Of re-rating, current politics

At the 2013 Asean Summit held last week in Brunei Darussalam, P-Noy said the Philippines was no longer the “Sick Man of Asia,” a phrase originally used to refer to China’s weak and impoverished economic disposition in the late 19th and early 20th centuries, but now used to describe Asian nations with a similar experience.

In his speech, he confidently claimed that this kind of reference to the country’s economic status was fast fading away.

Some major institutions agree with the observation.

The Philippines is now reported as “one of the fastest growing economies and emerging markets” in the world. The Philippine economy is likewise said to be the world’s “40th largest,” according to the 2012 statistics of the International Monetary Fund (IMF).

This glowing reference to the country was punctuated last week with the statement made by Moody’s Analytics, a subsidiary of sovereign-credit watcher Moody’s Investor Service.

The agency believes that the country’s “growth this year may even prove to be stronger” and faster than last year’s.

According to Glenn Levine, Senior Economist of Moody’s Analytics, “the Philippines has been among the brightest parts of a generally gloomy global picture. Even with China’s economy slowing, the US struggling to gain traction and Europe stuck in a long-running crises, the Philippines economy has continued to drive forward, registering 6.6-percent GDP growth in 2012.”

Levine also expressed confidence that the country’s macroeconomic performance was sustainable. He cites, among others, the success of government in keeping the country’s risk to inflation low. “Inflation has stabilized near 3 percent per year, comfortably at the lower end of the central bank’s targeted 3-percent to 5-percent range, allowing the overnight interest rate to be cut to 3.5 percent. This has allowed most economic sectors to grow solidly, suggesting that “the rate of growth of the country will grow to as high as 7 percent for 2013,” he noted. “The stock market has surged 23 percent this year after a 33-percent rise in 2012.  Investors are bullish on the Philippines, and so are we,” he added.

In this connection, the market hit another record high last Monday. However, at an all-time high of 7,120.48, it left most investors more afraid than delighted that the market slipped on profit-taking in the next two days. This brought down the main index 147.79 points lower at 6,782.69. The market quickly rebounded and by Friday, it was at 7,025.44, although some 95.04 points less than the recently established all-time record high. Notwithstanding this shortfall, it still ended with a weekly gain of 68.34 points or 0.98 percent.

This failure of the market to completely recover lost ground can be understood from the market’s transaction data in the last two weeks. Total transaction last week was 22.03 billion shares valued at P70.57 billion.  The market established an all-time record high during the period.  Yet, it ended lower by the end of trading for the week. In contrast, trading before last week was 16.0 billion shares valued at P90.35 billion. There was less volume but the market experienced high value turnover because trading rested mostly on first line stocks. Understandably, therefore, trading last week shifted to the lesser priced second and third line stocks that will explain why there was more volume while first line stocks continued to receive a beating from selloff activities that made the market, in general, fail to regain lost ground.

Fighting windmills

The country’s improving economic condition and stock market’s bullish trend are largely attributed to the program of the present dispensation on transparency and democratic rule, spurred by the movement against individual interest and political dynasties called the “Tuwid Na Daan” (The Straight Path).

Throughout the country’s political history, though, this kind of movement has only gone as far as a personal brand, thus, at best a temporary seal defining the national leadership.

One man out to “fight these windmills” is lawyer Esteban “Steve” B. Salonga, currently running as an independent candidate for governor in the province of Rizal. Due to his “tunnel vision,” political odd-makers cast Steve as a downright “political absurd” much like Don Quixote, the main character in the commonly interpreted comic novel of the great Miguel de Cervantes Saavedra. This is in addition to the fact that he ran for vice governor in the province in the last election and lost.

Steve was also left to himself by the very political party, the Liberal Party, that his father, the former Senator Jovito R. Salonga, had helped build to become one of the enduring political parties that stood against corruption fueled by individual interests and political dynasties.

Unknown to the common voting populace, Steve has the training to be an effective economic manager. Aside from his legal expertise, he has years of experience in financial and asset management.

No other candidate in the current race for the position has the theoretical and practical qualifications to handle the challenge of bringing back the economic glory of the province, which was inevitably lost in the emaciation of its political domain.

Steve is as well what contemporary management technocrats call a “servant leader.”  His brand of leadership is motivated by his sense of service rather than personal aggrandizement.  He has the skill to govern and discipline to wield authority.

More importantly, he has good spiritual values to lead. In the current state of Philippine politics, candidates like Steve are unfortunately “fighting windmills”, just like Don Quixote.

Bottom line spin

With good governance and management, I have no doubt the economy will continue to grow.  Its continued growth is as well assured by the availability of sufficient money for investment. Under these favorable conditions, it is not difficult to imagine that a big bull run is soon to happen.

However, the prospects of economic and market greatness will fast disappear unless the principles of transparency and democratic rule in the country’s fundamental law are properly defined in clear implementing rules that Congress has to legislate. Incidentally, Don Quixote was voted “the greatest book of all time” by the Nobel Institute.  Hopefully, too, the voting populace of Rizal will vote for Steve who only has good intentions of service for the province. I wish the people of Rizal will vote for Steve in the way Miguel Cervantes presented the crux of the story: When Don Quixote “regains his sanity and renounces the absurdly chivalric lifestyle he has previously led, in a surprising twist, his fellow villagers (who had previously ridiculed him) recognize the impact he has had on others.  They tell Don Quixote that he is mistaken: that he is the Knight of La Mancha and must continue to be so.  Despite all the mocking jests they have hurled at him over the years, they cannot escape the truth that he has given them a new way of looking at the world.”

After all, individuals can be right while society is wrong.

(The writer is a licensed stockbroker of Eagle Equities Inc..  You may reach the Market Rider at [email protected] , [email protected] or at www.kapitaltek.com)