Financial IQ: n ’13, PH growth may be second to China

World map showing GDP real growth rates for 2010. CIA world factbook estimateshttps://www.cia.gov/library/publications/the-world-factbook/rankorder/2003rank.html as of Januay 2011. (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

Good to hear experts seeing continuous growth in Philippines.


Among emerging economies in Asia, the Philippines will continue to trail China in terms of economic growth in 2013, according to a think tank based in Washington, DC.

Similar to a forecast it released in 2012, the c said in a new global report that Philippine growth would remain second only to that of China next year.

Also, the IIF said that in three years to 2014, yearly domestic growth of the Philippines would be above 6 percent.

The think tank said that the country’s gross domestic product would follow through with a growth rate of 6.8 percent next year after the latest forecast of 6.5 percent for 2012.

These are upgrades of IIF’s previous forecasts of 5.7 percent this year and 6.5 percent in 2013.

In 2014, the IIF predicts that the Philippine economy will grow slower at 6.2 percent, to be overtaken by India and Indonesia for second and third place after China.

“The Philippines stands out for its strong growth this year,” the IIF said. “Real GDP was 7.1 percent greater in the third quarter than a year earlier—up from 6.2 percent in the first half, and 3.9 percent for 2011.”

Also, the IIF observed that exports of electronics products—which “sharply depressed” total Philippine exports in late 2011—recovered early this year.

Latest data from the National Statistics Office showed that exports grew by 6.1 percent year-on-year in October, while electronics shipments was almost flat at 0.3 percent.

“The reduction in the budget deficit gave the government some fiscal headroom this year to stimulate domestic demand, while consumption continued to be buoyed by inflows from workers abroad,” the IIF said further.

The think tank also noted that remittances reached $17.3 billion in the first nine months of 2012, which was 5.7 percent higher year-on-year.

Regarding the peso, IIF expected it to trade at 40.90 against the US dollar by year-end, strengthening further to 40.80:$1 in 2013.

The local currency will be much stronger in 2014 when it is expected to trade at a round 40 against the greenback.

http://business.inquirer.net/99455/in-13-ph-growth-may-be-second-to-china-says-think-tank

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Financial IQ: PSEi up 33%

stock market (Photo credit: 401(K) 2012)

Financial IQ Philippines Quick Hit(s):

What is not to like about investing on the financial market?  This year... those who were invested on the Philippine Stock Market got a pretty nice return. :)


Philippine stocks surged for the fourth straight year in 2012, rising by about 33 percent this year on favorable macroeconomic and corporate performance.

On the last trading day of the year, the main-share Philippine Stock Exchange index gained 17.84 points or 0.31 percent to close at 5,812.73.

“Market ended the year way above our expectations. We closed today with a loud bang. It’s a vote of confidence of investors for the market’s sustained performance next year,” said Astro del Castillo, managing director at investment management firm First Grade.

“No doubt we will continue to hear a lot of fireworks for 2013,” Del Castillo said.

While there had been window-dressing on the last trading session of 2012, the stock market was described to have performed well for most of the year.

In fact, the index has been on an upswing since 2009, coming out of a global financial crisis the previous year.

In 2012, the local bourse was one of the best performers in the region, gaining 1,440.77 points from the end-2011 closing of 4,371.96.

Also, the market broke the index record 38 times this year.

“2012 was a good year for the stock market,” veteran stock broker and former PSE president Ramon Garcia said. “Investors are happy that the listed companies gave them reasonable returns on their money. Stock brokers too see their bottom lines on a positive note.”

Garcia, president of stock brokerage RTG & Co., added the PSEi could break out of the 6,000 level by January next year.

The 2012 closing level was not too far from the record finish of 5,832.83 posted on Dec. 26. The intraday peak reached 5,866.83 last Dec. 3.

Elsewhere across the region, stock markets were mostly higher on hopes that US officials would strike a last-minute budget deal to avoid a “fiscal cliff”—a series of tax increases and drastic spending cuts that could push      the US economy into another recession next year.

At the local market, value turnover for the day amounted to P7.87 billion, buoyed by yearend window-dressing. There were 101 advancers against 83 decliners, while 35 stocks were unchanged.

The biggest gainers were URC, JGS, Semirara, SMC, ALI, AGI, FGEN, EDC and AC.

BDO, SMIC, MWC and AP also contributed gains.

http://business.inquirer.net/99963/more-airlines-flying-to-ph-if-govt-scraps-carriers-tax-ftip-official

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Financial IQ: Firms still below PSE’s minimum public float

English: Phillippine stock market board (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

It is good to see our regulators implementing the Stock Exchange policy.  With stricter policies in-force... hopefully, the Philippine stock market can be an even better place for investors. :)


With two weeks to go before the ultimate deadline, 19 listed companies are still below the 10-percent minimum public ownership required for continued listing on the Philippine Stock Exchange.

In the last few days, some companies such LTG Inc., the holding firm of the Lucio Tan group, and the Gotianuns’ Filinvest Development Corp. have undertaken equity deals to comply with the requirement.

Based on a PSE report, among the companies with insufficient public float as of Dec. 18 were: Integrated Micro-electronics Inc., Alphaland Corp., Synergy Grid & Development Phils., Manchester International Holdings, SPC Power Corp., Vivant Corp., Atok-Big Wedge Co. Inc., Mariwasa Siam Holdings Inc., Southeast Asia Cement Holdings Inc., PAL Holdings Inc., 2Go Group Inc.,  Allied Banking Corp., Maybank ATR Kim Eng Financial Corp., San Miguel Brewery, PNOC Exploration Corp. and San Miguel Properties.

Three of the companies with insufficient public float are currently suspended from the PSE: Philcomsat Holdings Corp., Cosmos Bottling Corp. and NextStage Inc.

In the case of Ayala-led Integrated Microelectronics Inc., AYC Holdings Ltd., a subsidiary of Ayala Corp., has agreed to sell a portion of its stake to a public investor to enable IMI to remain listed. IMI expects the transaction to be completed before the year of the end, according to the company.

Maybank ATR Kim Eng is also expected to announce an equity placement deal to meet the requirement before the year’s end.

The last time the PSE announced the list of non-compliant companies, there were 25 companies. Two companies previously on the list—First Metro Investments Corp. and Metro Pacific Tollways Corp.—are set to be delisted by Friday while one, Eton Properties, is undergoing delisting procedures.

Immediately after December 31, the PSE will impose a trading suspension on the shares of non-compliant listed companies for a period of not more than six months, or until June 30, 2013. If after June 30 a listed company remains non-compliant, the listed company’s shares will be automatically deisted.

The Bureau of Internal Revenue, as contained in its recent rule issuance relating to the minimum public ownership rules, will impose capital gains tax and a documentary stamp tax (DST) on every sale, barter, exchange or other disposition of shares of non-compliant companies starting the first trading day of 2013.

A capital gains tax equivalent to 5 percent of the net capital gains amounting to not over P100,000 will apply while a 10-percent capital gains tax will apply on the excess. A DST of 75 centavos on each P200 of the par value of the stock will also be applied on the sale.

In contrast, trading of shares listed and traded at the PSE are subject only to stock transaction tax equivalent to 0.50 percent of the transaction value levied on the seller.

http://business.inquirer.net/98883/19-firms-still-below-pses-minimum-public-float-2-weeks-before-deadline

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Financial IQ: Electricity rates seen to increase in 2013

ERC 66208 (XFFB, 18.10.2008) (Photo credit: kbs478)

Financial IQ Philippines Quick Hit(s):

Philippines is already one of the countries that pays high electricity rates.  This is one of the reasons why some businesses have shut down because they cannot compete with the prices of other countries.  If electricity is your specialty, maybe you can invent something that can be cost effective for the residents and at the same time, earn significant profit. :)


Power consumers may have to brace for possible rate increases next year with the nearing approval of the petition of state-run Power Sector Assets and Liabilities Management Corp. (PSALM) to collect close to P140 billion worth of stranded debts and contract costs.

Francis Saturnino Juan, executive director of the Energy Regulatory Commission, has confirmed that the commission last week issued an order confirming that the case was ready for final deliberations after the completion of case hearings and other documentation.

“[This means that] any time after today, the case can be deliberated upon and resolved. We don’t have a definite timeline as to when this will happen. We are also cognizant of the fact that PSALM is urgently requesting for the resolution, but we are saddled with cases that are equally important,” Juan said.

Juan added that the ERC has yet to evaluate and deliberate the final amount to be collected from consumers and the length of the collection period.

Should PSALM’s application be approved, consumers can expect to pay another 36 centavos a kilowatt-hour over the next four years and a separate 3 centavos a kWh over a 15-year period to help pay the debts of another government firm, the cash-strapped National Power Corp. (Napocor).

The 36 centavos a kWh that PSALM wanted to pass on to consumers would cover the payment of stranded contract costs (through the universal charge for stranded contract costs or UC-SCC), while the 3 centavos a kWh would be used to settle stranded debts (through the universal charge for stranded debts or UC-SD). With the 39 centavos a kWh from the two charges, PSALM will be able to collect about 25 billion a year to help pay for its outstanding obligations.

PSALM president Emmanuel Ledesma Jr. earlier said that the government agency was hoping to start the collection of universal charges for stranded debts and contract costs from all grid-connected power consumers early next year amid rumors that the ERC would be releasing the decision by January.

PSALM, however, is hoping to collect the UC-SCC for a longer period of 15 years, instead than the current four years set by the ERC, to ease the burden on consumers.

Should the ERC allow PSALM to recover the UC SCC for 15 years, the additional charge would be equivalent to 6 centavos a kWh. This means that the total universal charges for both stranded contract costs and stranded debts will amount to 9 centavos a kWh over the next 15 years. At 9 centavos a kWh, PSALM will be able to collect an additional P5 billion from consumers yearly.

Ledesma earlier said that PSALM also wanted to extend its corporate life by another 10 years as this would further reduce the universal charge burden to about 6.5 centavos to 7 centavos a kWh over a longer period.

“Extending the corporate life of PSALM is not necessary but it would be nice because we’re trying to mitigate the impact to consumers—it will be for the benefit the consumer,” Ledesma had stressed.

PSALM has since been seeking to extend its corporate life to 2036, intended to mitigate the impact of the P140 billion in stranded costs on all power consumers.

http://business.inquirer.net/98469/electricity-rates-seen-to-increase-in-2013

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Financial IQ: Fund managers optimistic about ’13 prospects

Lehman Brothers Rockefeller centre (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

It is good that fund managers are bullish on the global economy for 2013.  Since global markets are interconnected... Philippines can still enjoy growth while major countries are experiencing growth as well.


Investment professionals across the globe are optimistic about global growth prospects for 2013, but they believe much work needs to be done to restore financial market integrity.

Based on the CFA (Chartered Financial Analyst) Institute 2013 global market sentiment, about 40 percent of respondents see an expansion in the global economy in the coming year, a six-point increase from last year’s poll.

But citing an overwhelming lack of trust in finance, CFAs stress the need to develop a culture of ethics and integrity inside financial firms.

“Mis-selling” of financial products topped respondents’ ethical concern locally. Mis-selling—or the pushing of unsuitable products to obtain a commission, or failure to provide advice tailored to the client’s needs—is seen as the most serious ethical issue in the coming year, according to 29 percent of members, up significantly from 13 percent last year.

In terms of asset classes, equities are still expected to outperform.

Half of respondents globally think equities will provide the highest expected total return in 2013, up from 41 percent a year ago—when compared to bonds, cash, commodities and precious metals.

Equity markets expected to provide the best investment opportunities in 2013 are the United States (32 percent), China (17 percent) and Brazil (10 percent).

The annual survey measured the opinion of 6,783 CFA charterholders and members across the globe.

“There is mounting optimism around global economic growth from both investors and the financial industry, despite ongoing issues like the European sovereign debt crisis and significantly greater concern about mis-selling,” said Kurt Schacht, managing director of standards and financial market integrity at CFA Institute.

“We’ve seen the industry become more vocal about the behavior that led to the global financial crisis, and survey respondents are emphatic about the need for stronger ethical culture at financial firms. Our members are convinced that to build a more trustworthy industry, change must start with top management to develop a culture where ethical practice is just as important as investment performance,” he said.

In the case of the Philippines, CFA Society of the Philippines president April Lee-Tan said the country’s impressive gross domestic product growth—together with relatively benign inflation—would put the country in an excellent position to capture more foreign direct investments in light of the improving outlook of the global economy.

“The drive of the current administration to improve governance has already enhanced investor confidence in the Philippines. However, we must ensure that the money coming in is channeled to the right sectors of our economy so that the most number of Filipinos benefit,” Lee-Tan said.

While 40 percent of CFA respondents expect the global economy to expand, only 20 percent believe it will contract, down from 29 percent a year ago.

Those in advanced economies (42 percent) are more optimistic than members in developing economies (35 percent).

The respondents are generally optimistic on local economies, except in Europe. Almost half (45 percent) of investment professionals think the economies of their own countries will expand in 2013, up slightly from 42 percent last year. By stark contrast, only 28 percent of those in Europe expect their economies to expand in the new year. Also, those in developing economies (56 percent) are markedly more optimistic than members in advanced economies (43 percent).

The survey also showed that ethical cultures and behavior within financial firms must change. More than half of respondents (56 percent) cite a lack of ethical culture within financial firms as the primary contributor to the low level of industry trust.

http://business.inquirer.net/98493/fund-managers-optimistic-about-13-prospects

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Financial IQ: Fewer households allot remittances for savings

Coins (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

Hopefully, households were able to find alternative investments that provided good returns... instead of just spending money on items/services for immediate gratification.  Remember to first set aside at least 10% for investment, and the remaining for expenditures.


The proportion of Filipino households that set aside remittances for savings and investments dropped in the fourth quarter from a year ago, highlighting the need to provide financial education to more people in the country.

The Bangko Sentral ng Pilipinas said that households dependent on remittances would need to learn how to save and invest the money they receive to secure their future and stimulate growth of the economy.

Results of the latest quarterly BSP survey showed that only 39.5 percent of respondents said they used a portion of their money for savings. This marked a drop from the 42.6 percent recorded in the same period last year.

Still, the fourth-quarter figure was better than the 36.8 percent recorded in the previous survey three months ago.

Results also showed that respondents who said they used a portion of their money for investments settled at just 3.1 percent. This represented a decline from the 6.4 percent registered a year ago, and the 4.9 percent of the previous quarter.

The survey was conducted in the first two weeks of October and had a sample of size of 478 households that regularly receive money from abroad.

The drop in the number of households that save up and invest the money received coincided with the current low-interest-rate environment, which led to shrinking yields on bank deposits and portfolio investments.

Economists said that in times of low interest rates, people tend to spend more of their money rather than save up or invest in fixed-income securities.

BSP Deputy Governor Diwa Guinigundo earlier said that if OFW households were to use their money to put up their own businesses, the multiplier effect of remittances on the economy would be much bigger. This is because, when one puts up a business, even a small one, he or she will create jobs.

At least 10 million Filipinos are estimated to be working overseas. Their remittances amounted to $20.1 billion last year. The World Bank expects remittances to the Philippines to rise to $24 billion this year, making it the third-biggest recipient next to India and China, with $70 billion and $66 billion, respectively.

http://business.inquirer.net/98477/bsp-fewer-households-allot-remittances-for-savings

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Financial IQ: Philippine stocks seen to weaken

English: Coat of arms of the Philippines (Photo credit: Wikipedia)

Financial IQ Philippines Quick Hit(s):

Were you caught off guard by this news?  Typically technical traders take profit when new highs are reached.  As far as valuation is concerned, some Asian countries have cheaper valuations compared to our stock market at this point.


Local stocks are seen continuing to pull back this week as many stocks have hit rich valuations while some external factors such as the US’ fiscal woes linger.

Last week, the main-share Philippine Stock Exchange fell by 87 points, or about 1.5 percent, to close at 5,707.11 on Friday.

Freya May Natividad, an analyst at 2TradeAsia, said the deadlock among US legislators on budget discussions depressed sentiment during the week, overshadowing the Federal Reserve’s pledge to buy $45 billion worth of treasury bonds a month and retain interest rates near zero levels until 2015.

“Momentum is likely to slow gradually as a prelude to holiday portfolio closing. Institutional players might be inclined to unwind some of their earlier buy positions to retain enough liquidity ahead of the Christmas and New Year breaks. With no firm compromise pact in place yet on the US fiscal deficit issue, some might be on ‘tentative mode’ unless positive surprises are announced,” Natividad said.

Over the long term, Natividad said funds flow would continue to favor high-growth emerging markets like the Philippines on supportive growth numbers for 2013. But after peaking at 5,866, she said the market might retest maintaining its poise above 5,700.

“Set against a healthy macro backdrop at home, gradually seize intraweek softness to position for 2013.  It might be timely to consider unnoticed shares per sector, especially those with promising yields,” she said.

Immediate support was seen at 5,650-5,700 and resistance at 5,800.

AB Capital Securities analyst Abbygayle Estrella said a temporary technical correction had restrained the PSEi. “Aside from the omnipotent shadow that the US fiscal cliff has cast over major markets, we do not foresee any catalyst that could reverse the ongoing correction of the local index.”

http://business.inquirer.net/98481/ph-stocks-seen-to-weaken

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