CBN Interactive 

CBN Interactive

The stock market broke the psychological 2200-point bottom of the Philippine Stock Exchange Index (PSEI) yesterday closing at 2157.68. which itself was a drop of 3.1 percent from Tuesday. The stock market has reached its lowest in two months.
By coincidence. Atty. Francis Lim. president of the PSE. and Francisco Liboro. president of the Association of Securities Analysts of the Philippines. have been conducting a media barrage. They are saying the stock market is. on the third year of a six-year boom that began in 2003.
"I'm confident the index will hit 2800 before the end of the year. that implies an upswing of 30 percent in share prices. He thinks the index will climb further to 3500 by the end of 2008. a price gain of another 25 percent. Thus. "a 25-percent rise per year over the next two years is conservative." What triggered the rally?
PSE CEO Francis Lim and Liboro cite four reasons: the economic fundamentals. fiscal management by the government. and robust earnings growth of corporations. Equally important is relative political stability. "President Arroyo is now on solid ground." says Press Secretary Ignacio Bunye.
The economy grew by 5.5 percent in the first quarter 2006. higher than the 5.3-percent forecast. NEDA says the expansion was driven by a rebound in agriculture. a pickup in industry. particularly manufacturing and construction. and a continued upsurge in the financial sector.
More importantly. the healthy growth happened in the face of serious challenges. the escalating crude oil prices. which translated to rates of inflation we have not seen since 1998 when inflation averaged 8.6 percent. Other challenges include the still tight fiscal situation; the imposition of the 12-percent EVAT; and the political conflict which peaked in February with a reported coup attempt.
At the same time. the government promises to balance the budget as early as 2008. something that has never been done before without artful window-dressing. And indeed. corporate profits have been surging.
Combined earnings of PSE listed companies rose 24 percent to P191.26 billion in 2005. Pilipino Telephone 38 percent to P13.45 billion. SM Investments Corp. 18 percent to P10.4 billion. First Philippine Holdings 38 percent to P9.7 billion. and Aboitiz Equity 19 percent to P3.2 billion. These are among the country's 20 most profitable companies.
In the first quarter. SM Investments increased net income by 83 percent to P3.77 billion. Robinsons Land 17 percent to P410 million. Universal Robina 10.2 percent to P702 million. Megaworld 39 percent to P604 million. and RCBC 239 percent to P252 million.
Why are companies doing so well? Consumers keep spending. government keeps spending. particularly for infrastructure. and agricultural harvest has been good. thanks to sufficient rainfall. If farmers have good income. they spend more. In the first quarter. manufacturing growth exceeded expectations. particularly the food and beverage sector.
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What is important in this discussion is that in any society there has to be a real and effective voice for labour which should be focused. and of course should act in a responsible way.
During January to May this year. the Ayala-owned Integrated Microelectronics. Inc. (IMI) registered with the Philippine Economic Zone Authority 13 projects costing P1 billion. It will make RF gold finder handheld devices. electronic door locks. portable email terminals. broadband routers. internet radio modules. power supply for amplifier base stations. automotive multifunction switches. car stereo main boards. super slim multidrives and even do repairs of electronic data storage.





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