop the way Fort Bonifacio in Metro Manila did, fueled by a continuously growing BPO sector.


“Americans return to Clark for business process outsourcing, call centers, and other ventures,” Santos said.


The BPO workforce is expected to grow to 1.3 million by 2016. This early, companies are scrambling for scant office space in Metro Manila. Developers are now forced to consider other places such as Clark Field.


“We see rapid growth and development in Clark and its surrounding areas,” he said. “More investors are going to come in once developments are fully maximized.”





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Biz Buzz: Tour guide Tessie


How does one help a visiting foreign journalist—who may not immediately be able to imagine the physical size of a project—realize just how big a real estate development is?


Why, by giving him a bird’s eye view, of course.


That’s exactly what SM Investment Corp. vice chair Teresita Sy-Coson did when she gave CNN’s Andrew Stevens a helicopter tour (with doors open on either side for the cameraman’s benefit) of the Sy family’s 74-hectare Mall of Asia complex. She also toured him inside the sprawling shopping mall, which is one of the world’s largest.


The Hong Kong-based journalist was in town recently as part of the network’s coverage of the World Economic Forum on East Asia, and interviewed the de facto leader of one of the country’s largest conglomerates. In it, Sy-Coson revealed the inner workings of the “family council” that now runs the business empire that covers malls, banking and real estate, among others.


She revealed that most business decisions are now voted upon by the family council composed of the six Sy siblings (of which she is the eldest). Inevitably, Stevens asked hypothetically how 3-3 voting ties are broken, and she said that Elizabeth, Henry Jr., Hans, Herbert, Harley and herself usually talk it over before reconvening for another vote.


During the interview, Sy-Coson also praised President Aquino’s anti-corruption campaign, even as she noted that cleaning up the entire government bureaucracy would be a long-term endeavor.


Back to the aerial tour she gave the visiting CNN journalist, Biz Buzz asked Sy-Coson what kind of helicopter she owns. The business-focused magnate replied: “I don’t even know what kind of helicopter that is, just like I don’t know what kind of car I have or am riding.”


Five minutes later (after consulting her staff) came a follow-up reply: “Eurocopter.”


We asked around and learned that it was a Eurocopter EC135, whose “suggested retail price” is around P200 million—peanuts, really, when you’re part of a $12-billion business empire. Daxim L. Lucas


Control tower ‘lagayan’?


Anyone who has driven in the Philippines knows that things can get a bit hairy and the lack of discipline sometimes becomes the norm on the highway.


Unfortunately, this freewheeling mentality has been adopted by some of our commercial pilots in airports outside Manila. That means situations where pilots actually cut in line just to secure an earlier flight and control tower operators are pressured to let them get ahead.


The situation has worsened to the point that the Civil Aviation Authority of the Philippines gathered senior executives of airlines two days ago to crack the whip.


“Just like on Edsa, there is no more driver discipline. This is also disappearing with our pilots,” CAAP deputy director general John Andrews said.


In the past, pilots would be given a departure time, which is important in coordinating arrivals in busy airports like the congested Ninoy Aquino International Airport in Manila.


But some airlines, instead, board their passengers up to an hour earlier and once doors are closed “pressure” the control tower to release them for takeoff.


The result is that passengers wait inside the plane longer and with the slotting system not being honored, congestion actually worsens in Manila.


Andrews said the new rules would bar airlines from boarding passengers until 20 minutes before scheduled departure. The result, he said, is that passengers wait inside the plane for a shorter period—no more than 20 minutes—and congestion eases, somewhat. Sounds like a winning scenario for all. Miguel R. Camus


PNB’s migration


Instead of one big migration to the Makati central business district, “Kapitan” Lucio Tan-led Philippine National Bank now plans to slowly phase in the relocation of its headquarters from the vast PNB Financial Center in Pasay.


Thus, the relocation will probably be executed over a span of 12 months, said PNB executive vice president Horacio Cebrero.


As earlier planned, PNB will use the head office of Allied Bank along Ayala Avenue, but some of its operations will be kept at the existing financial complex in Pasay to temper the higher cost of settling in Makati.


Cebrero told Biz Buzz that most likely, two floors of the existing structure in Pasay may still be occupied by some of PNB’s units in the near term while the rest will be vacated and rented out.


“There had been a lot of orders for short-term lease, three to four years, while they come up with a masterplan: either a joint venture or to develop the [Pasay] property,” Cebrero told Biz Buzz.


The 11-story PNB building, which has a large office space of about 6,000 square meters per floor, was valued at PNB’s books at around P10 billion as of last year (but its market value may be over P15 billion).


Cebrero said the units that would relocate to Makati could fit into the Allied Bank building because PNB Savings Bank would be housed in the former Petron building in Makati City.


Meanwhile, PNB is expected to earmark P600 million to hike its interest in Allied Commercial Bank to 100 percent from 91 percent. Full control is needed for the China-domiciled bank to be allowed to expand operations in Asia’s largest economy. Doris C. Dumlao


Cebu power wars


The privatization of the 153-megawatt Naga power complex in Cebu province may be in for another twist.


Therma Power Visayas Inc. (TPVI), a member of the Aboitiz group of companies, gave the highest bid to acquire the asset during an auction in March, but listed firm SPC Power Corp. (SPC) wants to exercise its right to give a heftier offer.


State-owned Power Sector Assets and Liabilities Management Corp. (PSALM), which is privatizing the asset, sought the opinion of government lawyers. But before that was handed down, SPC wired to PSALM the amount of P1.14 billion representing a 5 percent premium over the winning offer.


However, government lawyers said SPC’s right to top was based on an existing land lease agreement (LLA) on an adjacent gas turbine area, and that the same period would govern its purchase of the Naga complex.


The trouble is that the existing LLA runs out in 2020, leaving SPC with just six years. SPC believes it should have the new 25-year LLA that came with the bidding of the Naga complex.


In a new twist, speculation floated mid-week that the Office of the Government Corporate Counsel may reverse its opinion or that SPC’s lease term may be extended from six years to 25 years.


Sources say the push is coming from a high-ranking official at the Department of Finance.


SPC Power is said to have until today, May 30, to confirm it will exercise of its right to top the highest bid before it loses all rights to the power asset. Also today, PSALM is said to be up for a board meeting to formalize its position on the matter. Riza T. Olchondra


Helping the upgrade


The government and the private sector are still rejoicing over the recent credit-rating upgrade given by Standard & Poor’s on the Philippines, but few are aware of one crucial element that helped make the upgrade happen.


Biz Buzz heard that the Bangko Sentral ng Pilipinas (BSP) played a large part in the upgrade by showcasing the Philippine government’s achievements to visiting S&P executives last March.


One of the areas BSP focused on was the much-maligned Public-Private Partnership program. But instead of harping on what could be achieved under PPP, we’re told BSP highlighted a big program that has already been reaping rewards for the country for many years: the Malampaya deep water gas-to-power project.


The Malampaya project is the outcome of a public-private partnership, spearheaded by the Department of Energy and developed and operated by Shell Philippines Exploration, B.V. (Spex).


In particular, Spex briefed S&P associate director Agost Benard and director Takahira Ogawa about the project. They even arranged an onsite helicopter fly-by for the party.


Two months after the briefing and the visit to the Malampaya gas platform, S&P raised the country’s credit rating to a notch above investment grade.


To be sure, the Shell people aren’t claiming the credit for the upgrade. But nowadays, they share knowing smiles and pat each other’s back knowing they did their part. Daxim L. Lucas


Unattractive LRT deal?


Perhaps one of the biggest surprises during the bid submission of the P65-billion LRT-1 extension project to Cavite last Wednesday was that San Miguel Corp., one of the country’s most aggressive conglomerates, did not participate.


SMC was expected to join and its bid boxes were all there at the Transportation Department’s headquarters ahead of the 2:00 p.m. deadline, but it was ultimately a “no go.”


The reason had to do with returns and San Miguel, after doing all the math up until two days before bid submission, decided its money would be sitting on the project too long—at least two decades long, SMC president Ramon Ang said Thursday.


“We really wanted to bid,” Ang said, but added that waiting for money to return until the latter half of the 32-year concession period did not make sense for SMC.


The six other bidders that did not participate felt the same way.


DMCI Holdings’ chief financial officer Herbert Consunji noted that even with the revised terms, the LRT-1 PPP “was not commercially viable.”


This left the tandem of Ayala Corp. and Metro Pacific Investments as the sole bidder, and assuming they qualify, could bag the project next month.


But perhaps the Zobels- Manuel V. Pangilinan partnership, which won the the automated fare collection system PPP earlier, sees something everyone has missed. Only time will tell. Miguel R. Camus


E-mail us at bizbuzz@inquirer.com.ph. Get business alerts and a preview of Biz Buzz the evening before it comes out. Text ON INQ BUSINESS to 4467 (P2.50/alert).





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World Bank extends grant to help PH reduce poverty

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The World Bank has granted the Philippines technical assistance worth $700,615 to study how the sustainable use of the country’s natural resources—specifically mangroves and minerals—could help reduce poverty.


In a statement, the multilateral lender said the grant for the Wealth Accounting and Valuation of Ecosystems (Phil-Waves) project aimed to “provide data on the current state of the Philippines’ natural resources” as well as “promote the integration of principles of sustainable development into country policies and programs.”


“Ensuring sustainable use of natural resources could improve the lives of the poor as they are usually highly dependent on natural resources for their livelihood,” the World Bank pointed out.


Citing Philippine government data, the World Bank noted that even as agriculture, fisheries and forestry comprised 11.2 percent of the gross domestic product (GDP) and a third of employment last year, poverty incidence in these sectors remained at a high of 36.7 percent in 2009.


“Sustainable management and judicious use of natural resources are thus critical to ensure that growth is pro-poor and inclusive,” the lender said.


According to the World Bank, Phil-Waves will measure mangroves and mineral resources by using the 2012 System of Environmental and Economic Accounting (SEEA), which is a globally accepted framework for the accounting of natural resources.


The information to be generated through SEEA will then be used by the Philippine Statistics Authority in developing macroeconomic indicators that assess “the value of these key natural resources and their contribution to the country’s GDP” by so-called natural capital accounting, it said.


“Having sufficient data on natural resources and analyzing this properly is crucial to making decisions that will help the country reach the twin objectives of ending extreme poverty and increasing shared prosperity,” World Bank Philippines country director Motoo Konishi said.



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Benguet eyes revival of pre-1990 quake mine


Benguet Corp. is looking at an opportunity to relive its heyday with plans to mine 4 million to 8 million ounces of gold that have remained unreachable since the big Luzon earthquake of 1990.


Renato A. Claravall, Benguet senior vice president and chief finance officer, said in an interview that the company is preparing a detailed plan on reactivating four main tunnels and three subsidiary ones.


The tunnels are part of the Acupan gold project in Itogon town, which in 2013 produced some 12,000 ounces of gold.


Output from these tunnels stopped since late 1992 when metal prices were very low, production costs were high, and the tunnels themselves became inaccessible due to flooding caused by the earthquake.


Before that, during about 65 years of operations, the Ampucao project produced at least 5.5 million ounces of gold.


“We are finishing up the plan,” Claravall said. “The information memo could be done by mid- to late July.”


He said that, if this happens and other regulatory requirements were met, Benguet may be able to proceed with searching for an investor or partner as early as January 2015.


“De-watering the tunnels and (all the other work needed to bring them back online) would need $150 million to $175 million,” the official said.


“This could put us back to where [the company was] 20 or 30 years ago,” Claravall added. “The resource estimate is based on historical information.”


The global mining industry regards the company, which is the Philippines pioneering modern miner, as having been the country’s biggest producer of gold and the 16th-largest in the world.


Claravall said Benguet expects to incur P250 million to P300 million in capital expenses this year, mainly for existing nickel and gold operations.


“That’s smaller than our capex in 2013, which was about P400 million,” he said.


Further, the company is also considering to push exploration activities in the Ampucao copper prospect, also in Itogon.


“Drilling would cost P30 million and, if the company decides to go ahead, may be financed with cash at hand,” Claravall said.


During Benguet’s annual stockholders’ meeting on Thursday, the incumbent board was authorized to continue its functions in a holdover capacity, following a long-standing temporary restraining order (TRO) issued by the Supreme Court in 1993 in relation to litigation over the ownership 16.2 million shares sequestered by the Presidential Commission on Good Government.





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Higher rates weighed down Landbank in first quarter

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Profits of state-run Land Bank of the Philippines fell by nearly half in the first quarter of the year due to higher interest rates.


In a statement, Landbank said it posted a net income of P2.9 billion in the January-to-March period—down by 44 percent year-on-year. This translated to a return on equity of 11.9 percent.


Landbank president and CEO Gilda E. Pico attributed the decline to reduced profits from investments on the back of an increase in interest rates from historically low levels in the first half of 2013.


“Notwithstanding these low Q1 results, we are encouraged as income from loans remains strong,” Pico said. “We are well-positioned for sustained growth this year as we continue to expand our deposits and increase revenue from traditional and non-traditional sources.”


The dip in profits came despite a 28-percent growth in deposits to P733.8 billion at the end of March.


Loans grew 13.4 percent to P310.9 billion—slower than the rest of the industry. Data from the central bank showed outstanding loans of universal and commercial banks rose by 20 percent at the end of March.


Landbank’s total assets increased by 18 percent to P873.7 billion from P737.4 billion in March 2013, while capital stood at P67.6 billion.


Alongside fortifying its universal banking operations, Landbank remains the biggest lender to the agricultural sector, Pico said. The lender prioritizes small farmers and fisherfolk, microenterprises and SMEs, agri-aqua related projects of local governments and government-run firms, socialized to medium cost housing, and utilities.


Landbank maintains a presence in 80 provinces, with a nationwide network of 344 branches and 1,256 ATMs. It also plays a significant role in major government programs such as the Conditional Cash Transfer, the Food Supply Chain Program, and the overseas Filipino Workers’ Reintegration Program.



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Asia shares mostly down after Wall St losses



A man looks at an electronic stock board of a securities firm in Tokyo, May 23, 2014. Asian stock markets were mostly lower on Thursday, May 29, as investors took a breather after the previous day’s rally, taking their lead from a retreat on Wall Street. AP PHOTO/KOJI SASAHARA



HONG KONG—Asian stock markets were mostly lower on Thursday as investors took a breather after the previous day’s rally, taking their lead from a retreat on Wall Street.


The euro continued to face pressure from the dollar and the yen ahead of next week’s European Central Bank board meeting that many expect will see an easing of monetary policy.


Tokyo reversed earlier losses to end higher for a sixth straight session. The Nikkei edged up 10.77 points to 14,681.72, while Sydney fell 0.14 percent, or 7.68 points, to 5519.5 and Seoul lost 0.24 percent, or 4.80 points, to close at 2,012.26.


Shanghai shed 0.47 percent, or 9.63 points, to 2,040.60 and Hong Kong lost 0.30 percent, or 69.89 points, to 23,010.14.


With key US economic data due to be released later in the day, including the second estimate of first-quarter gross domestic product, dealers were keeping to the sidelines after enjoying a healthy pick-up on Wednesday.


On Wall Street the three main indexes ended lower ahead of the indicators. The Dow dipped 0.25 percent, the S&P 500 eased 0.11 percent, snapping a two-day streak of record closes, and the Nasdaq fell 0.28 percent.


Investors are also waiting for the release Monday of HSBC’s closely watched purchasing managers index (PMI) of manufacturing activity from China, the United States and Europe, hoping for signs of further improvement.


China is also due to unveil its own official PMI on Sunday.


Traders eye ECB policy easing


On foreign exchange markets the euro fell to 138.02 yen from 138.40 yen late in New York and 138.96 yen in Tokyo earlier Wednesday, with expectations high that the ECB will announce new measures to combat tepid price rises.


The bank’s chief Mario Draghi this month hinted at possible new policy moves as it struggles to prevent deflation in the eurozone.


The single European single currency also fetched $1.3591, against $1.3590 in US trade—which was a 15-week low—while the dollar eased to 101.54 yen from 101.84 yen.


In oil trade the US benchmark, West Texas Intermediate for delivery in July, climbed three cents to $102.75 a barrel and Brent North Sea crude for July gained 13 cents to $109.94.


Gold fetched $1,254.15 an ounce at 1040 GMT compared with $1,265.08 late Wednesday.


In other markets:


– Bangkok gained 0.41 percent, or 5.72 points, to 1,408.51.


Thai Airways International rose 5.88 percent to 14.40 baht, while Bangchak Petroleum dropped 2.46 percent to 29.75 baht.


– Kuala Lumpur’s main stock index added 4.96 points,or 0.27 percent, to 1,876.62.


Public Bank gained 0.7 percent to 20.62 ringgit, while Axiata Group rose 1.2 percent to 6.90.


– Mumbai fell 1.31 percent, or 321.94 points, to end at 24,234.15 points.


Infosys slid 7.81 percent to 2,924.30 rupees and Wockhardt tumbled 7.69 percent to 592.80 rupees.


– Singapore’s Straits Times Index rose 0.88 percent, or 28.87 points, at 3,300.71.


DBS Bank gained 0.71 percent to Sg$16.98 while oil rig maker Keppel Corp. was up 0.56 percent to Sg$10.72.


– Taipei fell 0.14 percent, or 12.71 points, to 9,109.0.


Smartphone maker HTC rose 0.31 percent to Tw$163.5 and Taiwan Semiconductor Manufacturing Co. skidded 1.61 percent to Tw$122.0.


– Wellington was flat, nudging up 1.7 points to 5,183.16.


Air New Zealand added 0.46 percent to NZ$2.175 and Telecom was down 0.18 percent at NZ$2.72.


– Manila closed 1.64 percent lower, shedding 111.21 points to 6,676.67.


The government said gross domestic product grew 5.7 percent in the first three months of 2014, the first time in nine quarters it has seen expansion below six percent.


Metropolitan Bank and Trust fell 2.96 percent to 83.50 pesos while BDO Unibank eased 0.56 percent to 88.40 pesos.


– Jakarta was closed for a public holiday.





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