Archive for January 17, 2011

PHILIPPINE STOCKS @4,200+ POINTS, WILL SURGE ANEW BY 2011

January 17, 2011

Erle Frayne D. Argonza

Asian bourses continue to perform excellently, and the Philippines is a contributor to this bullish trend. In the past year, there were some junctures when the bourses did dip a bit, but never too dip as not to be able to surge back ahead. The bourses reflect the optimal growth patterns in Asia and are bound to replicate the feat in 2011.

By the start of 2010, I was of the opinion that the Philippine stock exchange will trade very bullishly, that it will eventually breach the all-time best record of 3,600+ points achieved during the era of the Ramos presidency yet. True enough, it did breach the 3,600 points and ended up at 4,200+ points by end of December 2010.

To recap, 2,000 points is the bourse’s psychological break point in my beloved Philippines. Quite a barometer of the economy’s health, the stock index says that the economy here is faltering when the bourse crashes below the 2,000 point barrier and stay down there for many months. At some time in 2009, that incident happened, though fortunately for the country the stock index climbed back past the 2,000-point threshold quickly.

Being among the Asian countries that have learned to insulate themselves from global economic downturns and great recessions, the Philippines did bounce back right away and saw the index breach the 3,000-point level in the first semester of 2010. This trend alone is cause enough for great hope for the coming months and years in this country.

With ‘smart money’ leaving the North due to stagnation and recession, it wasn’t long before the Ph bourse soon felt such ‘manna from heaven’ getting invested into its stock options. With that happening, the stocks  meteorically ascended the 4,000-point level in the 2nd semester, and was optimistically forecast to reach 4,600+ points by certain quarters.

Witnessing the pattern of periodic decreases amid a general trend of sharp climb, I did raise eyebrows over the mega-optimistic forecast. I was already happy to see the 3,600+ points breached, but a 4,600 point conclusion is far from achievable in 2010. And so, true to my intuitive forecast, it settled at 4,200+ points, or just 200+ points beyond the new barrier of 4,000 points.

As big ticket projects are now on the pipeline for negotiations and implementation soon, we can expect investments to surge upwards more sharply this 2011. This will be reinforced further by the upgrading by Moody’s of the country’s investment grade from “stable” to “positive” just as soon as the new year commenced.

An offshoot of the optimism in the investment field will be entry of more players locally to purchasing stocks in the new IPO options opened to the public. Furthermore, ‘smart money’ from overseas will inflow into the local bourse and capital markets, thus ensuring another year of surge in the stock index.

This time around, I will be among those who will accept a forecast of the Philippine bourse breaching the 4,600+ points at the end of 2011. Granted that fairness in the stock trading and surety of regulatory mechanisms will be stronger this year, the Philippine bourse will perform excellently again this year and facilely breach that new forecast level.

[Philippines, 13 January 2011]

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WESTERN ECONOMIC SHRINKAGE A REALITY AS ASIA RISES

January 17, 2011

Erle Frayne D. Argonza                                                       

Magandang araw sa kapamilyang global! Good day to fellow global citizens!

For three decades already, I have been echoing a prognostication that was already current stock within sociology, about the ‘decline of the west’. Let me return to the same theme, as the rapid decline of the West and the fast rise of Asia is now a reality of the current historical juncture.

Just a couple of days ago, the Philippine Daily Inquirer’s or PDI’s opinion pages published an article by the past recent premier of the UK, Gordon Brown (PDI, 7 January 2011). Titled “Reviving the West,” it was a rather straightforward admission of the techno-economic decline that the West had undergone and the rapid ascent of Asia as the global economy’s growth driver.

As Brown succinctly stressed, “Time is running out of the West, because both Europe and the United States have yet to digest the fact that all the individual crises of the last few years—from the sub-prime crisis and the collapse of the Lehman Brothers to Greek austerity and Ireland’s near-bankruptcy—are symptoms of a bigger problem: a world undergoing a far-reaching, irreversible and, indeed, unprecedented restructuring of economic power.”

That was the former premier speaking, a technocrat and economic manager prior to his premier stint, so it does carry weight as much as those of the globe-trotting former US president Bill Clinton. Gordon went on to demonstrate his deep knowledge of the rising middle class consumers of Asia who altogether will make the greatest consumers the world over in the foreseeable future.

Said Gordon:

Of course, we all know of Asia’s rise, and that China exports more than America and soon will manufacture and invest more as well. But we have not fully come to terms with the sweep of history. Western economic dominance—10 percent of the world’s population producing a majority of the world’s exports and investment—is finished, never to return. After two centuries in which Europe and America monopolized global economic activity, the West is now being out-produced, out-manufactured, out-traded, and out-invested by the rest of the world.

That indubitably is an empirical substantiation of the thesis long held by Western social forecasters about the ‘decline of the West’. Oswald Spengler, Arnold Toynbee, Daniel Bell, Alvin Toffler, and John Naisbitt have churned out voluminous prognosis and forewarnings about the same thesis within a century’s span…and that thesis is now a reality.

In the middle and last portions of Brown’s article, he admonished Americans in particular to re-invent the ‘American dream’. The way to the revival of the West, with the USA showcasing the compass, is to re-structure the economy altogether. Accordingly, the nascence of over a billion middle class Asian consumers is a huge opportunity for America to re-invent itself and revive a strong economy.

Brown also forewarned America’s politicians, notably the Right, about criminalizing external forces, such as China’s currency, as culprits behind the decline of the US economy. Intervention measures such as currency wars are flawed, precisely because they fail to address the internal factors that are truly the causes of the economic decline.

To a great extent, I do agree with the evaluations and interventions of Brown. Fact is, I have already begun to echo the theme that America and Europe ought to reverse the policies of liberalization, privatization, and deregulation that led to de-industrialization, agricultural decay, infrastructure decay, and the rise of a ‘virtual economy’ based on predatory finance (vulture funds, derivatives or hedge funds). As I had been saying all along, the West should go back to the principles of the ‘real economy’ where wealth is produced from agriculture, manufacturing, infrastructures, transportation & communications, and science & technology.

As a matter of fact, I have been among Asian analysts and development practitioners who have urged the Americans to go back to the economics of New Deal propounded by the late Franklin Delano Roosevelt. Likewise should the tried & tested policies upheld by Alexander Hamilton, Abraham Lincoln, Frederick von List, and John F. Kennedy, policies that impelled the rise of the physical economy and brought bountiful prosperity to Americans (read: created a predominant middle class), be put to the fore in rebuilding America.

Gordon resonates somehow with the ‘physical economy’ framework, even as he heralded the need for a new Marshall Plan for the world. Accordingly, the Plan could help to recast the banking system that was dirtied by its engagements in speculative financing and contributed to creating financial bubbles. The Western peoples should better listen to him, more so the youth who will be tomorrow’s Western leaders.

Let me re-echo the same message I have been saying all along: that prosperity should be a win/win phenomenon. No one here in Asia would ever want the USA and Europe to go back to the era of ‘cave man’ economy of hunting & gathering. I’d be happier many more times if the West should re-invent itself, cease from playing the destructive game of win/lose logic in order to prosper, and move back to reconstruct its physical economy altogether.

Asian spiritual masters, who incidentally also discoursed on economic doctrines (i.e. Baha’ullah, Gandhi, Vivekananda, Sarkar, Sri Aurubindo), left us all the legacy of building prosperity through the way of peace, cooperation, and mutual-help. It’s time for the Western peoples to retool themselves, by throwing away the binary and destructive thought system they inherited from their forebears, and by learning from Asia’s spiritual and intellectual giants.

[Philippines, 11 January 2011]  

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