Thursday, 19 February 2009

No reason for doom or gloom in the Philippines

Gloom and doom ahead?
Outside the Box
John Mangun
Business Mirror
http://www.businessmirror.com.ph/index.php?option=com_content&view=category&id=28&layout=blog&Itemid=64

A man owned a good business, a little restaurant about a kilometer or two from the main road. He always kept a sign advertising his business at the turn-off to let people know where he was located.

One year, a storm broke part of the sign and he wanted to put up a brand new sign. His son told him that times were bad and he shouldn’t spend the money repairing the sign. The son had been to college and was very smart about the world. So the old man left the sign alone.

Regular customers sometimes did not go down the road now, thinking that maybe the restaurant had changed because the sign was broken. New customers had a hard time finding the turn-off because they couldn’t see the sign. Business went down a little.

The old man thought that it might be a good idea to put more lights outside in his parking lot. But the son told him that times were bad and he shouldn’t spend the money. Customers that found the restaurant thought maybe the place was not so good because the parking lot looked dark and some of them went past, never stopping. Business went down a little.

The old man thought that maybe painting the front of the building would be a good idea to make the place look nicer. But the son told him that times were bad and he shouldn’t spend the money. Business went down a little.

The old man thought that maybe he should raise his food quality and spend more for the ingredients that he used in his cooking. But the son told him that times were bad and he shouldn’t spend the money. Business went down a little.

Then the old man fired his best cook because the son told him that times were bad and he shouldn’t spend the money. Business went down a little.

About a year later, the old man closed his restaurant. The son said that was too bad, but reminded him that times were bad. And there wasn’t anything he could have done about his restaurant.

****

The voices of the “gloom and doom” crowd are becoming louder every day. Toward the end of 2008 they kept saying that the economic numbers would be very bad, and then when 2008 turned out not be to be so bad, they raised the volume and are now shouting, “The worst is yet to come.”

As the days of 2009 tick off and it appears that the Philippines is not economically sinking into the South China Sea, the “gloom and doomers” are looking for anything possible to support their negative position. For example:

The headline read, “Universal Robina suffers first-quarter loss of P246 million.” Wow, that sounds bad. Except, when you read past the headline, you discover some interesting facts. Universal Robina Corp. (URC) actually saw total revenues double, up 122 percent, over last year. International sales rose 64 percent and they made a P36-million profit, compared with a net loss of P51 million a year ago. URC’s operating profit went up by almost 12 percent to P1.02 billion. The reason they showed a net loss for the quarter was because of their nonbusiness investments especially overseas, not because of their core business, which is making food. The Philippine economy is supposedly crashing but URC made 12 percent more than in 2007.

Then there was the stock market yesterday. The market ended down an insignificant 7.67 points or 0.4 percent. One “analyst” was quoted saying, “The drop shows investors remain skeptical of the effect of the US stimulus package.” Seven points doesn’t sound like investors are very worried. What this analyst did not say was that the night before, there was a bloodbath in US and European stocks, with their markets down nearly 4 percent, not just 0.4 percent. Even in Asia yesterday, Japan and Hong Kong dropped 1.5 percent and China followed the West down 4 percent. We did very well, all things considered.

To justify their “gloom and doom” stance, it was pointed out that Bank of the Philippine Islands was down 2 percent, Ayala Land was off 1.7 percent and SM Prime dropped 2.6 percent. Four stocks, including Philippine Long Distance Telephone Co., out of 30 Philippine Stock Exchange index issues dropped the market less than 8 points. Now I am not saying all is well in the market, but let’s at least tell the full story and not pick and choose facts to push an opinion.

The “worst is yet to come” voices in the Philippines cannot find any hard and significant evidence to justify their very dismal outlook. Instead, because they have been to college and are very smart about the world, they are telling us that their crystal balls are going to be accurate. Maybe they will be proved right. Maybe not. But I can predict one thing for sure.

If we as an economy start thinking and acting like the times are bad for the Philippines without some hard evidence to back that opinion up with, a year from now we will have created our own bad times. Be sensible, be smart and be financially efficient. And, most of all, be realistic.



PSE stock-market information and technical analysis tools provided by CitisecOnline.com Inc. E-mail comments to mangun@email.com.

No comments:

Post a Comment