Market tumbles; SMIC bucks downtrend

STOCKS tumbled Wednesday on worries that hardline Republicans could vote down a crucial bill to hike the US borrowing limit and risk a catastrophic default that could hammer an already fragile global economy.

The PSE index, the 30-company bellwether of the Philippine Stock Exchange, dropped 33 points, or 0.51 percent, to close at 6,477.36 as four of the six subsectors declined, with only financials and mining and oil ending in the green.

The broader index representing all shares also lost 16 points, or 0.48 percent, to settle at 3,458.30 on a value turnover of P24.54 billion. Losers outnumbered gainers, 94 to 83, while 49 issues were unchanged.

Only three of the 10 most active stocks ended in the green, led by SM Investments Corp. which rose 2.03 percent to P929.00. BDO Unibank Inc. gained 1.27 percent to P136.00, while Ayala Land Inc. inched up 0.19 percent to P26.30.

Musk talks ‘new energy vehicles’ with minister during China visit

BEIJING, China—Elon Musk and China’s industry minister discussed ways to develop new energy vehicles Wednesday, a day after the Tesla CEO flew into Beijing and declared he wanted to expand his business in the world’s second-largest economy.

The mercurial billionaire, one of the world’s richest men, is on his first trip to China in more than three years.

On Wednesday he met Jin Zhuanglong in Beijing to discuss “the development of new energy vehicles and intelligent connected vehicles”, the Ministry of Industry and Information Technology said in a readout. It did not share further details. Tesla representatives did not respond to AFP requests for further information on Musk’s itinerary.

Musk has extensive business interests in China and on Tuesday told foreign minister Qin Gang that his firm was “willing to continue to expand its business in China”, according to a foreign ministry readout. Chinese media reported Tesla welcomed its CEO to Beijing on Tuesday with a 16-course dinner that included seafood, New Zealand lamb, and traditional

Beijing-style soybean paste noodles.

China is the world’s biggest electric vehicle market and Tesla announced in April it would build a second massive factory in Shanghai, which would be its second plant in the city after Gigafactory, which broke ground in 2019.

In his meeting with Qin on Tuesday, Musk also expressed his opposition to an economic “decoupling” between China and the United States, Beijing said. “The interests of the United States and China are intertwined, like conjoined twins, who are inseparable from each other,” Musk added.

Musk’s extensive business ties to China have raised eyebrows in Washington, with President Joe Biden saying in November that the executive’s links to foreign countries were “worthy” of scrutiny.

And he has caused controversy by suggesting the self-ruled island of Taiwan should become part of China —a stance welcomed by Chinese officials but which deeply angered Taiwan.

Critics point to the industrial ties linking Musk to China, which has increasingly fraught ties with Washington.

Chinese foreign ministry spokeswoman Mao Ning said on Tuesday that the country welcomed visits by international executives “to better understand China and promote mutually beneficial cooperation.” AFP

Other conglomerates were heavy losers Wednesday. Meanwhile, the peso slightly rebounded to finish at 56.15 against the US dollar from 56.31 Tuesday. Most Asian markets traded lower. Further signs that China’s post-pandemic recovery was fading added to the downbeat mood on trading floors, as did worries that the US Federal Reserve is likely to increase interest rates again next month.

The buoyant mood that started the week, after US President Joe Biden and House Speaker Kevin McCarthy finalized a debt deal, was giving way to a fear that the far-right Freedom Caucus could torpedo it.

Members on both sides of the political spectrum have raised concerns about the agreement, with Republicans saying it does not have enough spending cuts and the left wing of the Democratic Party unhappy that Biden agreed to any limits at all.

The Treasury has warned that if the borrowing ceiling is not lifted by June 5, the government will run out of cash to service its debt obligations.

While McCarthy has described the deal as “transformational” and expressed confidence the bill will pass, leading Freedom Caucus member Chip Roy called it a “turd sandwich”.

“Not one Republican should vote for this deal. It is a bad deal. No one sent us here to borrow an additional $4 trillion to get absolutely nothing in return,” Roy said at a Freedom Caucus news conference. He later warned McCarthy would face a “reckoning”. That came as another GOP Representative, Dan Bishop, called party members to vote McCarthy out as speaker.

And CMC Markets analyst Michael Hewson said ratings agencies were “already sharpening their pencils on downgrades for the US credit rating”.

Still, House Democratic leader Hakeem Jeffries remained confident, telling Bloomberg Television: “We will be able to get this bill over the finish line tomorrow.” With AFP

Japan allows nuclear plants to operate beyond 60 years

TOKYO - Japan on Wednesday passed a law allowing nuclear reactors to operate beyond 60 years, as it tries to reinvigorate the sector to meet energy challenges and climate targets.

The bill intends to “establish an electricity supply system that will achieve a carbon-free society”, a parliament spokesman told AFP.

Under the new rules, the age cap technically remains 60 years but exceptions are allowed for reactors that have had to pause operations for “unforeseeable” reasons.

Those might include changes to safety guidelines, or provisional injunctions by a court. The new rules allow operators to exclude periods of shutdown when calculating the total years of operation.

However, operators require approval from Japan’s nuclear safety watchdog for the exemption and the law also includes measures intended to strengthen safety checks at aging reactors.

The government wants to “ensure a stable supply of electricity while pro-

Custody battle over RE firm; Trade with EU needs a nudge

DIVORCE proceedings are now underway between a recently married big-time investor and renewable energy startup that could be trivialized as excellent material for a telenovela, except that the success of the campaign for a fossil fuel-free Philippines is highly at stake.

Akin to a child custody battle, the proceedings are centered on a prized possession—control of a company that holds promise as the breakthrough needed to turn so-called green energy into the norm, rather than the exception, in the Philippine energy industry which is still heavily reliant on fossil fuels.

The investor has already dug deep into his pockets. But the marriage partner, the renewable energy startup, is failing to fulfill its marital and parental obligations, stunting the growth of their child, the largest RE and battery energy storage power project to ever emanate from renewable energy’s drawing board and the closest such a dream has come to turning into reality. The divorce proceedings between big-time investor and RE startup have now escalated into which parent could best rear the child and which possesses the resources to nurture the child’s growth.

On the table are big-time investor’s billions and startup’s millions, mostly generated through the trust of other investors highly impressed by startup’s image as a pioneer. It makes for a good telenovela series but the proceeding’s outcome would be far more serious in its impact on the dream to beat dirty fuel by harnessing nature.

PH underperforms in Europe

The Philippines appears to be underperforming in its trade relations with the European Union despite the upbeat mood of the economic bloc on the Southeast Asian nation. The European Chamber of Commerce of the Philippines is bullish on its prospects on the local economy and lavish on its praise for recent business reforms here. ECCP president Lars Wittig conceded that European companies were considering the Philippines as an investment destination given the improving economic fundamentals and the country’s open investment policy.

“This is following the enactment of economic reforms and the recent creation of a ‘green lane’

Magenta Yellow Black

moting the use of carbon-free electricity resources,” Japan’s ministry of economy, trade and industry said in a statement.

The move comes as Japan’s government looks to reinvigorate a nuclear sector that was taken offline after the 2011 Fukushima disaster caused by a deadly tsunami.

Most of Japan’s nuclear reactors remain out of action today, but the global energy crisis has reopened debate on the subject and polls show that public views on nuclear power are softening. AFP for strategic investments. Further, we have seen solid headway in facilitating ease of doing business particularly in terms of the ease of establishing reliable supply chain connection and structural factors as the country moves 17 spots, from 60th to 43rd place, in terms of logistics performance index as reported by the World Bank,” says the ECCP executive.

The Philippines, however, may botch the opportunity and lose potential European investments to its competitors in the Association of Southeast Asian Nations (ASEAN) block if Manila does not roll up its sleeves.

“Certainly, there is much opportunity for Europe and the Philippines to strengthen their economic ties, especially in line with their longstanding trade and investment relations. It is highly encouraged that the Philippines further leverages its status as the only ASEAN country beneficiary of the EU GSP+ trade preference. We equally look forward to further advancements in the EU-PH FTA discussions, which are crucial for the Philippines to become a magnet for European investments,” Wittig said.

The European executive referred to the proposed Philippines-EU Free Trade Agreement and the trade benefits the nation enjoys under the generalized system of preferences that completely removed all tariffs on 66 percent of all products in the EU’s official list. Such preferential treatment is given in the form of reduced or zero rates of customs duties, which the Philippines must exploit. The EU GSP+ arrangement is set to expire by the end of this year.

Another economic opportunity that the Philippines must pursue is the the formalization of the PhilippinesEU Free Trade Agreement.

Trade Secretary Alfredo Pascual knows fully well the importance of a free trade pact. A successful negotiation of the FTA would allow the Philippines to obtain additional duty-free market access beyond those covered by the EU GSP+ scheme, and serve as a incentive for attracting larger investments from the EU.

Pascual noted that an FTA with the EU will put the Philippines at par with other ASEAN countries that are aggressively pursuing similar agreements with the EU.

E-mail: rayenano@yahoo.com or extrastory2000@ gmail.com

Tito Sotto, Vic Sotto, and Joey de Leon bidding goodbye to the audience