POSTSCRIPT / September 12, 2010 / Sunday


Philippine STAR Columnist

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Upbeat economic news break thru dark clouds

SILVER LINING: A silver lining has appeared over the dark clouds that have covered the country since the Aug. 23 Luneta hostage tragedy. Positive economic big news finally broke through this week.

President Noynoy Aquino has reason to be elated over these items:

* The Philippines’ first ever Global Peso Bonds issue was a success. The peso-denominated $1-billion offering drew a demand for $13.3 billion, meaning it was 13 times over-subscribed. The 10-year bond was priced at 5-percent yield, or 23 percent lower than expected.

* Exports climbed 35.9 percent in July from a year earlier, reaching $4.502 billion due to sustained demand for electronics products, according to the National Statistics Office. In July, the value of electronics exports grew by 49.4 percent to $2.862 billion year-on-year.

* Local stocks surged past 3,900 to a historic high on Sept. 9, powered by strong investor optimism on corporate earnings and economic fundamentals.  Some analysts see a new bull market based on upbeat economic data.

* The Philippine Economic Zone Authority approved close to P71 billion worth of new investment pledges in the first eight months, 31.2 percent higher than the P54.1 billion committed in the same period last year.  They include new investments and expansions of existing projects that would generate around 58,260 jobs.

* The auto industry is cashing in on a recovering economy and increased consumer confidence, with vehicle sales jumping 37 percent to 112,454 units as of end-August from 82,081 units in the same period a year ago. Elizabeth Lee, president of the chamber of automotive manufacturers, said the industry looks poised to overtake its highest-ever sales of more than 162,000 units in 1996.

* * *

CONFIDENCE VOTE: Finance Secretary Cesar V. Purisima said the response to the peso-denominated offshore issuance by the Philippines, the first deal of its kind out of Asia, was a vote of confidence in the macro-economic fundamentals of the country and the economic agenda of the administration.

The book-building process for the offering reportedly took about 16 hours. By geographical allocation, 37.1 percent came from Asia, 32.6 percent from the United States, and 30.3 percent from Europe.

Purisima said, “This Philippine Peso Global Bond issuance is the latest development in the country’s financing program in support of the government’s proactive management of external liabilities, particularly with respect to reducing its vulnerability to foreign currency risk.”

* * *

SECONDARY MARKET: An elated President Aquino said: “I understand two records have been shattered in the past few days and we’re going to do everything possible to keep on going. This will probably be continuing.

“The stock exchange reached a new high. The last time we did that was during my mother’s time, in 1987. We are even more excited – there’s a Philippine peso bond, that’s the first time this has ever been done and this first issue was 13 times over-subscribed.”

The great interest as shown by the oversubscription has spawned a secondary market. People are reportedly lining up to buy from those who had bought ahead of them.

But this happy turn may not have been totally due confidence in the peso. The unimpressive performance of the US and the European markets may have fueled diverted interest in Asian bonds.

* * *

CRITICS UNIMPRESSED: Demand for peso bonds may help reduce dollar IOUs in the future. In turn, improvement in our US dollar reserves, which now stand at plus $50 billion, will further strengthen the peso.

But a stronger peso could be bad for exporters and Overseas Filipino Workers whose families depend on dollar remittances. Their dollars would fetch them fewer pesos.

In another area, the peso’s gathering strength versus the US dollar disrupts exchange rate policies of the government.

Critics still sniff at the performance of the peso bonds. Not a few opine that the proceeds will just be used to redeem the maturing Peace Bonds brokered years ago by Dinky Soliman & Co. who have joined the Aquino administration.

As for the other “good news” of foreign money coming into the stock market, critics note that such “investment is fragile, flying out at the first sign of trouble.

* * *

TO THE RESCUE: Reader Marino Bual shares a story in the San Francisco Chronicle about a female humpback whale that had become entangled in a web of crab traps and lines.

His story: “The humpback was weighed down by hundreds of pounds of traps that caused her to struggle to stay afloat. She also had hundreds of yards of rope wrapped around her body, her tail, her torso, and a line tugging at her mouth.

“A fisherman spotted her just east of the Farallon Islands (outside the Golden Gate) and radioed an environmental group for help.

“Within hours, the rescue team arrived and determined that she was so bad off, the only way to save her was to dive in and untangle her. They worked for hours with knives and eventually freed her.

* * *

THANK  YOU: “When the humpback was free, the divers said, she swam in what seemed like joyous circles. She came back to each and every diver, one at a time, and nudged them, pushed them gently around…. She was thanking them!

“Some said it was the most incredibly beautiful experience of their lives. The guy who cut the rope out of her mouth said her eyes were following him the whole time, and he would never be the same.

“May you, and all those you love, be so blessed and fortunate to be surrounded by people who will help you get untangled from the things that are binding you.

“And, may you always know the joy of giving and feeling the touch of the grateful ones.”

* * *

(First published in the Philippine STAR of September 12, 2010)

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