Are PSE investors shallow?

Tuesday, 27 September 2011 02:03
John Mangun /Outside the Box

Prices on the Philippine Stock Exchange (PSE) took another massive hit yesterday with the blue chip index down 164 points, or 4.24 percent. The All-Share Index fell 2.94 percent. Interestingly, we started this week as the worst-performing stock market (except for Thailand) in Asia yesterday.

The same thing happened on Wednesday when we were down much more than the rest. I wondered aloud on Twitter if we were overdoing the selling or if Philippine investors were more accurate in predicting a gloomy future than the rest of the markets. As it turned out, the PSE was right, as the rest of Asia caught up with the drop on Thursday and Friday.

This is a new week and our stock prices are still going down in a big way.

Are PSE investors unsophisticated about how bad things really are and should prices be going so far down?

Or are PSE investors ahead of the curve, not shallow at all?

The move that took the PSE index from below 2,000 to over 4,000 began in the fourth quarter of 2008. That was about the same as for the other regional exchanges. It took a few months longer from the stock markets in the West to bottom up. But through the bull market, both Asia and the West have pretty much tracked each other’s performance.

However, in terms of economies, there is now a divergence that should be seen in the performance of stock-market prices. Asia’s economies, particularly the smaller ones, are growing; the Western ones are not.

Of course, we are led to believe that all the world’s economies, big and small, developed and underdeveloped, Western and Eastern, are on the same potentially sinking ship. That may be true in a general sense, but is it true for the Philippines?

When looking at how stock prices could move, we need to examine the broad national economic picture, look at the projected financial performance of the companies, and then figure what the stock prices should be.

I believe it is at this point, that the Philippines will move off the road that the others are passing on.

Bank of the Philippine Islands (BPI) released its latest monthly economic research on September 15. Normally I am hesitant to accept this type of analysis because there is often a disconnect with the total range of economic activity. Official numbers often do not show the full extent of what is going on in the economy.

However, BPI accurately forecasts lower-than-expected growth through the rest of 2011. But it also says the Philippines is in “a better position to withstand another global economic downturn and financial shock waves.” Allow me to quote a portion of BPI’s report:

“We could hardly conceive the Philippines falling into recession should the world’s economy contract once more, given our relatively minimal exposure to global trade, while most overseas Filipinos are deployed in critical, recession-proof industries and still provide a historically reliable stream of foreign inflows. What was true in 2009 is still true to this day.”

That last sentence is the key to the deal. If 2011 is a repeat of 2009 (and it looks like it will be), we came through that period well and we should do even better this time in relation to most of the world. The macro looks good.

Now if the macro is acceptable, then corporate revenues and profits will be even better than in 2009 as local companies are now leaner (less debt) and meaner (more adaptable to changing conditions) than before.

Now to stock prices. At this time, stock prices are historically low in comparison to corporate financial valuations and in comparison to other countries. That should be favorable for future price movements.

However, I see the potential for prices to fall even further. Not guaranteed but possible. But at some point in the near future, prices will begin to move significantly higher than they are today.

PSE investors, local Filipino investors, are very sophisticated because they are accustomed to moving quickly and they do recognize investment value when they see it.

The one missing piece that I did not mention above is government policy. This is one-note tune administration; corruption. That is not bad but it is not complete. Deteriorating global conditions may force policy-makers to address the government’s direct role in the economy. Once that happens, you will see greater economic action and that will translate into higher stock prices.

On a personal note, I invite you to visit mangunonmarkets.com. Now is the time to protect capital and prepare for opportunities. You can gain access to the PSE Strategy Guide for stock-market investors, as well as other content.

E-mail to mangun@gmail.com and Twitter @mangunonmarkets.PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.

http://www.businessmirror.com.ph/home/opinion/17072-are-pse-investors-shallow

‘Panic selling’ grips investors

Tuesday, 27 September 2011 02:17  
Miguel R. Camus / Reporter 

Philippine stocks slid anew on Monday as investors continued to liquidate positions in what some analyst are already calling “panic selling.”

The Philippine benchmark Index lost another 4.24 percent, or 164.74 points, to 3,721.22, said to be the lowest close since September 2, 2010.

The benchmark measure had already declined over 18 percent from the year’s record high of 4,550.52 in August mainly as fears mount that the global economy could enter another recession.

World stock markets also remained volatile as investors grew increasingly convinced that Greece would default on its debts, an event that economists say has the potential to worsen a global downturn.

Stocks were mixed in early European trading. Britain’s FTSE 100 fell 0.5 percent to 5,040.61. But Germany’s DAX gained 1.6 percent to 5,280.93 and the CAC-40 in Paris gained 0.9 percent to 2,836.70.

Wall Street was headed higher, with the Dow Jones industrial futures up 0.2 percent to 10,716. S&P 500 futures rose 0.4 percent at 1,134.

Negative sentiment was most intense in Asia, where markets closed sharply lower. Japan’s Nikkei 225 index slid 2.2 percent to 8,374.13—its lowest close since April 2009. South Korea’s Kospi fell 2.6 percent to end at 1,652.71 and Hong Kong’s Hang Seng lost 1.5 percent to 17,407.80. Australia’s S&P/ASX 200 receded 1 percent to 3,863.90.

“People expected over the weekend that European finance ministers and [International Monetary Fund] officials would probably announce some concrete plans to stabilize the euro zone. But it came out empty again,” said Jackson Wong, vice president at Tanrich Securities in Hong Kong.

“Everything is so negative right now. People are waiting for a positive catalyst to get back into the market,” Wong said. “The road ahead is very unclear.”

A stubbornly strong yen also weighed on Japan’s export sector because it makes Japanese goods more expensive abroad.

“There are already signs of panic going on and all markets are being affected which during a normal situation does not happen. Some investors are no longer asking about fundamentals anymore,” April Lee-Tan, research head at stock brokerage firm CitisecOnline, said in a phone interview on Monday.

Tan said selling could have intensified after the PSEi index fell below the 3,800 psychological barrier. “Whatever bargain hunting there was disappeared. They probably decided to liquidate all positions and wait on the sidelines,” she said.

Tan said the next psychological support is at the 3,500 level. At that level, the PSE index is valued at about 12 times earnings, regarded as a “cheap” level historically, she said.

Joey Roxas, president of stock brokerage firm Eagle Equities Inc., said there is still room for the market to move lower, although selling could slow down in the latter part of this week.

Roxas said part of the sell-off was due to then-“expensive” PSE index catching up with losses in the rest of the region alongside fund redemptions.

“We are already in a downtrend,” Roxas said, adding that investors looking to enter the market could take small positions at this point but should hold back from making big investments given the current level of uncertainty.

Meanwhile, the broader all-shares index also declined 2.94 percent to 2,700.58. Volume slightly slowed from Friday at P9.39 billion, while foreign selling intensified to P852.37 million.

All subsectors ended in the red, again led by the mining and oil sector, which declined 8.22 percent.

The PSE index is already down 479.92 points, or 11.4 percent, since the start of 2011. (With AP)

http://www.businessmirror.com.ph/home/top-news/17081-panic-selling-grips-investors

Puregold's global share offer 3 times oversubscribed

By Zinnia B. Dela Peña (The Philippine Star)
Updated September 24, 2011 12:00 AM

MANILA, Philippines - The global share sale of supermarket chain Puregold Price Club has been three times oversubscribed, according to one of its international lead underwriters.

Lauro Baja, UBS managing director for the Philippines, said the issue attracted orders from several sovereign wealth funds looking for long-term investments despite the volatility in global markets.

“Foreign investors are attracted to the Philippines, especially on the retail market, and Puregold is considered a pure retail play,” Baja said.

Puregold priced its maiden offering of shares at P12.50 apiece, the low end of a revised indicative price range. At a 2011 price-to-earnings multiple of 11.8, the retailer’s initial public offering (IPO) is very attractive compared to other retailers in Asia.

“We could have priced higher but the owner wants to leave some upside on the table for investors. We wanted to eliminate any perception that the company was squeezing investors up to the last cent,” Baja said.

Puregold will sell up to 500 million new shares through a primary offering and 100 million existing shares held by majority shareholders.

The shares to be offered represent 34.5 percent of the company’s issued and outstanding capital stock after the IPO. It has an option to sell another 90 million shares in case of strong demand.

The share issuance is expected to fetch P7.5 billion, P6 billion of which will go to Puregold while the balance of P1.5 billion will go to the selling shareholders. The proceeds may reach up to P8.62 billion should the company decide to exercise the over-allotment option.

The domestic offering kicked off yesterday and will run until Sept. 29 while the shares will start trading on the local bourse on Oct. 5.

The company is the country’s second largest retailer among hypermarkets and supermarkets. From just a single store in 1998, it has grown to 72 in 20 cities and 22 municipalities throughout Metro Manila and the main island of Luzon as of July 2011.

In the six months ending June this year, the company posted a net income of P782.8 million, up 269 percent from a year ago as net sales grew 41 percent to P17.3 billion.

http://www.philstar.com/Article.aspx?publicationSubCategoryId=66&articleId=730269

Don’t Panic! Why Falling Stock Prices Are a Good Thing

Portfolio StrategyBy J.D. Roth | @jdroth |
September 23, 2011 |

As tends to happen, yesterday’s dramatic stock market decline has put some investors on edge. The other day, I talked with my friend who is a financial planner, and he told me that after the market dropped by 15% in early August, he couldn’t keep certain clients from selling. They were scared to be caught in a downturn like the one three years ago, and they just wanted out.

The problem, of course, is that selling in a panic is rarely a smart move. Remember the old adage: Buy low, sell high. When you sell your stocks or mutual funds after a market drop, you’re doing just the opposite.

The best time to prepare for a market downturn is before it happens. I’m not suggesting that you should try to time the market upturns and downturns — nobody can do that reliably, not even the experts! — but that you invest in such a way that you don’t have to sell in a panic when the stock market decides to take a dive.

Easier said than done, right? How does one actually do this? Well, there are few ways to make your investing less emotional and more methodical.

• First, know your risk tolerance. Each person is different. For some, even the slightest possibility that they may lose money induces a stomach ache. Others are willing to risk potential losses of the potential gains are greater. I’m young, so can take on more risk; on the other hand, I don’t like risk. I’ve found that having 60% of my investment in equities is the perfect balance for my risk tolerance. You can learn more about your risk tolerance using the Rutgers investment risk tolerance quiz.
• Second, have a plan. Serious investors create an investment policy statement, a roadmap with guidelines that they and their investment advisors can follow. When the stock market goes crazy — soaring with irrational exuberance are crashing with irrational fear — the investment policy statement can help take the emotion out of investing. Morningstar has a crash-course in creating an investment policy statement.
• Third, be systematic. Once you know your risk tolerance and have an investment policy in place, you can invest systematically. You might use dollar-cost averaging, for instance, or dividend reinvestment plans. Or you might do what I do: Simply buy into the market once per year. If you have a system and stick to it, you don’t need to panic when prices fall.

Finally, remember that investing in general (and stock-market investing specifically) requires you to take the long view. You have to think in terms of decades, not years. (And certainly not months or weeks or days.) The younger you are, the truer this is.

Over the long term, the stock market has historically returned an average of about 10% before taxes, which is more than any other assest class. (But also keep in mind that average is not normal.) Investing for the long term makes sense — and cents.

If I can’t convince you that a market downturn is no reason to panic, maybe the world’s greatest investor can. In his 1997 letter to Berkshire Hathaway shareholders, Warren Buffett wrote:

A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves.

But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the “hamburgers” they will soon be buying. This reaction makes no sense. Only those who will be sellers of equities in the near future should be happy at seeing stocks rise. Prospective purchasers should much prefer sinking prices.

The next time the stock market takes a tumble, remember Buffett’s advice. And then go out and buy yourself some hamburgers!

http://moneyland.time.com/2011/09/23/dont-panic-why-falling-stock-prices-are-a-good-thing/#ixzz1Yqy0WJrc

Recession panic grips world markets

(The Philippine Star) Updated
September 24, 2011 12:00 AM
 
MANILA, Philippines - World markets buckled under a frenzied sell-off Thursday as investors panicked, believing the global economy was headed for another slump that policymakers may be ill-equipped to prevent.

From New York to Tokyo, it was a brutal day for investors as countless billions of dollars were wiped off the value of companies globally.

In Manila, the benchmark 30-company Philippine Stock Exchange index (PSEi) settled at its lowest level in three years as investors turned to safer US dollar and government bonds. The peso, meanwhile, briefly touched the P44 to $1 level before recovering at P43.58 from Thursday’s P43.77.

The PSEi plummeted 210.14 points or 5.13 percent to close at 3,885.96, logging its biggest drop since Oct. 27, 2008.

The 30 firms that make up the Dow Jones Industrial Average alone lost $103 billion of their value or around 3.5 percent  while major indexes in Europe, Asia and Latin America commonly suffered losses of around five percent.

The seeds for the turmoil appear to have been planted Wednesday, when the Federal Reserve warned an already tepid US recovery faces serious risks, even as the bank appears to be running low on policy remedies.

“It’s the ever-increasing threat of another recession that is really spooking investors,” said analyst Simon Denham at Capital Spreads.

But concern about the fate of the world’s largest economy only heightened long-running fears that key pillars of the global economy are cracking under the strain of debt and slow growth.

The Dow lost 391 points to finish the day at 10,734, a level only seen once in the last year.

London’s FTSE-100 index closed down 4.7 percent, Brazil’s Bovespa was down 4.8 percent and Hong Kong’s Hang Seng closed down 4.9 percent to its lowest finish since July 2009.

As representatives from the world’s major economies gathered in Washington for a regular meeting of the G20 and the International Monetary Fund (IMF), there were increasing doubts that Europe can overcome political difference and decisively tackle its long-running debt crisis.

“Bad economic news from the United States and Europe, compounded by political paralysis and the risk of a serious policy mistake, continues to roil markets,” IHS chief economist Nariman Behravesh and IHS Global Insight economist Sara Johnson told clients.

The heads of the World Bank and IMF warned that Europe and the US risked “suffocating” the global economy if they did not get control of their economies.

Danger zone

World Bank president Robert Zoellick called for action, warning: “The world is in a danger zone.”

The IMF’s Christine Lagarde said that risks to the global economy had increased, “but there is a way forward, if countries act now, act boldly, and act together.”

But across the globe investors voted with their feet, pumping money into perceived safe-haven assets, notably the dollar and US government debt.

The euro fell to its lowest level since January against the dollar, at $1.3462 at 2130 GMT, while the yield on the 10-year Treasury note sank to a new record low, indicating sky-high demand.

Michael Hewson of CMC Markets said “European markets have plunged today on a trifecta of different factors, starting with disappointment about last night’s measures by the Federal Reserve as well as its downbeat assessment of the US economy.”

He added that “fears about a slowdown in China on disappointing HSBC manufacturing PMI, which contracted for the third month in a row, and disappointing eurozone, French and German manufacturing PMI’s data,” also weighed on sentiment.

It was stocks that bore the brunt of that flight to safety.

Tokyo shed 2.1 percent and Shanghai lost 2.8 percent.

Jitters

In the Philippines, anxieties over the US sliding back into recession and Italy and Spain heading for bailouts left shares tumbling.

The main composite index is now 10 percent below its end-2010 level with global markets issuing a vote of no confidence in the management of the world’s two largest economies  the US and the Euro zone.   Year-to-date loss has reached 7.5 percent.

All sub-indices were in the red, led by mining and oil which slid by 9.87 percent followed by property which lost 6.08 percent.

The broad All-Share index likewise plunged by 4.6 percent. Of the stocks traded, 166 turned up losers as against 13 gainers, with 15 unchanged. A total of 13.87 billion shares changed hands valued at P8.19 billion.

“Growing concerns on the global economic slowdown is scaring the market. Most investors are worried that the recession fears will turn out to be a nightmare for the market. Most opted to sell down the market and shift to safer investment instruments,” said Astro del Castillo, managing director at First Grade Holdings Inc.

“The US is wrestling with its debt concerns and poor growth while Europe’s sovereign debt crisis threatens to bankrupt Greece and place Italy in a similar position. For the moment, market performance hinges largely on global issues but discerning investors should watch oversold stocks, careful for signs of recovery,” AB Capital Securities said in its online market report.

Foreign investors remained on the sell side and posted a net selling amount of P267.6 million. Among yesterday’s top losers were Semirara Mining, Philex Mining and Atlas Mining, Lepanto.

The most actively traded stocks were PLDT and Metrobank.

Meanwhile, volume at the Philippine Dealing & Exchange Corp. (PDEX) was heavy at $964.84 million from $1.356 billion last Thursday.

Traders pointed out that central banks in the region including the Bangko Sentral ng Pilipinas (BSP) have been intervening in the foreign exchange markets to stem the decline in local currencies against the US dollar.

The US Federal Reserve on Wednesday warned of significant risks to the already weak US economy and launched a new plan to lower long-term borrowing costs and bolster the battered housing market.

The US Fed announced it would sell $400 billion of short-term Treasury bonds to buy the same amount of longer-term US government debt as part of efforts to boost growth that slowed to a crawl over the first half of the year.

Protectionism looms

In Washington, the WB’s Zoellick said protectionism and populist policies in the developing world could rise as countries face increasing head winds from a growing European sovereign debt crisis and a weakening economic recovery in the US.

Zoellick warned another crisis was building at a time when the budgets of many developing economies had not fully recovered from the 2008 financial storm, adding to their fiscal strains.

He told Reuters in an interview more than half of developing countries’ budgets have deteriorated by two percent of gross domestic product since 2007, and more than 40 percent of developing nations now have government deficits in excess of 4 percent of GDP.

“If the situation deteriorates further, then developing countries’ growth could turn down, their asset prices could drop and then their non-performing loans could increase,” Zoellick said.

“With these pressures and prospects we have to anticipate possible protectionist pressures, beggar-thy-neighbor policies and a risk of a retreat to populism,” he added.

While he still believed advanced economies could avoid a double-dip recession, Zoellick said his concerns were growing unless they acted forcefully to tackle their problems.

“A crisis made in the developed world could become a crisis for developing countries,” he said. “Europe, Japan and the United States must act to address their big economic problems before they become bigger problems for the rest of the world. Not to do so would be irresponsible.”

Developing economies, he said, had grown more resilient over the past decade and were in a better position to withstand another crisis but they were still concerned about the spillover effects from troubled advanced economies.

Some of the largest impacts to poorer countries would be felt through a decline in global demand, which would affect trade and commodity prices.

Zoellick said $6.1 trillion was wiped out globally in stock market declines over the past couple of months, which is equivalent to 10 percent of global GDP.

A meeting of finance leaders from emerging market economies  China, India, Russia, South Africa and Brazil  in Washington on Thursday called for ‘decisive action’ by advanced countries to tackle the deterioration in their economies.

“The best role for the BRICS countries is the same as the best role for any country, which is to focus on what they need to do at home to get through the current financial dangers and to move on to long-term growth,” he said.

Zoellick said he was paying close attention to consumer and business confidence in emerging economies.  Zinnia de la Peña, Lawrence Agcaoili

http://www.philstar.com/Article.aspx?articleId=730344&publicationSubCategoryId=63

‘Be flexible to change directions when opportunity comes’

By: Tina Arceo-Dumlao
Philippine Daily Inquirer  
1:58 am | Sunday, July 3rd, 2011 

MAHENDRA Gursahani, CEO of Standard Chartered in the Philippines

The road toward achieving life’s goals is not always straight. More often than not, it is marked by long detours, deep potholes, seemingly insurmountable roadblocks and discouraging dead ends.

In the case of Mahendra Gursahani, chief executive officer of Standard Chartered Bank’s Philippine operations, the path he took was long and winding, initially taking him to the world of accounting before finally leading him to his true calling in the field of banking and finance.

Gursahani tells SundayBiz in an e-mail interview that he studied accounting and economics in the university because he thought then that he wanted to be in accountancy. He got his first taste of it when he was 20 years old, working as a trainee accountant in London, and thought he was hooked.

“I earned enough then to keep body and soul together with a little left over for the occasional visit to the pub,” Gursahani recalls. “I became entirely self-sufficient financially from that time.”

He trained and worked hard for five years in London to qualify to be an accountant.

However, as fate would have it, when he did qualify in London with the Institute of Chartered Accountants in England and Wales, he decided that he did not really want to be a Chartered accountant after all.

He wanted to be a banker instead.

“My belief is that at times, you have to go with your current desires and be flexible enough to change directions if the opportunity presents itself. Too much planning for the future can become exhausting and counterproductive,” says Gursahani, who is turning 55 this October.

He went headlong into his new field and picked up as many lessons and advice as he could through the many posts he occupied on his way up the corporate ladder.

It did not take long for his superiors to realize that they had a high flyer in their midst, one with great potential to handle great responsibilities.

Focus and determination to enhance his innate abilities were traits he learned growing up in an upper class family in India.

“My father was on the board of Unilever in India so my upbringing was somewhat privileged. Our life was disciplined, focused and principled, and conversations around the dinner table were around education and the business and political world,” Gursahani says.

“I learnt from an early stage to not just be financially responsible but also to be sensitive to those who have to struggle more. My parents themselves sacrificed tremendously to educate my brother and I through the best schools. Education was a cornerstone of our value system.”

MAHENDRA Gursahani (left) accompanies Jaspal Singh Bindra, Standard Chartered chief executive officer for Asia (center), during a courtesy call to President Benigno Aquino.

He considers his father one of the many role models who have all helped put him where he is today.

“There is no single mentor, but many along the way whom I have respected and learned from. One must be a keen observer of people and be willing to accept that you can never stop learning,” he says.

“Know your strengths and use them to create advantages for yourself and your company. Surround yourself with people whose strengths might be your weaknesses. This way, you can build fully complementary and contributing teams,” Gursahani adds.

Gursahani adds that in his experience, having an open mind is essential to one’s career as it alerts a person to opportunities for growth that can come up unexpectedly.

“I never consciously planned my career, but I have always had an open mind, knowing only that the broader my experience, the better banker I could be. It is because of this that I have experienced a broad range of roles across multiple geographies,” Gursahani says.

Before coming to the Philippines in June last year, Mahendra was Standard Chartered’s chief financial officer for the Middle East, Africa, Europe and Americas, and based in Dubai.

He was also concurrently senior executive officer for Dubai International Financial Center, overseeing all general management responsibilities.

Before landing in Dubai, he held positions in Sydney, Singapore and London.

“I have never looked at my career as a way up the ladder but rather as an opportunity to become more and more self-aware and to contribute in different ways as one evolves. I have few regrets,” he adds.

Gursahani says that in his career, the biggest lesson he has learned is always “be yourself” and not try to be different just to please other people.

For the Australian national, that is not the way to get ahead.

“Pretending to be something else is way too stressful,” he says.

He offers more words of advice for the executive wanting to also succeed in the corporate world.

“Build teams that can make the environment professional and also fun. Respect others for what they can bring and above all treat people as you would like to be treated. Fair but firm would be the hallmark of a good leader,” Gursahani says.

At this point in his life, Gursahani can actually afford to just retire and enjoy the rest of his life with his family. But retirement is not yet on the horizon as he still wants to move forward professionally and personally, especially in the Philippines, which is considered a major market of the London-based bank.

“I want to continue to contribute to my bank, all the staff members and society, in whatever little way that I can,” Gursahani says, “At the moment, I am entirely focused on seizing the new opportunities that the Philippine economy is presenting to us and positioning our bank to be a partner in the country’s journey to economic success.”

“I want Standard Chartered Bank here in the Philippines to be recognized as an institution that provides great service to our customers, innovative solutions to our clients and gives back to local communities,” Gursahani says.

“Being the first foreign bank to have been established here in 1872, Standard Chartered proudly considers itself a partner of the Filipino in nation-building.”

“I am very optimistic about the Philippines and consider myself privileged to be joining at this time when the country’s future looks very promising,” he says.

US Fed plan sends Asia stocks diving, dollar gains

By: Danny McCord
Agence France-Presse
11:34 pm | Thursday, September 22nd, 2011

HONG KONG—Asian markets plummeted on Thursday while forex dealers ran for safety after the US Fed’s latest multibillion-dollar move to shore up the American economy was met with worldwide disappointment.

The dollar strengthened against regional currencies as investors sought its safe-haven status after the US central bank warned of serious downside risks for the global outlook.
And the euro was sent spinning to another 10-year low against the yen as risk aversion set in.

Tokyo fell 2.07 percent, or 180.90 points, to 8,560.26, Seoul dived 2.90 percent, or 53.73 points, to 1,800.55, and Sydney plunged 2.63 percent, or 106.9 points, to 3,964.9, its lowest in more than two years.

Hong Kong tumbled 4.85 percent, or 912.22 points, to 17,911.95, its lowest finish since July 2009, while Shanghai ended 2.78 percent, or 69.90 points, lower at 2,443.06.

Jakarta was hammered as the dollar’s rise against the rupiah saw foreign investors shift out of the local market. The index closed down 8.88 percent, or 328.35 points, at 3,369.14.

The Fed said after a two-day policy meeting that it would shift $400 billion in its shorter-term debt portfolio holdings to longer-term bonds, a move it said would lower rates for mortgage holders and businesses.

The plan – nicknamed Operation Twist – is also designed to entice banks to put some of their idle reserves to work.

However, in announcing the new plan, the Fed warned of “significant downside risks to the economic outlook,” with the economy struggling with slow growth, high unemployment and a depressed housing market.

“The Fed’s economic view is sharply deteriorating and there seems to be little it can do as a next step with Republicans calling on the Fed not to intervene,” Yutaka Miura, a senior technical analyst at Mizuho Securities, told Dow Jones Newswires.

Wall Street plummeted on the news. The Dow lost 2.49 percent, the S&P 500 dropped 2.94 percent and the Nasdaq shed 2.01 percent.

Wednesday night’s Fed announcement piled further misery on markets already reeling due to the ongoing Greek debt crisis, which analysts fear could end with Athens defaulting and another global financial crisis.

Adding downward pressure to sentiment, especially in Shanghai and Hong Kong, was preliminary data from China showing manufacturing contracted for the third straight month in September due to ongoing troubles in the key US and European markets.

The early HSBC purchasing managers’ index (PMI) fell to 49.4 in September from a final reading of 49.9 in August.

A reading above 50 indicates the sector is expanding, while a reading below 50 suggests contraction. The gauge stood at 49.3 in July, which was the lowest in 28 months and the first contraction in a year.

Investors were also digesting a series of downgrades by Moody’s on three top US banks – Bank of America, Wells Fargo and Citigroup – saying it saw the US government as less willing than before to rescue them if they become unstable.

With risk appetite waning, the dollar rose against regional currencies while the euro languished near 10-year lows versus the yen.

In afternoon Tokyo trade the euro was at 103.37 yen from 103.74 yen late in New York on Wednesday.

The European currency was also at $1.3530, down from $1.3566 but well down from the $1.3700 seen in Asia on Wednesday. The dollar edged up to 76.50 yen from 76.48 yen.

However, the greenback was at Sg$1.2903 against its Singapore counterpart after reaching a nine-month high of S$1.2969 in New York, and was at a one-year high of 1,180.10 Korean won.

Ongoing troubles in the eurozone and US economy have boosted the greenback at the expense of Asian units, some of which had touched record highs. It had been as low as Sg$1.1988 and 1,047.90 won.

The Australian dollar also fell below parity to the US currency, sitting at 99.74 US cents. The fall comes after the commodities-backed Aussie, which broke parity for the first time in October last year, hit a record high US$1.1081 in July.

The decision “brought disappointment, with the Fed announcing the minimum policy action expected while also warning of significant downside risks to the economic outlook,” said National Australia Bank forex strategist John Kyriakopoulos.

“In response, risk-aversion escalated, which boosted ‘safe haven’ demand for the USD,” he said.

Oil fell as the stronger dollar made the commodity more expensive.

New York’s main contract, West Texas Intermediate for November delivery, was down $2.35 to $83.57 a barrel in late afternoon Asian trade, and Brent North Sea crude for November dropped $2.45 to $107.91.

Gold fetched $1,765.40 an ounce by 0900 GMT, down from the $1,805.80 it was at by 0900 GMT Wednesday.

In other markets:

– Singapore dived 2.55 percent, or 71.26 points, to close at 2,720.53.

DBS Bank tumbled 2.10 percent to Sg$12.10 and oil rig-maker Keppel Corp dropped 1.52 percent to Sg$8.45.

– Taipei dived 3.06 percent, or 230.38 points, to 7,305.50.

HTC shed 5.33 percent to Tw$710.0 while Taiwan Semiconductor Manufacturing Co was 4.17 percent lower at Tw$69.0.

– Manila tumbled 2.57 percent, or 108.19 points, to 4,096.10.

Lepanto Mining fell 1.5 percent to 1.29 pesos, Philippine Long Distance Telephone dived 2.3 percent to 2,238 pesos and Alliance Global shed 3.2 percent to 9.73 pesos.

– Mumbai fell 4.12 percent, the sharpest single-day drop in two years. The benchmark 30-share Sensex index closed down 704.0 points at 16,361.15. India’s top property firm DLF slumped 7.16 percent to 197.85 rupees while energy giant Reliance Industries fell 6.16 percent to 786.45.

– Wellington edged 0.10 percent, or 3.46 points, higher at 3,312.29.

Telecom (TEL.NZ) rose 1.5 percent to NZ$2.64 while Fletcher Building fell 0.1 percent to NZ$7.45. Fisher & Paykel jumped 3.5 percent to NZ$3.48.

– Kuala Lumpur closed 2.20 percent, or 31.23 points, lower at 1,387.81.

Hong Leong Bank lost 5.8 percent to 9.98 ringgit and gaming giant Genting fell 5.4 percent to 8.80. GPRO Technologies gained 4.2 percent to 0.13 ringgit.

– Bangkok fell 3.79 percent, or 39.00 points, to 990.59.

http://business.inquirer.net/20793/us-fed-plan-sends-asia-stocks-diving-dollar-gains

Philippine stock prices slump in the face of global economic concerns

By: Doris C. Dumlao
Philippine Daily Inquirer
1:56 pm | Friday, September 23rd, 2011 

MANILA, Philippines – Most local stock prices dropped sharply on Friday, bringing the main index to its worst single-day slump in three years as concerns over global growth dragged global equities back to bear territory.

The main-share Philippine Stock Exchange index slid by 210.14 points or 5.13 percent to finish at a six-month low of 3,885.96.  This was the steepest daily drop seen by the local bourse since October 27, 2008, when the main index fell by 12.3 percent.

The index has now reversed earlier gains for the year and is now 7.5 percent below its end-2010 level.

All counters were sold down but the mining/oil and property counters were the most battered, outpacing the PSEi’s drop by falling 9.87 percent and 6 percent, respectively.
Turnover was heavy at P8.2 billion, including some block sales. There were nearly 13 stocks that declined for every single stock that advanced.

“The 3Rs continue to feed the bears – recession fears on the global economy, renewed risks in the capital markets especially with possible default of European countries and the continuous retreat of investors to safer investment instruments,” said Astro del Castillo, managing director at local fund management firm First Grade Holdings.

“Fundamentally, we are stable but definitely not immune to the realignment of fund managers,” he said.

Investors dumped index stocks PLDT, Metrobank, Semirara, ICTSI, AGI, EDC, ALI, BDO, SM Investments, Ayala Corp., Philex, BPI, Aboitiz Power, SM Prime, DMCI, San Miguel Corp. and Megaworld.  Likewise heavily sold down were Lepanto A (open only to local investors) and B (open to both local and foreign investors) as well as Atlas.

There was a P1.29 billion block sale on Rizal Commercial Banking Corp. at P29 each and another P69.6 million block transaction on Polar Property Holdings at P2.32 each.

Overnight, the Dow Jones Industrial Index tumbled by 391.01 points or 3.5 percent to 10,733.83 as fears over another US recession fuelled risk aversion. A decline in China’s factory output for the third straight month added to the jitters.

For the first time in two years, the MCSI All-Country World Index of 45 nations went into bear territory.

“Risk-off sessions were seen with intensifying worry about double-dip recession,” said European investment bank Credit Agricole CIB.

“Markets continue to be volatile; growth concern weighs further on sentiment,” it said.

http://business.inquirer.net/20921/philippine-stock-prices-slump-in-the-face-of-global-economic-concerns

Executive tells PR men: ‘Honesty better than PR’

Thursday, 22 September 2011 21:24
Dennis D. Estopace / Reporter

IN PHOTO -- PR CONGRESS
OPENS - Bob Grove, managing
director of Edelman Southeast Asia,
gives a presentation at the opening
of the 18th National PR Congress
on Thursday. --ROY DOMINGO

HONESTY remains the best policy to gain customer trust and shore up share prices, according to the CEO of the company that created the “trust barometer.”

“You may have a bad PR [public relations] but having an honest leader telling people what they’re really doing so that the bad things won’t happen again evokes trust because it shows the leadership is on top of what’s happening,” Bob Grove of Edelman told the BusinessMirror in an interview late Wednesday.

Grove, managing director for Southeast Asia of the consultancy firm Edelman, spoke on trust and the global PR industry at the 18th National PR Congress on Thursday, where he emphasized the importance of honesty and transparency in running a business.

Citing studies, Grove said share prices of companies that were able to regain consumer trust from a failed product recovered when their leaders immediately apologized to the public, explained the situation and bared the steps to rectify.

“Those that showed decline in share prices were companies that were slow to react, the leadership wasn’t involved and didn’t show the whole story,” he said.

Grove explained that the market punishes such companies because their actions after a crisis suggest the strength—or weakness—of its leaders. “They always ask, ‘Should I trust my money on these guys?’” he said.

Just recently, Edelman’s “trust barometer” showed business in the United States suffering a decline in trust from 54 percent last year to 46 percent this year.

But, according to Grove, businesses in Southeast Asian countries, which were excluded in the survey, are considered highly trusted. Grove, who has spent time in Asia since 1993, cited companies in South Korea as having credibility among consumers even outside its territory.

This is a feat in itself, he said, since high levels of trust are usually given to businesses mostly from Europe, like Germany and Sweden.

Technology companies consistently scored high levels of trust, whether in the Edelman’s poll or the recently released Trust Index by local PR firm EON Inc.

“That’s the key differentiator today, technology,” said Grove, who added that the advent of social media and synchronicity of traditional and online media give consumers the power to make or break a company.

He said a consumer can become a company’s spokesman via the online social media and mobile phones. 

“We’ve discovered that trusted companies sold more product than distrusted companies. Eighty percent of consumers won’t buy products and services from companies they don’t trust, whereas 70 percent will buy in a company they trust. It’s now a reality,” he said.

In times of crisis, he said companies should act quickly—“within the hour”—adding that “companies that weren’t able to recover were the companies that had leaders not communicating fast and honestly.”

http://www.businessmirror.com.ph/home/top-news/16919-executive-tells-pr-men-honesty-better-than-pr

Does the ‘gloom’ make the ‘doom’?

Wednesday, 21 September 2011 21:17
John Mangun / Outside the Box

What would you do if you knew tomorrow was the last day of your life?

That philosophical question has been asked for centuries. 

However, it may have become more relevant in the post-war and Cold War period when the vast majority of the citizens of the world were living under the cloud of nuclear war.

In the last decades, primarily because of instant communication and news, we had the greatest of human tragedies brought right into our own homes. Crime, natural disasters and war are offered as nightly fare on the news. We can experience nearly in real time as these events unfold and no matter how immune we might think we are, some of this hit home, touching our souls and our thinking. It seems as if no one, no matter his or her country or economic status, is safe anymore.

We are almost constantly bombarded by all the gloom that we can handle and it has been happening for a generation.

People are not very optimistic and positive about the future. You might say that we have reason to be afraid of the future. I mean, look at all the different kinds of major problems that even the average person may have to face. Not only must we consider the traditional “Acts of God”—earthquakes, storms and volcanic eruptions—but each can be compounded by subsequent “man-made disasters.”

The Japanese have known for 600 years that the Sendai plain could be subject to a tsunami. There are old markers in the area telling people not to live closer than a certain distance from the ocean.

But the ancestors did not have to confront the aftermath when a nuclear plan goes ballistic.

In the 1970s, the “experts” told us that the world was going into another Ice Age, which would cause massive starvation as crops would not be able to grow. Now we are told that so-called global warming will sink the land.

We live under the same psychological cloud as the child who is convinced that there is a monster on the closet, never knowing when it is going to strike.

In the last decades, fear of the future has become a worldwide pandemic.

The world is in the midst of a financial disaster that is going to last years, if not decades. 

Purchasing power, which is just another way of saying “standard of living,” in the US is the same as in 1996. It is as if more than a decade of hard work, wealth creation and advances in technology has been wiped out. How could this have happened?

We now obviously know that it is the result of very bad decisions on the part of governments, business, and, maybe most important, individuals.

Then you must ask, if you knew back then what you now know, would you have made those same decisions? Tens of millions of families bought homes they knew they could not afford, only because they believed that the price of the house would always go higher and that they would never have to pay the mortgage off. Does that make any sense at all?

Financial institutions invested in financial instruments that did not have any value whatsoever except if they could find another institution to buy it for a higher price just because that’s what they were all doing. Does that make any sense? Governments borrowed trillions to buy things “for the people” when they knew there would never be enough tax revenue to pay the debt. Does that make any sense?

What would you do if you knew tomorrow was the last day of your life?

Would you spend your remaining life helping others in order to leave a lasting positive mark on the world? Or would you sink to the lowest level of immediate gratification, completely disregarding the lasting consequences because you will not be here to face it?

Perhaps the world never look at future consequences because there was a hidden belief that the future would never come.

Year 2000 came and went and the world continued. 2012 will come and go and the world will go on. Perhaps all of the secular humanism doomsday thinking of the last decades has created the gloom the world must face today. So what do we think today and what do we do tomorrow when we are still here?

On a personal note, I invite you to visit mangunonmarkets.com. You can gain access to the PSE Strategy Guide for stock-market investors as well as other content that I hope you will find interesting. The web site is still on “soft launch” status but do not hesitate to ask your questions using the appropriate box.

E-mail to mangun@gmail.comand Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc.

http://www.businessmirror.com.ph/home/opinion/16858-does-the-gloom-make-the-doom