US stocks rally as Q2 growth estimate hiked

BY AGENCE FRANCE-PRESSE
POSTED ON 08/30/2013 10:31 AM

STOCKS UP. The Dow Jones rises following an upgrade to the 2nd-quarter GDP growth of the US. Photo by AFP

STOCKS UP. The Dow Jones rises following an upgrade to the 2nd-quarter GDP growth of the US. Photo by AFP

NEW YORK CITY, United States – US stocks Thursday (Friday, August 30 in Manila) closed higher following an upgrade to US 2nd-quarter economic growth and a shift in expectations away from an immediate military strike on Syria.

The Dow Jones Industrial Average rose 16.44 (0.11%) to 14,840.95.

The broad-based S&P 500 added 3.21 (0.2%) at 1,638.17, while the tech-rich Nasdaq Composite Index increased 26.95 (0.75%) to 3,620.30.

US economic growth in the second quarter came in at an annual rate of 2.5%, faster than the original estimate of 1.7%, the Commerce Department said.

Stronger consumer spending and exports underpinned the pickup from the first quarter’s sluggish 1.1% pace, while imports grew more slowly than originally estimated, the department said.

In addition, market watchers have been calmed by an apparent shift from the US and other western powers in the timing of any military strike against Syria in response to its alleged chemical warfare attack on its people.

“There just seems to be less urgency about an attack any time soon,” said Alec Young, global equity strategist for S&P Capital IQ. “The stress level has come down a little.”

Dow component Verizon rose 2.7% after British telecommunications giant Vodafone said it is in talks regarding a possible sale of its stake in Verizon. The stake is said to be worth more than $100 billion. Vodafone’s US-traded shares rose 8.1%.

Oil giants Exxon Mobil and Chevron, both components of the Dow, fell 1.8% and 1.2% as oil prices retreated on diminished Syria anxiety.

Microsoft, another Dow component, gained 1.6% on reports that the tech giant is considering a strategic investment in Foursquare, which provides recommendations on restaurants and other services by geographic area.

Fashion house Guess surged 12.9% after forecasting full-year earnings in the range of $1.78-$1.92 a share, whereas analysts currently project earnings of $1.80. Results in North America were strong, but Southern Europe remains “challenging” and the company is “beginning to see a slowdown in China,” it said.

Bond prices rose. The yield on the 10-year Treasury bond fell to 2.75% from 2.78% late Wednesday, while the 30-year dropped to 3.7% from 3.75%. Prices and yields move inversely. – Rappler.com

 

Higher forecasts for PH after strong Q2

BY RAPPLER.COM
POSTED ON 08/30/2013 12:39 PM  | UPDATED 08/30/2013 12:57 PM

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MANILA, Philippines – Global banking giants Citi and HSBC upgraded their growth forecasts for the Philippines this year following “better-than-expected” growth in the 2nd quarter.

Citi raised its 2013 gross domestic product forecast for the Philippines to 7.3% from 7%, while HSBC hiked its projection to 7.1% from 6.4%.

Both said exports will improve in the 4th quarter, boosting growth, and added household and government consumption will remain strong.

“We expect net exports to improve, especially in Q4 when growth in the US, Japan, China and eurozone should accelerate,” said HSBC in a research note.

The Philippines grew 7.5% in the 2nd quarter – the same pace as China – making the two countries the fastest growing in Asia. This brought growth in the 1st half to 7.6%, above the government’s 2013 target of 6% to 7%.

Growth was largely driven by consumer and government spending, but investments also provided support.

Citi and HSBC said remittance inflows, a weaker peso and benign inflation will continue to drive household consumption.

Citi however warned that delays in the implementation of infrastructure projects under the Public-Private Partnership program “lead us to be more sober in our investment growth forecasts.”

It said financial volatility due to the anticipated winding down of the US Federal Reserve’s stimulus program can also impact investments.

HSBC nevertheless said that sound fiscal and monetary policy will “help the Philippines weather the recent volatility triggered by the withdrawal of US liquidity.”

New growth trajectory?

The 2nd quarter marked the 4th consecutive quarter that the Philippines grew above 7%.

Socioeconomic Planning secretary Arsenio Balisacan said the country is moving away from being largely consumer-driven to investment-led. He said it is now on a higher growth trajectory.

But Citi said the Philippines’ prospects in the 2nd half and next year “retain a slower growth trajectory” of “less than 7% growth.”

“Lacking strong export recovery also downplays a higher trajectory.”

It said a more important concern is the “rising potential of relying on consumer-driven growth” for GDP growth of 7% or more. It warned this growth will not necessarily lead to higher job creation.

Balisacan said sustained investments and industry gains, particularly in manufacturing, are the ones “with the ability to provide high-quality jobs for Filipinos.” – Rappler.com

PH matches China’s 7.5% growth in Q2

BY RAPPLER.COM
POSTED ON 08/29/2013 10:00 AM  | UPDATED 08/29/2013 2:40 PM

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MANILA, Philippines (4th UPDATE) – The Philippines remained the fastest-growing economy in Southeast Asia with a gross domestic product (GDP) growth of 7.5% in the 2nd quarter, the National Statistical Coordination Board (NSCB) announced Thursday, August 29.

Driven by the resilient services sector and improvements in manufacturing, Socioeconomic planning secretary Arsenio Balisacan said the Philippines’ April-to-June economic expansion was at par with thegrowth of regional powerhouse China.

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The Philippines’ 2nd-quarter growth was slower than the 7.7% revised growth recorded in the first.

But Balisacan said it was “significant” because it marked the 4th consecutive quarter that the country grew above 7%.

Economic growth in the first half stood at 7.6%, faster than the 6.4% achieved in the first half of 2012, NSCB secretary general Jose Ramon Albert announced.

A ‘rebalancing’ in process

The local economy was still dependent on the services sector, which accounted for 57.9% of GDP. Industry sector’s share was 32.7%, and agriculture, the top employer, contributed 9.4%.

Trade and real estate supported the services sector, which grew 7.4%.

Trade rose 7.3%, while real estate, renting and business activities posted a 9.5% growth, indicating continued expansion of business process outsourcing, said Albert.

Services have also been consistently fueled by consumption-led economic activities and, recently, investments by overseas Filipino workers (OFWs).

Remittances have remained strong despite fiscal issues faced by western countries that host most of the OFWs, but growth has slowed down.

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While the services sector lifted the economy the most by contributing 4.3 percentage points to the overall 7.5% growth, the spotlight was on the industry sector, which has been picking up.

The Philippines, dragged by high energy prices, restive labor and regulated wages in the past decades, is getting back in the radar of job-generating investors, noted Balisacan.

“The composition of our growth shows signs of an economy that is in the process of rebalancing, moving from being largely consumption-driven to becoming investment-led and industrialized, with the ability to provide high-quality jobs for Filipinos,” he said.

“For the past 3 quarters, capital formation has been growing more rapidly than household consumption and the growth of industry has so far outpaced that of the services sector. Notable are the double-digit growth rates in fixed capital and the manufacturing subsector in the last quarter,” he added.

Industry grew an impressive 10.3%, and contributed 3.3% percentage points to the GDP number. Construction, which stepped up again during the quarter, grew by a whopping 17.4%.

Balisacan said construction will remain key driver in coming years. “In all major forms of infrastructure, we have huge backlog.”

Manufacturing grew 10.3%, maintaining the industry’s recovery, which started a few quarters ago, when Japanese, Korean, and other foreigners decided to plow their job-generating investments back into the Philippines after heavy flooding in Thailand and the earthquake-tsunami disaster in Japan.

Balisacan said, “with the rebound of industry sector, stable and productive jobs will be generated. He added persistent unemployment will also be addressed.

“Within manufacturing, food processing, furniture and household appliances like radio and TV, basic metals, and machinery posted significant growth, indicating greater use of skilled labor,” he noted.

How the Philippines’ impressive GDP growth rate is translating into jobs is a major concern among analysts and economists watching the country.

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Agriculture, mining

Agriculture, which remains the main employer in the country, performed poorly. For the first time since the first quarter of 2012, the sector contracted. Its 0.3% decline pulled down the GDP by 0.03 percentage points.

The officials attributed this to the 25.9% contraction in corn output and 1.8% decline in palay. These “may be due to the intense heat experienced in Ilocos and Cagayan Valley regions and farmers harvesting their crops in advance in anticipation of the drought,” Balisacan explained.

About 624,000 jobs were lost in agriculture-related activities, compared to about 224,000 and 380,000 additional jobs generated in the industry and services sectors, respectively. Balisacan cited the April 2013 labor force survey for these indicators.

“The seasonality in the agriculture sector poses a challenge to growth and employment, and this is why we will need to diversify agricultural production and move towards further processing of agricultural products, particularly food,” he stressed.

Mining and quarrying remained laggards, declining by 2.7% during the quarter. This reflected investors decisions to cut on their investments as the Aquino government reviews and pursues legislative reform on the revenue-sharing scheme between government and the mining industry.

Recently, the global miners behind Tampakan gold-copper mine in South Cotabato in Mindanao decided to downsize pre-commercial operations. The investment in the mine, which is supposed to start operations after President Benigno Aquino III steps down in 2016, is potentially the country’s biggest foreign investment with operators planning to put in up to US$5.9 billion, which in turn is expected to boost the Philippines’ GDP by 1% every year.

Govt, household spending

On the demand side, household and government spending as well as construction were the key growth drivers.

Household consumption, which contributed 3.6 percentage points to growth, rose 5.2% in the second quarter.

Government spending (2 percentage points contribution to growth) surged 17%, while construction (1.3 percentage points) rose 15.6%.

Election, 2013 targets

The mid-term polls in May, which were expected to boost spending, did not materially contribute to economic growth.

Balisacan said election spending played a “minimal role” in the second quarter.

Albert said presidential elections are usually the ones that have big impact to the economy.

With the 2nd-quarter growth, Balisacan said the 6% to 7% target for 2013 will likely be surpassed.

Officials are aiming to hit a growth rate of 7% to 8% every year until 2016 to lift more out of poverty and provide more jobs. – with reports from Judith Balea, Rappler.com

Population gains need FDI boost

By Bettina Faye V. RocReporter
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THE PHILIPPINES must improve its ability to attract investments to take advantage of its favorable demographic, according to Bank of America — Merrill Lynch (BofA).

In a report, “Asia in Focus: Demographic Divide and Peaks”, BofA said that based on the United Nations’ (UN) latest population estimates, the demographic divide among Asian countries over the next decade will become more stark, which could have implications on the region’s economy.

“The UN revisions bring forward the demographic peaks of several countries in terms of working-age population, including China (2015), Thailand (2017), Malaysia (2047) and India (2050); while deferring the peaks of Indonesia (2058) and Philippines (2085),” the bank noted.

“The next decade for Asia will therefore be very different from previous decades when most of Asia was still experiencing demographic dividends, including China and Korea,” it said.

The bank said that based on the demographic peaks noted by the UN, labor forces of the majority of Asian countries will likely shrink significantly over the next decade.

“This will have important implications on GDP (gross domestic product) growth, consumer spending and asset prices, judging from Japan’s experience,” it said.

The Philippines’ demographics, though, look encouraging, BofA noted, as its peak — projected by the UN to be reached in 2085 — remains far off. This means that the population remains young, with more people expected to enter the labor force in the coming years.

“Demographic peaks will be the most favorable and distant for the Philippines (2085), Indonesia (2058), India (2050) and Malaysia (2047),” it said.

“Philippines, Malaysia, Indonesia and Singapore — in that order — will likely see the strongest labor force growth in Asia over the next decade,” BofA said.

Meanwhile, Thailand — whose demographic is seen to peak in 2017 — is emerging as the “old man” among Southeast Asian economies, the bank noted, and will see its working age population shrink, along with those of Japan, Hong Kong, Korea and China.

“Still, Philippines, Indonesia and India have struggled to attract FDI (foreign direct investments) despite their resource advantage,” stressed BofA.

Thus, there is much room for improvement, it said, as Asia continues to rebalance its economy.

“This is the opportune time for the Philippines, Indonesia and India if the governments can capitalize on their abundant labor resource and lower labor costs to attract greater foreign direct investment,” the bank said.

“Barriers to foreign investments however remain daunting. The outcome has been more an outflow of workers and talent to a growing diaspora outside their borders, rather than investments flowing in,” it said.

This is especially important as production, consumption, and investment patterns across Asia continue to change amid the availability of labor, BofA noted.

According to data from the Bureau of Labor and Employment Statistics, the country’s labor force as of April stood at 40.905 million, up 0.6% annually from 40.645 million in the same month in 2012. The labor force participation rate stood at 63.9% as of the same month this year, slightly lower than the year-ago rate of 64.7%.

Meanwhile, net FDI inflows stood at $1.522 billion as of May, lower than the $1.666 billion recorded in the comparable 2012 period, based on Bangko Sentral ng Pilipinas (BSP) data.

PSM 08.30.13

By: Erwin San Luis
FB: Philippine Stock market Update

August 30, 2013

Trend: sideways
Phase: technical rally
(Rally due to stocks being too much oversold for consecutive days
Below rsi 25)

Mode:
(+)
-Monthend window dressing
-Ghost month to end on sept 3
-Bear market entry was not confirmed
(-)
Fed tampering
Syria issues
Ghost month

Bear market entry became invalid as psei rallied back to 6,000 level

To be considered under bear market

Our major index (psei) should be losing at least 20% from previous all time high for a period of at least 2 MONTHS

In our case just fell for a few days
Making the entry to the bear market invalid

On the other note
The technical rally seemed to be short & will soon face the challenge regarding FED tapering next month

Sept 3 also marks the end of ghost month that will enable the market to gain more mentum to push up

Athou rally is bound by technical issues of the stocks and becoz of window dressing

Market is still expected to be under pressure for the whole month of sept as it is still unclear as to what would the fed really stand for
And a lot of issues to be clarified under our government

Banking sector will also remain weak for the rest of the year until next year as there are a lot of issues that it will facing then

stay away from banks
Go consumer instead

You can use this technical rally to sell your position (stock position)
And then reposition it later when major issues are cleared

Thank you and regards

PSEi reindexing/rebalancing

By: Erwin San Luis
FB: Philippine Stock Market Updates

PSEi reindexing/rebalancing that will take effect on September 16, 2013 will have as follows:

To be removed from the index:

Stock Code: MER
Company Name: Meralco

Stock Code: BEL
Company Name: Belle Corp

To Be included in the index:

Stock Code: LTG
Company name: Lucio Tan Group
Note: Holding firm of Lucio tan

Stock Code: GTCAP
Company Name: GT Capital Holdings
Note: holding firms of George Ty

The respective holding firms of Lucio Tan and George Ty have joined the 30-company benchmark index of the Philippine Stock Exchange (PSE), replacing the gaming arm of Henry Sy and the country’s largest electricity distributor.

“The changes reflect the dynamics of the market.
The periodic review of the main index and the sector indices is necessary to give the investors a reliable and transparent gauge of the market’s performance and trading activity,”
-Hans Sicat, PSE president and chief executive officer

Bloomberry Resorts Corp of ports magnate Enrique Razon replaced Henry Sy-led SM Development Corp during the last PSEi recomposition (Feb 2013)