‘Power situation, POGOs should worry investors’

By Jordeene B. Lagare – March 5, 2020
from The Manila Times

A possible power shortage in Luzon in the summer and the shutdown of Philippine offshore gaming operators (POGOs) by China should worry investors, a banker said during the The Manila Times’ 11th Business Forum on Tuesday.

“I have two specific risks that I’m worried about. The first one is the power shortages. It’s not being talked about much but if there’s going to be a power shortage especially in Luzon, we will be complaining and it also means that we will not be able to meet their demands, to build their products to sell,” BDO Capital & Investment Corp. President Eduardo Francisco said.

BDO Capital & Investment Corp. President Eduardo Francisco

Last month, the Department of Energy (DoE) warned of power blackouts in the Luzon grid once summer kicks in.

Specifically, red alerts might be raised in Luzon between the 18th week and 21st week of 2020, or from April and May, depending on the number of power plants that will have a forced outage or sudden and unplanned breakdown.

A red alert is hoisted because of thin power reserves.

“The second, of course, is POGO,” he added. “But as I was already looking at some research reports, worst-case scenario you could see cancellations in some of the POGO rentals.”

Earlier, the Ministry of Public Security of China canceled the passports of thousands of Chinese working for POGOs.

“In order to crack down on cross-border telecommunication fraud crimes, the Ministry of Public Security of China has obtained a list of Chinese nationals suspected of committing long-term telecommunication fraud crimes abroad, who are classified as the persons prohibited from exiting China, according to the Exit-Entry Administration Law of the People’s Republic of China,” the Chinese embassy had said in a statement.

“Such operations are aimed at the suspects of Chinese who have committed telecommunications fraud crimes in different countries,” it added.

Francisco said Chinese people working for POGOs might not return to the condominium units they already prepaid or rented, causing a decline in leasing rates.

As for local stocks, he said they could regain momentum from the earnings of listed companies in the country.

“In the long run, corporate earnings will consistently be high or good,” Francisco said. “At least Philippine companies continue to do well. The conglomerates are doing well because the conglomerates represent the Philippine economy.”