Broker anonymity in trades pushed

After all the fiasco of the current global economic crisis, PSE is now considering to allow anonymous stock trades. According to PSE President Francis Lim, “the new policy would align local trading activities with global best practices as a number of developed markets like the United States, Japan and Australia had adopted the practice of broker anonymity.”

I cannot see any value added in this move to revive our slumbering equities market. We have this regulation when we experienced bull run a few times, and implementing his new measure will not guarantee a more vibrant stock market. It will only create an opportunity for deceit and anomaly. If enough regulations are in place I think people would not mind seeing their broker’s identification in the PSE screen.

Islamic Stocks, Anyone?

According to this breaking news, the Philippine Stock Exchange is considering setting up an index of sharia compliant stocks to compete with the likes of Malaysia in capturing a slice of the Islamic investment market.

Based on this site, a Sharia portfolio manager firstly investigates the sectors (industry screen) that potentially have a negative impact on society. Conventional banks, insurance companies, tobacco firms, entertainment businesses and weapons manufacturers are all excluded from the portfolio.
The initial emphasis is placed on the ethics rather than profits.

Considering the current crisis brought about by “greed”, is it time now to turn to Sharia stocks rather than the conventional one?

Amid the bad news there is good news

Philhealth has announced that it is increasing its benefits for members by 35 percent starting May 1 which would translate to roughly P7 billion increase in benefit payments to member-beneficiaries.This is part of its contribution to the government’s economic stimulus package.

Ralph Recto of NEDA is encouraging SSS and GSIS to follow Philhealth and hike benefits for their members.

See the rest of the story here.

Fearless Forecast 2009 – Update

It’s not yet end-of-Quarter but I think it is good to reflect on what I predicted for our economy. I mentioned four (4) signs to watch out, so let’s discuss this one by one.

1) Remittance. Our wall against external shocks is starting to fall down. Year-on-year, remittance grew by only 0.8% in December. This sounds off the alarm that remittance may hit the slowdown soon. In fact, Citigroup is seeing a 3% growth of remittance for this year, compared to double digit growth we are used to see year after year.

2) External Trade. We have seen in the news that merchandise exports dropped by 40.4 percent to $2.672 billion from $4.482 billion in December 2007. This is a complete reversal from the growth in December 2007 at 21%. Bulk of our exports come from imports of parts of electronics. Sad news is that November data shows that imports dropped by 32%, and with the closure of electronics manufacturing/companies in the country I don’t think we can still reverse the situation of external trade. Unless we become net exporter of our very own products like Banana, Woodcrafts/Furniture, Pineapple, etc. The government can try to develop export of this industries to increase its share of total exports.

3) Inflation. Good thing is that inflation now manageable this year albeit still higher than 2007 levels. This is due to continued rollbacks in fuel prices, stable price of electiricity and water rates. However, with the implemented rate hike of water yesterday and planed increase of electricity charges on April, we may see prices to go up again. Also note that rice crisis may still haunt us as no concrete solution has been made but to import rice.

4) Employment. We are hearing bad news on employment everyday. retrenchment here and there. The pump priming on infrastructure can only do so much. How about those electronics employees of closed companies, can we put them in infrastructure? I don’t think so. The job mismatch will worsen and we may see a situation of too much unemployed and too few “abled” workers, capabale of doint the task/job.

There you have it. Still bleak forecast for me in the next 10 months. I am still hoping we can get out of this situation as soon as possible. Any suggestions on how we can turn this around will be appreciated.

Ang Dynasty

This is what most likely Ramon S. Ang would like to have in few years time through San Miguel Corporation. After taking the the presidency of the food, beverage and giant, the company has reached the greater heights, penetrating the international maret and acquiring strategic companies along the way. SMC has bought six companies in four nearby countries,boosting international sales to 13 percent of total revenues. SMC’s major acquisitions were Australian boutique brewer J. Boag and Son, Thai Amarit Brewery Ltd., food processor TTC (Vietnam) Co., Australia’s top juicemaker Berri Ltd., Japanese brewer Kirin Brewery Co. Ltd., Australia’s largest publicly traded dairy National Foods Ltd, and the world’s largest pineapple canner Singapore-based Del Monte Pacific Ltd. However, in November 2007, SMC sold Boag’s to Lion Nathan and National Foods to Kirin. I personally think this is an attempt to limit foreign exposure and shift to deomestic investments. In 2008, SMC acquired GSIS’ shares in Meralco, signed a memorandum of understanding with Qatar Telecom QSC (Qtel) to build wireless broadband and mobile communications projects in the Philippines, and has taken control of the country’s biggest oil refiner, Petron Corporation. Based on some news articles, Ramon Ang revealed that the company will soon provide broadband and high-speed Internet service using Meralco Broadband over Power Lines (BPL). With BPL, users can plug their computer into any electrical outlet in their home and instantly have access to high-speed Internet. Ang is also committed to provide more affordable gas and petroleum products to Filipinos through Petron. It is clear that as an investment strategy San Miguel is into the diversifying game – acquiring upto 50.1% stake only of a company to take control, and the excess money can be invested somewhere else. Ang is like buying stocks of blue chip companies like MERALCO and PETRON. However, with his personality Ang is a hands-on guy. He wanted participation in all of his business venture. But the market is jittery about the direction of San Miguel. That’s is why investors are more excited for the bond offering of Globe Telecom than of San Miguel. For some investors, there is too much risk for San Miguel investing in companies not related to brewery, packaging, and food. Only time will tell if Ang will have the last laugh establishing his name among the top companies in the Philippines or investors are right not betting their money on Ang’s envisioned dynasty.

Globe bond offer now P5 billion

Did you missed out the bond offering last week? Here’s your chance to get hold of Globe’s 3-year and 5-year bond. Globe Telecom and the underwriters for its P3-billion corporate bond issuance have agreed to double the amount of oversubscription to P2 billion due to increased investor interest.

If you want to diversify your portfolio and have at least P50,000 to spare, I suggest you consider this one.

Globe Telecom’s P3-billion bond issue

Telephone lines of BPI branches has been sending busy tone yesterday morning, February 12, as it marks the start of Globe’s P3-billion bond issue. See related story here. It is selling like hotcakes! Investors are all in a hurry to avail themselves of the offering due to Globe’s good track record. I think it will be oversubscribed by Monday.

The P3-billion corporate bonds will be issued in three-year and five-year notes, with an over subscription option worth up to P1 billion. The three-year bonds, maturing in February 2012, will carry an interest rate of 7.5 percent while the five-year bonds, due on Feb 2014, will have an eight percent return, to be paid quarterly.

With the current low interest rate environment this latest offering is a good investment alternative for a minimum of P50k. However, I did not availed it since I also have a corporate bond of a Government Corporation offering 5% per annum rate, tax free, maturing also on 2012. And this is almost risk free since it is backed by the government.

I hope more investment opportunities like this at a higher coupon rate will be made available in the future.

The Government Knows…

…that hundreds are losing their jobs in our country everyday as the global economy slows. This is according to the Labor Secretary himself. From December 1 and January 19, some 15,600 workers were laid off, most of them were happening in the electronics sector, which has suffered from plunging global demand. He even estimated the number of jobs to be cut soon – around 60,000 from the electronics and garments industries.

But what are they doing about it? On the stimulus package bundled in the 2009 GAA (Gen. Approriations Act), the emphasis is on Infrastructure and replaced OFW. But what about replaced local jobs from the abovementioned industries? Convert them into infrastructure workers?

The problem with our government is that it is reactive more than proactive. They should have concrete plans to counter anticipated effects like this. Electronics Industry workers posses a specialized skill, and they will not be properly compensated if they switch industry. If We cannot attract other electornic firm to come here to do their operations, then it is best for these workers to go abroad. Otherwise, they will be counted as officially unemployed in 2009

Recession stories

It quietly slipped under our blankets while we are chilling on a December night. We were all lulled by the long break due to government proclaimed extended holidays. We tried to make the holidays simple to have enough reserves for the coming year. But then, it hit us. We thought we were prepared, but I think no one can prepare for this.

We were still having a holiday hang-over. the mood was still upbeat despite the load of work to be finished. We already heard stories of some export companies ceasing operations due to drop in orders, or no orders at all.

First over the hush-hush was Citibank. The latest is Accenture. In the news, Intel.

How would you like to do it? through a pink slip? The story of Citibank employees being handed over a pink slip – which is the last payment plus some benefit for you to leave the company.

Or through a pleasant vacation? The story of Accenture employees being asked to maximize their leave credits so that the company won’t have to pay for it, then will make you leave the office upon return before lunch time, along with your last pay plus some cash.

The government has been serious, but not serious enough to avert the situation. They are even saying that the BPO industry is strong despite these economic crisis. In a time when inflation is hitting double digits while the salary is not keeping up, loosing your job is the worst thing that could happen to you.

We will hear more stories in the coming days. Feel free to share it with me.

What To Do When Your Bank Folds

This is in relation to my previous post about banks folding up. Money Smarts came up with a guide for depositors of closed banks on what to do and where to go. Remember to manage your expectation as the process is usually long from scrutiny of eligible depositors to cash pay-out.

I read some posts in money smarts few years ago encouraging people to go into rural banks offering higher yields than usual. The justification usually is that this is covered by PDIC. I wonder where are those readers now.