PESO, STOCKS UP FOLLOWING PEACEFUL RALLY
MANILA, July 15, 2005 (STAR) By Rica D. Delfiinado - The peso and the stock market recovered yesterday as relief swept the financial markets following a peaceful anti-government rally which drew less than half the number of people opposition groups expected.
"Looks like Wednesday’s political exercise did not really impact on the market. The numbers were not there," DA Market Securities president Nestor Aguila said yesterday.
At the Philippine Dealing System (PDS), the peso rose strongly by 27 centavos to settle at 55.88 to a dollar from Wednesday’s close of 56.15 to $1. Yesterday’s close was the strongest since July 1 while the increase was the sharpest since April 22.
Total transaction was heavy at $452 million indicating that corporates are still hedging on the dollar.
The peso dropped 1.3 percent over the past month as Mrs. Arroyo faces accusations she cheated in the vote and some of her family members took kickbacks from illegal gambling operators.
"It’s a short-term relief, supporting the peso," said Irene Cheung, head of Asia currency strategy at ABN Amro Bank in Singapore. "But definitely the situation has not cleared up yet. The political noise will continue and the market will just trade on that on a day-to-day basis, " Cheung said.
The benchmark 30-company Philippine Stock Exchange Index climbed 25.42 points, or 1.4 percent, to close at 1,879.46 after falling 0.8 percent Wednesday. Volume was 439.5 million shares worth P1.4 billion. Gainers beat losers 55 to 15, with 33 stocks unchanged.
As many as 40,000 people took part in the demonstration by a wide spectrum of opposition groups calling for President Arroyo’s resignation over election fraud allegations. But the number fell short of the 60,000 to 100,000 targeted by the organizers.
Analysts said organizers of the anti-Arroyo rally failed to mobilize crowd as massive as those that helped topple the administrations of the late Ferdinand Marcos in 1986 and Joseph Estrada in 2001.
They added that the President’s opponents were unlikely to mobilize more people to oust Mrs Arroyo because they have yet to present a credible alternative to her and her economic program.
Aguila said another positive development which supported the market was Mrs Arroyo’s appointment of Margarito Teves as Finance Secretary, replacing Cesar Purisima, who resigned last week as he called on the President to step down.
"Teves has been very well accepted," said Aguila.
Fitch Ratings and Standard & Poor’s on July 11 and Moody’s Investors Service yesterday cut their outlooks on Philippine ratings to "negative" from "stable," citing political concerns and delays to an expansion of a value-added tax.
The cuts suggest the ratings companies are more inclined to reduce the nation’s ratings. Fitch has a long-term foreign- currency rating of BB, two levels below investment grade, on a par with Peru. S&P’s BB- rating is three levels below investment grade. The Philippines is rated B1 by Moody’s, four levels below.
The Philippines has been borrowing from home and abroad to finance spending as tax revenue lags government targets and seven years of budget deficits caused debt to triple to $69 billion. A lower debt rating may increase financing costs at a time when a third of the budget goes on interest payments.
The Supreme Court on July 1 suspended a law changing value-added taxes, hours after it went into effect, following the filing of petitions by the opposition groups saying the measure was unconstitutional.
Second Quarter Earnings
Astro del Castillo, managing director at First Grade Holdings said some investors may have started taking positions ahead of the second quarter earnings season.
"We can expect a good set of corporate results for the second quarter which I believe is still immune to the political crisis," he said. "But if this crisis drags on, it will definitely create a major dent on corporate earnings."
Analysts said investors will remain cautious given concerns stemming from international ratings agencies’ negative outlook on the country’s credit ratins and the delayed implementation of the expanded value-added tax (EVAT) law. - AFP
Philippines saddened over FedEx decision to leave 07/14 5:03:32 PM
MANILA (AFP) - Philippine officials expressed regret on Thursday after US logistics giant FedEx announced it would close its Asia-Pacific hub in the country and move it to China.
"It is quite unfortunate to hear about the plan of FedEx. We already have the infrastructure projects ready," said Socioeconomic Planning Director Dennis Arroyo.
Arroyo said FedEx's decision came just as the government was improving rail and road links to Subic Bay.
"If that is a business or corporate decision it is unfortunate. We hope they might reconsider. They may have other reasons privy only to themselves," said Transportation Department spokesman Thompson Lantion.
FedEx chairman Frederick Smith announced in Hong Kong on Wednesday that his company would move its regional hub from Subic Bay, a former US naval base north of Manila, to what would be the largest Asia-Pacific air transshipment hub at Guangzhou's Baiyun International Airport.
Smith said the runway at Subic Bay would not be long enough to accommodate its A380 superjumbo jets, although a greater consideration was that its future growth in Asia will be in China.
Both Lantion and Arroyo said their agencies were not informed beforehand about FedEx's decision.
Reported by: Sol Jose Vanzi
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