World's biggest money manager "BlackRock" picks Philippines, Indonesia as top share hunting ground

BlackRock, Inc. is a U.S.-headquartered multinational investment management corporation based in New York City

HONG KONG - BlackRock Inc, the world's biggest money manager, said improving economic indicators in Indonesia and consistent corporate earnings in the Philippines make those two countries prime hunting grounds for Southeast Asian stocks.

Indonesia has slashed its current-account deficit and tamed inflation, strengthening its previously ailing currency. In the Philippines, companies have met forecasts more often than the rest of Asia during a period of successive sovereign credit rating upgrades.

Immediate beneficiaries of economic growth include consumer, financial and infrastructure shares. These make up more than half of BlackRock's $244 million ASEAN Leaders Fund which features stocks such as Indonesian state-controlled lender Bank Mandiri Persero Tbk PT and conglomerate Astra International Tbk PT.

Southeast Asian markets saw sharp volatility last year when investors pulled out in anticipation of tighter liquidity as the U.S. Federal Reserve winds down economic stimulus. Interest has since returned, with Indonesia's main stock index .JKSE rising 18 percent in dollar terms this year, the highest in Asia.

"In an environment where we are sort of pulling back on liquidity with (Fed) tapering, there was an initial shock in these countries and currencies," said head of Asian equities Andrew Swan at the Reuters ASEAN Summit in Hong Kong.

"But current account deficits are declining and trade surpluses are increasing. And that's been quite pleasing I think for many people to see that it's actually happened reasonably quickly, and that's why money is coming back."

BlackRock's Indonesian investments amounted to less than its benchmark index for most of last year. Last month, however, Swan raised the proportion of Indonesian securities in BlackRock's ASEAN fund to 20.2 percent, 1.5 percentage points higher than the MSCI South East Asia Index, according to the fund factsheet.

The proportion of Philippine securities was 8.6 percent which, at 2 percentage points higher than the benchmark, was the fund's boldest exposure.

Indonesian and Philippine shares currently trade at nearly 3.5 times and 3 times their book value - or companies' total value - indicating they are the most expensive in Asia. Shares in the rest of the region, excluding Japan, average 1.4 times.

The stock may be expensive, but Swan said earnings per Philippine share so far in 2014 have been similar to earnings over the past two-and-a-half years, whereas elsewhere in Asia ex-Japan earnings on average have been 25 percent lower.

Increased investment in the Philippines, resilient income growth and a current account surplus - indicating more money coming into the country than going out - suggests a chance of future earnings exceeding analyst estimates, Swan said.

In Indonesia, swift economic adjustment came as a surprise, Swan said. The current account deficit is narrowing, suggesting "we are getting through the worst of the adjustment process."

The deficit in the fourth quarter was about 2 percent of gross domestic product. That compared with a record 4.4 percent six months before, and was the narrowest since the second quarter of 2012.

BlackRock's ASEAN Leaders Fund returned 2.2 percent in the first two months of 2014, outperforming a 1.6 percent gain in its benchmark MSCI South East Asia index.

The fund returned 1.7 percent last year when its benchmark was down 4.5 percent and fund peers lost 5.3 percent, according to data compiled by global fund tracker Thomson Reuters Lipper.

Swan's top bets in the fund he co-manages include Singapore Telecommunications Ltd, Keppel Corporation Ltd and Malayan Banking Bhd. - ABS-CBN News

 

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France' Compagnie Française d’Assurance (COFACE) cite Philippines as top emerging economy

The Philippines is among the top countries with “emerging economies,” a French credit body said in its latest economic publication.

Compagnie Française d’Assurance pour le Commerce Extérieur (COFACE) cited the Philippines as a country with high growth potential and the most favorable prospect of increasing production capacity in the years to come.

COFACE said the Philippines is also considered to have the most favorable business climate.

Other countries recognized as top emerging economies include Peru, Indonesia, Colombia and Sri Lanka replacing Brazil, Russia, India, China and South Africa.

The criteria used by COFACE to determine the new emerging economies include intermediate level of per capita income (above that of less advanced economies but below that of advanced economies); higher GDP growth rate than most advanced economies; and major institutional transformations.

“This piece of economic good news comes at the heels of the report that the International Monetary Fund (IMF) had raised its 2014 economic growth forecast for the Philippines to 6.5%, up from its January projection of 6.3%. Standard and Poor’s (S&P) also raised its growth projection for the Philippines to 6.6% for 2014,” DFA said in a statement Friday.

The IMF and S&P are leading providers of global credit benchmarks, policy advice and research to foster economic development and growth around the world, while the COFACE is the French credit rating agency which publishes quarterly risk assessments for 160 countries.

 

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Philippine imports surge 222% in sign of rising growth: govt

Workers unload sacks of rice from a truck at the National Food Authority warehouse in Manila.- Bloomberg 

Philippine imports surged 21.8 percent in January, their highest level in nearly three years, with imports of raw materials indicating further upward momentum for one of Asia's fastest growing economies, the government said Tuesday.

It was the biggest rise since March 2011, when imports grew by 21.9 percent, National Statistics Office figures showed.

The Philippines, formerly an economic laggard, grew by a remarkable 7.2 percent in 2013 despite a series of disasters including the devastating Super Typhoon Haiyan in November. Its growth last year was second in Asia only to China, officials said.

Imports surged due to a recovery in Philippine exports such as electronics and garments and increased spending on infrastructure, especially in areas affected by Haiyan, said Rosemarie Edillon, assistant director general of the government's socio-economic planning agency.

"The economy is definitely going to grow. A huge chunk of these imports are for production: capital goods and investments for the manufacture of other goods," she told AFP.

Imported raw materials are a major input in many of the country's key exports such as electronics and garments so the surging imports mean even higher exports later, she said.

"These imports are a leading indicator for exports two or three months down the road. If imports in January increase, we will probably see an increase in exports in March and April," she said.

The increase in shipments of steel, metal and chemical products were also an indication of the major construction efforts being undertaken, both to upgrade infrastructure and to rebuild the damage caused by the disasters, she added.

Imports in January hit $5.757 billion, up 21.8 percent from the same period last year, the statistics office said.

This resulted in a trade deficit of $1.376 billion in January, up 92 percent from the same period in 2013.

Socio-economic Planning Secretary Arsenio Balisacan also said in a statement that "this positive (import) performance may be reflective of the optimistic outlook of businesses on their own operations", in the second quarter of the year.

China was the biggest source of imports to the Philippines, accounting for 14.7 percent of the total, with the United States in second with 10.6 percent, the statistics office added.- MSN News

 

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Philippines, Switzerland strengthen economic cooperation

The Philippines and Switzerland vowed to intensify bilateral economic and political cooperation and partnership during their recent 6th Bilateral Consultations in Manila. The meeting was co-chaired by Department of Foreign Affairs (DFA) Undersecretary for Policy Evan P. Garcia and Swiss Federal Department of Foreign Affairs Assistant State Secretary for Asia-Pacific, Ambassador Beat Nobs. Participating were DFA Assistant Secretary for European Affairs Maria Zeneida Angara Collinson and Switzerland’s Ambassador to the Philippines Ivo Sieber.

The two parties welcomed the signing of an Agreement on the Establishment of a Joint Economic Commission (JEC). Switzerland has been active in pursuing economic agreements in the Asia-Pacific region, including in the Philippines. With the signing of the Joint Declaration of Cooperation, the Philippines can commence negotiations for a Free Trade Agreement (FTA) with the European Free Trade Association (EFTA), composed of Switzerland, Norway, Iceland, and Liechtenstein. The Philippines and Switzerland exchanged views on various areas of common concern, including migration, education, and finance. They agreed on the importance of maritime security, freedom of navigation, and the peaceful resolution in international law, including the United Nations Convention on the Law of the Sea (UNCLOS).

The Philippines thanked Switzerland for being one of the first countries to respond following super-typhoon Yolanda, with a total combined public and private humanitarian assistance amounting to US$49 million. Switzerland reaffirmed its commitment to co-host the Asia-Europe Meeting (ASEM) Manila Conference and Management which will take place in Manila this June. The Conference will be attended by 48 partner countries in the ASEM, the ASEAN Secretariat, and the European Commission. The Philippines agreed to co-host Switzerland’s proposed ASEM on Restitution of Hidden Wealth later this year.

Diplomatic relations between the Philippines and Switzerland were formally established on August 30, 1957, although Swiss presence in the country has been recorded since the 1800s. In 1862, Switzerland established an honorary consulate in Manila, its first diplomatic outpost in Asia. In 2012, bilateral trade stood at US$657 million while Swiss investments in the Philippines amounted to US$290 million. There are about 60 Swiss companies operating in the Philippines today.

The Manila Bulletin, led by its Chairman of the Board of Directors Dr. Emilio T. Yap, President and Publisher Atty. Hermogenes P. Pobre, Executive Vice President Dr. Emilio C. Yap III, Editor-in-Chief Dr. Cris J. Icban Jr., Business Editor Loreto D. Cabañes, Directors, Officers and Employees, Congratulate the Department of Foreign Affairs of the Philippines headed by Secretary Albert F. Del Rosario and the Federal Department of Foreign Affairs of Switzerland headed by Didier Burkhalter, in their efforts in intensifying bilateral economic and political cooperation and partnership of Switzerland  and the Republic of the Philippines. 

 

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Philippines to sign $525 Million Canada and Korea aircraft contracts this March 28, 2014

The Department of National Defense and Armed Forces of the Philippines chose to acquire 12 FA-50 jet fighters made by the Korean Aerospace Industries Ltd. Photo from Korean Aerospace Industries Ltd.

The Philippines will award aircraft contracts to South Korean and Canadian companies worth $525.62 million (P23.7 billion), a senior defense official said on Friday, boosting its capability as tension simmers in the South China Sea.

The Philippines has embarked on a five-year, 75-billion-peso modernization program to boost its capability to defend its maritime borders against the creeping expansion of China in the South China Sea.

"This is significant because we need to give our armed forces the minimum capability to perform its mission and responsibility," Manalo told reporters after completing negotiations with the two companies.

Korean Aerospace Industries Ltd. got the contract for the fighter-trainers worth 18.9 billion pesos while Canadian Commercial Corporation, which is licensed to market Bell helicopters, promised to deliver its first craft next year.

Last week, China prevented two civilian ships from delivering supplies to troops stationed in the shipwreck in the Second Thomas Shoal.

China claims 90 percent of the South China Sea's 3.5 million sq. km. (1.35 sq miles) of waters. The sea provides 10 percent of the global fish catch and carries $5 trillion in ship-borne trade each year.

Brunei, Malaysia, Vietnam and Taiwan also have claims to the sea.

The Philippines' ill-equipped armed forces are no match for those of China, despite receiving two cutters and coastal radar stations from the United States. The military lost its fighter capability when it mothballed all its F-5A/Bs in the early 2000s.

Manalo said the Philippines was also spending 26 billion pesos within the year to acquire two frigates, two strategic sealift and three anti-submarine helicopters. — Reuters

Foreign Affairs Secretary Albert del Rosario on Friday warned that China was determined to change the status quo in the disputed waters, taking control of the Scarborough Shoal and forcing Manila to remove a transport ship that ran aground in the Second Thomas Shoal.

Fernando Manalo, undersecretary of defense for finance, munitions, installations and materiel, said the Philippines would acquire 12 brand-new FA-50 fighter-trainers and eight Bell 412 helicopters under a government-to-government deal.

The contracts to be signed on March 28 will include the purchase of 12 FA-50 fighter jets from state-run Korea Aerospace Industries for 18.9 billion pesos ($417.95 million), Defense Undersecretary Fernando Manalo told reporters.

The Bell 412 is a development of the Bell 212 Twin Huey, the main difference being the 412 has a four-blade main rotor. Photo from www.bellhelicopter.com

State-owned Canadian Commercial Corp. will meanwhile be contracted to supply eight Bell 412 combat utility helicopters worth 4.8 billion pesos, with the first three helicopters expected to be delivered next year, he added.

"This is significant because it will give our armed forces the minimum capability to demonstrate their ability to perform their responsibilities," he added.

The Philippines has embarked on a 75-billion-peso effort to upgrade its armed forces, particularly units tasked with patrolling disputed territory in the South China Sea.

These units are dwarfed by those of neighboring China, which claims most of the area, including waters and islets much closer to the Philippines.

The Philippines has already acquired two refurbished frigates from the US coastguard as part of its military modernization program .

China said its coastguard on March 9 blocked two Philippine-flagged vessels approaching Second Thomas Shoal, which is guarded by a small group of Filipino marines but is also claimed by Beijing.

The shoal is part of the Spratlys, a chain of islets and reefs that sit near key shipping lanes, are surrounded by rich fishing grounds and are also believed to lie atop huge oil and gas reserves.

The Philippines has also accused the Chinese coastguard of firing water cannon blasts on January 27 at two Filipino fishing vessels off Scarborough Shoal, a rocky outcrop lies just 220 kilometers off the main Philippine island of Luzon. GMA news/ Reuters 

 

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CHACHA WIN! VOTE: 24-2-1 Economic Charter Change allow foreign investors to own 100% in the Philippines

House committee  okays cha-cha

Rep. Mercedes Alvarez (Neg. Occ., 6th District), a co-author of the bill seeking an amendment to the economic provision of the 1987 Constitution, said it was approved by the Committee on Constitutional Amendments of the House of Representatives yesterday afternoon.

The principal author of the bill is House Speaker Feliciano Belmonte Jr.

Voting 24-2-1, the Committee on Constitutional Amendments approved Resolution of Both Houses No. 1 aiming to insert “unless otherwise provided by law” in the economic provision of the Constitution.

Davao City Rep. Mylene Garcia-Albano, who chairs the committee, said the approved resolution will be forwarded to the plenary for second reading.

Those who voted against the resolution were Bayan Muna party-list Reps. Carlos Isagani Zarate and Neri Colmenares, while Pampanga Rep. Oscar Rodriguez, abstained from the voting.

The resolution aims to amend economic provisions on the 60-40 rule that limits foreign ownership of certain activities in the Philippines.

The resolution will include the phrase “unless provided by law” in the foreign-ownership provision of the Constitution, particularly land ownership, public utilities, natural resources, media and advertising industries.

Under Article XII of the Constitution, foreign investors are prohibited to own more than 40 percent of real properties and businesses, while they are totally restricted to exploit natural resources and own any company in the media industry.

The amendments to the Charter will be approved through separate votings by the both Chambers -- the Senate and the House of Representatives -- with a three-fourth votes required from them.

The Cha-cha debate will start after Congress resumes session on May 5 as they are prepared to go on Lenten recess on March 15.

Belmonte and Alvarez said the amendments are purely for the economic provisions.

Belmonte stressed that he will not allow any member to insert any provision other than what is specified in his resolution.

He expressed confidence that his proposal will get the vote of the majority in the Lower Chamber.- CARLA GOMEZ - Visayan Daily Star /*CPG/PNA

 

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