PSEi Philippines March 2012 0 Stocks hit 77.7 points record high, heralding economic rebound

ADB recently reported 5% predicated gworht for Philippines economy 2012. With the bullish performance of the Philippine stock market during the last two days that culminated in a new record high of 5,016.30 in Friday's trading, the economy is now poised for a rebound.

This was what an elated President Benigno Aquino III told reporters over the weekend in Calapan City in Oriental Mindoro, south of Manila, where he inaugurated a mini-hydroelectric plant that would provide electricity for some 45 villages in the area.

According to Aquino, the stock market is "the clearest and fastest" indicator of renewed business confidence in the country.

The main Philippine Stock Exchange index (PSEi) surged 1.57 percent, or 77.69 points, to close at an all-time high of 5,016.30 Friday. On Thursday morning, the PSEi rose more than 2 percent to an intraday high of 5,011.09 before paring down gains and closing at 4,938.61.

Aquino said that the PSEi could have breached the 5,000 level much earlier had it not been for the political tension in the Middle East and the financial crisis in Europe.

Local stocks hit an all-time high first on Thursday on expectations that the Bangko Sentral ng Pilipinas, the country's central bank, would cut interest rates to boost the economy.

The BSP indeed cut its main policy rate by 25 basis points after the market closed to a record low of 4 percent to help cushion the domestic economy from the global slowdown.

The bullish local stock market performance could be attributed to the continued strong inflow of portfolio investment or hot money into the country.

According to the BSP, the net inflow of foreign portfolio investments into the country hit $586 million in January, a sharp 250.3 percent increase from the $167 million net inflow a year ago.

The BSP said the figure was four times the $140 million recorded in December 2011.

A report by the PSE said that the local stock market attracted droves of foreign investors in the first two months of the year, driving valuations higher and lifting the main index to unprecedented heights.

Net foreign buying at the local stock market amounted to ₱22.72 billion ($532 million) during the January to February period, a dramatic turnaround from the $7.65 billion ($179 million) in net selling recorded in the same period last year, the PSE reported.

In the early part of 2011, investors were dumping emerging- market equities due to concerns over rising inflation.? This time around, however, sound macroeconomic fundamentals are luring more funds into the region, benefiting the Philippines whose stock market was the region's best performer in 2011.

The main-share PSE index pierced through the 5,000 or the first time in history in Thursday's trade.? Since the start of the year, the index has gained by 13 percent.

"The trek past the 5,000 index marks a very significant milestone in PSE history.? Central banks, especially in the larger, developed economies, have put in place various measures to make sure that we avoid a widespread collapse, and this has provided a rallying point among global markets. Coupled with the country's own growth story, we are hopeful that this rally will continue," PSE president and chief executive officer Hans Sicat said in a press statement.

Total market capitalization at the PSE as of Feb. 29 stood at $9.31 trillion ($218 billion), up 5.91 percent from the level in the same period last year.

Turnover for the first two months reached P331.87 billion ($7.77 billion), 69.47 percent higher than the level a year ago.

According to recent research analysis undertaken by the regional investment house CLSA Asia-Pacific, the Philippines "is undergoing a renaissance that looks all set to bring the economy to higher growth and power stocks to new heights."

The CLSA said that like the rare endangered Philippine eagle, a private sector investment cycle was a rare sighting in the country.

But now, the CLSA said, the country was on the cusp of another investment cycle for the first time in 15 years driven by political stability, rising business confidence, low interest rates, robust balance sheet and the country's long-term demographic potentials. "The Philippines soars like an eagle, again," the analysis said.

For the banking sector, Ron Rodrigo of DBP-Daiwa Securities was reported as saying that there were expectations that the Philippines may soon get a credit rating upgrade.

This helped sustain positive sentiment, Rodrigo said, a day after the BSP trimmed its key interest rates.

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Philippines Unemployment drop bolsters economic optimism for 2012

THURSDAY, 01 MARCH 2012 21:16         

By: CAI U. ORDINARIO (http://businessmirror.com.ph)

The National Economic and Development Authority (NEDA) is confident that the increase in the number of employed Filipinos will boost the optimism for the economy this year.

Socioeconomic Planning Secretary Cayetano W. Paderanga Jr. said data from the National Statistics Office showed that the government created more than a million jobs last year. The quality of jobs also improved as indicated in the Labor Force Survey (LFS).

"Last year the country generated more employment from the previous year. Employment level rose by 3.2 percent or 1.156 million, largely on the strength of the continued growth in services and the recovery in agriculture, although there was a slowdown in the industry sector," Paderanga said in a statement.

Paderanga also said the country has a better unemployment figure compared to the United States, which has an unemployment rate of 8.3 percent in January 2012. He explained that this is because the character of our economy is different from those of developed nations.

He added that the government's infrastructure investments this year, such as those that will be used for public-private partnerships, will also boost the economy and enable small and medium enterprises to attain "economies of scale" in their operations and therefore, hire more workers.

"Infrastructure investments will actually go a long way because when you connect the economy, then our own small businessmen will have a bigger market to look at and therefore we may start attaining economies of scale, although this means more competition among them but we think in the end it will be good for everybody that they become more productive," Paderanga explained.

Data showed out of the 61.9 million Filipinos aged 15 years old and over, about 40 million were in the labor force or economically active in 2011. This translates to an annual labor force participation rate (LFPR) of 64.6 percent, higher than the LFPR in 2010 which was at 64.1 percent.

The NEDA added that despite an increase in the LFPR, the quality of employment remained positive last year, with strong growth in wage and salary employment which posted a 4.6 percent growth; modest growth in full-time employment, 1.5 percent; and slight easing of the unemployment rate to 7 percent in 2011 from 7.3 percent in 2010.

However, Paderanga said that while the Philippines may have fewer unemployed persons, the country would compare unfavorably to developed economies in terms of underemployment, which increased from 18.8 percent in 2010 to 19.3 percent in 2011.

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China called the Philippines Illegal exploring in the Palawan Shore

China on Tuesday (February 28, 2012) reaffirmed its claimed indisputable sovereignty over the Nansha Islands and its adjacent waters and protested against the Philippines' plan to explore for oil and natural gas in the area of the West Philippines Sea (South China Sea).

China Foreign Ministry spokesman Hong Lei made the remarks at a regular news briefing when responding Philippine Secretary of Energy Jose Almendras' statement on inviting foreign investors to explore two oil and gas blocks in the Bloc 3 & 4 of the West Palawan Sea within 200 Nautical Mile Exclusive Economic Zone as china called it under China's jurisdiction base on their claim.

"It is unlawful for any country or company to explore oil and gas in sea areas under Chinese jurisdiction without the permission of the Chinese government," Hong said., pointing the Philippines as said to be illegally inviting investors to explore its oils in the Palawan Province

The Philippine Department of Energy is proceeding with plans to offer 15 offshore territories for oil and gas exploration, including two areas in Palawan province that are part of China's sovereign territory he said.

China blunting its claim that part of Palawan Province of the Philippines is under the china's jurisdiction in the recent news.

China protested the plans to invite foreign companies to explore in the two areas last year, saying they are part of the South China Sea region in waters where it has "historic titles" and "sovereign rights and jurisdiction".

The Philippines insisted the protest of China as the Sultanate State of Sulu has the full territorial rights back 7 century and call China to bring the disputes to the United Nations Convention but China rejects the call of the Philippines to resolve the disputes through UNCLOS but recommending for a bilateral discussion adding a bullying tactics by pronouncing to sanction the Philippines for not obeying their demand over the Spratly archipelago.

However, Philippine officials continue to maintain that the two areas in question - Area 3 and Area 4 in the licensing round - are not part of the disputed area in the West Philippines Sea (South China Sea) and are well within the country's territory, The Daily Tribune reported.

Almendras said on Monday (February 27, 2012) that the Philippines government would start awarding exploration contracts to some companies by March 2012, but did not say whether the permits would include Area 3 and Area 4.

Companies are allowed to submit pre-qualification documents until Wednesday (February 19, 2012).

The Department of Energy will let the Department of Foreign Affairs deal with diplomatic issues, according to the Philippine Star.

"I am sure it will have diplomatic complications, which I am sure the DFA will be able to handle," Almendras said.

Vietnam, the Philippines, Malaysia and Brunei claim sovereignty over some areas in the West Philippines Sea (South China Sea), which are rich in natural resources.

Hong urged relevant countries to adhere to the spirit of the Declaration on the Conduct of Parties in the South China Sea and refrain from taking moves that will complicate or aggravate the dispute, and make due efforts for the peace and stability of the South China Sea.

The huge potential interest in energy exploration is driving the Philippines to enlarge its presence in the area, said Zhang Tuosheng, a researcher at the China Foundation for International and Strategic Studies.

"Its economic interference is against the spirit of Declaration on the Conduct of Parties in the South China Sea - changing the status quo in the disputed area," he said.

The Philippines insisted that the Declaration of Conduct or DOC is effective only in the disputed areas beyond 200 Nautical Miles Exclusive economic Zone but for the Red bank which is just few kilometers away from Main Island Palawan is not part of the Disputed areas but a territory of the Philippines which is also supported by international laws of Sea (UNCLOS) and the Archipelagic States Law which given title to the Philippines, Indonesia Bahamas, Papua New Guinea & Fiji held in Jamaica held in December 10, 1982.

CHINA IS NOT AN ARCHIPELAGIC STATE and must respect the International law of Sea and must respect the countries who have the right titles and ownership of the islands and territories as defined by the Archipelagic States – UNCLOS (See definition of Archipelagic States) according to the Philippine government law makers who refused to be name.

Wang Yingfan, former Chinese ambassador to the Philippines, said last week that China and the Philippines should jointly explore and develop some areas in the South China Sea.

During a meeting with Philippine Foreign Affairs Secretary Albert del Rosario, Wang reiterated China's position that the Philippines should not allow a third party, such as the United States, to help resolve the problem, adding that "with goodwill and hard work, we could find a way out that's agreeable and acceptable to both sides".

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