PEACEFUL RESPONSE TO ERAP VERDICT BUOYS FINANCIAL MARTS
MANILA, SEPTEMBER 13, 2007 (STAR) By Zinnia B. Dela Peña and Des Ferriols - The country’s financial markets reacted positively yesterday as relieved investors discounted political risks after former President Estrada was convicted of corruption, analysts said.
The benchmark Philippine Stock Exchange index or PSEi added 39.63 points (1.21 percent) to 3,307.60 after losing 1.6 percent in the last two sessions.
At the foreign exchange market, the peso also extended its gains, closing at 46.71 to a dollar yesterday after plunging to a four-month low of 47.12 last Tuesday.
“The market reacted positively to the Estrada verdict and I think they’re giving more weight now to growing optimism for a US rate hike,” said Nestor Aguila of DA Market Securities.
“The court has spoken. It’s time to move on,” AB Capital Securities research head Jose Vistan Jr. added.
He said while the market reacted positively to the verdict, it was still too early to say that political tension has totally eased.
“Fundamentals are starting to prevail over emotion but there are still a lot of hurdles.”
“Despite the tension, security measures are in place and strong fundamentals such as strong inflows and well-balanced economic growth are supportive of the peso,” said Thio Chin Loo, currency strategist at BNP Paribas.
Analysts said the Sandiganbayan decision helped calm investors who had been jittery over political uncertainties ahead of the verdict.
“After a long trial, investors are happy that it’s over. The decision calmed the nerves of wary investors,” said Astro del Castillo, managing director of First Grade Holdings.
Vistan said investors are taking positions for a possible cut in the US Federal Reserve’s key rates “but the question is by how many basis points. A 25-basis-point cut may not be good enough to prevent a skid of the US economy.”
Del Castillo said the market will continue to contend with other external threats, such as the possibility of an accelerated slowdown of the US economy and surging oil prices.
Oil prices hovered near all-time highs above $78 in Asian trading yesterday after the Organization of Petroleum Exporting Countries (OPEC) agreed to boost its crude output by 500,000 barrels a day in an effort to calm markets unnerved by high energy prices and worried that supplies could grow tight by the end of the year.
At the stock market, all major sub-indices posted gains with mining and oil as the biggest gainer, up 334.34 points.
The broader all-shares index also closed higher by 23.53 points to 2,091.39.
Trading volume was at 3.20 billion shares worth P5.06 billion, as gainers beat losers, 94 against 18, with 43 stocks unchanged.
Market leader Philippine Long Distance Telephone Co. added P10 or 0.4 percent to P2,680.00.
Conglomerate Ayala Corp. rose P15 or 3.1 percent to P485 after the company announced a P2.5-billion share buyback program.
Power retailer Manila Electric Co. gained P3 or 3.9 percent to P78.50.
Bangko Sentral ng Pilipinas Governor Amando M. Tetangco Jr. said the peso also rebounded following the recovery in global stocks and the appreciation of regional currencies against the dollar.
“Some market players also said the generally peaceful reading of the verdict on former President Estrada likewise calmed market sentiments,” Tetangco said.
Moreover, Tetangco noted that there was a large inflow of remittances from overseas Filipinos as well as exporter receipts. The dollar inflow, he said, provided more support to the peso.
Some analysts even pointed out that the local currency’s appreciation was also due to more stable regional financial markets.
“I don’t really attribute the peso’s rise to the Estrada verdict,” said Philip Wee, currency strategist of DBS Bank in Singapore. “It is more in reaction to US stocks which did well overnight.”
“Fundamentally, the peso is still on track, it should really appreciate, but today, I think it is going up - but pretty much at the whims of risk aversion,” said Wee.
“There is volatility right now, but the verdict doesn’t seem to have much impact,” said BNP Paribas’ Loo. – with AFP
DOLE expects OFW remittance to exceed $14 B Thursday, September 13, 2007
(STAR) Largely due to the depreciation of the dollar, the Department of Labor and Employment (DOLE) is expecting the remittances from overseas Filipino workers (OFWs) to exceed $14 billion this year.
Labor Secretary Arturo Brion said this year’s total global remittances could breach the record of $14 billion in 2006.
“We have recorded $1.1 billion remittance in June and this marks the 14th straight month that OFWs have sustained more than $1 billion monthly remittance,” Brion said.
Earlier, labor officials said the depreciation of the dollar would not adversely affect the remittances from OFWs abroad.
“In fact, OFWs are expected to send more dollars to their families here to cover the amount lost due to dollar depreciation,” Brion said.
Labor officials also said that growth in dollar remittance is expected this year despite the drop in the number of Filipino workers hired abroad.
Data from the Philippine Overseas Employment Administration (POEA) showed a 3.9 percent decline in the number of OFWS.
As of Aug. 31, a total of 725,999 Filipino workers were deployed to work abroad. The figure was about 30,000 lower than last year’s deployment record of 755,185.
Yet, Brion expressed confidence that the global deployment of OFWs would still reach the one million mark, saying 500,000 workers went abroad in the first half of the year.
“We have already deployed 725,999 workers as of August and this represents more than two-thirds of our one million goal,” Brion pointed out. – Mayen Jaymalin
Chief News Editor: Sol Jose Vanzi
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