Philippines, USA, Japan plus Australia Strengthen Maritime Power to Counter China

Philippines Offers Strategic Partnership with Australia

President Benigno S. Aquino III disclosed on Monday that the Philippines wants Australia to be its third strategic partner after the United States and Japan.

The President sought closer bilateral cooperation between the two countries, citing the shared values and principles of the two nations.

"We're offering Australia actually a strategic partnership. We only have two strategic partnerships -- one in the United States of America and the other with Japan. We're offering the third to Australia and they are presently studying it," the President told the foreign media at the historic landmark Manila Hotel.

Pending the approval of the partnership agreement, the President said Australia has started to help the Philippines with the coast watch system.

"There are various trainings being conducted by their military security forces with our own personnel in the form of scholarships or they're meeting with various institutions," he said.

The President is scheduled to make a state visit to Australia on Oct. 24 to 26 to strengthen economic, defense, and development cooperation. Prior to his Australian tour, the President will travel to New Zealand on Oct. 22 to 23 for meetings with government and business leaders.

The President also cited the friendly ties between Manila and Canberra, saying "we share the same values, we're both democracies."

"We have been normally on the same side of issues that have confronted our respective peoples since at least World War II, the Korean War, the Vietnam War. We face the same challenges be it terrorism, global climate change, relationships with the superpower in the neighborhood," he said.

"So all of these lend to shared values, in a sense, shared background and therefore it promotes closer cooperation between our peoples," he added.

Earlier yesterday, the Department of Foreign Affairs (DFA) announced that President Aquino has decided to take the trips upon the invitation of New Zealand Prime Minister John Key and Australian Prime Minister Julia Gillard.

In New Zealand, the President's visit aims to deepen and strengthen relations in terms of political, defense, economic and development cooperation and people-to-people relations.

The President will first proceed to Auckland where he will meet with the Filipino community there. Currently numbering at around 36,000, Filipinos comprise 1 percent of the total population of New Zealand.

He is also slated to deliver a speech in a business forum to be attended by the Philippines New Zealand Business Council and the New Zealand Philippines Business Council.

Aquino is also expected to have one-on-one meetings with some New Zealand corporations.

From Auckland, Aquino will proceed to Wellington, the country's capital, to meet with Prime Minister Key and Governor-General Sir Jerry Mateparae.

The President will exchange views on regional and international developments of mutual concern with the two leaders, as well as share updates on national developments, including the conclusion of the Framework Agreement on the Bangsamoro between the Government of the Philippines (GPH) and the Moro Islamic Liberation Front (MILF).

In Australia, the Chief Executive will first fly to Canberra where he will meet with Prime Minister Gillard and Governor-General Quentin Bryce.

The leaders are expected to update each other on national developments, including the signing of the GPH-MILF Framework Agreement on the Bangsamoro.

The DFA said discussions will likewise focus on cooperation in the political, economic, defense, and development fields, and on the future direction of Philippine-Australian bilateral relations. At the same time, regional and international issues will also be taken up.

From Canberra, the President will proceed to Sydney where he is scheduled to deliver his keynote address at the Philippines-Australia Business Forum.

He will also meet with top CEOs in a roundtable setting and have one-on-one meetings with several Australian companies.

President Aquino will again deliver another address to The Asia Society of Australia and the Australia Philippine Business Council.

While in Sydney, President Aquino will unveil a statue of Philippine national hero Dr. Jose Rizal in Campbelltown.

He will also meet and interact with the members of the Filipino Community in Australia where he is expected to encourage them to help raise the profile of the Philippines by being knowledgeable and competent sources of information on their home country, be it on history and culture, business, and tourism, among others.

The Philippines is among the top 10 source countries for recent migrant arrivals in Australia where there are about 224,000 Filipinos.

During the State Visits, President Aquino will be accompanied by Foreign Affairs Secretary Albert F. del Rosario, Trade and Industry Secretary Gregory L. Domingo, Defense Secretary Voltaire T. Gazmin, and other Cabinet Secretaries who will also be meeting with their counterparts.

Manila Bulletin 

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Spain rating hold, US earnings lift Philippine Peso & Asian Foreign eXchange; intervention seen

Emerging Asian currencies led by the Korean won and the Philippine peso hit new highs on Wednesday as concerns over the global economy eased after strong U..S. corporate earnings and a credit ratings affirmation for Spain.

Traders said the potential for further gains was limited, with central banks seen as stepping into the market to stem the rise of the currencies, which make exports more expensive.

The South Korean won hit a one-year high, while the Taiwan dollar climbed a five-month peak on inflows from foreign financial inflows.

The Philippine peso reached its highest in more than five and half years, but it gave up some of the gains after the central bank was spotted buying dollars, traders said.

The Singapore dollar barely moved on similar intervention by the authority, dealers said.

Asian stocks also rose on Wednesday, boosted by Moody's decision to retain Spain's investment grade rating, assuaging widespread fears that it would be cut to junk status.

Strong earnings from US firms also improved risk appetite.

"The positive sentiment appears to be sustained," said Frances Cheung, senior strategist at Credit Agricole CIB in Hong Kong.

"However, Asian policy makers may not want to see their currencies too strong. I expect them to jump into the market trying to cap currency strength," she added.

Emerging Asian countries heavily rely on exports and the recent slowing global economy, especially China, has kept investors from chasing regional assets including currencies.

The risk sentiment is likely to depend on China's third-quarter growth due on Thursday.

Still, Credit Agricole's Cheung said slowing growth in the world's second-largest economy may not much deter a firm trend in emerging Asian currencies.

"There could be downside risk from China GDP, but the data may not be very worrying, given China's recent yuan-fixing," Cheung said.

The People's Bank of China has been fixing the yuan's mid-point firmer, helping the currency hit record highs, even though its economy has cooled.

TAIWAN DOLLAR

The Taiwan dollar strengthened to 29.142 to the US dollar, its highest since May 2 on inflows from foreign financial institutions.

Its upside was limited as the island's importers including oil companies bought greenbacks, dealers said.

The central bank was spotted intervening to stem the Taiwan dollar's strength, but its US dollar bids were not that strong, they added.

KOREAN WON

The won advanced for a fifth consecutive session to hit 1,103.3 per dollar, its strongest since Oct. 31.

The South Korean currency is seen heading to the previous peak of 1,100, given improving risk appetite, but investors stayed cautious over possible dollar-buying intervention by the foreign exchange authorities.

Importers bought dollars for payments on dips, while some offshore funds took profits.

"We may see the 1,100. But not that soon. Exporters are not active enough to push the won there," said a foreign bank dealer in Seoul.

PHILIPPINE PESO (₱)

The Philippine peso jumped to ₱41.160 to the dollar, its strongest since March 2008, on remittance inflows and solid economic fundamentals.

The peso found some resistance as the central bank was spotted buying greenbacks below 41.20, prompting offshore funds and interbank speculators to chase dollars, dealers said.

But some dealers saw the peso's retreat as opportunities to buy the local unit on dips.

"Market sentiment is still to sell the dollar on rallies. So any bounce to 41.30 would be a chance to either reinstate or add on to short-dollar positions," said a foreign bank dealer in Manila.

RINGGIT

The ringgit hit 3.0390 per dollar, its firmest since Sept. 14, as interbank speculators chased the local currency, tracking a firm euro and other risky assets.

Still, the Malaysian unit could not extend gains as the Singapore dollar was capped by spotted intervention.

SINGAPORE DOLLAR

The Singapore dollar barely changed as the central bank was spotted buying US dollar to stem the local unit's strength, dealers said.

Agent banks of the Monetary Authority of Singapore were seen preventing the city-state's currency from strengthening past 1.2180 to the greenback, according to dealers.

The intervention came as Singapore reported a surprise drop in non-oil domestic exports in September, disappointing market expectations of a slight growth.

Business Recorder 

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Thailand, with the unique Philippines twin Best performers Asian stock markets 2012

Thailand, Philippines are unlikely best performers among Asian stock markets in past year

Thailand and Philippines could be compared as twin for best Asian stock market but the Philippines is too different with Thailand in other aspects to link Indonesia. The Philippines is also called twin tiger with Indonesia but still the Philippines have its uniqueness compare to Indonesia in different aspects to link with Thailand so the 2 would not become similar.

The two Asian nations with the region's best performing stock markets in the past year are unlikely havens for investors: Thailand and the Philippines. Both are better known for troubled politics and natural disasters, but have outshone higher-octane neighbours as new leaders nurture relative calm.

The PSE benchmark in the Philippines has soared 29 per cent in the last 12 months and Thailand's SET index is up a whopping 33 per cent. By contrast, an index compiled by MSCI that tracks stocks in 12 Asian countries is up a ho-hum 2 per cent. The Shanghai Composite Index in rising power China has sunk nearly 14 per cent.

The Philippines, long regarded as an economic backwater blighted by a succession of deeply corrupt governments, has gained a measure of credibility due to the stability ushered in by the 2010 election of President Benigno Aquino III. Analysts credit him with boosting investor confidence by cracking down on corruption and living up to his promises of openness and good governance.

Thailand too has benefited from an improvement in its politics, although it's unclear whether the current stability will be enduring. The country seemed to be veering toward civil war in 2010 when deadly street battles raged in Bangkok between the army and loyalists of Thaksin Shinawatra, the populist prime minister ousted in a 2006 coup.

Local stock brokers were resigned to the Thai market lagging its potential but the landslide election victory in 2011 of a pro-Thaksin party and the popularity of the country's first female prime minister, Thaksin's younger sister Yingluck, have boosted confidence. Lately, Thai stocks have also got a fillip from big spending government policies that include efforts to overhaul flood defences after a widespread inundation wrecked industry last year.

For both countries, the perception abroad that they have become a bit less risky has drawn renewed attention to their selling points.

One of the high notes for the Philippines is its newly minted status as a creditor nation, the first time in 40 years. Its foreign currency reserves total $80 billion, while foreign debt is about $65 billion. Theoretically, the country could pay off all its foreign obligations and still have $15 billion in cash left over, said Alfred Dy, head of Philippines research at CLSA Asia-Pacific Markets.

"It's the opposite of the countries in the West, where there's a lot of external debt," Dy said.

The country's accumulation of foreign exchange is driven by two sources: remittances, or money sent home to the Philippines by citizens who work abroad, and the dramatic growth in outsourcing.

The remittance trend began as early as the 1960s, when Filipino nurses travelled to the U.S. to work the night shifts at hospitals — hours that American nurses didn't want to work. Today, more than one in 10 Filipinos out of a population of 95 million lives abroad for work. They sent home $20 billion in 2011 — more than double the amount in 2004.

The fact that they are spread across the world — in the Middle East, in America, throughout Asia — also spreads the risk if a particular region goes into an economic slump.

Meanwhile, a boom in business outsourcing, enabled by the high level of English proficiency in the Philippines and its young workforce, racked up $14 billion in 2011 — soaring from $3 billion that was earned just seven years ago. The Philippines now rivals India as a global outsourcing giant.

These trends have insulated the Philippine economy from the export-reliant doldrums being experienced elsewhere in Asia.

"We don't rely as much as other countries on exports," Dy said. "It's really more of a service economy, it's sending people abroad and getting contracts on business outsourcing, which makes the Philippines a bit unique."

"Even if the global economy slows down, we think these two items will be relatively resilient compared to traditional exports," he said.

In Thailand, the government's drive to boost investment and growth after massive flooding decimated industry last year has helped to make it a favourite of stock investors.

Thailand's economy shrank 10.7 per cent in the last quarter of 2011 after the country's worst flooding in more than half a century disrupted operations at more than 1,000 factories, bringing the country's key automotive and computer parts industries close to a halt.

But ever-resilient Thailand is bouncing back. The Asian Development Bank predicts Southeast Asia's second-biggest economy will grow 5.2 per cent this year and 5 per cent in 2013.

Investors view positively measures Thailand has taken to increase domestic consumption, such as raising the daily minimum wage to 300 baht ($10) and offering rebates to first-time car buyers.

"It's enabled households to have more disposable income and spend more," said Frederick Gibson, associate economist at Moody's Analytics. "I think the market has taken that as a positive sign, that households will have the ability to spend and that hopefully will have a positive impact on growth."

Thailand's public debt load as a per cent of the economy — relatively low at 40 per cent — means the government has the leeway to undertake expansionary fiscal policies, such as corporate tax cuts and other measures, said economist Eugene Leow of DBS Bank Ltd. in Singapore.

The country also has mapped out major infrastructure projects, including flood prevention measures, in the next few years.

"There are a lot of projects in the pipeline," Leow said. "All these projects will cushion any slowdown."

So of the two stock markets, which might be the better bet for investors wanting to take the plunge into Southeast Asian equities?

Herald van der Linde, head of equity strategy for Asia Pacific at HSBC, said he believes the Philippines stock market has become one of the most expensive in the world.

Van der Linde especially likes Thai banks since demand for financial services is growing fast. Like elsewhere in Asia, Thais have begun to invest in their own local markets and investment products, breaking from the traditional way of stashing wealth into houses and land, van der Linde said.

Canadian Business 

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