PHNO-HL: PNoy BULLISH ON PH ECONOMY / STOCKS, PESO CLIMB AFTER S&P UPGRADE

PNoy BULLISH ON PH ECONOMY / STOCKS, PESO CLIMB
AFTER S&P UPGRADE
[PHOTO
-President Aquino(second from
left) at a luncheon conference with Philippine businessmen at Malacañang
presidential palace in Manila on September 17, 2010, together with Finance
Secretary Cesar Purisima (right). According to the head of the Makati Business
Club, Filipino business executives are more upbeat about the country's economic
prospects in 2012, with about 81 of them expecting to see higher investments
approved by investment promotion agencies this year. AFP
PHOTO/JAY DIRECTO]
MANILA, JULY 6, 2012 (INQUIRER) By:
Daxim L. Lucas - Philippine execs turn more bullish on economy MBC says
expectations buoyed by impeachment.
Filipino business executives have turned more upbeat about the country's
economic prospects this year and, according to the head of the Makati Business
Club, the Aquino administration's drive to impeach Chief Justice Renato Corona
has contributed largely to it.
In its biannual Executive Outlook Survey, the umbrella organization of the
country's biggest corporations, said that eight out of 10 senior business
executives believed that gross domestic product growth would be better this
year.
This view offers little surprise since the local economy grew by only 3.7
percent in 2011 due to the government's decision to tighten its purse strings as
it sought to clean up processes it said were prone to corruption.
"What we're seeing here really is a surge in confidence in the business
community and this is due to a large degree to the impeachment trial," MBC
chairman Ramon del Rosario Jr., a staunch supporter of President Aquino, said in
an interview with the Inquirer.
"What we really want to see is for people in government to be made
accountable, and I think we're seeing that now," he noted, adding that the
impeachment trial—though poorly executed by the House prosecution team—was "an
important first step" toward making the country experience inclusive economic
growth.
The MBC—formed in the early 1980s at the height of power of the Marcos
regime—has been a staunch backer of President Aquino and has cheered his
administration's decision to impeach the Supreme Court chief, an appointee of
former President Arroyo.
According to the MBC, about 81 percent of polled business executives also
expected to see higher investments approved by the country's investment
promotion agencies this year, compared to the P757.3 billon registered last
year.
"Businesses are more bullish now compared to the 76.1 percent of respondents
who expected higher investments in 2011," the group's paper said.
The MBC pointed out, however, that business sentiment in terms of exports—the
country's main source of foreign currency along with remittances from overseas
Filipinos—was dampened by the 6.9-percent drop in merchandise exports to $48
billion in 2011.
"Almost 41 percent of respondents believe exports will remain at the same
levels in 2012 as the previous year," it said.
More importantly, however, the MBC survey showed that more firms were on
"hiring mode" this year, with 61.3 percent of respondents planning to expand the
size of their workforce, compared to only 37.3 percent of respondents in 2011.

More companies also plan to make additional investments in 2012 as 63.4
percent of respondents' plan to make more investments compared to only 56.7
percent in 2011.
FROM MANILA BULLETIN
Stocks Climb, Peso Gains Further After Ratings Upgrade By
S&P's By IAN C. SAYSON and LILIAN KARUNUNGAN/Bloomberg July 5,
2012, 4:54pm
MANILA, Philippines – Philippine stocks, the peso and bonds gained after the
nation's debt rating was raised to its highest level since 2003 by Standard
& Poor's.
The benchmark Philippine Stock Exchange Index advanced 15.26 points or 0.29
percent to a new record high of 5,369.98 at the close of trading yesterday,
extending this year's gain to 23 percent. A total of 2.41 billion shares valued
at 5.196 billion changed hands with 91 issues gaining, 59 declining and 50
unchanged.
The peso climbed 0.4 percent to P41.69 per dollar, near a four-year high of
41.60. The long-term foreign currency-denominated debt ranking was increased one
level to BB+ from BB, S&P said in a statement yesterday. That's one step
below investment grade and on a par with neighboring Indonesia.
The endorsement will help President Benigno Aquino as he boosts government
spending to a record this year and seeks $16 billion of investment in roads,
bridges and airports to shield the economy from Europe's debt crisis.
"It's a confirmation of what the market expected," said Rajeev De Mello, the
Singapore-based head of Asian fixed-income assets at Schroder Investment
Management Ltd. "It would be positive for the currency as well as external and
domestic bonds."
The yield on the 4 percent dollar bond due January 2021 fell four basis
points, or 0.04 percentage point, to 2.78 percent, according to prices compiled
by Bloomberg. The notes gained for a seventh day. That on the 6.5 percent peso
bonds due April 2021 declined five basis points, or 0.05 percentage point, to
5.13 percent, according to Tradition Financial Services. The rate was the lowest
since March 12.
Trade and Industry Secretary Gregory L. Domingo said the upgrade in the
country's credit rating will have positive impact on both the fiscal deficit and
foreign direct investments.
"Our interest cost for the government should go lower for future funding
requirements. Our attractiveness as an investment destination also improves
significantly as this reaffirms the positive and growing momentum that d country
is experiencing as a result of the good governance and inclusive growth agenda
of President Aquino," Domingo said.
S&P's move follows that of Moody's Investors Service which upgraded the
nation's rating outlook in May to positive, citing improving debt levels.
Moody's still ranks the $200 billion economy at the second-highest junk level.
Fitch Ratings raised its assessment to one step below investment grade last
year.
"We can now clearly make our case for an investment grade status," Finance
Secretary Cesar Purisima said yesterday.
The cost of insuring Philippine debt against default dropped four basis
points to 149.8 basis points yesterday, a seventh day of decline, according to
data provider CMA. The contracts pay the buyer face value in exchange for the
underlying securities or the cash equivalent should a nation or company fail to
adhere to its debt agreements.
Bank of Tokyo-Mitsubishi Ltd. forecasts the peso will drop to 42.00 per
dollar in one month, 42.40 in three months and 42.80 in six months.
"At such levels, and in the midst of a slow moving global economic cycle,
we're reluctant to shift our forecasts of the peso too strongly," Leong Sook
Mei, Singapore-based regional head of global currency research at Bank of
Tokyo-Mitsubishi UFJ Ltd., wrote in a research note today. "Official rhetoric is
coming in more cautious."
The peso is up about 5 percent against the dollar in 2012, the best performer
in a basket of 11 major Asian currencies tracked by Bloomberg. Central bank
Governor Amando Tetangco said on July 4 that the monetary authority is "watchful
for signs the speculative part is not overtaking the fundamental flows."
Aquino plans to narrow the budget shortfall to 2 percent of gross domestic
product by 2013 from a target of 2.6 percent this year. The government has
stepped up efforts to catch tax evaders and smugglers, and has drawn up bills
aimed at increasing revenue to narrow the fiscal deficit. The $200 billion
economy grew 6.4 percent in the first quarter, the fastest pace since 2010.
Aquino is aiming for an expansion of as much as 8 percent annually to cut
poverty.
S&P's move is "very positive because it promotes the country's
macroeconomic and fiscal context," said Fitz Aclan, who helps manage P850
billion ($20.4 billion) at Manila- based BDO Unibank Inc. "There could be some
upward movement for our sovereign bonds, even our local bonds. This will also be
positive for equities."



Chief News Editor: Sol Jose Vanzi
© Copyright, 2012 by PHILIPPINE HEADLINE NEWS ONLINE
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