So Far, So Good For Asian Markets

Early signs point to a good year for the Philippine and the region’s stock markets in 2004

By Tina Arceo-Dumlao

If the spurt in the Philippine composite index to a 33-month high at the start of the trading season this year is any firm indication, then things are looking up for the stock market in the Year of the Monkey.

Stocks surged across-the-board on the back of rosier net income projections for blue-chip companies and excited speculations over the purchase of the Social Security System-held shares in the Equitable PCI-Bank by Henry Sy’s Banco de Oro. The deal struck over the holidays fueled talks that a merger between Banco de Oro and Equitable PCI-Bank was underway.

Unpredictable As of Yet

BPI Securities said the above par performance of the stock market at the start of the year could mean that large local and foreign investors have already discounted political risks, although it is definitely too early to say.

Most foreign analysts have pointed to the presidential and local elections in May as one of the wild cards that would have a direct impact on the economy and consequently, the stock market.

There is room to be optimistic, however, as the Phisix is coming from a 41.63 percent increase at the close of 2003, making it one of the best-performing stock exchanges in the region.

Taking Off from 2003

The Philippines, however, was a far cry from the region’s superstar Thailand, whose SET (Stock Exchange of Thailand) main index skyrocketed by 106 percent last year. The main index more than doubled its value despite concerns of an economic overheating, making it one of the most attractive investment sites in the region due to its robust economy. The SET easily outpaced its rivals in the region due to an enviable economic performance and the strong leadership of the kingdom’s Prime Minister Thaksin Shinawatra, whose optimism surpassed that of the experts.

India’s Sensex followed with a 73.29 percent increase over 2002 levels, followed by Pakistan with a 67 percent rise. Indonesia, China, and then the Philippines followed.

Japan’s Nikkei index was up 24.4 percent for the year, its first annual gain in four years, raising hopes that Japan is finally on the road to economic recovery.

This spells only good things for the rest of Asia, including the Philippines, which depends largely on Japan to buy its export products.

Most Asian markets closed strong for 2003 as the economies generally shook off the last of the adverse effects of the war in Iraq and the deadly SARS virus that all but ground the region’s airline and travel industries to a halt.

Favorable Signs

The Morgan Stanley Capital International’s index of Asia-Pacific shares outside Japan was up about 0.5 percent and even touched a three-year high before succumbing to profit-taking.

Analysts said that the passable showing indicated that foreign institutional investors are willing to risk their money again in Asia.
China’s shares likewise grew significantly in 2003 thanks to China’s continuing economic growth.

This again provides the Philippine economy with some much-needed good news as China has emerged as another significant export market.

The Philippines’ largest export market – the United States – is likewise poised for an economic comeback in 2004 despite concerns over its own Presidential elections and its role in the continuing violence in the Middle East.

Gains in the US, Japan, and China should augur well for the Philippines, stoking expectations that the country’s Gross Domestic Product would hit at least 4.5 percent this year.

Even astrologers predict a good 2004 for the region as the world rids itself of major wars and mysterious diseases that affected not just Asia, but the rest of the world.