Stock markets dominated by Interest Rate Differential

This point is amply supported by last week's market actions. Early in the week, Bernarke said that the US dollar needed to be strong. The market intepreted it to mean that US Fed rate would not go any lower for sure, and may even have a chance of going up. This, apparently, was perceived as good news, since the concern at the moment is more on inflation than the economy, which most people regard as having bottomed. If US interest rate does go up, it could result in a stronger US dollar, and some investment funds that have flown to commodities as a hedge against weakening US dollar may flow back into US dollars, resulting in lower commodity prices.




That plan worked for two days. Then the European central bank indicated that they may increase interest rate to combat inflation. If they do, then the interest rate differential will widen again, so US dollar fell anew against Euro, and commodity prices were lifted. The graph on gold price, as represented by GLD in the US stock market, shows the effect of these two events on commodity prices. The same for oil price. Of course, the bad news from the US financial sector (re Lehman Brothers) and US jobs data also worked against the US stock market, but the effect of the interest rate diffential cannot be ignored.

When US stock market sneezes, the Philippine stock market usually trembles. Brace for Monday (Oops! Sorry, Monday is a holiday, for Independence Day, the official celebrations ofwhich will be held on 12 June. Holidays in the Philippines can change a few days before the previously assumed holiday. Maybe the government knew the stock market is going to be slammed.)

Phils. issues USD2.25bn Debt Exchange Warrants

The warrants allow the holders to convert to peso-denominated bonds in case of a default.

Investment Climate of the Philippines

Major negative news regarding pullout of investments from the Philippines and other problems:

1. UPS announced their planned transfer of their hub to a more centrally located USD180M facility at the Shenzhen airport. May 2008.
2. Intel Corp. has announced its possible exit from the Philippines as it plans to close its second offshore assemply operations center in Asia.
3. One of the highest power rates in Asia; second only to Japan.
4. The Philippines is now the world's largest importer of rice. "Decades ago, Vietnamese and Thai students learnt rice cultivation methods in Philippine universities and implemented these upon return to their countries. Thus, many find it ironic that the Philippines is now the world’s biggest rice importer and has to buy rice from the very same people who studied in its institutions." (ipsnews)
5. Corruption is perceived as widespread. The Philippines ranks 121st out of 163 countries in Transparency International's Corruption Perceptions Index for 2006. Corruption is pervasive and long-standing. Enforcement of anti-corruption laws is inconsistent, and the public perception of judicial, executive, and legislative corruption remains high. (Heritage Foundation)

Advantages of investing in the Philippines:

1. Large english-speaking work force.
2. Significant foreign currency inflows amounting to around USD10-12bn/year from the overseas foreign workers.


Is there hope for more foreign investments in the Philippines?

What should we be doing to attract and keep foreign investments in the Philippines?

What are the advantages of investing in the Philippines?

REIT Investor Series - June 17, 2008 Registration Form

REIT Investor Series - June 17, 2008

These are some pictures of the recently held 1st REIT Seminar of the CFAP REIT Investor Series. Due to popular demand, we are already preparing for the 2nd REIT Seminar which will be held in October 2008.

The line went all the way to the escalator! Rizchelle is seen here doing all she can to get the line moving.

A full house.

Sign up now for the 1st seminar of the CFAP REIT Investor Series!

Value Investing

Value Investing corner
Great Businesses at Low Prices!

Real Estate Investment Trusts (REITs)

The article below is from BusinessWorld May 23-24, 2008 issue, while the ad immediately below is one made for SGX in Singapore:

What are REITs? When will the Philippines have REITs?

Can we establish a REIT market to compete for foreign capital?

About I-Genius

The world is full of people who want to make a difference. People who areinterested in helping others and the wider environment.
i-genius helps people promote what they are doing, their work, their ideas, theirpassion – and through our community, enables them to connect with others.

Strengths and Weaknesses of the Peso

A list of current and historical strengths and weaknesses of the Philippine Peso. It is preferred that focus is given to current issues. Analyses and Conclusions are welcome.