| Net ‘hot money’ inflow breaches $3B mark Investments should translate into jobs By Michelle Remo Philippine Daily Inquirer
Data from the Bangko Sentral ng Pilipinas showed that the net inflow of foreign portfolio investments from the start of the year to November 12 reached $3.44 billion. Gross inflows amounted to $10.19 billion, while gross outflows settled at $6.75 billion. Most of the inflows are invested in stocks, while others are placed in bonds and bank deposits. From January to November last year, the net inflow of foreign portfolio investments reached only $372 million. “There is significant amount of liquidity globally, and part of this liquidity is going to emerging economies like the Philippines,” BSP Governor Amando Tetangco Jr. said. Foreign investors have been placing funds in the Philippines and other developing economies in Asia because of projections that the region would continue to drive growth of the world economy. While the increase in “hot money” inflows highlighted investors’ confidence in the country, some economists said the portfolio investments would not amount to much unless these could be turned into long-term, job-generating investments. They said investments in stocks, bonds and bank instruments are short term in nature and only serve to strengthen the peso—a development that will adversely affect exporters. Tetangco said there should be a sustained push for investments and that there should be viable, attractive investment opportunities to make the growing liquidity more productive. He said there should be enough investment opportunities to encourage banks to lend more of the funds they are getting as deposits. Tetangco is hopeful that the Aquino administration’s Public-Private Partnership (PPP) program will help spur demand for and actual extension of bank loans .
Lottery gods must have smiled on Monday night because someone beat the 1-in-29 million odds, a feat that had proved elusive for at least six months since this streak began. The jackpot at P741 million was the biggest in the country’s history. Liza Gabuyo, PCSO assistant general manager, said the bettor picked the combination, standing to win the pot tax free. It took 86 draws before a bettor won the jackpot. The previous biggest jackpot was posted in February 2009, when the pot for the 6/49 Super Lotto game reached P347 million. Two lucky bettors picked the same combination to split the top prize. |
U.S. Stocks Drop as Concern Grows About European Debt Crisis U.S. stocks fell, sending the Standard & Poor’s 500 Index down for the fourth time in five days, as Ireland’s bailout failed to ease investor concern that Europe’s debt crisis may spread to the southern region. The S&P 500 rallied in the final 90 minutes of trading, almost wiping out a 1.3 percent drop, as the measure bounced off a level watched by chart analysts. Hewlett-Packard Co. and Verizon Communications Inc. lost at least 1 percent, pacing declines in the Dow Jones Industrial Average. Visa Inc. sank 1.7 percent as an analyst said mobile-network operators may take market share. Wells Fargo & Co. and Bank of America Corp. led a rally in financial shares, gaining more than 1.6 percent. The S&P 500 retreated 0.1 percent to 1,187.76 as of 4 p.m. in New York, after earlier falling below its average price of the last 50 days of 1,177. The Dow lost 39.51 points, or 0.4 percent, to 11,052.49. “There seems to be plenty to bother the market,” said E. William Stone, who oversees about $105 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “There’s concern about the European financial crisis affecting healthier economies and the viability of the euro. This issue seems to be far from over. I’m not sure that the market is going to be happy with much of anything right now.”
The Federal Reserve bought $9.4 billion of Treasuries as part of its plan to pump $600 billion into the economy through June and keep yields low. Bonds fell earlier as euro-region governments agreed to an 85 billion euro ($113 billion) aid package for Ireland. “The concern is what’s next,” said Christian Cooper, head of U.S. dollar derivatives trading in New York at Jefferies Gorup Inc., one of the 18 primary dealers that trade with the Fed. “At what point do we legitimately begin to question the extent the European Central Bank can be an effective backstop and what unknowns remain out there?” The 10-year note yield fell five basis points, or 0.05 percentage point, to 2.82 percent at 5:03 p.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in November 2020 rose 12/32, or $3.75 per $1,000 face amount, to 98 9/32. Ten-year yields are up 22 basis points this month, while down 102 basis points this year. |
| Crude Oil Increases to the Highest Level in Two Weeks on U.S. Retail Sales Oil rose to a two-week high as U.S. consumers spent more over the Thanksgiving weekend than last year, a sign confidence in the economy is strengthening. Oil climbed above $85 a barrel as the average U.S. shopper increased purchases by 6.4 percent from the 2009 period, a report from the National Retail Federation showed. Crude also advanced amid speculation that colder-than-normal weather may boost demand for heating fuel in the eastern U.S. and Europe. “People are looking at a pretty decent retail environment, and that’s giving oil a boost,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “Cold weather is more bullish earlier in the season than later. If people turn on their heaters early and they stay on, that’s good for the season.” Oil for January delivery climbed $1.97, or 2.4 percent, to $85.73 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 11. Futures have gained 13 percent in the past year. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
Jonathan Ravelas
Chief Market Strategist
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Rhys Cruz
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