...the microconsumer lending countries

Laos, India, Philiipines, Myanmar and Vietnam the have highest prospects for the development of online microconsumer lending, according to Robocash Group study

Stephen Netto
theonlinecitizen.com
18 October 2019

With a growing attention to financial inclusion of the population lacking access to finance, countries in South and Southeast Asia are demonstrating the dynamic development of financial services.

According to a study by financial holding Robocash Group on the prospects for online micro consumer lending across countries in the region, Laos, India, the Philippines, Myanmar, and Vietnam have taken the highest positions in the company ranking.

The highest score in the ranking (20) belongs to Laos. It combines a high potential of the untapped demand with a positive attitude to short-term online lending from the government and population. The need for relevant products in Laos is similar to the situation in Myanmar, but it is free from some obstacles of the latter.

Over time, the new market will grow, and foreign investors may significantly contribute to this process. The underdevelopment of the legislation and the absence of financial institutes such as credit bureaus encourage experienced foreign companies with a fine-tuned scoring and reliable operation processes to support the efficient development of the market.

India holds second place with a score of 18. Despite a direct connection between the development level of a country and its place in the ranking, India is an exception. Although a significant part of local people already has access to credit products (79.9%), the rest include hundreds of millions of people. It correlates with the formed regulation.

After all, the market has a relatively small number of foreign companies, and not many Chinese startups have entered the market. Hence, the competition remains quite moderate.

Third place belongs to the Philippines (16). The country gives in the leading positions to other countries because of their hidden potential. However, other advantages compensate for it. The country has an established market of short-term lending services, flexible, and facilitative regulation.

Not forgetting, there is a balance between the high demand for relevant products and low debt load among the population. Moreover, the Philippine government is driving the digitization of financial services to decrease the factor of geographical fragmentation. It makes the country stand out on the regional background.

Myanmar is fourth in the ranking (14). As a country with a relatively large number of people below the poverty line and high demand for micro consumer loans, Myanmar stands out in comparison to the more developed countries in Southeast Asia. Still, some points are holding the market back.

Partly, this is due to its underdevelopment. The government has introduced strong regulation to get rid off illegal creditors, which activities have led to debt overload of the population. The latter reduces the attractiveness of the country for foreign companies significantly.

Fifth place belongs to Vietnam (12). Vietnam demonstrates significant demand for micro consumer online loans. With a large number of people living in rural areas (66%), only one-third of the population has access to credit products. Another stimulating factor is the growing GDP forecasted to increase by 6.6% by 2020.

Nonetheless, Vietnam should improve its regulation in terms of licensing of companies and control of financial statements. Overall, the country represents a bright example of the market with a medium position in the ranking. Vietnam is quite perspective but gives in the leadership due to the current difficulties for the business.

...the fast growing gig economy

Philippines’ fast-growing gig economy 

Liyana Hasnan

The ASEAN Post
10 Ocober2019

More professionals are joining the gig economy to look for additional income or a change of pace in work. The gig economy refers to the hiring of independent contractors and short-term workers by businesses. Talents that make up the gig economy are usually called freelancers, gig-workers, independent contractors and free agents. 

Technology is enabling gig economy workers to take on extra or freelance work from anywhere in the world. Eyal Moldovan, the general manager of Payoneer, a financial services company, said that professionals who voluntarily choose to freelance do so for lifestyle reasons because online platforms make it possible for them to work from home.

Companies are also embracing this new work setup and employing freelancers for certain projects. 
Based on a 2018 report by talent outsourcing and consultancy group, KellyOCG, 84 percent of hiring managers in the Asia Pacific outsource to freelancers. These hiring managers use freelancers in their departments to save cost, drive innovation and keep a competitive advantage. The KellyOCG report also found that 43 percent of global organisations who engage these free agents have saved at least 20 percent in labour costs.

According to a 2019 report by Payoneer on ‘Global Gig Economy Index,’ the Philippines placed sixth in the world as the fastest-growing market for the gig industry, revealing a 35 percent growth in freelance earnings. 

Whether it’s the flexible hours, the absence of micromanaging bosses or a desire to build their businesses, the rewards for freelancers includes work flexibility, higher incomes and autonomy. A rising number of freelancers have also created a demand for flexible coworking spaces.

Choosing to freelance 

Driven by digital technology and high Internet penetration, more Filipinos are choosing to freelance. According to PayPal’s 2018 Global Freelancer Insights Report, at least two percent of the Philippines’ population is said to be freelancers. The report also found that 84 percent of freelancers use a freelancer online platform such as Upwork and Freelancer. Some of the many types of works Filipino freelancers are engaged with are data entry/internet research (34 percent), virtual assistance (13 percent) and customer service (8 percent).

PayPal’s survey revealed that digital platforms provide ease and convenience for freelancers to receive payments from clients overseas.

Filipino freelancers are supported by government initiatives such as the DigitalJobsPH Technical Training which help people find work as digital entrepreneurs and freelancers in the Information Communications Technology (ICT) field. The government recognises the potential of the gig economy to provide meaningful work to rural folks who are otherwise left out in the industrialisation of cities. According to Senator Sonny Angara, Philippine’s Congress member, the training has helped 712 freelancers find online jobs. The Oxford Internet Institute (OII), through their real-time monitoring of online platforms found that the Philippines is the fifth-largest supplier of online labour. 

Freelancing can become stressful 

Even though there are benefits to freelancing, participating in the gig economy comes with its own set of challenges. PayPal’s recent online survey found that 92 percent of Filipino freelancers said ‘job stability’ is a key concern for their careers. It is hard for freelancers to calculate their future since they move from contract to contract. To sustain a pipeline, gig-workers freelance for multiple clients, allowing them to anticipate the unpredictability of work and diversify their income streams.

The gig economy also raises concerns over social safety nets, financial security, and health and retirement plans. Without savings or health benefits, freelancing can become stressful. Surviving in the gig economy also requires competency in specific skill sets, which can get very competitive. In Southeast Asia, the gig economy is unregulated, making freelancers easy targets for exploitation either by being overworked or underpaid. 

Then there are people who assume freelancers work for free. The 2018 study by PayPal revealed that 58 percent of freelancers in four Southeast Asia markets (Singapore, Philippines, Indonesia, and Vietnam) have experienced not being paid. The key reason for this is that freelancers are not being taken seriously by clients.

A World Bank article on ‘Regulating the gig economy,’ stated that without changes to governments’ regulations, freelancers will continue to be left out of the traditional social protection systems such as unemployment benefits, sick pay and pensions. The International Labor Organization (ILO) has also suggested for countries to extend their labour protection to people who are working part-time or in temporary jobs. 

Sandra Polaski, the deputy director general of policy at ILO said: “There is huge scope for governments to use technology for enforcing the new regulations,” adding that “most transactions on the gig economy are done via the internet and as such, they can be tracked. These companies do need to contribute to insurance and other social contributions.”

According to a 2017 OII report on ‘The risks and rewards of online gig work at the global margins,’ regulation of online platforms can effectively improve labour conditions for workers, especially in low-income countries. However, it is contested that over-regulation can negatively impact the gig economy. 

As the gig economy continues to take over the workforce, governments and labour groups must reassess their role and be creative to better protect workers in this industry. 

...the fastest growing bond markets

PH 2nd-fastest growing bond market in East Asia as of Q3, says ADB

By Michelle V. Remo
Philippine Daily Inquirer

Friday, November 23rd, 2012

 

 

"The Philippines was one of the most preferred sites for portfolio investments given a favorable outlook on its economy. " - ADB

 

 

 

The bond market in the Philippines was the second-fastest growing among emerging economies in East Asia as of the third quarter, as the country’s buoyant economy boosted appetite for peso-denominated instruments.

The Asian Development Bank said in a recent report that outstanding bonds in the local bond market registered one of the fastest growth rates in the region as of end-September, as economic problems in Europe and the United States prompted investors to seek higher yields in Asia.

The Philippines was one of the most preferred sites for portfolio investments given a favorable outlook on its economy, the ADB said.

According to the ADB report, the outstanding amount of local currency-denominated bonds from the Philippines reached a dollar equivalent of $91 billion as of the end of September, up by 21.8 percent from that in the same period last year.

Only Singapore posted a faster growth rate of 25.8 percent.

In absolute terms, however, the amount of outstanding bonds in the Philippine market was lower than that for most countries in the region.

Industry players admit that the country’s capital market remains small compared with its regional counterparts.

Growth rates and outstanding amounts of bond markets in the region are as follows: Vietnam, 21.1-percent growth to $21 billion; Malaysia, 20.7-percent growth to $318 billion; South Korea, 16.2-percent growth to $1.37 trillion; China, 12.5-percent growth to $3.65 trillion; and Hong Kong, 3.7-percent growth to $176 billion.

Contradicting the trend in the region, the bond market of Indonesia fell by 0.6 percent to $110 billion.

For the entire region, the outstanding amount of bonds thus stood at $6.24 trillion, rising year on year by 13.9 percent.

“Volatility spillover was directly transmitted to Asian local bond markets during the US and eurozone crises,” said the ADB as it noted the shift in investor appetite to instruments issued from emerging Asian markets.

It said the appetite for portfolio instruments from emerging Asian economies was also reflected in the increase in demand for equities, currencies and money market instruments in the region.

Data on the Philippines also showed that of the P3.8 trillion (or $91 billion) in outstanding bonds by the end of September, about P3.3 trillion was accounted for by government securities while corporate bonds accounted for the balance of P500 billion.

The outstanding amount of Philippine government securities represented a year-on-year growth of 14.7 percent, while that of corporate bonds marked an annual growth rate of 26.1 percent, the ADB said.

Although the increase in foreign portfolio investments is a welcome development, monetary officials said excessive amounts and steep increase could be destabilizing to an economy.

They said these can cause sharp and sudden appreciation of the local currency against the US dollar, adversely affecting exporters.

This is why the Bangko Sentral ng Pilipinas has implemented several measures against excessive inflows.

...the PH strong position

Tetangco says PH in a position of strength

 

 

By Prinz P. Magtulis,

The Philippine Star

10/23/2012

 

 

MANILA, Philippines - Amid the challenging global financial climate, Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. believes the Philippines is in a "position of strength."

 

The country’s top central banker mentioned this in a recent interview with Emerging Markets magazine, which awarded him the distinction of being the central bank governor of the year for the Asian region.

“The central bank, under Governor Amando Tetangco’s stewardship, has managed monetary policy with considerable skill, not least given the twin threats of China slowdown and spillover from the euro zone crisis,” said Taimur Ahmad, editor-in-chief of Emerging Markets, in a statement.

Tetangco, who received the award on the sidelines of the World Bank-International Monetary Fund meetings in Japan two weeks ago, boasted of the country’s strong macroeconomic fundamentals that allowed it to grow 6.1 percent in the first semester.

“I think, over-all, we are in a position of strength at this point in time. Our interest rates are still significantly positive. The BSP borrowing rate is at 3.75 percent, so there is room there. The government has a fiscal deficit that is substantially below the projection for the year, so they also have room to accelerate spending,” the BSP chief explained.

BSP’s policy-making Monetary Board has slashed policy rates by an aggregate of 75 basis points this year as inflation, which averaged 3.2 percent as of the third quarter, remained manageable and growth continued to be strong.

It is scheduled to meet again this Thursday and the market is expecting it to cut key rates again by another 25 basis points in a bid to tame the peso’s appreciation and support export growth. That would put interest rates at new record-lows of 3.5 percent and 5.5 percent for overnight borrowing and lending, respectively.

Latest data showed merchandise exports dropped nine percent in August. A strong peso, while making imports cheaper, also trims the value of dollar export earnings and remittances when they are converted into local money.

While easier monetary policy has helped boost growth, it has also sparked concerns of asset bubble formation or a situation when value of assets, given huge demand, tends to rise beyond real market prices.

...the CB Governor for Asia

Tetangco Named CB Gov For Asia

 

 

By FIL C. SIONIL

Manila Bulletin 

October 22, 2012

 

 

MANILA, Philippines --- In recognition of his skillful handling of monetary policy amidst external financial threats, Bangko Sentral ng Pilipinas (BSP) Governor Amando M. Tetangco, Jr. was named the Central Bank Governor of the Year For Asia by the international financial magazine, Emerging Markets. 

 

 

 

 “The (Philippine) central bank, under Governor Amando Tetangco’s stewardship has managed monetary policy with considerable skill, not least given the twin threats of China slowdown and spill-over from the Eurozones crisis,” Emerging Markets, in a statement, said.

Tetangco received the award at the sidelines of the World Bank-International Monetary Fund annual meeting recently held in Tokyo, Japan. The yearly Emerging Markets CB Governor and Finance Minister of the Year Awards recognize the leading policymakers in each region. The awards are chosen by Emerging Markets’ editorial team, taking into account the views of leading regional experts. This is the second international recognition Tetangco has received for this year to date. Early this year, the Global Finance magazine named Tetangco as one of the world’s six best central bankers in 2012. For global finance, it was Tetangco’s fourth award.

Tetangco was chosen by Global Finance in recognition of his adept handling of the economy with the country taking advantage of the “receding inflation to cut its benchmark interest rate to a record low 3.75 percent in July, to stimulate growth as the global economy weakens.”

In an interview with Emerging Markets, the BSP Chief admitted that the monetary authorities “needed to sharpen our monitoring of market behavior and be creative in implementing market-based solutions to reduce, contain or eliminate asset bubbles.”

Against the backdrop of a brewing financial crisis in the Eurozone and the narrowing of growth in China, the Philippines economic performance has remained relatively strong, registering a 6.4 percent for the first quarter of the year.

...the 2012 Euromoney's Finance Minister of the Year

SECRETARY CESAR V. PURISIMA, 2012 FINANCE MINISTER OF THE YEAR

 

 

Editorial

October 16, 2012

Manila Bulletin

 

DEPARTMENT of Finance Secretary Cesar V. Purisima has been named “2012 Finance Minister of the Year” by leading global banking and finance magazine Euromoney for his “careful and successful stewardship” of the Philippine economy, and for his initiatives in promoting capital markets, both in the Philippines and in the Association of Southeast Asian Nations.

Euromoney is the flagship publication of business and financial publisher Euromoney Institutional Investor. It has been selecting a “Finance Minister of the Year” over the past 30 years to coincide with the World Bank/International Monetary Fund (WB/IMF) Annual Meeting. Selection is based on three factors: Opinions of a committee of Euromoney editors, views of world’s leading bankers, and analysis of over 400 global economist-contributors.

Secretary Purisima, who received the award during the week-long WB/IMF Meeting in Tokyo, which started October 11, 2012, said it is a recognition of the Philippines’ economic gains under the Aquino Administration. “This is a testament to how far the Philippine economic story has turned around under the leadership of President Aquino. The President’s unwavering commitment to good governance has brought significant gains to the Philippine economy,” he said. In 2011, Secretary Purisima was also named Finance Minister of the Year by the London-based financial news source, “Emerging Markets,” comprised of current financial news on emerging market trends and analysis in capital markets.

Secretary Purisima was appointed Finance Secretary by President Benigno S. Aquino III on June 29, 2010. He held the post previously in the Arroyo administration before he resigned in 2005. Before joining the government, he headed one of the country’s biggest auditing firms, Sycip, Gorres & Velayo. He was a member of the Global Executive Board and Global Practice Council of Ernst & Young, one of world’s Big Four accounting firms. He served in Land Bank of the Philippines, National Power Corporation, Monetary Board of the Bangko Sentral ng Pilipinas, Energy Development Corp., World Bank Group and International Monetary Fund. He is Governor for the Philippines in Asian Development Bank. He is Chairman of the Power Sector Assets and Liabilities Management Corp.

We congratulate Department of Finance Secretary Cesar V. Purisima for having been selected “2012 Finance Minister of the Year,” by the prestigious Euromoney Magazine. We wish him the best and success in all endeavors. CONGRATULATIONS AND MABUHAY!

...the investment grade

'Phl to get investment grade by 2013' By Prinz Magtulis (The Philippine Star) September 26, 2012

MANILA, Philippines - The Philippines is well on its way to achieving investment grade by next year, an investment bank said in a new report on Wednesday.

In its Daily Breakfast Spread, Singapore-based DBS Bank Ltd. noted the government’s “impressive” debt management that allowed it to secure eight positive credit rating actions during the first two years of the Aquino administration.

It said national government debt as a proportion of gross domestic product (GDP) has declined from as high as 74.4 percent in 2004 to a 13-year low of 50.9 percent by end last year.

GDP is the sum of all products and services created in an economy. A lower debt-to-GDP ratio indicates that the country has more resources to settle its obligations. Latest data showed the debt-to-GDP ratio further dipped to 50.5 percent as of the first semester.

“Therefore, it is not surprising that it won multiple upgrades from credit rating agencies over the past two years,” DBS said in its report released today.

“An investment grade rating is definitely a possibility in 2013,” it added.

The Aquino administration has been batting for an investment grade, which, if granted, is expected to lower our borrowing costs and boost foreign investments in the country.

So far, the highest credit rating of the country came from Fitch Ratings and Standard & Poor’s Ratings Services, which rank us one notch below investment grade with stable outlooks. The other major debt watcher, Moody’s Investors Service, put us two notches below but with a positive forecast.

A positive forecast means the country could be upgraded in the next 12 to 18 months.

Aside from declining government debt ratios, DBS said the country has also enjoyed dwindling foreign liabilities “in part due to the strength of the peso.” It said foreign debt just accounted to 35.8 percent of total outstanding debt as of July, from 39 percent in early 2011.

The national government has also been a prudent budget manager, it said, with the deficit expected to fall to just 2.4 percent and two percent of GDP this year and the next, respectively. Last year, deficit-to-GDP ratio hit 2 percent of economic output.

“Moreover, foreign reserves actually rose over the course of this year despite the slowing of inflows into Asia that resulted in many countries actually seeing foreign reserves stagnate or even decline,” the report said. Reserves amounted to a record-high of $80.8 billion as of August, data showed.

“A solid (first half) economic growth figure and strong external finances are key reasons for attracting continued inflows,” it added.

The local economy grew by 6.1 percent as of June, slightly above the government’s five- to six-percent target for the year.

...the strong PHP

Peso Strongest In Four Years

 

 

Manila Bulletin

11 September 2012

 

MANILA, Philippines --- The peso vis-à-vis the US dollar opened to its strongest level since 2008 at P41.57 but toward the end of the day, selling pushed it back to P41.615 from a high of P41.620.

 

 

This would be the third straight week that the peso appreciated against the US dollar on hints and hopes that the US government will soon implement economic stimulus package when the Fed meets this week.


In Monday's closing, the peso weighted average was P41.596 with total volume of P804.5 million, lower compared to Friday's P883.46 million.


According to a Bloomberg report, the peso touched the strongest level in more than four years after US employment data prompted speculation the Federal Reserve will add to monetary-easing measures, boosting demand for emerging-market assets.


Payrolls in the world's largest economy rose by 96,000 last month, compared with the 130,000 median estimate in a Bloomberg survey and the 141,000 jobs created in July, the Labor Department said on Sept. 7. The local currency extended a three-week rally after the Bangko Sentral ng Pilipinas (Philippine central bank) said it may raise inflation targets for 2012 and 2013, and economists forecast policy makers will keep interest rates at record low this week.


"The peso is definitely benefiting from inflows of foreign money into equities" given the speculation on monetary easing, said Jose Vistan, head of research at AB Capital Securities Ltd. in Manila.

"There's also increased confidence in the Philippine economy, with the possibility of a rating upgrade."


Rate Outlook


The country was upgraded one level to Ba2 by Moody's Investors Service in June last year, or two levels below investment grade. Standard & Poor's raised its rating one step to BB+ on July 4 this year, or one level below investment grade.


Gains in the peso may be limited before a government report tomorrow that may show exports shrank 2 percent in July following a 4.3 percent advance in June, based on the median forecast in a Bloomberg survey. Malaysia, Thailand and Taiwan also reported contraction in July shipments.


Bangko Sentral ng Pilipinas will keep its overnight rate at 3.75 percent on Sept. 13, according to 12 of 16 economists in a separate survey. Four predicted a cut to 3.5 percent. Monetary policy remains appropriate while the economy faces significant issues related to higher commodity prices, Deputy Governor Diwa Guinigundo said on Sept. 8. (Bloomberg)

...the uprising

PSE to break 2011 capital-raising record of P107.5B

 

MARC JAYSON CAYABYAB

GMA News

August 24, 2012

 

 

Philippine-based investors are the main drivers of the local listed equities market, which the local bourse president Hans B. Sicat said, is on track to breaking last year’s record of P107.5 billion of capital raised.
 

Speaking before the  4th annual Corporate Treasury and CFO Summit in Makati Thursday, Sicat said 62 percent of average daily turnover in the Philippine Stock Exchange (PSE) comes from a “strong local bid” largely responsible for pushing the total transactions volume to P7.35 billion daily from P5.56 billion year-to-date.
 

“I think it’s important to know, however, that on the relative share in trading, Philippine-based is still greater compared to foreign trading in related volumes,” Sicat said.
 

Foreign participation in trades is at 32 percent although these trades increased by more than four times to P89.84 billion as of (Wednesday) from P19.16 billion last year, the PSE president added.
 

Sicat said this investor profile is similar to what obtains in the BRICs emerging countries made up of Brazil, Russia, India and China, where the market performance is propped up mainly by “strong local demand with the add-on effect of foreign demand.”
 

“There are lots of reasons to remain bullish and optimistic on the PSE as an attractive investment destination. Compared to our peers, the PSE is just scratching the surface of potential," he said.
 

Raising capital
 

The PSE president said the local bourse is a growing market for generating capital, which  jumped to P91.13 billion from P60.03 billion last year.
 

“(Capital raised from the bourse) is well on its pace to break the record level (at P107.5 billion) we achieved last year,” said Sicat.
 

The benchmark of the PSEi has increased 17.8 percent as of August 22, the PSE president added. The local bourse has breached 21 record highs so far this year.
 

The PSE is now aiming for “liquidity in stocks,” as it is now requiring listed companies to maintain a 10 percent public float in order to enter the market, said Sicat. As of June this year, 27 companies have yet to comply with the public float requirement. — ELR, GMA News

...the World's Top Bank Governors

Tetangco keeps 'A' rating, named one of world's six top central bankers

August 25, 2012

GMA NEWS

Bangko Sentral ng Pilipinas Governor Amado Tetangco Jr. was listed by an international finance magazine one of the world's six best Central Bankers for 2012.

Global Finance magazine, which publishes the "Central Banker Report Card," said the six performed well as the world's central banks were severely tested.

"During one of the toughest years on record, the World's Central Bankers were tested as never before. Every year, we assess the determination of Central Bankers to stand up to political interference, and their efforts at influencing their governments on such issues as spending and economic openness to foreign investment and financial services," said Global Finance publisher Joseph Giarraputo.

The Central Banker Report Card grades Central Bank governors of 50 key countries (and the European Central Bank) on an "A" to "F" scale for success in areas such as inflation control, economic growth goals, currency stability and interest rate management.

Tetangco got an "A" along with:
- Australia's Glenn Stevens
- Canada's Mark Carney
- Israel's Stanley Fischer
- Malaysia's Zeti Akhtar Aziz
- Taiwan's Fai-Nan Perng

The BSP noted Tetangco also received an “A” rating last year. — ELR, GMA News

...the bull-run

PSEi to hit 10,000 by 2018—COL Financial

By: Doris C. Dumlao
Philippine Daily Inquirer

Wednesday, August 1st, 2012

 

 

 

MANILA, Philippines—The local stock market is still in the early stages of a bull run, with the main index likely to explore the 10,000 territory in 5 and a half years as much-improved domestic economic fundamentals will fuel earnings growth and investor optimism, according to leading online stock brokerage COL Financial.

But it would not be a smooth ride up given serious external problems, the expensive valuations of local stocks and numerous equity placements that have been sapping liquidity, COL Financial head of research April Lee-Tan said in a press briefing on Wednesday.

COL Financial chief technical analyst Juanis Barredo said in the same briefing that the Philippine Stock Exchange index might need to weigh out overbought levels first, noting that the market was asking for pullbacks to muster stronger support for fresh buying. He sees the PSEi having major support levels at 5,130 to 5,150.

Barredo saw a 15-20 percent risk that the correction might go as deep as 4,750, “if something (worse) happens to Europe and China.”

This year, the index has room to go up to a new record high at the 5,500 level, with a 30-percent chance of even exceeding this target, according to Barredo. As of Wednesday, the index closed at 5,298.72.

“The Philippine index proceeds to stand out and may be able to continue to outperform— but it too may need to present occasional corrections to short-term support,” he said.

The PSEi is still in wave three, out of five of Elliot’s bullish waves, according to Barredo. “Wave 3, however, is characterized by chopping swings as the uptrend may frequently swing in and out of overbought levels,” he said.

Over the long-term, Lee-Tan said the stock market should continue to do well due to its resilient consumers, the government’s ability and willingness to spend and the growing momentum of the public-private partnership in infrastructure-building.

“There are also no signs of a bubble yet given the absence of excessive borrowings and investments,” Lee-Tan said.

But Lee-Tan explained that local equities were currently trading at expensive levels not just relative to historical valuations but also relative to prices across regional markets.

The analyst said that COL Financial’s base case scenario of the index hitting 10,000 in 5.5 years assumes a sustained 12 percent per annum growth in corporate earnings and the market’s acceptance of a 16x forward-looking price-to-earnings ratio. This means that investors are willing to pay 16 times the amount of money that company will make for a given year.

“Fundamentals should eventually catch up with expensive valuations, allowing share prices to continue going up,” she said.

Under a best-case scenario, however, Lee-Tan said corporate earnings would be sustained at 15 percent and investors would tolerate a PE ratio of 18x. If this happened, she said, 10,000 might be reachable in 3.5 years.

The worst-case scenario is if earnings would grow by only 10 percent a year and the market would stick to trading at the historical PE ratio of 14x. In this case, she said, it would take eight years for the PSEi to climb to 10,000.

Given COL Financial’s favorable view, Lee-Tan said COL Financial’s recommended portfolio comprises mostly growth stocks: Metropolitan Bank, Banco de Oro Unibank, Metro Pacific Investments, Ayala Corp., Alliance Global Group Inc., Ayala Land Inc., EEI Corp., Puregold Price Club and SM Prime Holdings.

Also cited are three high-dividend-yielding stocks in its portfolio: Bank of the Philippine Islands, Robinsons Land Corp. and Manila Water Co. “These stocks will continue to be in favor given the low interest environment,” she said.

...the Congress agenda

Economy will be Congress' top agenda

 

By Kim Arveen Patria

Yahoo! Southeast Asia Newsroom

 23 July 2012

Legislation aimed at addressing "economic challenges" will be high on the agenda during the third regular session of the 15th Congress, leaders of the lower and upper House on Monday said.

Senate President Juan Ponce Enrile and House Speaker Feliciano Belmonte, Jr. emphasizes the need to further improve the country's business and investment climate in separate sessions of the two legislative chambers, prior to President Benigno Aquino III's State of the Nation Address.

Enrile and Belmonte particularly pushed for changes to the constitutional provision which limits foreign ownership to 40 percent in certain investment areas.

"It is high time that we revisit the economic provisions of the Constitution which, to my mind, restrict our economic progress and growth," Belmonte said.

However, Belmonte warned against changing the restrictive economic provisions of the Constitution "overnight."

In his speech before the Senate, Enrile said: "[W]e seek to amend only certain economic provisions therein such that there will be more flexibility in the ownership of certain industries, particularly those that are involved in the exploration, development and utilization of our natural resources."

He also identified as priority Senate bills aimed at prohibiting or discourage anti-competitive mergers; providing state support to Filipino business concepts; creating a Bureau of Copyright; and improving consumer protections, especially against "botcha" or double-dead meat.

Belmonte, for his part, said other measures the House will push for include a Fiscal Responsibility Act; an Anti-Trust Act to reduce transaction costs; amendments to the Energy and Power Industry Reform Act and strengthening the National Electrification Administration; and the National Transport Policy Act which is expected to "set the direction" for the development of the country's transport system.

He also stressed the need to pass the law institutionalizing "K to 12,"  which adds two more years to the country's basic education system, to strengthen human capital resources.

Aside from legislation for economic reform, also identified as priority were measures aimed at improved governance.

Enrile said Senate will prioritize bills that requires public officials and employees to submit waivers to allow the Ombudsman to look into their bank deposits; amend the Anti Money Laundering Act; and strengthen the political party system.

The House, meanwhile, will fast-track the passage of bills amending the Government Procurement Reform Act and the Witness Protection, Security and Benefit Act, Belmonte said.

Both the Senate and the House will likely continue discussion on the Freedom of Information Bill and Reproductive Health Bill, which Enrile said "have been cause for intense debate."

In the second regular session, the House approved on third and final reading a total of 15 measures identified as priority by the Legislative Executive Development and Advisory Council (LEDAC), Belmonte said. Enrile, on the other hand, said the Senate approved only five LEDAC priority measures.

...the IMF projection

IMF: 'Solid momentum' to push PHL 2012 growth to 4.8%, possibly higher

July 20, 2012

GMA News

The International Monetary Fund (IMF) said Friday it sees the Philippines’ economy growing this year by 4.8 percent and could pull off a “surprise on the upside” if the 6.4 percent expansion posted in the first quarter gains momentum that persists the rest of the year.

Only last Thursday, the World Bank revised upward its growth estimates for the country, but forecast slightly slower growth of 4.6 percent.

The IMF issued its latest estimates at the conclusion of a staff mission review done from July 16 to 19 and included meetings with top Filipino economic officials, other senior public officials and representatives of the private sector.

It partly based its forecast on expected surpluses of the current account, balance of payments and inflation from July until the yearend

The IMF mission also keeps close watch over public finance matters of the Department of Budget and Management and other economic agencies.

“The current account and the overall balance of payments are forecast to remain in surplus and inflation is expected to remain well within the target. Public finance continues to improve while the financial system has sustained its resiliency notwithstanding the more challenging external markets,” the IMF mission said in its statement.

Interest rates

In the eyes of the IMF mission, “the Philippines has the policy space to support growth if needed.”

This policy space includes the Bangko Sentral ng Pilipinas’ calibration of interest rates, which BPI Family Bank chief executive officer Jose Limcaoco said on Friday at an investment forum “have more room to fall.”

“The BSP cut special deposit account (SDA) rates by three basis points last week. We think that’s a cue cut—that’s how we call it. We think they’re sending a signal…not because the economy is slow but because they’re just reacting to what the rest of the world is doing,” Limcaoco said.

He posited that the BSP is being “proactive.”

“They cannot fall behind what the other central banks (are doing). The whole world is cutting rates. We cannot be seen as having relatively higher rates than the rest of the world or else we will just have a lot more hot money coming in which will cause problems,” the bank president said.

Limcaoco added that rate cuts loom in the near horizon. “I think the Monetary Board has a big decision to make next week. If they don’t cut next week, I believe they may be cutting in the month to follow. There is room for rates to fall both in government securities (GS) market and even in the lower rates.”

On the public finance dimension, the Aquino administration said it has the “fiscal space” that can allow it to put on hold its plan to source $750 million from external financing sources in the reamining months of 2012.

Finance Secretary Cesar Purisima said on the sidelines of a meeting of the Asia Pacific Economic Cooperation (APEC) that “we are in control of our fiscal destiny” because it can afford to wait to for better conditions in the international financial market, which is beset by worries about Europe’s lingering debt crisis.

The country raised $1.5 billion last January from a global bond issue maturing in 2037.

The Department of Finance had programmed to source $4.02 billion from the international markets. Some $2 .25 billion would be commercial debt while $1.77 billion will be program and project loans. — Earl Victor Rosero, GMA News

...the PH stock market

Net foreign buying at PH stock market up 382% to P71 B in 1st half

By: Doris C. Dumlao
Philippine Daily Inquirer

Tuesday, July 10th, 2012

 

 

This strong foreign investor appetite  allowed the main-share Philippine Stock Exchange (PSE) index to break into new all-time highs 19 times in the first semester, rising by a total of 20 percent to finish at the 5,246.41 level at the end of June.

 

 

MANILA, Philippines—Foreign investors went on a buying binge in the Philippine stock market in the first half of the year, resulting in a hefty 382.3 percent year-on-year surge in net foreign inflow to P71.12 billion and allowing the local index to outperform peers across the region.

 

The net foreign buying recorded in the first six months stood nearly five times larger than the P14.75-billion level recorded in the same period last year, said  a report from the Philippine Stock Exchange.

This strong foreign investor appetite  allowed the main-share Philippine Stock Exchange (PSE) index to break into new all-time highs 19 times in the first semester, rising by a total of 20 percent to finish at the 5,246.41 level at the end of June.

“The market’s run in the first half has been nothing short of historic, and there’s a good chance that we will be able to extend this forward momentum as we anticipate better first-half earnings from our listed firms. The latest sovereign credit rating upgrade also provides additional support for future growth so overall, I think we are in a terrific position to keep on improving,” PSE president Hans Sicat said in a press statement.

Last July 5, the PSEi again beat its previous record high to post a fresh all-time high at 5,369.98. As of July 6, the PSEi was the top performing market in Asia, with a gain of 22.7 percent year-to-date, beating bourses in Singapore, Indonesia, Malaysia, Thailand, Vietnam, Hong Kong, India and China, among others.

In the first six months, cyclical stocks banking and property led the PSEi’s rise in the first quarter albeit all indices were on the green.

The financial index emerged as the best performer in the first half after surging by 34.6 percent to the 1,304.42 level. The financial index was likewise the best performer in terms of bottomline based on first-quarter earnings culled by the PSE.

The next best performer was the property index, which jumped by 30.1 percent to finish at 1,927.48 in the first half.

The holding firms index  rose by 28.1 percent to the 4,488.80 level.

Other indices performed as follows in the first six months: the industrial index rallied by 10.8 percent to finish at 7,839.57; the services index  climbed by 8.8 percent to 1,759.02; -the mining and oil index crept higher by 4.8 percent to 24,629.48 points.

“Just like our main index, investor confidence in Philippines Inc. is at an all-time high. What’s remarkable is that we have been able to achieve unprecedented growth even in the midst of ongoing uncertainties in the Western hemisphere and a cooling Chinese economy. This is a testament to the effectiveness of the reforms that the country has undertaken, which further contributed to the stable macroeconomic environment,” Sicat said.

The PSEi’s finish in the first six months was higher by 955.20 points from its previous close of 4,291.21 in the same period last year.

The combined market capitalization of issues listed on the PSE during the January to June period stood at P10.05 trillion, up by 12.8 percent from a year ago.

Total turnover for the first half reached P947.73 billion or 43.2 percent higher than the P661.81 billion registered in the same period the previous year. Average daily turnover stood at P7.64 billion, an increase of 45.5 percent year-on-year.

...the new Manila's CBD

ALI Investing P65B In QC CBD

10-Year Development

By JAMES A. LOYOLA

July 5, 2012

Manila Bulletin

MANILA, Philippines – Ayala Land Inc. (ALI) is investing P65 billion over the next 10 years for the development of the Metro Manila’s next central business district (CBD) in Quezon City (QC) called Vertis North beside its Trinoma mall.

In a press briefing, ALI president Antonino Aquino said half of the budget will be for office buildings while the other half is for retail spaces, residential condominiums and hotels.

He added that the integrated urban development masterplan calls for the construction of 45 towers on a 29-hectare lot owned by the National Housing Authority (NHA).

“Quezon City is fast becoming a center of gravity for economic developments as it works to be at par with international business standards,” said Aquino.

ALI will invest an initial P12 billion for the launch of Phase 1 of Vertis North which will mark the
 development of its office, retail, and hotel components within a 7-hectare land area, which is expected to be completed in the next three to four years.

This initial phase will put up a total gross floor area of 220,000 square meters, including business process outsourcing (BPO) establishments, hotel, and retail shops.

It will also generate close to 200,000 jobs during its entire development phase, 35,000 of which will be filled during the development stage of Phase 1.

Meanwhile, the national government, through NHA, also eyes to gain P11 billion worth of housing investments through its partnership with Ayala Land at Vertis North.

This will further boost the government’s efforts to reduce the national housing backlog, as it stands to benefit close to 50,000 families, said NHA general manager Chito Cruz.

Vertis North is strategically located at the northern tip of Quezon City as it is the convergence point of commuter rail lines and three major road arteries, particularly the Epifanio de los Santos Avenue (EDSA), Mindanao Avenue, and North Avenue.

It also serves as the gateway to the North given its connection to the North Luzon Expressway (NLEx). Ayala Land intends to capitalize on this huge upside by bringing an intermodal transport terminal facility at Vertis North.

...the Break-out Nations

A Breakout Nation GO NEGOSYO PILIPINAS: NOW IS OUR TIME By Joey Concepcion (The Philippine Star) July 05, 2012

Aligned with our current theme, Pilipinas, Now is our Time, we saw a viral video on Breakout Nations that identified the Philippines as one of the few countries on the rise, and it described Philippines, Turkey and Indonesia as the “future’s big growers for big returns”. It suggests that the time to invest in the country is now, before it breaks out.

Good things are really happening to the Philippines. Our GDP numbers for the first quarter grew 2.5 percent, and are expected to grow to 4-5 percent for the full year. In the forex rates, we have seen the peso at P43 to the dollar in January. These days, it has appreciated to the levels of P41.75. While we are happy to see these improvements, we hope that we do not see our Philippine peso over appreciate below the 40s-level, as this will not be good for our country’s business model that is relying on overseas service exports, supplying the world with workers in almost every field. Back home, we are now one of the largest business process outsourcing providers, which show that the demand for service is greater than ever.

Jokingly, even with the RH bill not in place, Filipinos had to seek employment overseas because of the existing over population and the lack of jobs to meet the growing population through the years. But then, I ask: Was this providential? If we did not have this problem, would the Filipinos be the largest source of overseas workers? Would we have the kind of dollar reserves that we have today, which also brings about a surge in our economy through the increase in consumer spending? To prove this, our reserves have grown to record levels at $76 billion, from only $63 billion level last year. Would we have the real estate boom that we see today, which is driven by OFWs and Filipinos living abroad? Even the increase in interracial marriage is quite obvious, as many Europeans and Americans prefer to marry Filipinas, as they are seen to been more gentle and caring for their families, which manifests our innate advantage in terms of being caring people.

However, the social costs and implication to the family cannot be equated with monetary considerations as spouses get separated, which leads to an increase in the number of broken families, creating a negative impact on their children. Some would say that at least, families would have a better chance to rise above poverty by providing them with better shelter, education, and eventually, a negosyo. It is good that modern technology now offers a solution to families who are far away from each other. Companies like PLDT and Smart are providing cheaper means for OFWs to communicate with their loved ones in the Philippines. Internet connectivity has also allowed this to happen, and applications like Skype let us see and talk to people overseas for free.

Over all, the Philippines have weathered most of the economic crises in the past, and we can weather this European crisis because our business model is not dependent on the export of durable goods that consumers overseas can defer to buy. The export of Filipino services has become a necessity for many companies abroad that aims to lower their operating costs. Economic crises such as this even pushed more companies to outsource their labor, which made them set their eyes on the Philippines.

But a strong peso is also not good for our country, as I mentioned earlier. Recipients of the remittances will get less, and those paying for amortization on real estate purchases will have to pay more in dollars.  What should the government do to prevent this from happening? One way is to lower interest rates. Another way is for the government to keep borrowing in pesos, and convert it to dollars. I am sure they have other ways to maintain a favorable exchange rate that will continue to push our country’s growth further.

We are witnesses to this economic surge.   We hope that the success that we are currently enjoying will be sustained for a long time.

Pilipinas, now is our time!