Archive for September 2011

Another stocks sell off

September 22, 2011

Persistent bad economic news plus statements from the heads of the IMF and WB that the US economy is inching closer to a “danger zone” sparked another sell off in the US and European stocks the past 2 days or more.


Note that 3 of the top 14 biggest losses in Dow Jones Industrial Average since 1987 have occurred this year — August 4, 8 and 10.

Not a good day to end the week.



International Reserves inching towards $80 B

September 21, 2011

The gross international reserves (GIR) of the Philippine central bank has grown by almost $5 B from July to August 2011. It is possible that the GIR might reach $80 B by the end of this month or next month.

source: BSP, SPEI/International Reserves 

The bulk of such reserves though, are in the form of foreign investments. With what is happening in Europe and the US, many foreign investors are putting their money in many emerging markets like the Philippines — in local equities, bonds, the peso, etc.


Philippine Exports, July 2011 by country

September 21, 2011

The National Statistics Office released the July 2011 Philippine exports data last week. There are some surprising data:

1. Despite the damage to the Japan economy as a result of the big earthquake + tsunami last March, Japan’s imports from the Philippines has increased by almost $1 billion from Jan-July 2010 to Jan-July 2011.

2. There was a substantial decline in Netherlands and Germany importation from the Philippines over the said period, combined decline of $1.4 billion. US importations from the country also declined but by a smaller amount, only $289 M.

source: NSO Foreign Trade Stats 

3. The increase in importation from China, Taiwan, Thailand and other countries have covered up the decline in importation from Europe and US.





Unemployed + Underemployed is 26.2%

September 21, 2011


The National Statistics Office released last week its 3rd quarter, July 2011 Labor Force Survey. The results are not good. Unemployment rate + underemployment rate in July 2011 was 26.2 percent of labor force, while it was only 24.9 percent in July 2010.

Philippines    July 2011 1/       July 2010    


   Population 15 years and over (in ‘000) 62,054 60,928
   Labor Force Participation Rate (%) 64.3 63.9
   Employment Rate (%) 92.9 93.0
   Unemployment Rate (%) 7.1 7.0
   Underemployment Rate (%) 19.1 17.9

The underemployed are those who have work but are still looking for extra work, mainly to augment their income. Meaning, they compete with the unemployed in looking for work. This should be a wake up call for the current administration to do more in encouraging more job creation in the economy.


Gold rush and Philippine mining

September 13, 2011

Gold prices almost breached the $1,900 per troy ounce late last month as the uncertainty over the US debt limit hike bill was on-going.

Philippine mining will surely benefit from this continuing “gold rush”. We would like to see more transparent and more accountable system of mining via well-registered mining companies, local or foreign. Environmental fragility should be considered in the extraction of gold and other precious metals and minerals.

On PLDT-Digitel merger

September 13, 2011

The government, through the National Telecommunications Commission (NTC), will soon rule whether it will not stop the planned merger of PLDT/Smart and Digital/Sun cellular with the former as the surviving entity. Even big businesses also need extra resources, perhaps the Gokongwei group sold out so it can have more money for its real estate and mall development (Robinsons), airline expansion (Cebu Pacific) and other businesses.

Consumers and telecom subscribers like us would naturally fear that a two-players industry (Smart and Globe) would not be to our advantage as we shall have only two choices, instead of three or four or more, in a really competitive environment. Our problem is that the Constitution limits the entry of foreign players like any of the big telecom companies in the US, Europe, Japan and other countries. With 40 percent maximum foreign equity, they will have a hard time looking for those big local players who can put up the 60 percent equity. So we just hope that a two-players industry will not result in higher telecom rates later.

Skyway over Edsa

September 13, 2011

There is a proposal from the DPWH to build a 22-kilometers long, 6-lanes skyway along EDSSA, from Roxas Blvd to Balintawak. This would effectively connect two tollways, the Cavite Coastal Road and North Luzon Expressway (NLEx). If this project will push through, it will have plenty of positive effect on business and the economy.

DPWH Secretary Singson said they are looking at two funding, one is a foreign loan from ODA-JICA (Japanese government) or via private tollway operators. Given the high public debt of the government (please see our previous discussions on this subject below), private-funded infrastructure projects like the proposed Skyway over Edsa, or Skyway intersecting Edsa would be a better alternative. Government should focus on retiring many of its public debt, to reduce the huge interest payment annually, so that future savings can be used for other infrastructure like more roads and skyways in other big cities outside of Metro Manila.