Weekly “So What, Chocnut” entries didn’t work. First, those news articles are already history by the time Friday rolls along and second, it’s hard to consolidate one week of business stories you shouldn’t miss in one post.
So starting today, “So What, Chocnut” will be posted daily, in small snippets that busy MoneySmarts readers can easily digest. (I’ll try, I really will.) Here are the business headlines relevant to Personal Finance watchers:
In the Philippine Daily Inquirer today, Socioeconomic Planning Secretary Romulo Neri said the peso is now “uncomfortably strong” and urged the government to support the export sector. Did I miss something? Neri is urging the government? But he IS the government. He is the planning chief, for goodness’ sake! I have covered quite a few planning chiefs in my time. Neri is the only one with a multiple personality. Some things in this country are really strange, even for me.
A few notes on reading business stories on the peso. The words “strong” peso, “appreciation” of the peso all mean one dollar can be exchanged for lesser pesos. “Weaker” and “depreciation” is the opposite and this is what dollar earners (like exporters, OFWs) out there want to happen. As we speak, Filipinos across the world are starting to have dialogues with their employers on their compensation packages. Some companies may adjust, some will not.
The weakness of the dollar is a global phenomenon. It’s a zero-sum game. There will be losers in this trend, and there will be winners. I sure hope no one will call on the Bangko Sentral ng Pilipinas to intervene in the market to stop the peso from appreciating further. Puhleese! That is so 1996.
The story “15 insurance firms up for suspension” made my eyes pop out. Scary for personal finance watchers, who know very well that it is imperative for insurance companies to stay strong and healthy, because expensive policies can turn into useless slips of paper by the time benefits are claimed.
The list of insurance companies that may lose their licenses due to inability to reach the capitalization requirements of the Insurance Commission includes Generali Pilipinas Assurance, a life insurance company, and 14 nonlife insurance firms namely Asia United Insurance Inc., Covenant Assurance Co. Inc., Easterns Assurance & Surety Corp., Finman General Assurance Corp., First Integrated Bonding & Insurance Insurance Co. Inc., Generali Pilipinas Insurance Co. Inc., Investors Assurance Corp., Manila Insurance Co. Inc., Meridian Assurance Corp., Monarch Insurance Co. Inc., Oriental Assurance Corp., Solid Guaranty Inc., Summit Guaranty & Insurance Co. Inc. and Travellers Insurance & Surety Corp.
IC chief Evangeline Escobillo is out of the country, but Generali Pilipinas Assurance emailed an official statement that says the required capital infusion is already in an escrow account in Banco De Oro. Figures from that statement said it is actually over-capitalized at P1.9 billion, including the account in escrow. However, Bangko Sentral requires Banco de Oro, one of the majority stakeholders of Generali, to be given additional preferred shares in the company in exchange for the capital infusion. Generali will have to change its charter to do that, something that will likely take the SEC one year to approve. (If you want to read the full statement, click Generali Official Statement.)
By the way, Generali Assurance Pilipinas, as well as non-life arm Generali Pilipinas Insurance Co. Inc., is 40-percent owned by Henry Sy’s BDO. Its foreign partner is Generali Asia, a joint venture between the Kuok Group and Generali Italy.
For interest rate watchers, you need to read “BSP rules out monetary tightening anytime soon”. For stock market punters, I mean investors, news that combined profit of listed firms in 2006 went up 27.5% to P261B should be another reason to rejoice, although things might not be too hot in the next couple of days because the market seen to take a break. That’s all for now, folks.
June 12th, 2007 at 7:18 pm
[...] more important thing is to understand what the peso’s appreciation can mean for us, like some of MoneySmarts’ readers are trying to [...]
May 31st, 2007 at 2:14 pm
GDP at 6.9!!! woohoo!!! even stronger than GNP’s 6.2, which means economic development is happening here in our country. stocks end higher due to positive investor sentiments (http://business.inquirer.net/money/breakingnews/view_article.php?article_id=68818)
I think we have the economic momentum, we just have to sustain it. And I hope politics will stay away from our road to economic success
May 30th, 2007 at 2:08 pm
Look where is Escobillo right now? Bermuda? Some vacations in New YorK? Look for her now at Insurance Commission and she will say that she is busy.
As a commissioner, she has to protect the insurance companies not to down them with no actual facts on her hands. She accused the companies having a 8Billion deficiency to BIR, now turning down other companies accusing of deficiencies by using press conferences and publishes. As a commissioner she should protect the industry not to help the people lose their faith in the industry. There are so many companies cannot comply with the capitalization but not on the lists, why is it Ms. Escobillo? is this just a propaganda? are they securing your vacations?
May 29th, 2007 at 10:35 pm
Comparing the currrent exchange rate to what it was three years ago, OFWs are losing 1000 pesos for every 100 USD. I really don’t want to think about it, I just hope that stronger peso would benefit more Filipinos.
May 29th, 2007 at 9:26 am
The peso appreciation is a double edge sword. It’s going to hurt and help a certain sector of the economy. As Neri said, it’s uncomfortably strong to the Export sector, which is by the way one of the drivers our economy. Why uncomfortable? Because the appreciation is too fast that export firms can’t cope up. It’s going to hurt their revenue projections, make their products less competitive in terms of price. The solution is to upgrade the quality of the products offset the disadvantage in price.
“But he IS the government.”
Well, Neri is only a part of the government. If he IS the government, where he can be the planning, implementing, and monitoring at the same time, this country would be way ahead of its neighbors. So who is Neri calling? EVERYONE in the GOVERNMENT. Legislative, all of the agencies (including BSP), the Executive, the Judiciary (for the contracts). It is a pitiful reality to know that NEDA can only plan and plan and to realize that no matter how good your planning skills are, the delivery will spell the difference.
“I sure hope no one will call on the Bangko Sentral ng Pilipinas to intervene in the market to stop the peso from appreciating further. Puhleese! That is so 1996.”
Nobody’s calling BSP to intervene bec they are doing it without anyone’s consent.