Financial Crisis: The Philippine Version

**jeDi13** · November 11th, 2008 12:40 PM

staying liquid will not help solve the financial crisis everyone is facing. that's why government and financial institutions encourage people to keep their money deposited. if you stay liquid, it won't help you since inflation will slowly kill you. your money is not earning interest, but the price of commodities keep on rising.

**tidus1203** · November 11th, 2008 12:52 PM

^^I'd rather have inflation slowly erode my money than holding stocks getting killed with huge capital losses + as you say inflation eroding it slowly. No one is immune to inflation, NO ONE! Commodities are also not rising (at the moment) so I agree with uls stay liquid for now, the time is not right to be picking stuff up. In fact I am bullish on oil long term but don't buy a lot for now stay liquid so you have the ammunition later on to buy en masse. If you buy now and it falls you have capital losses and you won't be as flexible later on.

**jeDi13** · November 11th, 2008 12:59 PM

investments are not only concentrated in stocks. by simply depositing in banks is a form of investment. though the interest is not that interesting. but it'll earn somehow instead of just stocking piles of blue peso bills at our volts. besides, banks here in the Philippines are very conservative. add to that the benefit of having our Php 250K max of cash deposits being insured by PDIC. and I heard that there are plans to increase the cash guarantee to Php 1M.

**tidus1203** · November 11th, 2008 01:02 PM

Staying liquid includes bank deposits, treasury bills and short term bonds. So it just does not mean holding physical cash or savings account.

**uls** · November 11th, 2008 01:11 PM

staying liquid will not help solve the financial crisis everyone is facing

The purpose of staying liquid isnt to solve the financial crisis.

The purpose is to survive it.

Dude, liquid is not keeping money at home.

Liquid is money in the bank.

Liquid is not only cash. Treasury bonds are also liquid.

Nobody knows how long this crisis will last.

Nobody can say for sure that their job or business won't be affected by the crisis.

You don't want to be in a position where you run out of cash and will be forced to sell illiquid assets in a down market.

The concern now is not returns on investment.

The concern now is return OF investment.

Wealth is being wiped out. Ask anyone who has money in stocks or mutual funds. Weren't they the ones who were looking for higher returns to beat inflation?

Now isnt the time to be concerned about returns.

The concern now is protection of principal. Capital preservation.

**jeDi13** · November 11th, 2008 02:16 PM

Originally Posted by jeDi13

staying liquid will not help solve the financial crisis everyone is facing. that's why government and financial institutions encourage people to keep their money deposited. if you stay liquid, it won't help you since inflation will slowly kill you. your money is not earning interest, but the price of commodities keep on rising.

Originally Posted by tidus1203

Staying liquid includes bank deposits, treasury bills and short term bonds. So it just does not mean holding physical cash or savings account.

Originally Posted by uls

The purpose of staying liquid isnt to solve the financial crisis.

The purpose is to survive it.

Dude, liquid is not keeping money at home.

Liquid is money in the bank.

Liquid is not only cash. Treasury bonds are also liquid.

Oh well, if that's the case, I just contradicted myself then. But what I tried to point out was to keep our money deposited in the banks (which is also liquidity). My bad. So I'd agree that we should stay liquid.

Regarding stocks, I think investors should hold on to their shares. Their losses are unrealized anyway (until they pulled out their shares). And besides, money invested in stocks should be their excess. If not, then they are in deep trouble.

**Monseratto** · November 12th, 2008 08:53 AM

Business group sees RP recession, job losses in 2009

Filipino businessmen expect a grim economic scenario in 2009 as a more difficult credit environment is expected to translate to a recession, which will lead to job losses.

In a survey of Makati Business Club (MBC) members, 87 percent of respondents expressed pessimism as they said the Philippine economy will likely go into a recession next year.

MBC said in a statement that it conducted the survey between October 24 to November 7 among its 738 members who are mostly senior executives in medium and large companies in the Philippines. About 113 members responded to various questions, which hope to get an indication of their outlook over the next six months.

Of those (87 percent) who responded that the domestic economy will likely be in recession next year, 16 percent said they "somewhat agree," while 71 percent said they "completely agree."

A recession technically means two consequtive quarters of negative economic growth, usually measured by the gross domestic product or GDP figures.

MBC executive director said that GDP growth will post a "mild downturn" towards the first quarter of 2009.

The respondents' sentiments on the possibility of a recession in the Philippines defy forecasts by economic managers and various analysts who have pegged the 2009 GDP growth at over 4 percent.

Credit difficulty, lower consumption

One of the potential reasons for the prevailing pessimism is the expectation that access to traditional financing sources will be difficult.

More than 76 percent of the respondents agreed that "obtaining bank loans for your company will be more difficult [in 2009]," while 75 percent said "access to trade credits for your business will be more difficult."

The Bangko Sentral ng Pilipinas has made several moves, including cutting policy rates and reducing banks' reserve requirements, to stir financing institutions into keeping credit flowing.

The BSP has been following leads of central banks abroad that have been using similar traditional monetary tools, but these have had little effect as they are not being passed on to the real economies in the form of easier lending by banks.

While the Philippines and several Asian countries have explained time and again that their economies have no similar subprime-led financial crisis, which originated in the US, its impact have started to creep into the real economy as businessmen grow increasingly nervous.

Recently, one of the units of Ayala conglomerate, capital-dependent Globe Telecoms, announced that it would tap the local retail bond market to diversify its funding sources as it forsees that the traditional loans and equities here and abroad will be less friendly. It also said it will cut its investment budget for new and upgrades in existing technology as it expects consumers to use their mobile phones less.

The reductions in consumer spending--highly dependent on the almost $15 billion remittance money from overseas workers--is seen to be a persistent concern despite one bright spot: lower inflation.

In the MBC survey, 59 percent of the top business executives expect that inflation rate will slow in 2009. Food and fuel prices have been dropping since they reached record highs in the past months.

Weaker peso, job losses

Moreover, the survey respondents anticipate other major economic factors to weaken, with 87 percent saying they expect the peso to depreciate against the US dollar.

A depreciating peso will squeeze profit margins of companies, especially those who export since it will make their products less competitive in the global market and their cost of imported raw materials more expensive.

Given their bleak reading of the economic environment in early 2009, some businessmen said they will lay off some of their workforce and cut their investment budgets.

About 62 percent of the respondents said their "company's workforce will contract" in the coming year and 55 percent said their capital expenditures "will drop."

However, about 35 percent percent of the respondents seem to be contrarians. They said investments for future businesses "will rise."

http://www.abs-cbnnews.com/business/...weak-peso-2009

**uls** · November 13th, 2008 04:23 PM

Effect

Philippines' Ayala Corp. earnings down 43 percent
http://ap.google.com/article/ALeqM5j...nTwJgD94DODJG0

MANILA, Philippines (AP) — Ayala Corp., the Philippines' largest conglomerate, said lower equity earnings and capital gains on its investments slashed its January-September net income by nearly half of last year's.

Ayala said profits were down 43 percent to 7.8 billion pesos ($159.2 million) compared to the same period last year.

Ayala President Fernando Zobel de Ayala said Wednesday the global economic slowdown and inflation in recent months had dampened consumer spending and affected "top-line growth" of some of the company's key businesses.

**Gen. Miting** · November 14th, 2008 08:11 AM

globe telecom down, pldt up
bpi down, bdo up

pldt has been announcing that their record profits are at an all time high. why? broadband penetration, pldt wireless landline + smart network.

bdo has been expanding and expanding their branches. why?
bdo banking hours open up to 5:30pm. some bdo branches are even open on Saturdays and even Sundays, I think.

like i said efficiency and sufficiency. this will beat any traditional business out there.

i envy business who are open 24 hours in call center areas like Ortigas, Tiendesitas, Eastwood, Makati. eto yun natutulog ka na, kumikita ka pa. if new york became the greatest financial city in the world, maybe it's bec it's the city that never sleeps ...

**Monseratto** · November 14th, 2008 08:20 AM

Why the peso is down...

$390M ‘hot money’ fled RP in Oct.

MANILA, Philippines—The US-centered global financial crisis cost the Philippines $390 million in foreign “hot money” outflows in October, the largest foreign capital flight seen this year, as offshore investors worried about the worst credit crunch to hit the West in 80 years.

The capital flight in October brought the 10-month net outflow of foreign portfolio investments to $911.68 million, a sharp reversal of the $3.67 billion in net inflows in the same period last year, the central bank reported on Thursday.

“Risk aversion further intensified given the global financial crisis and slowdown in the US and other major economies. This development has resulted in the withdrawal of investments out of emerging markets for investment in the US, primarily in Treasury securities,” said Bangko Sentral ng Pilipinas Governor Amando Tetangco Jr.

http://business.inquirer.net/money/b...fled-RP-in-Oct