PH markets bracing for rough ride ahead

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Antonio Moncupa Jr. INQUIRER file photo

MANILA, Philippines—Local financial markets are bracing for a very rough ride when trading resumes Thursday after a three-day break that forced them out of the action while other Asian emerging markets wrestled against capital flight arising from anticipated tapering of US easy money policy.

But while global investors tend to treat Asian emerging markets as one big basket, local market experts are mostly optimistic that Philippine assets—backed by better economic fundamentals compared to the Asian currency crisis on 1997—to at least fare better than their heavily battered peers.

“Offhand, the peso could be affected but I don’t expect it to be much. The story-line in other markets is negative current account and balance of payments. We don’t have those issues,” Antonio Moncupa Jr., president of East West Bank and chair of the Banker Association of the Philippines’ open market committee, said on Wednesday.

“But of course, it is also not surprising if we get to be somehow affected by the aftershocks of the emerging market earthquake, but at least we are not in the epicenter,” he said.

With the recent fall of asset markets in India, Indonesia and Thailand alongside the slump in Wall Street, Banco de Oro Unibank chief strategist Jonathan Ravelas said the main-share Philippine Stock Exchange index may retest the 6,350 level alongside the trend of a strengthening US dollar that has bludgeoned the Indonesian rupiah and the Indian rupee. “So far we are better off. But I am biased to see the dollar/peso (exchange rate) to test 44 levels,” Ravelas said.

The PSEi finished at 6,525.95, about 11.8 percent down from the historical peak seen earlier in the year, while the peso last traded at the spot foreign exchange market last Friday at 43.64 to the greenback, depreciating by about 4 percent so far this year.

Rafael Algarra Jr., executive vice president of Security Bank, said that after being left behind the action in the last three days, local markets would have to catch up with the trend. “We’re less susceptible but it doesn’t mean we’re not susceptible,” he said in an interview yesterday.

Personally, Algarra said he was not convinced that the US Federal Reserve would start tapering by next month its $85-billion monthly asset buying as widely anticipated by global markets. This bond-buying activity referred to as quantitative easing (QE)–in a period when such is the only route to inject additional liquidity when US Fed targeted rates are at near-zero level–has helped perk up emerging market assets over the past few years. But with the US economy showing signs of growth, QE “infinity” has been replaced with QE “tapering” pronouncements.

“The Philippines is still very strong. In the region, we’re the bright spot in Asia or Southeast Asia,” Algarra said, echoing views of some foreign analysts. Algarra said he expected the peso to recover late in the year, supported by economic fundamentals and sustained foreign exchange inflows from overseas remittances.

For his part, BDO’s Ravelas said the trend continued to favor the greenback, putting his yearend forecast of 42:$1 at risk. If the euro falls below 1.30, the British pound slips below 1.50 and if the Japanese yen rises above 104 against the US dollar–which are all likely to happen–he said this would “solidify the change of sentiment for the greenback.”

But Ravelas said a weaker local currency should be good for the Philippines, the business process outsourcing sector and households supported by overseas Filipino remittances.

The Philippines, Asia’s fastest-growing economy in the first-quarter with a 7.8-percent growth, is scheduled to release its second-quarter economic report card on Aug. 29. While widely believed to be on an economic upswing and possibly in a “miracle decade” buoyed by the service sector, the Philippines is facing big challenges on job creation and inclusive growth, mostly attributed to a laggard industrial sector.

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  • 33Sam

    YEAH YOU DUMB FCUKS. AND YOU TOOK IT UP THE A$$ WHEN YOU SPREAD CHEEK FOR GOLDMAN SACHS AND J.P., MORGAN WHO BOUGHT YOUR LEADERS OFF TO INSTALL THAT 12% VAT ON ANYTHING THAT MOVES.

    SO WHEN HARD TIMES WHICH HAVE NEVER GONE AWAY GET WORSE, YOU STILL HAVE TO PAY BALATO TO THOSE FOREIGN BANKERS WHO ARE RAPING YOUR COUNTRY ON A DAILY BASIS WHILE IT EMPLOYS YOUR OWN PEOPLE WHO THINK “THEY’VE ARRIVED!!!”

    A FLIPPER IN A BMW IS JUST AS BADUY!!!

    FILIPINOS ARE THE CAUSE OF THEIR OWN PROBLEM.

    UTO-UTO JUST AS LONG AS THERE IS MONEY, ALL JUDAS IN EVERY SECTOR OF GOVERNMENT.

    YOU BOUGHT THE SYSTEM AND NOW THE SYSTEM IS BUYING YOU!!!

  • gringoloco

    How about fifty to one?
    Exporters will have a lot of orders.
    And millions of people will have a wonderful holidays.
    Inflation is already very high.
    Dollar in my personal opinion is manipulated by the Central Bank.

    • El_Gran_Capitan

      Yeah they are doong that for long time

    • 33Sam

      WHICH IS CONTROLLED BY FOREIGN BANKERS LIKE GOLDMAN SACHS AND J.P. MORGAN WHO BAMBOOZLED YOU FILIPINOS INTO OPENING YOUR CENTRAL BANK VAULTS AND TREASURY TO PAY TONG TO THESE BANKSTERS.

      AT LEAST ICELAND REALIZED ITS MISTAKE AND KICKED THEM OUT AS THESE FOREIGN BANKSTERS ADD GAMBLING BANK DERIVATIVES ONTO THE NATIONAL DEBT.

      BRAZIL WAS THE ONLY COUNTRY WHO HAD BRAINS ENOUGH TO TELL THESE BANKSTERS TO GO TO HELL EVEN IF THESE BUTTHOLES THREATENED BRAZIL WITH CUTTING OFF THEIR ACCESS TO AMERICAN MARKETS. BRAZIL STOOD UP FOR THEMSELVES.

      WHAT DID FILIPINOS DO??

      NOW THIS 12 %VAT IS THESE BANKSTERS’ EXTRA TONG WHEREIN THEY BOUGHT OFF YOUR BIR TO SHOVE DOWN FILIPINOS’ ALREADY BELEAGUERED THROATS AS YOUR BIR WENT WITH THE USUAL OPENING THEIR A$$ CHEEKS ONCE MORE.

      ONCE YOU TURN WHORE, YOU WILL ALWAYS BE A WHORE!!!

  • http://www.yellowmythbusters.gov.ph/ Weder-Weder Lang

    “The historic highs of the PSEi are a reflection of my good governance and Daang Matuwid. Not the speculative hot money.” — PNoy and his yellow yabang.

    There goes PNoy’s ego-bubble burst.

    • El_Gran_Capitan

      I agree with you that the problem with all president In making the stock market as bench mark not realizing that stock market is speculative market

  • PinoyDude

    The Philippine economy owes a lot to its migrant workers and the BPO sector. Our system is awashed with remittances and revenues coming from them.

    Maraming salamat sa inyo.

    • El_Gran_Capitan

      Oh yeah then the exchange rate should be greater than tbe artificial one it should be at least 47 per us dollar. Lip service is not needed by us ofw

      • PinoyDude

        I don’t control the exchange rate! I’m in the same boat as you are.

      • 33Sam

        AND THE 12% VAT ON ALL MONEY MOVEMENT GOES TO THE A$$HOLE FOREIGN BANKSTERS WHO CONTROL THE EXCHANGE AND CURRENCY RATE, THE PHILIPPINE TREASURY AND THE CENTRAL BANK. WHO THEN DICTATES WHAT FINANCIAL REGULATIONS GET TO BE SADDLED ON THE AVERAGE EARNER WHILE THESE FOREIGN BANKSTERS PAY NO TAXES ON THE MONEY THEY STEAL FROM YOUR WALLET!!!

        THE MAFIA MOVED IN AND FILIPINOS OPENED THEIR COUNTRY!!

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