Opinion BusinessMirror
opinion@businessmirror.com.ph
Friday, April 21, 2017 A11
What are the financial markets responding to? Ser Percival K. Peña-Reyes
EAGLE WATCH
A
pril 11 ended with the peso going back to 49.58, while the Philippine Stock Exchange index (PSEi) reached 7,601.40. At these levels, the peso has already appreciated by 1 percent and the PSEi has gained 11.4 percent year-to-date. Just about two weeks ago, investors have been jittery over the sideways and lackluster movement of the PSEi and the seeming freefall of the peso toward 51. What is happening with the financial markets? Usually, they move in relation to economic and political news. The most recent economic data that came out points to some weakening to the otherwise strong growth performance last year. Specifically, unemployment rate for January 2017 rose to 6.6 percent of the labor force, up from 4.7 percent posted in October 2016 and from the 5.7 percent in January 2016. Inflation, meantime, reached 3.4 percent, the highest in the last 30 months. The peso breached 50 to $1 in mid-February and the recent pronouncement of Credit Suisse that the country’s current account is reaching deficit levels and that could lead the peso to breach 51 in 12 months. Our colleague, Dr. Cielito Habito, wrote about these in his column, entitled “Dark Clouds over the economy” (Philippine Daily Inquirer, April 7). He called them “dark clouds” to show that they can potentially derail the current growth trajectory. They seem to beckon a repeat of the boombust cycle experienced in the 1990s. Nonetheless, he ended by saying he is not worried because the country continues to be resilient amid the weaker global growth conditions. Indeed, these numbers need deeper corollary analysis. Unemployment, for instance, has risen but the more important measure of quality employment—underemployment has fallen to 16.3 percent of the labor force. This is the lowest in two decades. It is signaling that, while fewer jobs were created recently, the existing jobs are of better quality and of the right hours allowing workers to have sustainable income and job security. Inflation, meanwhile, has risen to the highest levels in two-anda-half years but this is well within the expectations of analysts and the Bangko Sentral ng Pilipinas (BSP). This is already taking into consideration the erratic price movement of oil and the increase in electricity prices. With expected better agricultural harvest this year, food prices, which comprises about 50 percent of inflation, are seen to remain within their current levels. Thus, our own Eagle Watch forecast see a gradual decrease of inflation to about 2 percent by the end of the year. This will mean that the full-year average will still be below 3 percent. As such, any interest rate increase by the BSP will be more due to adjustments from Federal Reserve rate hike rather than due to inflationary pressures. Finally, regarding exchange rate, we have previously written that the exchange rate has a fundamental value. This value is determined by its Balance of Payments (BOP) position composed of a current account, which includes trade of goods, trade of services (including business-process outsourcing and tourism), overseas Filipino workers remittances and the capital account, which includes foreign direct investments (FDI) and portfolio investments. The current account reflects the foreign savings generated by the country in its regular trading and operating transactions. The Philippines has been posting surpluses in its current account in the last decade. The highest surplus was about 7 percent of GDP in 2009.
Our own Eagle Watch forecast see a gradual decrease of inflation to about 2 percent by the end of the year. This will mean that the fullyear average will still be below 3 percent. As such, any interest rate increase by the BSP will be more due to adjustments from Fed rate hike rather than due to inflationary pressures. It has fallen to about 0.2 percent of GDP as of end-2016. The surpluses has allowed the country to generate more foreign-exchange reserves. As of end-March, the reserves are about $80 billion, or equivalent to nine months of imports. While this has fallen from double digit levels in 2015, it is still way above the three months cover that could potentially lead to devaluation. This, however, does not determine the daily exchange rate. The daily rate reflects the actual market supply and demand for the currency (in this case, the US dollar). The chart below shows the apparent relationship between the peso-dollar exchange rate and the PSEi. Note that when the PSEi rises (+ change), the peso-dollar exchange rate appreciates (- change). In a market driven largely by foreign funds, this twin effect is observable. Net foreign selling dominated the PSE from January to March. The tide began to turn by April with volume surges leading to net foreign buying. This is notable in the breaking of the 7,400 barrier on April 4 with total volume increasing by 30 percent and foreign buying increasing eight times. The exchange rate went back below P50 on April 6. About the same day, Pulse Asia released its March 2017 Presidential Trust and Performance Survey showing President Duterte’s trust and performance ratings remaining above 75 percent. Meanwhile, two days later the US launched missiles against a Syrian airbase effectively rebalancing the geopolitical landscape of the world. This spooked the global markets, weakening the US dollar and increasing gold prices and the yen. On April 12 the PSEi added another 0.4 percent and the peso appreciated further to P49.48 after Donald J. Trump said the US dollar is too strong for global trade. In a globalized world, financial markets are not beholden to predictable factors. One has to cover and understand how events will ultimately affect the behavior of the investor, whether local or abroad.
April wars and love Tito Genova Valiente
annotations
T
he 10th of April this year disappeared under the splendor of a week considered holy by most Filipinos. The Redeemer had just entered the city to the spectacle of swaying palms. By Monday, it was the beginning of sorrows for Him and His mother.
Grief was elevated to the sacral level and memories of war, fairly recent by historical reckoning, is profane. And yet, if there is an event in the country that figures in the annals of world history, it is that fateful day on the 10th of April, in 1942. Called the Bataan Death March, it was a march to defeat. American and Filipino soldiers who fought with them were forced to walk under the heat of the April summer from Bataan, the last bastion of defense made immortal by a speech which begins with the fall of Bataan and the imagination, or exhortation, that it will rise again. For 60 miles, nearly 80,000
people (the number varies according to memory and histories) marched without food or drinks. Some survived to arrive in the concentration camps; some were lucky to fall on the wayside and die, forgotten but heroes in the documentation of a nation, unless if forgets an event for something important. Some years back, I was with writers as we drove past the markers of the march. The ricefields and trees have grown over the remembrances of that day. How did the place look like in 1942? Were women and children allowed to look at the odd mix of cruelty and courage? Were people,
already seeing the future, predicting that this day would go down as one of the biggest triumphs of the human spirit? History is generally about big tales. History to make it to books is writ large. What is missing in this Death March is the imagination of the ordinary. I am interested in what the young Filipino soldiers talked about as they walked. The embankments along the way could have encouraged them to roll off them and disappear into the dark. I can see people hiding behind the trees brave enough to pull into the comfort of their homes some of the prisoners. The Japanese soldiers, young as most of them, would have admired the tropical sceneries new to them, unless they came from Okinawa. Contrary to the faceless, vicious killers materializing from the dark shadows, the youthful Japanese soldiers recruited or conscripted fresh from high school must have known a smattering of English greetings. Did they practice their English conversation skills with the Americans. In the heat of April, they must have missed the early spring and the sakura blooms in the Ueno Park. It was war, however, and youth
Cardinal Tagle encourages the public to imitate the risen Christ’s selflessness
greedy. They cannot say ‘you first’,” Cardinal Tagle added. He mentioned the attitude of some people who are rushing to enter the mall as soon as it opens as an example of this “me-first” mentality.
“Why do they have to enter ahead of everyone else and push one another when the products will not run out immediately?” he asked. The Cardinal encouraged everyone to imitate the altruism of the resurrected Christ even in the smallest ways in their daily lives, such as giving the young, the old and persons with disabilities (PWDs) preferential treatment in public transportation, or letting others enter an establishment first. This is a sign of the resurrection, the Cardinal said, the capacity to withdraw and allow others to come first. The resurrection is about God preparing a place for everyone, telling that “it is for you, you first”. The Holy Mass was followed by the joint anniversary celebration of Radio Veritas 846 and Radio Veritas Asia, the start of our three-year
partnership toward the celebration of our golden anniversary on 2019. With the theme “Enabling Communion of Communities in the Social Communications Ministry”, the event was highlighted with the performances of Hiyas ng Hagonoy Folkloric Group, Alay sa may Kapansanan Association Inc., Gawad Kalinga Mabuhay Choir, Hangad Music Ministry, Vietnamese students from Institute for Consecrated Life in Asia and a surprise performance by Jose Mari Chan. Also, Veritas 500, the station’s campaign for the 500 years of Christianity in the Philippines, was launched, as well as the new logos and theme songs of three of its stationproduced programs, namely, Veritas Pilipinas, Barangay Simbayanan and Hello Father 911.
Vice President Nelia Halcon issued a press release containing the lie. Last month Chito Gozar, senior vice president for communications and external affairs of OceanaGold, repeated the falsehood (“Mines absent in 10 poorest provinces,” March 7). A belated check with the Mines and Geosciences Bureau (MGB) directory of operating mines online (http://www.mgb.gov.ph/201505-13-01-44-56/mining-projectsdirectory, http://www.mgb.gov.ph/ attachments/article/50/MAR_2017_ MPSA_2A.pdf) showed that two of the 10 poorest provinces host a mine each. No. 9 Siquijor is the location of Lazi Bay Resources Development Inc. (limestone) and Philsaga Mining Corp. (gold and silver) operates in Agusan del Sur, the No. 10 poorest province. In the case of Philsaga Mining Corp., it is hard to believe
that Halcon and Gozar are not aware of its existence and location because the company is a regular member of the COMP and the group only has 25 regular members. OceanaGold is also a member of the COMP. When I first read the press releases, I did not see the need to countercheck because of the presumptions that nobody would be so reckless as to try to turn the tables on anyone on the strength of false data and that nobody in his right mind would dare monkey with easily verifiable information. It turns out I was dead wrong. But I was not the only one taken for a ride because albeit the wide exposure of the press releases specially that of Halcon, which was carried by almost all the major news outlets in the country, nobody had earlier come out to dispute the claim.
Based on these brazen attempts to fool the public and the silence of the entire mining industry while Halcon and Gozar perpetrated the whoppers seven months apart, truth appears to hold only as much value to our mining sector, as their mine wastes the proper disposal of which they still have to learn more than a century after they set up business in this country. If these mining companies could not even be trusted with ordinary information like the places they operate in, of what worth now are their vehement denials and protestations against the allegations leveled by Secretary Lopez at them?
Rev. Fr. Antonio Cecilio T. Pascual
SERVANT LEADER
H
is Eminence Manila Archbishop Luis Antonio Cardinal Tagle, D.D., said the “me-first” mentality is the root of social problems in his homily at the Eucharistic Celebration during the 48th anniversary celebration of Radio Veritas 846 and RadioVeritas Asia on Easter Sunday, April 16. “It lies at the root of social problems, and could prove ‘deadly’. People have this feeling of needing to be first all the time and not being left behind. That kind of attitude is the mentality of the corrupt, thieves and
Brazen lies MAIL
The Chamber of Mines of the Philippines (COMP) and the OceanaGold deliberately misled the public when they claimed in the media that there are no mines in the 10 poorest provinces in the country. In the wake of Environment Secretary Regina Paz L. Lopez’s statement sometime middle of last year that mining causes poverty, COMP Executive
had nothing to do with peace. Only films would bask in the heroic tales. The men marching were there to die and the Japanese, the enemies, were there to kill. These soldiers would benefit from the system called “comfort women”. Not the peaceful years of correct politics would right this wrong. If I walked this road, at night, would I be able to listen to more stories? Darkness is such a solace in Bataan. There is a quiet that tells me if I just paused behind the markers, I would hear pains and dreams. Juan Gelman, the Argentine poet of loss, could tell them: it’s beautiful to walk along with you/to discover the source of new things,/to get at the root of happiness,/to bring the future in on our backs…. To them, the spirits of the Great March, I would offer these lines from Gelman: I tell them, it’s beautiful, what a great mystery/to live treated like dirt…. And, like what Gelman says, still sing and laugh. For that was what some of them were doing, in the heat and in the night, to sing a bit, and to laugh, and to weep in silence. All of them, including the young unfortunate enemies.
Estanislao Albano Jr. Secretary, Kalinga Anti-pollution Action Group casigayan@yahoo.com