| Gov’t needs private sector help in war on graft CULTURE OF INTEGRITY. President Aquino shares the stage with Chief Justice Renato Corona during the First Integrity Summit between government officials and business leaders at The Marriott Hotel in Pasay City on Wednesday. EDWIN BACASMAS It takes two to tango. President Benigno Aquino III on Wednesday said businessmen who had taken the so-called “Integrity Pledge” had no more excuse to take a short cut, offer a bribe, or avoid paying the right tax in dealing with the bureaucracy. In a speech at the First Integrity Summit between government officials and business leaders, Mr. Aquino said his administration had institutionalized transparency with the appointment of officials with integrity and the full disclosure of projects. “But instilling a culture of integrity in government is only one aspect of the equation. We must also foster the same culture in the private sector, and this is why what you are doing today is very important,” he said. After getting signatures on a pledge for integrity, the business leaders presented to Mr. Aquino a Unified Code of Conduct which details how corporate executives and their employees will uphold the highest standards of ethics in their transactions. “This is the result of more than five months of consultations and meetings,” Edilberto de Jesus, president of the Asian Institute of Management, told the President. “This is a collective effort of the private sector to conduct business with integrity and to signify cooperation with the government to combat corruption.” The Integrity Initiative is spearheaded by the Makati Business Club and the European Chamber of Commerce. Close to 700 companies have signed the Integrity Pledge. Organizers expect the number to reach 1,000 by the yearend. Tony Kwok of the Hong Kong Independent Commission Against Corruption said at the summit that the war on corruption should not be left for the government alone. He said private persons and businesses should do their part as well. “Don’t ask why the government is failing to fight corruption. Ask yourselves. It takes two to tango,” Kwok said. US trip Mr. Aquino announced that he was leaving for New York next week to attend the Open Governance Forum upon the invitation of US President Barack Obama. “I will be proud to tell him as well as the representatives of several other countries, how in the Philippines, the effort for integrity in governance—the effort for creating a transparent relationship between the people and their government—is one that is shared by the government and the private sector,” he said. Since assuming the presidency, Mr. Aquino has made the campaign against corruption the centerpiece program of his administration. However, the President has been criticized for hemming and hawing on the long-pending freedom of information bill that seeks full disclosure of government transactions and assures every citizen, with few exceptions, access to public records. He said that since July 2010, 61 tax evasion and 43 smuggling cases had been filed with claims totaling P26 billion and P54 billion, respectively. Revenues collected had increased by 13.64 percent year-on-year, he added. Culture of integrity Also Wednesday, chief finance officers (CFOs) called on the private sector to help build a culture of integrity. “It is very possible for a corporation to succeed and to prosper without resorting to corruption,” said Jollibee Foods Corp. CFO Ismael Baysa. “Always try to do the right thing and if you have to walk away from an opportunity in order to avoid corruption, you walk away.” Solving corruption isn’t the responsibility of the government alone, Baysa told a forum organized by the Economic Journalists Association of the Philippines in partnership with ING Bank and the Financial Executives Institute of the Philippines. “If the private sector doesn’t give corrupt money, nobody will receive corrupt money.” SM Investments Corp. CFO Jose Sio said: “There’s no way you can cleanse the system if the leader on top is not leading the way. Any organization, in corporate matters, should insist on corporate governance. This has to be enshrined in all organizations to be effective.” Right track Baysa and Sio, both winners of the annual search for outstanding CFO by ING-Finex, were asked what advice they would give to CFOs faced with corruption-related dilemma. Baysa, who worked with Procter & Gamble and Union Bank of the Philippines prior to Jollibee, said he had seen these corporations prosper without resorting to corruption. “Prosperity and success are possible without corruption even in the midst of a corrupt environment,” he said. Sio pointed out that the administration’s thrust of improving governance was “on the right track.” “Let’s set our house in order. Otherwise this will just become a vicious cycle,” Sio said. |
| U.S. Stocks Rally as French, German Leaders Express Support for Greece By Rita Nazareth - U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a third day, as French President Nicolas Sarkozy and German Chancellor Angela Merkel said they are convinced Greece will remain in the euro zone. All 10 groups in the S&P 500 advanced. General Electric Co. (GE), Home Depot Inc. (HD) and Monsanto Co. (MON) rose at least 2.4 percent, pacing gains in companies most-tied to economic growth. The Dow Jones Transportation Average, a proxy for the economy, added 2 percent, as FedEx Corp. (FDX) climbed 1.4 percent. Dell Inc. advanced 3.3 percent as the second-largest personal-computer maker approved an additional $5 billion for its stock repurchases. The S&P 500 gained 1.4 percent to 1,188.68 at 4 p.m. New York time, rallying 3 percent in three days and erasing its drop on Sept. 9, which had been driven by speculation Greece could default. The index pared a gain of as much as 2.5 percent in the final minutes of trading today. The Dow Jones Industrial Average rose 140.88 points, or 1.3 percent, to 11,246.73. “It’s a psychological lift,” Peter Sorrentino, a senior money manager at Huntington Asset Advisors in Cincinnati, said in a telephone interview. The firm oversees $14.8 billion. “The Europeans haven’t given up hope. It buys them another day. There’s a desire to keep the euro strong. The question is -- do they have the mechanism in place to avoid a domino effect?” Concern the global economy was slipping back into a recession amid a worsening European-debt crisis triggered an 18 percent plunge in the S&P 500 between the end of April and Aug. 8. Since then, the index has rebounded 6.2 percent. ‘More Than Ever’ German Chancellor Merkel is convinced the future of Greece is inside the euro area, following a telephone conversation with Prime Minister George Papandreou and French President Sarkozy, government spokesman Steffen Seibert said. The fulfillment of Greece’s adjustment program is “more than ever” essential and is a condition for the payment of further aid tranches, Merkel said, according to an e-mailed statement. Papandreou committed to meet deficit-reduction targets demanded as a condition for an international bailout, according to statements distributed by Athens and Paris, easing concerns Greece may default on its debt. “It’s a relief rally,” John Carey, a Boston-based money manager at Pioneer Investments, said in a telephone interview. The firm oversees about $250 billion. “Over the last few days, there had been speculation that Germany was about to pull the plug and abandon the effort to keep Greece solvent and funded. Stocks have been beaten up. On the slightest bit of potentially good news, people tend to scoop up some of those bargains.” Chinese Support Stocks also rallied on optimism that China may support Europe. China is willing to buy the bonds of nations hit by the debt crisis, Caijing reported on its website today, citing Zhang Xiaoqiang, a vice chairman of the National Development and Reform Commission. Earlier today, equities slumped after inventories in the U.S. rose less than forecast in July, indicating companies are bracing for a slowdown in demand. Separate data showed that retail sales in the U.S. unexpectedly stagnated in August as a lack of employment and limited income growth restrained demand, highlighting the risk the economy will stall. The Morgan Stanley Cyclical Index of companies whose earnings are most-tied to economic growth gained 1.7 percent. GE advanced 2.5 percent to $15.79. Home Depot jumped 2.7 percent to $33.54. Monsanto climbed 3.1 percent to $69.47. FedEx added 1.4 percent to $76.01. Dell, Yahoo Dell increased 3.3 percent to $14.86. The repurchase plan adds to the $2.16 billion remaining from prior authorizations at the end of the fiscal second quarter, which ended in July. The Round Rock, Texas-based company spent $1.6 billion on buybacks through the first half of the year. Yahoo! Inc. climbed 2.1 percent to $14.55 as investor Third Point LLC ramped up pressure on the company’s board, saying it may add to its 5.2 percent stake. Daniel Loeb, chief executive officer of Third Point, said he’d seek U.S. approval to buy more stock in a regulatory filing and criticized Chairman Roy Bostock’s oversight of the company in a letter today to Yahoo co-founder Jerry Yang. Pessimism about U.S. stocks among newsletter writers increased to its highest point since March 2009, when the last bear market ended, spurring speculation equities will rebound. The share of bearish publications tracked by Investors Intelligence rose to 40.9 percent yesterday from 37.6 percent a week earlier. When the proportion was last this high, the S&P 500 started a bull market rally that produced gains of as much as 102 percent. ‘Pretty Bad News’ “When you have bearish sentiment at a peak, it’s one good indication that you’ve shaken loose most of the people who are inclined to be rattled,” Bruce McCain, who helps oversee $22 billion as chief investment strategist at the private-banking unit of KeyCorp in Cleveland, said in a telephone interview. “We’ve had some pretty bad news out of Europe the past couple days, and yet the market’s been able to keep a little bit of a positive tilt to it.” Edward Yardeni, chief investment strategist at Yardeni Research Inc., isn’t expecting an immediate rebound. He believes U.S. stocks will stay at current levels in 2011 as companies struggle to beat analyst estimates. S&P 500 earnings are poised to reach a record $99.74 a share this year, according to the average of securities industry estimates compiled by Bloomberg. “For the S&P 500, I don’t expect we will cover much ground when we look at the trend over the rest of the year,” Yardeni said in an interview on Bloomberg Radio’s “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. “The main reason is that earnings estimates are just too high,” he said. “For the past nine quarters, industry analysts were too low and there were lots of positive surprises. That’s going to be a little more challenging going into the upcoming earnings season.” |
| Oil Trades Near 2-Day Low on Rising Fuel Stockpiles, European Debt Outlook By Ben Sharples Oil traded near a two-day low in New York as signals that U.S. fuel demand is weakening countered optimism that European leaders will step up efforts to resolve the region’s sovereign debt crisis. Futures were little changed after slipping as much as 0.4 percent. Gasoline stockpiles rose 1.94 million barrels last week, the biggest gain since June, according to the Energy Department. Supplies of distillate fuel, a category that includes heating oil and diesel, increased to the highest level since February. Equities and the euro climbed after German and French leaders said they are “convinced” Greece will remain in the single currency. Crude for October delivery was at $88.80 a barrel, down 11 cents, in electronic trading on the New York Mercantile Exchange at 10:23 a.m. Sydney time. The contract yesterday slid $1.30, or 1.4 percent, to $88.91. Prices are up 17 percent the past year. Brent oil for October rose 1 cent to $112.41 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract was at a premium of $23.49 to U.S. futures, compared with a record $26.87 on Sept. 6. U.S. gasoline stockpiles were forecast to fall, according to a Bloomberg News survey of analysts. Consumption of the motor fuel dropped 1.2 percent to 8.85 million barrels a day in the week ended Sept. 9, the lowest since May, the Energy Department report shows. Angela Merkel and Nicolas Sarkozy, the leaders of Europe’s two biggest economies, issued a statement yesterday following a telephone conversation with Greek Prime Minister George Papandreou. Papandreou committed to meet deficit-reduction targets demanded as a condition for an international bailout, according to statements from governments in Athens, Berlin and Paris. |
Sources: Bloomberg, Reuters, www.inquirer.net, www.philstar.com, www.bworldonline.com, www.cnnmoney.com
BDO UNIBANK INC.
Jonathan Ravelas
Chief Market Strategist
(632) 858-3145
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