BOP surplus hits record high of $14.4B Bangko Sentral sees further improvement in 2011 By Michelle Remo Philippine Daily Inquirer MANILA, Philippines—The sustained increase in remittances, higher export earnings and a surge in foreign capital inflows lifted the surplus in the country’s balance of payments (BOP) to an all-time high of $14.4 billion in 2010. The Bangko Sentral ng Pilipinas on Wednesday said the BOP surplus cemented claims that 2010 was a banner year for the Philippines especially in terms of inflows of dollars and other foreign currencies. The surplus, the highest ever recorded, was more than double the $6.42 billion registered in 2009. For December alone, the surplus stood at $1.23 billion, up slightly from $1.22 billion in the same month of the previous year. The BOP is a record of the commercial and financial transactions of the country with the rest of the world. A surplus, which indicates that the inflows are more than the outflows, adds to the Philippines’ total reserves of foreign currencies or the gross international reserves (GIR), which reflects the country’s ability to pay for imports and services and settle maturing debts to foreign creditors. The central bank earlier reported that the country’s GIR registered a historic high of $62.1 billion as of the end of 2010. The national elections in May and the ensuing government transition, said local observers, possibly caused the hesitation, which was also exacerbated by the country’s allegedly unattractive business climate. FDI flows into Malaysia, Indonesia and Singapore in 2010 were estimated to have surged by triple-digit rates from yearago levels as Southeast Asia was among the regions that led the global economic recovery, the UN Commission on Trade and Development (UNCTAD) said in its Global Investment Trends Monitor. Malaysia was projected to have grown its FDI by 410% to $7 billion while Indonesia similarly enjoyed a 163% rise to $12.8 billion, the UN agency said, annualizing available data for the three quarters of 2010. Singapore, meanwhile, likely saw FDI levels grow by 123% to 16.8 billion. These improvements allowed inflows to South, East and Southeast Asia to rise by 17.8% to $274.6 billion while the global average flattened to $1.122 trillion in the same year, the UNCTAD said. Full-year estimates for the Philippines were not included in the report but the country, according to latest central bank data, recorded an annual 36.5% decline in FDI as of October. The disparity was likely caused by last year’s elections, University of the Philippines economist Benjamin C. Diokno said in a text message yesterday. "Investors adopted a wait-and-see attitude given the change in political leadership," Mr. Diokno said. He added that the high level of investments already in neighboring economies allowed them to enjoy a faster recovery as well. Foreign business group officials echoed this but also noted that the country’s perennial lack of competitiveness was also to blame. "We’re not competitive," American Chamber of Commerce of the Philippines Executive Director Robert M. Sears said in a telephone interview. "It behooves the administration to realize that all three [branches of government] from the executive, legislative and judiciary have to work together to improve the country’s investment image." Long-proposed moves to improve infrastructure have just started, European Chamber of Commerce of the Philippines Executive Director Henry J. Schumacher said in a text message. -- Jessica Anne D. Hermosa
It’s going to be a wet summer that will have typhoons due to the La Niña phenomenon that has been spawning rains in the Philippines since December, the weather bureau said Wednesday. The Philippine Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) said large parts of the country would get above-normal rainfall in the summer months of March, April and May. Tropical cyclones “This means that we expect to have a rainy summer. We expect to have tropical cyclones,” Flaviana Hilario, chief of PAGASA’s climatology and agrometeorology division. She said weather models and advisories from various national meteorological centers forecast La Niña to last until May, with the peak occurring in February. The months from March to May are considered the height of summer in the country, when millions troop to the beaches. These months are usually the driest months, with typhoons making an appearance only in mid-May. Typhoons in March-May Citing meteorological models, Hilario said there was a “slim chance” that a typhoon would enter the Philippine area of responsibility next month. PAGASA expects one typhoon in March, two in April and another two in May. June, the start of the rainy season, is expected to have two to three typhoons, Hilario said. La Niña arrived in the Philippines last October. The phenomenon, the opposite of El Niño, occurs when the surface temperature in the Pacific Ocean gets colder. El Niño refers to the increase in the surface temperature in the Pacific Ocean. The Philippines will be under heavy cloud and will experience cooler temperatures in the next five days as a result of the combined effects of the tail end of the cold front and the northeast monsoon. |
U.S. Stocks Retreat as S&P 500 Index Posts Biggest Decline Since November U.S. stocks fell, driving the Standard & Poor’s 500 Index to its biggest drop since November, after Goldman Sachs Group Inc. failed to beat profit estimates and housing starts slid more than forecast. Goldman Sachs slumped 4.7 percent, the most since April, after earnings tumbled 52 percent because of lower revenue from trading andinvestment banking. A gauge of homebuilders in S&P indexes retreated 2.9 percent. American Express Co. declined 2.4 percent following a lower-than-estimated profit forecast. International Business Machines Corp. rallied 3.4 percent after reporting earnings that topped analysts’ projections. The S&P 500 slumped 1 percent to 1,281.92 at 4 p.m. in New York after a two-day rally of 0.9 percent. The Dow Jones Industrial Averagedeclined 12.64 points, or 0.1 percent, to 11,825.29 as IBM’s advance limited losses. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 9.1 percent, the most since November, to 17.31.
The extra yield 30-year bonds offer over two-year notes was near a record, indicating investors are demanding compensation for the risk that inflation will accelerate. The Federal Reserve purchased $7.7 billion in Treasuries. Volume in the U.S. debt market was the lowest in more than a week. “Given the backup in rates yesterday, lower stock prices and no news coming out of Europe, you get an environment where the buyers step in,” said Kevin Flanagan, Purchase, New York- based chief fixed-income strategist for Morgan Stanley Smith Barney. The benchmark 10-year note yield decreased three basis points, or 0.03 percentage point, to 3.34 percent at 5 p.m. in New York, according to BGCantor Market Data. It slid earlier to 3.32 percent and rose to 3.39 percent. It reached 3.41 percent yesterday, the highest level since Jan. 12. The 2.625 percent security due in November 2020 rose 7/32, or $2.19 per $1,000 face amount, to 94 2/32. Ten-year yields earlier traded in a 4.7 basis-point range between 3.39 percent and 3.34 percent, the narrowest gap since Nov. 11. |
Oil Declines to Lowest Level in a Week on Drop in Housing Starts, Equities Oil fell to a one-week low as builders began work on fewer U.S. homes than projected in December, a signal that the economic recovery may be slowing. Futures decreased 0.6 percent as the housing starts slipped to the lowest level in 14 months and the Standard & Poor’s 500 Index retreated from a two-year high. Oil flows in the Trans Alaska Pipeline System increased to the highest rate since Jan. 7, the day before a leak shut the line. “It’s not a positive economic number, and I think the market is still keying on the economic factors,” said Gene McGillian, an analyst and broker at Tradition Energy in Stamford, Connecticut. “We’re watching how the dollar and the equities move.” Oil for February delivery fell 52 cents to settle at $90.86 a barrel on the New York Mercantile Exchange, the lowest level since Jan. 10. Futures have risen 15 percent in the past year. Prices declined from the settlement after the American Petroleum Institute reported at 4:30 p.m. that U.S. crude-oil stockpiles increased 3.53 million barrels to 340.6 million. February oil fell 61 cents, or 0.7 percent, to $90.77 a barrel in electronic trading at 4:31 p.m. Housing starts dropped 4.3 percent last month to a 529,000 annual rate, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg News survey called for a 550,000 rate. |
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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