Francis Ed. Lim, president of the Philippine Stock Exchange (PSE), is one of the happiest people around, and for good reason. The bullish sentiment in the stock market has been running for the longest time, and the PSE index (PSEi) even breached the 3,000-point mark, closing at 3,020.70 points on January 3, the second trading day of the year, up 43.85 points higher than the 2,976.85 points posted on the previous day.
It was the first time that the index closed above the 3,000-point level since it ended at 3,060.59 points on April 4, 1997.
"Our market is off to a good start in 2007, and the strong finish of the PSEi today [January 3] has buoyed up our expectations that the New Year will usher in more growth for the local stock market," Lim predicts. "The market's performance reflects the continued confidence of investors on the country's favorable economic prospects, which are perceived to have significantly improved as an offshoot of welcome reforms in the government."
Lim is confident that the stock market will replicate, if not surpass, its record 42-percent growth for 2006.
The surge in the stock market was accompanied by further strengthening of the peso, which hit a new six-year high of 48.825 to the dollar on January 2, driven by remittances from overseas Filipino workers and foreign investments in the equities market.
There has been no shortage of good news before 2006 ended and right after 2007 began:
• Investments registered with the Philippine Economic Zone Authority (Peza) reached P83.7 billion in 2006, reflecting a 24.6-percent increase in investments registered with it last year, from P67.2 billion in 2005. That's more than twice the Peza director-general Lilia de Lima's 10-percent growth target. More investments means more jobs, estimated at 40,000 for the projects registered last year.
• Approved foreign direct investments (FDIs) grew by 121 percent to P35.8 billion in the third quarter of 2006 from P16.2-billion level in the same period in 2005.
• Philippine exporters see a 12-percent growth in exports this year despite a projected slowdown in the US economy and reduced competitiveness due to the stronger peso. Philippine Exporters Confederation president Sergio Ortiz-Luis says exports for 2007 could even grow by 15 percent if the US market recovers sooner than expected.
A higher growth rate for exports, which account for a third of the country's gross domestic product (GDP), will help achieve the government's GDP growth target of 5.7 percent to 6.5 percent for 2007. The exporters' optimism is shared by the Bangko Sentral ng Pilipinas, which even expects 2006 export earnings to grow by as much as 16 percent.
• The International Air Transport Association has predicted that the international passenger traffic in the Philippines would grow by 5 percent this year, while air cargo traffic would increase by 3.9 percent. That's on a par with the 5.7-percent passenger growth forecast for Asia. This will sustain the current boom in the tourism industry, which now includes medical tourism and the retirement industry.
• Overseas Filipino workers and business-process outsourcing continue to drive the boom in the property sector, and the end is nowhere in sight.
For purposes of objectivity, there are also not-so-good news, like the failure by the Congress to enact the proposed P1.126-trillion budget for 2007. This is the second year in a row that the government is operating on a reenacted budget of P907.56 billion.
We are in an irritatingly peculiar situation—whereas in the past we had to borrow to finance spending, now we have the money but which we cannot spend because our lawmakers have not passed the legislation that will authorize the government to use all its resources for infrastructure, which could boost the economy.
Some businessmen and economists are also worried that the elections in May could derail government efforts to balance the budget. On the other hand, the fact that the elections are only for 12 senators, all seats in the House of Representatives and local government positions, means that Malacañang will not spend as much as it would if we were having a presidential election.
So, let's keep the good news coming. Let the politicians continue their petty quarrels, let the courts and the lawmakers handle the Daniel Smith case, let the candidates make more empty promises.
But let the good news in, and let the economy grow. This could be our last chance to catch up with our neighbors.
E-mail at raulbvalino@yahoo.com.ph
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