SUCCESSFUL POLLS WILL  BOOST PROPERTY,  BANKING  SECTORS - CREDIT SUISSE


MANILA, 
FEBRUARY 3, 2010 (STAR) By Lawrence Agcaoili - United Kingdom-based investment bank Credit Suisse sees the property and banking sectors are likely to benefit from the positive outcome of the presidential, national, and local elections scheduled in May.

In its Asian Daily, Credit Suisse research analyst Gilbert Lopez said property and banking companies that are being traded at the Philippine Stock Exchange (PSE) have the most potential upsides to the share price.

“We continue to have a positive political outcome in May 2010 as our base case. Under this scenario, we believe the property and banking sectors would do best and have the most potential upsides to the share price,” Lopez stressed.

He pointed out that the Metrobank Group of taipan George SK Ty as well as property companies such as Ayala Land Inc. and mall giant SM Prime of retail king Henry Sy are expected to perform well.

He said the share price of Metrobank could go up to P59 from the current level of P42 while that of Ayala Land could increase to P14.43 from P10.50 and SM Prime could improve to P12.07 from P9.40.

He added that diversified conglomerate Ayala Corp. and Sy’s SM investments are also expected to perform well this year. The share price of Ayala Corp. is expected to increase to P399.85 from P290 while that of SM Investments would improve to P395.74 from P317.50.

The investment bank stressed the need for the next government to pursue fiscal consolidation after the failure of the administration of President Gloria Macapagal Arroyo to achieve a balanced budget due to the global economic meltdown.

“A fairly smooth presidential and general elections should help the upcoming government with a better chance of achieving its most pressing problem of fiscal consolidation,” Credit Suisse said.

The Philippines has postponed the achievement of a balanced budget to 2013 after failing to balance the budget in 2008 and this year under the Medium Term Philippine Development Plan (MTPDP).

The country likely posted a record high budget deficit of over P290 billion last year due to the full impact of the global financial meltdown eclipsing the previous record level of P210.7 billion booked in 2002.

“The next government needs to raise tax revenues to gross domestic product, which has been a disappointment over the last two years,” Lopez added.

BIZ COLUMN:

Ate Glue's lies costing us money DEMAND AND SUPPLY By Boo Chanco (The Philippine Star) Updated February 03, 2010 12:00 AM

That multi-million peso “information” campaign of Ate Glue’s propaganda boys is being justified as the administration’s way of reporting its achievements to the people. But many economists who have gone through the details point out the facts and figures being cited are misleading. Peddling the lies is costing the taxpayers plenty. Given our fiscal deficit problem, this adds insult to injury.

For instance, one of my economist friends commented that ‘the one statistic that caught my eye was the one on Credit Rating. It is misleading. It suggests that credit rating has improved thanks to PGMA, showing the situation before PGMA was ‘negative,’ which then turned ‘stable’ at the end of her term.

“It misleadingly takes these words in quotes as RATINGS, which they are not. They are indicators for OUTLOOK, i.e. whether ratings are expected to go down or up. The objective fact is that the actual rating as she leaves office is two or three notches (depending on which rating agency) lower than when she assumed office. At the end of PFVR term, we were one notch below ‘investment grade’... now we are at least three notches below that threshold.”

Then there is Peter Wallace, who is also taking exception to the claims that the ads of the Philippine Information Agency headed by Dodie Limcaoco are making. But what can you expect from a propaganda hatchet man like Limcaoco?

Anyway, Peter sent our e-group in the Foundation for Economic Freedom a detailed analysis of Ate Glue’s reign. Because most of the members of the group are economists, Peter carefully crunched his numbers and produced a paper he entitled “Uncertain Times.” It totally disabuses you of any illusions that Ate Glue’s nine years stay in Malacañang did any good for the nation.

“The Philippines is listed as a developing country, and the President claims it will be amongst the First World countries 20 years from now,” Peter started his paper. “But, maybe the reverse is happening, is the country not, instead, a de-developing country. When you look at the numbers, the facts, not rhetoric everything seems to be going backwards.”

Peter has all the right to be frustrated. He has invested his life in this country and from the many years I have known him, he strikes me as more Filipino than many Filipinos… more concerned about the welfare of Filipinos than most politicians. So I understand when he laments: “This was the shining light of Asia in the ‘50s and through to the early ‘70s just read the reports of that time. It’s why I invested in a factory here. Today it doesn’t even get mentioned in any assessment of Asia, let alone even Southeast Asia unless derogatorily or with dismissive amusement. What went so horribly wrong?”

And Peter continues: “this is where GMA’s logic falls down. She says she’s unpopular because her focus is on economic reforms to improve the lot of the people. Well in such a case after 9 years the lot of the people should have much improved – and the people would start to appreciate you. Instead the reverse has happened, the standard of living of the people has fallen, more are in poverty, more are without a job, all the indicators of quality of life have worsened in the past nine years.”

Citing official and published data, Peter goes to say that “I want to dispel the propaganda myth that the economy has done well under Arroyo. It hasn’t, at least not to the extent she tries to claim. I maintain that what growth and improvement we’ve seen would have occurred with or without her. And if anything, growth would have been stronger without her.

“In fact I’d maintain that her influence has been negative. I base that on the fact that job creating, new wealth – creating investment hasn’t happened to the extent a successful president would have achieved. More people were without a job than there were in 2000. Even more have little or no income from their jobs (fastest growing sources of employment are unpaid family workers and self-employed such as sidewalk vendors), yet are counted as employed – a deliberate deception.

“As to call centers and Business Process Outsourcing (BPO) they’ve been a great success. But they’ve been so despite GMA, not because of her. It grew because Filipinos have a natural talent for it, government added nothing. If it had it would be double the size now…”

Then Peter cites data in a favorite topic of mine in this column: our attraction to investament (local and foreign). As Peter points out, this is a good indicator of a strong economy because investors see a country as a profitable place to go. How did Ate Glue fare in this area?

“In past eight years the Philippines has attracted the lowest level of foreign investment amongst the ASEAN-6. The Philippines got $12.1 billion; next lowest was Indonesia at $29.7 billion; little old Singapore did best at $133 billion 11 times the Philippine level; while Malaysia and Thailand got about the same at a little over $40 billion each.”

But the worst statistical indicators are in education because that means our future is really bleak. Last Monday, PhilStar reported that even for OFWs, we will no longer be able to send as many workers abroad because the really trained workers are getting old and the younger ones are victims of an educational system that taught them next to nothing.

The statistics cited by Peter should give us nightmares: “Today, out of 100 Filipino kids who enter school, only 65 get to finish primary. Back in 1998, 70 got to finish; while only 42 finish high school compared to 54 who did in 1998. Add to that the fact that public expenditure per high school student (as a percentage of GDP per capita) fell from 10.7% in 1999 to 9.2% in 2004.

“While the education department has been getting a bigger allocation from the government (from P90 billion in 1999 to P149 billion in 2008), there’s been no significant increase in real terms – P90 billion vs P92.5 billion for example. The total Education budget’s share to NG budget has been declining (19% in 1999 to a little over 11% in 2008).

“Education budget is only between 2% to 2.5% of the country’s GDP, lower than the 4%-5% recommended by UNESCO; Major East Asian economies allot 5% to 6%.”

Here are the comparative figures cited by Peter.

The country spends the least on educating its kids ($318 per child vs. Thailand’s $1,048)

RP has the largest student-teacher ratio at elementary level in Southeast Asia, next to Cambodia

About P22 billion is reportedly lost due to overpriced materials. The amount could’ve been used to build 4,500 classrooms or procure 11 million desks or 440,000 computers. Or pay teachers a decent wage.

An IMD report noted that together with Indonesia, the Philippines has the worst secondary school enrollment rate among the Asian countries.

The Philippines is a “striking example of under performance” said UN Secretary General Ban Ki-Moon.

The editorial of another daily warns that our graduates are in danger of not being recognized abroad because of the insufficiency of the education they get here at home. In fact, the Asian Development Bank has warned about a decline in remittances from migrant Filipino workers in the coming years amid a slowdown in deployment of Filipino professionals abroad. Poor education has killed the OFW goose laying all those golden eggs.

Peter had more to say about other sectors of the economy to dispute the claims made by the advertising blitz of Ate Glue’s propagandists. We will take them up at some other time as we are running out of space today. Suffice it to say that the taxpayers would have been better served if the millions of pesos spent to mislead the public about the imagined accomplishments of Ate Glue were spent to build classrooms, buy good textbooks and pay teachers better.


Chief News Editor: Sol Jose Vanzi

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