MARKET  SEEN  TO  REMAIN  VOLATILE  THIS  WEEK

MANILA, FEBRUARY 11, 2008
(STAR) By Zinnia B. Dela Peña - The local stock market will remain volatile this week as traders though tempted by attractively low share valuations are still skittish on signs of further weakening of the US economy and renewed political concerns.

Francisco Liboro, president of the Association of Securities Analysts of the Philippines, said share prices will likely continue a declining trend in the near term due to lingering concerns over a US credit squeeze.

“The market’s weekly moving averages are in negative crossover territory so we will see more downtrends in the next three to six months,” Liboro said.

Liboro said once the market reaches oversold levels of between 2,800 and 2,650, investors are expected to resume their buying activities.

Last week, the main composite index fell 52.95 points or 1.61 percent to 3,241.13 due to the revelations of Rodolfo Noel Lozada Jr., a new witness to the Senate probe on the botched $329- million national broadband network deal with China’s ZTE Corp.

Lozada implicated former elections chief Benjamin Abalos Jr. and First Gentleman Jose Miguel T. Arroyo in this scandal which exploded last year.

Aside from all these, the stock market is under pressure from a rising trend in inflation.

“Long-term investors will need to remain patient as it’s going to take some time before we know if we’ve reached a bottom. The market will have a bottom despite the deteriorating economic conditions. The market has largely priced in the possibility of a recession and this has resulted cheap prices for some quality blue chips,” AB Capital Securities said.

What growth? DEMAND AND SUPPLY By Boo Chanco Monday, February 11, 2008

I haven’t seen the media campaign but I understand the administration has launched one that tries to convince people that the tiger economy-like GDP growth rate is real and palpable. The campaign runs under the slogan, nararamdaman ko. Hmmm. That sounds desperate to me. If you have to convince people about something that should be obvious if it is true, something must be wrong.

Or maybe, those who complain that “hindi nila nararamdaman”, like the man-on-the-street interviewees on television newscasts are probably manhid... walang pakiramdam. O di kaya, manhid na sa gutom. Recent surveys show that there are still a large number of Filipinos who consider themselves poor, specially in terms of access to food. To them, a near eight percent GDP growth rate means nothing. As one interviewee I saw remarked when asked about this high growth rate, “sa mga mayayaman lang naman yan.”

Indeed, the most recent SWS survey showed thirty-four percent or about 6.1 million Filipino families consider themselves “mahirap” or poor in terms of food. The survey is the Fourth Quarter 2007 Social Weather Survey, fielded over Nov. 30 - December 3, 2007. There seems to be a bit of good news too in the survey... just a tiny bit. Self-Rated Food Poverty has been on a downward trend since June 2006, reaching 37 percent in June 2007 before bouncing to 43 percent in September 2007. The latest score of 34 percent is a record-low since 35 percent in June 2004. But that’s still 6.1 million families at average five persons each family equals 30.5 million souls. Dassalat of pipol!

The SWS report also notes that “just like the Self-Rated Poverty Threshold, or the monthly budget that poor households need in order not to consider themselves poor in general, the Self-Rated Food Poverty Threshold, or the monthly food budget that poor households need in order not to consider themselves poor in terms of food, has been sluggish for several years despite considerable inflation. The failure of the thresholds to increase despite so much inflation is a sign that the poor are actually lowering their real living standards.”

SWS continues: “In poor Metro Manila households in particular, the food threshold for the poor have considerably weakened against the Consumer Price Index (CPI) for food, which rose by over 30 percent from the base year of 2000. A declining poverty threshold, despite a rising cost of living, means that households are lowering their living standards, i.e., belt-tightening. The median food poverty threshold of P6,000 in Metro Manila is equivalent to only P4,382 in base year 2000 purchasing power for food.”

So, that seems to be it. A tiger economy-like GDP growth rate means nothing much unless it trickles down to people. That’s why the administration is only wasting our tax money on any advertising campaign that tries to convince people that we are doing well and with figures to back it up if they know from their own experience it just isn’t so. Besides, even the figures may no longer be considered accurate measurements, as some leading economists have pointed out. Once adjusted to make them more comparable, they don’t look too tiger-like anymore.

From still another perspective, I remember SWS’s Dr. Mahar Mangahas once explained “When I say Family Income is a ‘better’ indicator than GNP, I mean as an indicator of the people’s general economic welfare or well-being. For such a purpose, I shall continue to maintain that real GNP per person is definitely inferior to real income per family. Thus for any period when real GNP per person rose whereas real income per family fell, as happened in 2003-2006 according to the official surveys, it is very apparent to me that general economic welfare DECLINED.”

On the subject of family income, I received this e-mail from a reader, Earl Victor L. Rosero, a former business reporter, who was also trying to understand what is happening. He reviewed official data and came out with his studied conclusions. I am sure our PhD Economist in Malacañang will understand Mr. Rosero’s analysis.

“The final results of the latest Family Income and Expenditure Survey (2006 FIES) were released recently (Jan. 11, 2008 ). A close look at the disclosed details reveals several significant facts which prove that the economic growth of the country as a whole is hardly trickling down to the poor and the lower middle class. The figures for 2006 average family income at 2003 prices tell the true story. Most of us were poorer in 2006 than in 2003.

“Measuring income, expenditure and savings at 2003 prices instead of at 2006 prices takes into account inflation and the weakening of the purchasing power of money. One peso in Year 2006 buys less goods and services than one peso in 2003. Here are the hard facts from the 2006 FIES:

“2006 average family income (at 2003) prices declined from P148,000 to P142,000.

“2006 average family expenditure (at 2003 prices) slid from P124,000 to P121,000.

“2006 average family savings (at 2003 prices) slipped from P24,000 to P21,000.

“At 2003 prices, 2006 average family incomes were down across the board (all deciles).

“At 2003 prices, 2006 average family savings were down from the fourth decile to the tenth decile while the first and second deciles were in the same state of indebtedness they were at in 2003. The third decile were at break-even.

“At 2006 prices, the average income of the poorest 10 percent (first decile) was only P32,000 but their expenses were P35,000 and so they are not just poor but also in debt by P3,000.

“At 2006 prices, the lower middle income families (third, fourth and fifth deciles) were almost break-even. They had only P7,000 in savings which is about one month’s salary of a low-paid clerk.

“Total annual family savings (at 2003 prices) dropped by eight percent from P399 billion to P367 billion.

“Total annual family income (at 2003 prices) rose by only 1.7 percent from P2.437 trillion to P2.478 trillion

“Average incomes of some regions (at 2003 prices) declined significantly:

For Metro Manila: down from P266,000 to P253,000;

“For the Ilocos: down from P124,000 to P115,000;

“For Calabarzon: down from P184,000 to P175,000;

“For MIMAROPA: down from P103,000 to P92,000;

“For Bicol: down from P109,000 to P104,000;

“For Davao (Region XI): down from P117,000 to P107,000;

“For ARMM: down from P83,000 to P70,000;

“For SOCCSKARGEN: down from P113,000 to P95,000

“At 2006 prices, the poorest 30 percent of the whole population did earn more income: up from P206 billion to P258 billion. But they spent more than what they earned: up from P212 billion to P266 billion which means that their savings declined from negative P6 billion to negative P9 billion.

“In contrast, the richest Filipinos really got much richer. The tenth decile of the population saw their total incomes rise by 22 percent from P884 billion to P1.082 trillion and their total savings rose by 13 percent from P249 billion to P282 billion.

“The upper middle class (sixth to eight decile) are pretty much in the same financial states they were at in 2003, but they are a bit poorer. Their combined average family savings (at 2006 prices) were at P43,000 in 2006 versus P45,000 in 2003.

“These facts should place in proper perspective the Philippines’ GNP and GDP figures we now see as banner headlines on newspapers, television and the Internet.

“The National Statistics Office did not release a detailed table of total and average incomes at 2003 prices by income decile. They did give out some charts in PDF format. Why? Not a pretty picture? The truth hurts?”


Chief News Editor: Sol Jose Vanzi

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