...the Asia's best currency in February 2019

Philippine Peso Surprises to become Asia's Best Currency 

David Finnerty

Bloomberg| 03March 2019

The Philippine peso has defied a yawning current-account deficit to emerge as Asia’s best-performing currency in February. And it may continue to surpass its peers.

Peso bulls say record remittances, rising investment and a buoyant domestic economy will propel further gains in the currency. Easing inflation could also lend a hand, as higher real yields burnish the appeal of Philippine bonds.

The peso is among Asia’s biggest turnaround stories, as the currency bounced back from a 13-year low after a slew of economic reforms and a $170 billion infrastructure spending plan revived sentiment. Proactive central bank policy has also helped win over skeptics.

“The peso has been stronger recently and could continue to outperform in the region, amid sustained net foreign portfolio investments on a widely expected further declining trend of local inflation," said Mike Ricafort, economist at Rizal Commercial Banking Corp. in Manila.

The Philippine currency strengthened 0.8 percent in February to 51.70 per dollar, the best performance among Asian currencies. It has climbed since the start of the year, as a pause in Federal Reserve tightening and easing global trade tensions fueled demand for developing-nation assets.

The peso was among the hardest hit in the emerging-market sell-off last year, tumbling to a 13-year low of 54.41 in October as investors punished economies running current-account deficits.

Technicals back the case for further peso gains. The dollar-peso currency pair remains in a bear trend, hovering above initial support at 51.90, its Feb. 13 low. The pair’s slow stochastics, a momentum indicator, signals it may drop further in the near term, with the %D line reading 43 and falling.

Sentiment toward the peso has recovered even after the central bank forecast the nation’s current-account deficit will widen to 2.3 percent of gross domestic product in 2019, the biggest shortfall since 2001. The recent rebound in crude prices threatens to worsen the gap, as the Philippines imports almost all its oil requirements.

Investors are betting on the peso after foreign investment into Philippine stocks and bonds recorded a net inflow of $763 million in January, more than four times the level a year ago. Remittances from Filipinos working abroad climbed to an all-time high of $2.85 billion in December.

Inflation data due March 5 could provide more fodder for peso bulls. Consumer-price gains may have eased to a one-year low of 4.0 percent in February, according to a Bloomberg survey of economists on Friday afternoon, and within the central bank’s target band of 2 to 4 percent. Price pressures have waned since touching a nine-year high in September, thanks to government measures to boost food supplies.

This augurs well for peso government bonds, which gained 0.4 percent in February, the seventh-best performer among 34 sovereign markets tracked by Bloomberg. Waning price pressures will boost real yields on Philippine debt, particularly as the central bank remains in hawkish mode for now.

Ten-year peso bonds offer a real yield of 2 percent, compared with about 5 percent for Indonesian securities and Indian debt.

But for peso bears, the outlook is less certain.

“Peso outperformance is unlikely to persist," said Divya Devesh, head of Asean and South-Asia FX research at Standard Charted Bank in Singapore.

— With assistance by Ditas B Lopez, and Masaki Kondo

...the emerging market for digital currencies

PHL is an emerging market for digital currencies - Citi

 

 

GMA News

February 21, 2014

A newly-released study commissioned by financial giant Citi has put the Philippines in the group of “emerging markets” in terms of use of digital money:

 

The study also picked the Philippines and Greece to illustrate that two countries within the same stage can face different challenges, and may even have to improve in vastly different areas. The report noted that investments in enabling infrastructure may be a priority for some countries. For others, lack of strong private sector may be a far bigger barrier.

 

 

“Both countries are a similar stage, but require a clear difference in priorities, with the Philippines needing to focus on market efficiency and corporate use-case accelerators, and Greece needing to focus on improving the ICT infrastructure and adoptio,” the report said.

 

 

 

— Newsbytes.ph

...the PH business confidence

Business confidence in Philippines reaches new heights

 

The National staff

Dubai, UAE

---

Business sentiment in the Philippines has soared to an all-time high after the country was awarded investment grade credit ratings.

The central bank said the overall confidence index rose 54.9 per cent from the first quarter's 41.5 per cent. "This is the highest reading since the start of the nationwide survey in the fourth quarter of 2006," said the central bank.

The confidence index is the percentage of firms that answered in the affirmative less the number of firms that answered in the negative with respect to their views on a given sector. But that failed to boost confidence in the country's currency, which dropped the most since March 2009 yesterday.

The currency fell 1.2 per cent to 41.69 per dollar at the close in Manila amid speculation that an improving US economy would prompt the Federal Reserve to reduce asset purchases.

"A recovering US economy and prospects of the Fed starting to tighten raise the possibility of some of the funds moving out of emerging markets like the Philippines," said Rolando Avante, the president of Philippine Business Bank in Manila.

 

...the stable currency

Asian economists see PHL peso more stable than peer currencies

SIEGFRID O. ALEGADO

GMA News

May 13, 2013

 

Despite the inflow of more portfolio investments as a result of the investment grade rating the Philippines received from Fitch Ratings and Standard & Poor's, the peso is expected to grow stronger at a more stable pace than other Southeast Asian currencies.

Analysts said the volatility, or unhealthy ups and downs, in the daily exchange rate will be kept on an even keel by central bank intervention coupled with the Philippines' healthy foreign reserves.

The Philippine unit is currently trading at the high 40 and low 41 per dollar, stronger than the 42 level it hovered at in the same period last year. It closed at 41.12:$1 last Friday.

DBS Bank Ltd. forecasts the peso gradually strengthening to 39.3:$1 by year-end, unchanged from its projection prior the March 27 and May 2 credit rating upgrades.

“Our optimism for the Philippine is based on the country’s strong international liquidity position,” DBS's senior currency economist in Singapore Philip Sung Seng Wee noted in an e-mail message to GMA News Online.

Philippines' foreign currency reserves stood at $84 billion as of March this year, more than double the $37.6 billion as of end-2008.

HSBC associate director for Foreign Exchange Strategy in Hong Kong Dominic Bunning sees the peso ending the year at 40.2:$1, compared with the British banking giant's 39.5:$1 projection late last year.

“While we do think that the upgrades will increase portfolio inflows for the peso, we do not necessarily think this will be excessively volatile for the currency,” Bunning said in a separate e-mail message.

As of April 26, foreign portfolio investments also known as hot money—given the ease with which they enter and exit economies—hit $1.954 billion, up 150 percent from $782.91 million a year earlier.

Hot money has been flooding Southeast Asian economies amid stuttering growth in the United States and the continuing financial crisis in Europe.

Local economists are worried that excessive flows could stoke the peso and threaten dollar-dependent sectors like exporters, business process outsourcing, and families that rely on remittances from overseas Filipinos.

Least volatile in Southeast Asia

Wee said the peso “is probably the one of least volatile managed floating exchange rates in Southeast Asia.”

He noted the peso's strength, unlike its Southeast Asian peers, “was not achieved with current account deficits, lower foreign reserves and higher external debt.”

Bunning sees the situation parallel to that analysis, saying “the Philippines retains a positive story which should ensure many flows are durable in nature.”

Currency analysts and traders, moreover, noted the central bank has been on guard against excessive portfolio flows and took steps to smooth out foreign exchange volatility in the past.

Citing the Bangko Sentral bias against a volatile peso, local currency traders who requested anonymity said the central bank buys dollars when the foreign exchange hits the lower 40 to-a-dollar to keep volatility in check.

“The CB (central bank) is not against currency strengthening. It's against excessive highs and lows and wants currency trades in a tight band daily,” a trader at a local bank said.

The central bank incurred a strained balance sheet after shielding the currency and the economy from the impact of large inflows of foreign portfolio investments, but currency analysts noted a benign inflation and good growth prospects provide room to tap policy tools.

“The central bank [has] more flexibility to cut [policy] rates, if it wants to, especially now that inflation eased to a 13-month low” of 2.6 percent, Wee said.

For his part, Singapore-based economist at Standard Chartered Jeff Ng said, “Near-term-wise, we think that the potential for further macro-prudential measures is likely to slow the pace of peso appreciation for now.”

The Bangko Sentral has dampened the appeal of interest yield by keeping it at record lows. Benchmark policy rates remained at 3.5 percent for overnight borrowing and 5.5 percent for overnight lending since last October.

It also slashed the yield on Special Deposit Accounts (SDA)—a tool to mop-up excess liquidity— thrice so far in the year to 2 percent from a premium over policy rates in January.

“Having already been cutting its SDA rate the BSP is actively managing its sterilization costs. This could continue in the future,” said Bunning, referring to savings made by the central bank on lesser SDA yields. — Graph used with permission from DBS Bank/VS, GMA News

 

 

...the world's best performing currencies

Peso is 3rd best-performing currency globally

By Prinz Magtulis

The Philippine Star

April 28, 2013

 

MANILA, Philippines - The peso remains one of the world’s best performing currencies, debt watcher Standard & Poor’s Ratings Services (S&P) said Friday.

The local currency ranked third globally, appreciating 25 percent in real terms from March 2007 to March 2013, according to the S&P report.

Only the Chinese renminbi and Singapore dollar outperformed the peso. The two currencies have strengthened 29 percent and 26 percent, respectively, from their levels six years ago.

The performance was calculated using the real effective exchange rate (REER), which measures the inflation-adjusted value of currencies versus a basket of other units from trading partners.

“No single member of the 27-member European Union and only one of the 34-member Organization for Economic Cooperation and Development is among the top 10 most appreciated currencies,” S&P noted.

Behind the peso, the Australian dollar ranked fourth, rising 23 percent from its 2007 level. It was followed by the Brazilian real, Colombian peso and Peruvian nuevo sol, which rose 22 percent, 21 percent and 19 percent, respectively.

Rounding up the list was the Russian rubble, which firmed up 18 percent, and Saudi riyal and Venezuelan bolivar, which both appreciated 15 percent, the report stated.

According to the Bangko Sentral ng Pilipinas (BSP), the peso has strengthened 6.8 percent versus the greenback last year. It closed at 41.22 to a dollar last Friday, up four centavos from the previous day.
In real terms, the peso increased its value by 6.5 percent versus currencies of trading partners, according to the BSP. “The peso lost external competitiveness in 2012,” it said.

Concerns have been raised against the continued appreciation of the peso, especially on how it trims the value of dollar export earnings and remittances from overseas Filipinos.

The BSP, for its part, has implemented various macro-prudential measures to temper capital inflows causing the peso’s strong performance.

Among others, foreign funds were banned in parking at special deposit accounts (SDA) last July. Interest paid on SDA - money of banks and trust departments with the BSP - were also slashed by 150 basis points this year.

Foreign exchange rules were also further liberalized this month to encourage more outflows and balance the inflows to prevent pressure for the peso to rise.


 

...the Aquinomic effect

Philippines Beats Indonesia as Aquino Finds Favor: Asean Credit

 

By Lilian Karunungan & Yumi Teso 

Bloomberg               

Mar 15, 2013

 

 

The yield on the junk dollar bonds of the Philippines is at a record discount to higher-rated Indonesian notes as confidence in the nations’ leaders diverges.

Philippine President Benigno Aquino, 53, halfway through a six-year term, increased taxes and ousted the country’s top judge last year for illegally concealing his wealth, impressing Pictet Asset Management and Kokusai Asset Management Co. Indonesian President Susilo Bambang Yudhoyono, 63, who is in his final year in office, failed to cut fuel subsidies in 2012 as the annual shortfall in the current account rose to a record.

 

 

 

A Tartanilla driver inspects the hoof of a horse as he awaits passengers in Cebu. The Philippines may shun the global bond market this year, breaking a run of sales that stretches back a decade as it boosts domestic borrowing, Treasurer Rosalia de Leon said this month. Photographer: Veejay Villafranca/Bloomberg

 

 

“In terms of fundamental reforms, the Philippines is improving while Indonesia is not,” Wee-Ming Ting, the Singapore-based head of Asian fixed income at Pictet Asset, which oversees $29 billion of emerging-market debt globally, said in an interview last week. “The yield gap between their hard-currency bonds is likely to stay or widen until Indonesia starts to implement real reforms.”

Philippine debt due 2037 yielded 3.97 percent on March 5, 91 basis points less than similar-maturity securities from Indonesia, according to data compiled by Bloomberg. The spread, which was 71 yesterday, increased from 29 basis points a year ago. The outperformance raises question marks over why Moody’s Investors Service and Fitch Ratings have left the Philippines’rating unchanged after raising Indonesia from junk status more than a year ago.

Dollar Sales

The Philippines may shun the global bond market this year, breaking a run of sales that stretches back a decade as it boosts domestic borrowing, Treasurer Rosalia de Leon said this month. Indonesia said in February it would sell dollar debt in the first half of 2013.

Aquino’s government recorded a current-account surplus of $7.2 billion for the first nine months of last year as remittances from overseas workers increased 6.3 percent in 2012 and revenue from foreign companies outsourcing functions, including call centers, to the Philippines rose 18 percent.

In Indonesia, the broadest measure of trade swung to a deficit of $24.2 billion in 2012, the biggest annual shortfall since Bloomberg began compiling the data in 1989, from an excess of $1.7 billion in 2011. The government spent 211.9 trillion rupiah ($22 billion) on fuel subsidies last year, discouraging the energy saving required to reduce its import bill.

It has been cheaper to insure Philippine debt against non-payment than Indonesia’s since July 2011.

Five-year credit-default swaps on the former’s bonds dropped 44 basis points to 97 basis points in the year through March 13, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market. Those on Indonesia’s notes fell 23 basis points to 131.

‘Policy Slippages’

Standard & Poor’s said in April 2012 it refrained from awarding Indonesia investment-grade status as the country’s push to lure investment was at risk from “policy slippages” such as the failed attempt to cut fuel subsidies earlier that year. President Yudhoyono said this week that his government is weighing the pros and cons of raising fuel prices or choosing another method that would more effectively target the subsidies at poorer consumers in a nation where almost one in five people lives on less than $1.25 a day, according to the World Bank.

Both countries have the highest junk rating of BB+ from S&P, which raised the outlook on the Philippines rating to positive in December, saying a revision is possible this year as public finances and governance improve. Aquino said in January the nation “is on the cusp” of winning an investment-grade rating. Moody’s rates Indonesia at its lowest investment grade of Baa3, while it assesses the Philippines one level below that at Ba1.

Corruption Perceptions

“The Philippines’ credit has been improving while there are some short-term concerns about Indonesia’s macroeconomic management,” Takahide Irimura, Tokyo-based head of emerging-market research at Kokusai Asset, which runs Japan’s biggest mutual fund, said in a March 5 interview. “Political situations in both countries have been stable, but Yudhoyono’s term ends soon” raising concern about what will happen next, he said.

Yudhoyono, who campaigned on promises to reduce corruption in 2009, has been beset by recent scandals within his own Democrat Party. Last year, Muhammad Nazaruddin, the former treasurer of the party, was sentenced to four years and 10 months in prison for taking 4.68 billion rupiah in bribes.

The Philippines is now seen as less corrupt than Indonesia, according to Transparency International’s Corruption PerceptionsIndex. It improved to 105th place in 2012 from 139th in 2009, a year before Aquino became president. Indonesia was ranked 118th last year, slipping from 111th three years earlier, according to the Berlin-based watchdog’s website.

Priced In

Indonesia’s dollar bonds are “slightly more attractive”than its neighbor from a valuation perspective because Philippine bonds have already priced in an investment-grade status, Jonathan Liang, a Hong Kong-based senior portfolio manager for fixed income at AllianceBernstein LP, which oversees $437 billion globally, said in a March 7 e-mail interview.

Gross domestic product in Indonesia will increase 6.3 percent in 2013, while the Philippine economy will expand 5.9 percent, according to the median estimate of economists in Bloomberg News surveys. Authorities in Jakarta plan to invest more than $300 billion by the end of next year on infrastructure and manufacturing facilities, Coordinating Minister for the Economy Hatta Rajasa said in December.

“Indonesia continues to devote a meaningful amount of capital towards fixed-asset investment, helping to alleviate bottlenecks in its economy, which we believe will help them sustain long-term economic growth and lower inflation,” Liang said.

‘Weak Momentum’

Pioneer Investments said it prefers the Philippine’s local-currency debt due to the “weak momentum” for the rupiah notes. The Philippine 10-year peso bond yield slumped 95 basis points this year to 3.45 percent, while the Indonesian rate added 25 basis points to 5.44 percent, data compiled by Bloomberg show. Indonesia’s securities returned 0.5 percent this year, compared with 7.8 percent for the peso-denominated notes, according to indexes compiled by HSBC Holdings Plc.

The peso will strengthen 2.9 percent against the dollar in 2013 after rallying 6.8 percent last year, according to the media estimate of economists surveyed by Bloomberg. It fell 0.1 percent to 40.625 yesterday. The rupiah will advance 0.1 percent this year after weakening 5.9 percent in 2012. It declined 0.1 percent to 9,700 yesterday.

Hakan Aksoy, a fund manager at Pioneer in London, which oversees 156 billion euros ($202 billion) of assets, said his company was short against its benchmark for rupiah bonds, meaning the firm holds less than the index it follows.

‘Inflow Bandwagon’

 

“After the election in Indonesia, we may increase our position,” he said in a March 5 interview. “We also expect to see lower rupiah levels in the meantime.”

Developing-nation bond funds have attracted inflows of $15.3 billion in the first two months of this year, compared with $10.1 billion in the same period in 2012, according to EPFR Global. Overseas investors raised their holdings of Indonesian local-currency government notes by 48.5 trillion rupiah in the six months through March 8 to 283.8 trillion rupiah, according to finance ministry data. There are no equivalent figures available for the Philippines.

“We are still more positive on the Philippines than on Indonesia,” Pictet’s Ting said. “Indonesia is riding on the emerging-debt inflow bandwagon and benefitting from that. If they do not take the opportunity to address their structural problems, it will not be nice when outflows start.”

 

...the emerging Asia's stable economies

Moody's sees PHL, Emerging Asia credit rating stable in 2013

 

SIEGFRID O. ALEGADO

GMA News

March 1, 2013

 

The creditworthiness of emerging Asian markets, including the Philippines, is likely to remain stable this year while local currency debt will account for a chunk of financing needs indicating stability of state coffers, debt watcher Moody's Investors Service in its latest report on the region.
 

“The past decade has seen a mixed picture of creditworthiness among Emerging Asia ex. China sovereigns, although the overall trend suggests stability,” Moody's noted in the report “Emerging Asia 2013 Government Financing Needs” released Friday.

 

 

Emerging Asia, excluding China, comprises Bangladesh, India, Indonesia, Malaysia, Mongolia, Pakistan, Philippines, Sri Lanka, Thailand, and Vietnam.

 

 

“Of the 10 countries that comprise the group, six have shown the same rating since the beginning of the decade or since the ratings were assigned during the last 10 years,” the report read.

 

 

Moody's upgraded the Philippines at Ba1 or one notch below investment grade last year on based on improved fiscal position.
 

The country underwent a deterioration in creditworthiness, moving three notches down to B1 in 2005 from Ba1 in 2002.

 

 

Moody's noted the region is becoming more reliant on local borrowing to meet financing needs.

 

 

“During this year, the 10 sovereigns will continue to fund themselves overwhelmingly from their domestic markets, using foreign currency debt for just 5 percent of their total gross financing needs,” the report read.
 

“This relatively low dependence on foreign-currency denominated external financing imparts stability to government finances,” it added.

 

 

The debt watcher estimates the gross financing needs for Emerging Asia sovereigns at $660 billion or equivalent to 13.8 percent of the region's gross domestic product in 2013, up from $629 billion estimated for 2012, but lower as a share of GDP at 14.5 percent last year.

 

 

Debt restructuring to borrow more locally alongside intensified revenue collection have been in the forefront of the Aquino administration's fiscal reforms.

 

 

Domestic debt is comprised mostly of Treasury bills and bonds, while external debt is mostly of sovereign bonds and direct loans availed by government agencies.

 

 

The Philippine government debt rose by 9.8 percent year-on-year to P5.437 trillion last year. Despite the increase, the end-2012 debt level is lower than the P5.52 trillion last year.

Moody's, however, warned that weak infrastructure and governance may continue to stunt any rating upgrade for the 10 countries.

 

 

“India, Indonesia, Thailand and Philippines all face credit constraints in the form of weak governance, while governance and transparency weakness were factors behind the downward pressure on Vietnam’s rating,” the report read.

 

 

“Almost all the group’s sovereigns face infrastructure constraints,” it read. “In this context, infrastructural improvements and the concomitant boost to potential growth are cited as potential ratings lifts for Bangladesh, India, and Indonesia.

 

 

“While most sovereigns in the group maintain favorably strong external payments positions, Pakistan’s position has been a key weakness and driver of its credit deterioration, while Sri Lanka’s and India’s remain monitored risks,” the report added. — VS, GMA News

 

 

...the stock market bull run

No stopping bull run in Philippines

 

Philippine Stock Exchange Index now Asia's most expensive in what is seen as an Aquino-led rally

 

 

Business Times (Singapore)

February 20, 2013       

 

Chasing away the bears: Dragon dancers at the Philippine Stock Exchange help usher in the year of the snake. Global players are upbeat about the nation's prospects citing a clean, honest government, pro-business climate and impressive stock valuations. - PHOTO: AFP

 

 

THE world's biggest equity bull market is propelling Philippine valuations to all-time highs as international investors pile into the country's stocks in an endorsement of President Benigno Aquino's economic policies.

The Philippine Stock Exchange Index climbed 13 per cent this year till yesterday, bringing gains since October 2008 to 285 per cent, at least 124 percentage points more than every other bull market in emerging and developed nations, according to data compiled by Bloomberg. The index turned into Asia's most expensive from the second-cheapest four years ago as rallies in Ayala Land Inc and Bank of the Philippine Islands lifted the gauge to 19 times estimated profits.

Aquino's efforts to boost spending on government projects and tackle corruption are convincing foreign investors to look past the nation's speculative-grade credit rating and focus on the third-fastest growth in Asia after China and Thailand. While Invesco Ltd says shares are too expensive, Samsung Asset Management and Religare Capital Markets see further gains of at least 20 per cent and an investment-grade ranking this year.

"Funds will remain net buyers," Alan Richardson, who helps oversee about US$110 billion as a money manager at Samsung Asset in Singapore, said in a Feb 6 email. "The focus is on opportunity and growth rather than contraction caused by deleveraging, bank recapitalisation, fiscal austerity and increased regulatory oversight in many of the developed economies."

The benchmark gauge for the nation's US$236 billion equity market rose 0.9 per cent, the biggest gain in Asia today, to a record 6,620.72. The bull market, defined as an advance of at least 20 per cent from the most recent low without a drop of the same magnitude on a closing basis, is the biggest since Bloomberg began compiling Philippine index data in 1987.

Mexico's IPC Index has climbed about 161 per cent since March 2009, making it the second-biggest bull market among 45 emerging and advanced countries, while the Standard & Poor's 500 Index is up 125 per cent from a low in the same month. In China, the biggest emerging market, the Shanghai Composite Index has increased 24 per cent from its Dec 3 low.

Philippine shares will probably return about 38 per cent by the end of 2014, according to Samsung's Mr Richardson. The benchmark index may rally 20 to 30 per cent this year, said John Sturmey, head of equity capital markets at Religare Capital Markets, a unit of New Delhi-based Religare Enterprises Ltd.

"We are very bullish on the Philippines for this year and the following years," Mr Sturmey said in a Feb 5 interview in Manila.

Foreign investors purchased a net US$819 million worth of shares in Asia's 12th-biggest stock market this year, 120 per cent more than during the same period a year ago, according to Philippine Stock Exchange data compiled by Bloomberg. The nation of about 100 million people recorded US$2.5 billion of inflows last year, the most since Bloomberg began tracking the data in 2000.

Stronger peso

Growing confidence in the economy is also boosting the nation's currency and debt. The peso has appreciated 5 per cent against the dollar during the past 12 months, the most in emerging markets
and reached the strongest level since 2008 last month at 40.55 to the dollar.

Yields on local-currency debt, rated BB+ by Standard & Poor's, fell to a record 3.76 per cent on Jan 28, according to the JPMorgan GBI-EM Philippines Index. The cost to insure government bonds, rated one level below investment grade, against non-payment for five years using credit-default swaps was 103 basis points yesterday, data compiled by Bloomberg show. That compares with 121 for Brazil, whose foreign-currency debt is rated two levels above the Philippines.

Philippine gross domestic product increased 6.8 per cent from a year earlier in the fourth quarter, compared with 7.9 per cent in China. The euro region contracted during the period, while the US expanded 1.5 per cent.

Mr Aquino plans to boost spending to a record and seek more than US$17 billion of infrastructure investments to spur growth of at least 6 per cent this year. Projects to build a toll-road south of Manila and more than 9,300 classrooms have already been announced since he took office in June 2010.

The 53-year-old president has narrowed the budget deficit by cracking down on tax evasion and raising taxes on liquor and tobacco. The gap was probably 2.3 per cent of GDP in 2012, Budget Secretary Butch Abad said in a Feb 14 interview in Manila. That's down from 3.5 per cent in 2010, according to Philippine Department of Finance data.

Mr Aquino, who had a 66 per cent approval rating in a January survey conducted by Pulse Asia, has also focused on reducing corruption. Renato Corona, the country's top judge, was ousted in May for illegally concealing his wealth.

The Philippines was ranked 105 on Transparency International's 2012 Corruption Perceptions Index, an improvement from 134 in 2010. (A lower ranking signals less corruption.)

"The macro environment looks very positive and the Philippines probably has the cleanest government in its history," Alistair Thompson, deputy head of Asia Pacific ex- Japan equities at First State Investments in Singapore, said in a Jan 16 phone interview. "Companies are very optimistic." His firm oversees about US$147 billion.

Philippine stock valuations already reflect the good news, according to Paul Chan, the Hong Kong-based chief investment officer for Asia ex-Japan at Invesco, which oversees about US$713 billion.
The benchmark index's valuation of 19 times projected 12-month earnings is the highest since Bloomberg began compiling the data in January 2006 and 46 per cent more expensive than the MSCI All-Country World Index. The Philippine gauge has the world's second-highest multiple after Greece's ASE Index, which trades at 22 times estimated profits, the data show.

Ayala Land, a Manila-based developer, is valued at 39 times 2013 profit forecasts, more than twice the median multiple for global peers, according to the average of 14 projections compiled by Bloomberg.

Bank of the Philippine Islands, the country's biggest lender by market capitalisation, trades for four times net assets, versus the 1.6 industry average.

Earnings outlook

Earnings-per-share in the Philippine index will probably increase 14 per cent in the next 12 months, versus 25 per cent for the MSCI All-Country gauge, according to analyst estimates compiled by Bloomberg.

"The Philippines is a very crowded market," Invesco's Mr Chan said in a Feb 7 phone interview. He cut Philippine positions to less than 1 per cent of total holdings from "much higher" levels last year and prefers shares in China and South Korea, where price-earnings ratios are about half the level of the South-east Asian nation's.

There is "probably room" for Philippine stock valuations to climb as long as growth in earnings and the economy can be sustained, Hans Sicat, president of the country's bourse, said in a Feb 15 interview in Tokyo.

First State's Mr Thompson said he purchased shares of Manila-based BDO Unibank Inc after visiting the country in November. The nation's second-biggest bank by market value trades for 2.2 times net assets, about half the multiple of Bank of the Philippine Islands.

"We remain positive," Douglas Cairns, an investment specialist for Asia and emerging-market equities at Threadneedle Investments in London, which oversees about US$122 billion, said in an email on Feb 7. Mr Cairns said the firm has overweight holdings in Philippine shares, meaning positions exceed the country's representation in benchmark indexes.

An investment-grade credit rating may open Philippine capital markets to pension funds and endowments that have avoided the country, according to Samsung Asset's Mr Richardson.

The rating will probably be upgraded in the first half, central bank Governor Amando Tetangco said in a Bloomberg Television interview on Jan 25. S&P raised its outlook to positive from stable on Dec 20, citing the stability of Mr Aquino's administration and economic growth. GDP will probably increase 6 to 7 per cent this year and accelerate in 2014, Economic Planning Secretary Arsenio Balisacan said at a forum in Manila on Feb 13.

Investors should add to their stock holdings on any declines, Christopher Wood, a Hong Kong-based strategist at CLSA Asia-Pacific Markets who recommends a bigger overweight position in the Philippines than any other equity market in Asia excluding Japan, said in a Feb. 7 report. "In such a structural bull market, those investors who focus too much on valuations sell way too early." - Bloomberg

...the 2012's Deals of the Year

Euromoney cites PHL global peso bonds as one of 2012's Deals of the Year

GMA News

February 11, 2013

 

 

The Philippine global peso bonds launched last November was one of Euromoney's Deals of the year, a recognition that the Philippines is one of the safest emerging emerging markets for investors, the Department of Finance said Monday.

 

 

"We welcome this award as another vote of confidence in the Aquino administration's good governance reforms, and a continued nod at the effectiveness of our proactive liability management agenda," Finance Secretary Cesar Purisima noted in a statement.

The US SEC-registered bond offering was part of government efforts at managing Philippine foreign debt. Issued in peso, but redeemable in US dollars, the bonds helped reduce the foreign exchange risk in the country debt portfolio. — VS, GMA News

 

...the PH stock market (2013's 12th record high)

PH stocks hit new record high; settles near 6300

 

ABS-CBNnews.com

01/30/2013

 

 

MANILA, Philippines - After playing in the 6300 territory earlier today, the PSE index finally settled at 6,271.23, up 0.58%.

 

This is the main index's 12th record close for the year.

The PSEi breached the 6,300 level for the first time in afternoon trade. Philippine stocks surged, hitting an intraday record high at 6,320.60.

The strong performance is attributed to bullish expectations for the 2012 GDP report due tomorrow.

Among today's gainers were Megaworld, which climbed 5.75% after receiving an "outperform" rating and Filinvest which rose 4%. Filinvest earlier confirmed its interest in the Cebu Mactan airport.

Peso strengthens

Meanwhile, the peso ended 11 centavos stronger, closing at 40.62 against the US dollar.

The peso strengthened on equity-linked inflows and demand from interbank speculators.

A foreign bank dealer in Manila said the peso's appreciation may accelerate.

"They would likely want to wait for a dollar/peso's bounce back above 40.70 to reinstate shorts. But I don't think people can wait for the bounce anymore," the dealer said.

But investors were wary of possible intervention by the central bank to prevent it from breaking 40.60, dealers said. They were also cautious before the Fed's policy decision. - With ANC and Reuters

...the World Economic Forum host (East Asia summit)

Philippines to host WEF in East Asia 2014

Aquino says foreign investors eager to ride on PH’s success

 

By Correspondent

Emirates 24/7

Monday, January 28, 2013

 

 

 

Philippine President Benigno Aquino attends a session of the

World Economic Forum at the Swiss resort of Davos. (AFP)

 

 

MANILA: The Philippines is now preparing to host the WEF, or World Economic Forum, in East Asia by next year.

 

This according to President Benigno Aquino III, who talked to reporters upon his arrival in Manila on Sunday afternoon from his first attendance at WEF in Davos, Switzerland.

“What I can say is that … they [some world leaders] praised our economic progress, and I felt their desire to continue with good governance, owing to what we have done here,” he said in Filipino, as quoted by the major daily Manila Bulletin.

Aquino was one of the keynote speakers at the forum’s Partnership Against Corruption Initiative (PACI). The others in the group were the heads of state from Mongolia, Peru, and India, who also brought good news about their growing economies.

In Zurich, where he spoke before a crowd of about 500 members of the Filipino-Swiss community on Saturday, Aquino said that foreign investors are now lining up to ride on the country’s economic success.

He told them that the Philippine Stock Exchange index (PSEi) may hit the 7,000-mark milestone within this year, or will reach 6,500 on February 8, his birthday.

The PSEi, seen as a bellwether of how the Philippine economy and the business landscape will fare, closed at 6,167.64 on Friday. It has hit new record highs for over 70 times since 2010, when Aquino first assumed office.

The Philippine peso, which closed at 41.05:$1 at the end of 2012, was the second-fastest appreciating Asian currency against the United States dollar last year.

Professor Klaus Schwab, who founded WEF, has lauded the Philippines for its economic reforms.
“If we further help each other, I won’t be surprised if we make it to the Guinness Book of World Records because of the strong performance of our stock exchange,” Aquino said, as quoted by Philippine Daily Inquirer’s Doris Dumlao.

He recalled how he joined some of the foreign trips made by her late mother, Corazon Aquino, when she became the country’s president after the exile of the strongman Ferdinand Marcos to Hawaii, leaving the Philippine economy in a quagmire.

“We went to Japan and we were almost begging for them to put up businesses in the Philippines,” he said. “But these days, there’s a long line of investors for us. They are eager to invest in a wide array of sectors from education and infrastructure to information technology.”

...the PH growth forecast 2013 (IMF)

IMF hikes PHL growth forecast for 2013

 

 

SIEGFRID O. ALEGADO

GMA News

January 23, 2013

The International Monetary Fund (IMF) has raised its outlook for the country’s economic growth for this year and the last on the back of robust domestic consumption and investments, officials of the multilateral lender said Wednesday.

“During 2012, the Philippine economy shrugged off weakness abroad by growing at around 6.5 percent while also maintaining price stability,” Rachel Van Elkan, head of the IMF’s mission to the Philippines, told reporters at a briefing in Pasay City.

Van Elkan noted that the faster forecast was due to “accelerating consumption and investment, fuelled by remittances, higher public spending and low interest rates.”

“Going forward, growth is expected to moderate to a more sustainable level, but to remain strong compared to the past, with annual growth projected by the IMF staff at 6 percent and 5.5 percent,” she added.

The IMF earlier forecast the Philippine economy to grow by 4.8 percent for both 2012 and 2013. It did not have a previous projection for 2014.

Van Elkan said the slower but still strong growth forecast this year and the next were due to waning base effects.

Apart from robust consumption, stronger growth forecast last year was also partly attributed to base effects, as the country grew by a disappointing 3.7 percent in 2011.

On Tuesday, Socioeconomic Planning Secretary Arsenio Balisacan said he expects that the Philippine economy grew by 6.5 percent last year, adding that the economy has gained momentum for this year.

The interagency Development Budget Coordination Committee targets a 6 percent to 7 percent growth this year and 6.5 percent to 7.5 percent in 2014.

IMF, however, warned of downside risks to growth. “Macro-financial challenges are emerging, even as structural issues remain,” Van Elkan said.

Van Elkan noted that potentially volatile capital flows place upward pressure in the peso, while low interest rates may fuel financial assets.

But “policymakers have responded in a timely and flexible manner to the difficult global conditions,” she said. — BM, GMA News

...the positive side of traffic

 

Aquino: Traffic Sign Of Booming Economy

 

Manila Bulletin

Wed, Jan 16, 2013

 

President Benigno S. Aquino III during the opening of the C-3 Road (Araneta Avenue) and Quezon Avenue Interchange Project in Quezon City Friday (Sept. 28). The new interchange is expected to ease traffic along …more EDSA and improve the level of service of congested roads within the area. (Photo and caption by Malacañang Photo Bureau)

 

 

 

MANILA Philippines --- Annoyed by the heavy gridlock along EDSA every day or worried by the strong appreciation of peso against the dollar?

There's nothing to worry about these developments.

President Benigno S. Aquino III has put a positive spin on these challenges facing the nation, saying these were better alternatives than having a dismal economic activity.

Aquino, during a visit in Cebu to campaign for the administration senatorial slate, saw the high volume of vehicle traffic along Metro Manila's main thoroughfare as a sign of a booming economy.

"Maganda na siguro ang problema na binabanggit na ma-trapik sa EDSA, tama po yan, dahil marami ang nasa kalsada, buhay na buhay ang ating economiya kaysa naman walang trapik sa EDSAa dahil wala ng makabili ng gasolina na patakbuhin ang kanyang sasakyan (The heavy traffic on EDSA is a better problem, that's right, because many vehicles are on the road because the economy is doing well. Having no traffic on EDSA, on the other hand, means nobody can buy gasoline for their cars)," the President said.

Hundreds of thousands of people endure bad to horrible traffic along EDSA everyday despite efforts of authorities to ease the situation. EDSA, supposedly a symbol of the first popular revolt that toppled a dictatorship, has become a traffic and pollution nightmare.

Apart from busy traffic along EDSA, the President welcomed the challenge of determining what to do with the peso-dollar exchange rate. The peso, considered one of the best performing currency in Asia, has surged against the dollar at 40.57 last Tuesday.

"We can sell peso bonds which have actually been oversubscribed. Bangko Sentral ng Pilipinas, however, has asked us to issue dollar bonds to help temper the fluctuation of the exchange rate," the President said in Filipino.

With the country's improved credit rating, Aquino added that choosing where to borrow was a better problem for the government rather than agonizing over the lack of creditors.

The President highlighted these positive challenges facing the nation as a result of his administration's reforms in managing the local economy. To build on these economic gains, Aquino urged the public to vote for the administration bets who will be his partners for reform.

...the PH 2012 forex reserve

Forex reserves end 2012 at all-time high of $84.25B

By Michelle V. Remo
Philippine Daily Inquirer

Monday, January 7th, 2013

 

The country’s foreign exchange reserves hit an all-time high of $84.25 billion at the close of 2012, buoyed by the central bank’s dollar purchases that were meant to temper what could have been a sharp appreciation of the peso. MARK WILSON/GETTY IMAGES/AFP

The country’s foreign exchange reserves hit an all-time high of $84.25 billion at the close of 2012, buoyed by the central bank’s dollar purchases that were meant to temper what could have been a sharp appreciation of the peso.

The yearend gross international reserves (GIR) were enough to cover a year of the country’s import requirements and were nearly six times the combined foreign currency-denominated debts of the government and private entities maturing within a year.

The latest amount of GIR was up by about 12 percent from $75.30 billion the previous year.

The BSP admitted that it had been buying dollars from the market to prevent a steep rise in the value of the peso against the greenback.

Officials said that under its policy, the BSP allowed the exchange rate to be generally determined by the market, but intervened through currency trading in cases of significant volatility pressures. They said the sharp and sudden rise or fall of the peso was disruptive to businesses and to the economy.

The peso closed at 41.05 against the dollar at the last trading day of 2012, gaining nearly 7 percent since the start of the year. The peso was the second-fastest appreciating Asian currency against the dollar last year after the Korean won, which rose 7.17 percent.

Exporters said the rise of the peso has made Philippine-made goods more expensive in dollar terms and less competitive. The appreciation of the local currency has also reduced the peso value of the dollar remittances sent by overseas Filipinos.

The BSP has sufficient dollars to buy from the market given the robust inflow of remittances, foreign investments in the local business process outsourcing (BPO) sector and external portfolio investments.

Officials said foreign portfolio investments were substantial in 2012 because the favorable performance of the Philippine economy fueled the appetite for peso-denominated securities.

The heavy dollar purchases by the BSP pushed its expenditures and led to a net loss of about P68 billion in the first three quarters of 2012, its latest income statement showed.

Nonetheless, the BSP said it would not hesitate to continue buying dollars if appreciation pressures on the peso remained significant this year.

The BSP said the accumulation of dollars has its benefits to the economy. The increase in the GIR reflected the improving capacity of the Philippines to pay its dollar-denominated debts. This, in turn, has led to improved credit ratings for the country.