President Benigno Aquino III
CALAPAN CITY—With local stocks hitting a new record high and finally closing above the psychological 5,000-point level on Friday, President Benigno Aquino III sees this as an indication that the country is indeed poised for an economic takeoff.
“The stock market is the clearest indicator and fastest reacting business indicator to show business confidence,” said the President, who was also in the city for the ceremonial switching on of electricity to 45 sitios (sub-villages) in the area.
The main Philippine Stock Exchange index (PSEi) surged 1.57 percent, or 77.69 points, to close at an all-time high of 5,016.30 Friday.
On Thursday morning, the PSEi rose more than 2 percent to an intraday of 5,011.09 before paring down gains and closing at 4,938.61.
“We’re happy that it has been breached. I hope the day closes that it’s still at 5,000,” Mr. Aquino said.
Cure for sick man of Asia
Speaking to reporters after inaugurating a 2.1-megawatt mini-hydroelectric plant, Mr. Aquino said the PSEi could have breached the 5,000 level much earlier had it not been for the political tension in the Middle East and the financial crisis in Europe.
“There have been many articles written by foreign media sources that say we are about to take off. One article appears to describe me as saying, ‘I may have the antidote, or the cure, for the sick man of Asia,’” he added.
The President noted that the 4,000 index couldn’t be reached before he took office. “We’ve already passed that point and we stayed above 4,000,” he said.
“To tell you the truth, they have been promising to reach 5,000 since last year but the tensions in the Middle East happened, the European crisis happened and it has yet to be solved,” he added.
Local stocks hit an all-time high on Thursday on expectations that the Bangko Sentral ng Pilipinas would cut interest rates to boost the economy.
As expected, the BSP cut its main policy rate by 25 basis points after the market close to a record low of 4 percent to help cushion the domestic economy from the global slowdown.
Bank shares saw strong gains on hopes lower rates would boost demand for loans and spur earnings growth.
Top lender Bank of the Philippine Islands ended Thursday nearly 5 percent higher and second-ranked Metropolitan Bank & Trust Co. rose 3.7 percent.
“The market anticipated another rate cut and we’ve seen a lot of buying into banks,” said Ira Ganhin, an analyst with BPI Asset Management.
Expecting credit upgrade
“The level of bad loans has fallen while loan growth is also increasing. So, everything seems to be going right for the banking sector,” he said.
Ron Rodrigo of DBP-Daiwa Securities told Dow Jones Newswires there were expectations that the Philippines may soon get a credit rating upgrade.
This helped sustain positive sentiment, he said, a day after the BSP trimmed its key interest rates.
Asian markets’ upward trend since the start of the year continued on Friday as optimism was boosted by a fresh set of upbeat US data and positive news from the eurozone.
In Europe, ministers agreed on measures linked to a Greek debt restructuring and the beleaguered country was expected to be given the all clear for its second bailout next week.
Adding to positive sentiment was news from the US Department of Labor that new claims for unemployment insurance, a key indicator of the pace of layoffs, fell slightly last week.
To electrify 36K sitios
Mr. Aquino also called on Filipinos to support the government in its bid to provide electricity to more communities in the country during the inauguration of the mini-hydropower plant in Calangatan village in San Teodoro town.
The facility in Oriental Mindoro is the first renewable energy project in the Philippines being constructed by an electric cooperative following the passage of the Renewable Energy Act of 2008.
Mr. Aquino also led the ceremonial switch-on of electrification of 45 sitios under his administration’s sitio electrification program.
“This is no joke. We will electrify 36,000 sitios. We can accomplish that … but if we help each other, why wouldn’t we accomplish that faster? You have the capability,” Mr. Aquino said in his speech before officials of the Oriental Mindoro Electric Cooperative (Ormeco) and beneficiary-residents.
Primary source of electricity
The President said there might come a time when electricity generated from diesel could be a secondary supply of power with the development of natural sources.
“Diesel might soon be used only to augment but would no longer be the primary source of electricity,” he said.
The Ormeco-owned Linao Cawayan mini-hydro plant-lower cascade facility is located in Sitio Ariguy.
The 2.1-megawatt lower cascade is a portion of the whole 5.1-megawatt LCMHPP. The remaining 3-megawatt upper cascade is now being constructed 6 kilometers away.
Ormeco finished the energization of the lines servicing the 45 sitios in 90 days since September 2011. The last energized sitio received power in December 2011.
The electrification benefited an initial 978 families, who finally had a “bright Christmas holiday season.”
The total cost for the energization lines for the 45 sitios reached more than P21 million. With reports from AFP and Reuters