Stock traders rate SONA 2011: Not enough to feed bull run

MANILA, Philippines—Stock market experts welcomed President Aquino’s continued emphasis on improving governance but were mostly disappointed with the lack of forward-looking statements on macroeconomics and business at this year’s State of the Nation Address (SONA).

While the President mentioned the stock market’s run-up to record highs, Joseph Roxas, president of stock brokerage Eagle Equities, said there wasn’t any “market-moving” news in this year’s SONA.

“I would have wanted to hear more about the solutions,” Roxas said, noting for instance the perennial problem of high electricity costs in the country.

Asiasec Equities chief strategist Manny Cruz had a similar view. “The government is committed to changing the political landscape by improving the justice system. However, it falls short of investor expectations that the President will dwell more on current projects especially the PPP (public-private partnership framework on infrastructure-building), which has been taking sometime to take off also,” said Cruz.

Many investors had been looking forward to the PPP framework, unveiled during the first SONA a year ago, as a potential growth catalyst in the years ahead.

“I’m optimistic about his commitment to fight graft and punish corrupt officials. It’s ‘freakonomics’ in action. However, it’s worrisome that President Aquino didn’t cite any economic target. It’s a message of socio-political not socio-economic transformation. I will take out and polish my crystal ball and store away my spread sheets for now,” said Jose Mari Lacson, research head of local stock brokerage Campos Lanuza & Co.

Astro del Castillo, managing director at local fund management firm First Grade Holdings, said he was disappointed with the SONA. “It’s not even enough to feed the (stock market) bull to run,” Del Castillo said.

“I didn’t hear anything about the economy especially given that we’re facing a potential global financial crisis triggered by the so-called debt crisis in America,” Del Castillo said.

Del Castillo said there was nothing said to address the common concerns of the business sector like the high cost of electricity given the potential shortage of electricity next year in Luzon. He added that many foreign investors were likewise anticipating that Aquino would throw his weight on the rationalization of incentive laws in order to attract more foreign funds, like the relaxation of foreign ownership in certain restricted industries.

Del Castillo was also surprised that the President was silent on “anti-trust” issue as no update was cited after bringing this up in the first SONA.

“But I’m giving him a passing grade considering he did house-cleaning and confidence was really high, which allowed the stock market to break to new highs. But moving forward, the focus should be more on the economy. Anyway, housecleaning is a continuing process and hopefully, housecleaning will not just target GMA’s (former president Gloria Macapagal Arroyo) allies but even those involved in as simple as blocking papers when you apply for business.”