Saturday, 11 February 2012

Opening of new A380 hangar at Lufthansa Technik Philippines


Third widebody hangar in Manila
http://www.lufthansa-technik.com/applications/portal/lhtportal/lhtportal.portal?requestednode=395&_pageLabel=Template7_8&_nfpb=true&webcacheURL=TV_I/Media-Relations-new/Press-Releases/LTP_A380_hangar_opening_US.xml

Lufthansa Technik Philippines (LTP), one of the largest providers of aircraft maintenance services in Asia, has opened a third hangar in Manila for work on widebody aircraft. With this step, the company is preparing for the technical support of the world’s largest commercial aircraft.

Lufthansa Technik Philippines, a joint venture between Lufthansa Technik (51%) and the Philippine MacroAsia Corporation (49%), invested USD 30 million in the construction of the new hangar, which is 8,500 square meters large and 35 meters in height. The new hangar offers space to work simultaneously on one widebody and two narrowbody aircraft.

"With the new hangar, we will be able to keep up with the increasing demand for technical services for long-haul aircraft, particularly in the Asian market," said Lufthansa Technik Chairman of the Executive Board, August Wilhelm Henningsen. "By adding A380 capability, it underscores Lufthansa Technik Philippines’ role as global aircraft overhaul center."

"The continuous growth of the company leads to up to 400 new highly-technology and high-skills jobs in addition to the existing 2,700 jobs," explained Gerald Frielinghaus, President and CEO of LTP.

Eleven years after its founding, Lufthansa Technik Philippines, located at Manila's Ninoy Aquino International Airport, offers comprehensive technical services including lease return checks and cabin modification for the Airbus A330/A340 and A320 families and now also for the Airbus A380.

LTP has 30 overhaul customers including Philippine Airlines, Lufthansa, Qantas, Virgin Atlantic, LAN Chile and AirAsia X. It has about 20 approvals from aviation authorities including the American FAA and the European EASA.

PH Military build-up


US Congress okays transfer of 2nd warship to Philippines
AP, with Florante Solmerin
http://www.manilastandardtoday.com/insideNews.htm?f=//2012/february/11/news7.isx&d=/2012/february/11
See also: http://www.youtube.com/watch?v=p40hQzZmXwA
And: http://www.youtube.com/watch?v=Gtg19oO-vpE

THE US Congress has approved the transfer of a second Coast Guard ship to the Philippines, an official said Friday, as Washington shifts its military ties with Manila that has been engaged in a territorial dispute with China.

Assistant US State Secretary Andrew Shapiro told reporters he would consider a Philippine request to have the warship turned over with as much military equipment as possible.

That drew a sharp reaction from the Communist Party of the Philippines which on Friday said the US military was preparing the Philippine Navy as its front-line orce against China in connection with the brewing conflict over the Spratly Islands.

“The transfer of another cutter from the US government serves the purpose of US military buildup in the South China Sea,” the group said in a statement.

“Through such, the US is able to employ the Philippine Navy as an augmentation force in the course of its operations to permanently project its military presence and power in the area and secure the trade routes and Asian markets in the interest of US monopoly capitalist companies.

Defense Secretary Voltaire Gazmin on Monday confirmed there had been talks about the Philippines acquiring another Hamilton-class cutter.

The Philippine Navy acquired its first cutter from the US Coast Guard last year and renamed the 1967-commissioned ship BRP Gregorio del Pilar (http://www.youtube.com/watch?v=RFGKDwSAPNU). The Navy then deployed the ship to the West Philippine Sea to patrol the area.

The CPP said the transfer of a second cutter to the Navy would further heighten the tension in the disputed Spratlys and provke China.

On Thursday, officials of the US congress announced that its Foreign Relations Committee was about to wrap up its decision to transfer the US naval cutter Dallas (http://en.wikipedia.org/wiki/USCGC_Dallas_(WHEC-716)) by the end of the week and planned to sail it to the Philippines soon thereafter, the group said.

But defense and military officials have said the acquisition of war equipment is part of the Armed Forces’ long-stalled modernization program, and that it has nothing to do with the dispute over the Spratly Islands.

The government had earlier announced it was also negotiating with the US government the acquisition of several F-16 fighters.

Last week, Gazmin and other officials went to Italy to sign a five-year contract to acquire fighter-bomber jets, frigates and destroyers and unmanned surveillance aircraft.

Saudi Investing $1.2B


By ALI G. MACABALANG
Manila Bulletin
http://www.mb.com.ph/articles/350948/saudi-investing-12b

BULUAN, Maguindanao, Philippines – A Saudi Arabian agro-industrial firm is investing $1.2 billion to cultivate an initial 2,000 hectares of idle lands in Maguindanao for the production of banana and root crops that are highly in demand in their oil-rich nation.

Maguindanao Governor Esmael “Toto” Mangudadatu announced this “good news” at a press conference in prelude to the launching here Friday of the 1st Sagayan Festival, which he and organizers have crafted extensively to showcase the bright side of the province, and create a situation conducive to peace and productivity.

Mangudadato said he and President Aquino had already made initial talks with the Arabian investors, whom he described as very keen to jump off the preparatsion of pilot areas involving 2,000 hectares before the end of this month or early next month.

He said the prospected areas are located here, and in Ampatuan, Abdulllah Sangki, Datu Odin Sinsuat, and other towns in Maguindanao.

The governor said the landowners of the prospected areas have already agreed to lend their lands in the joint farming venture that would allow their family members to work and earn an equitable share.

Initially, he said, the 2,000-hectare pilot area will generate employment for some 2,000 workers, each of them will tend one hectare.

Another incentive, Magudadatu said, is the provision of scholarships to the children of farm workers in any secondary or tertiary schools of their choice in Mindanao.

“In a nutshell, the farming venture will directly address poverty, illiteracy problem, and the inutility of huge lands in Maguindanao at the same time,” he said.

Citing government statistics, Mangudadatu said Maguindanao has some 324,000 hectares of idle lands and is saddled by high poverty and illiteracy incidents.

Friday, 10 February 2012

Peso nears 41:$1 territory


Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/insideBusiness.htm?f=//2012/february/10/business1.isx&d=/2012/february/10

The peso climbed near the 41-per-dollar level Thursday on heavy trading volume of $1.5 billion, as the Philippines continued to draw foreign capital flows and remittances despite the renewed volatilities in regional stocks.

“Capital inflows surged again, mostly in the stock market and government securities,” said Bangko Sentral Deputy Governor Diwa Guinigundo.

The country’s gross international reserves rose to a record $77 billion as of end-January, as the Bangko Sentral absorbed the excess dollar stocks in the country.

Read more: http://www.manilastandardtoday.com/insideBusiness.htm?f=//2012/february/10/business1.isx&d=/2012/february/10

Thursday, 9 February 2012

17th International Hot Air Balloon Festival


Balloonists from around the world gather at Clark Air Base north of Manila to open the 17-year-old hot-air balloon festival.

Click here for photos in the Wall Street Journal.

The bubble myth


JOHN MANGUN
OUTSIDE THE BOX  
Business Mirror
http://www.businessmirror.com.ph/home/opinion/23022-the-bubble-myth

SINCE the beginning of the year, there has been a genuinely important discussion as to whether the Philippines is facing an asset bubble in its stock market and property sector and if prices could fall significantly at some time in the future, sooner rather than later.
It is necessary to understand what an asset bubble truly is. The common notion of a bubble is that the price of an asset goes up too quickly to a level not reached in recent memory or in history for that matter. That is not accurate.

Imagine for a moment that scientists had proved that paracetamol could extend human life. There would suddenly be a huge demand increase and people would be willing to pay almost anything for this drug. Prices would stay high until supply was increased to fulfill the demand. That is not a bubble; it is a normal market price reaction to supply and demand.

Further, most of the purchases of the paracetamol would be for consumption not for price speculation. In fact, those who initially bought to make a profit would lose money as soon as supply stabilized.

Even “expert” economists cannot agree on a proper definition or even if asset bubbles, where the market price goes far above intrinsic value, even occur. Market prices often deviate widely from intrinsic value.

The first use of the term “bubble” occurred in the early 1700s. The British government granted exclusive trading rights to different companies covering large parts of the world.

The South Sea Company was a British stock company that was granted a monopoly to trade in Spain’s South American colonies. In return, the company took over half of the British government national debt. To pay for the debt, they issued shares of stock to raise money.

In order to raise the funds they needed, they announced the most ridiculous rumors of the money they would make from their monopoly; the shares went up widely. The price went from 100 to 1,000. The company even loaned money to people to buy the shares.

Other joint-stock companies jumped into the game, selling shares and making extravagant claims about foreign ventures and bizarre schemes. These were nicknamed “bubbles.” At 1,000, the selling came in and the price of South Sea went all the way back down.

The US Dot Com bubble was a five-year boom followed by a one-month bust that was fueled by cheap borrowed money used for stock speculation.

The bubble ended after the last nine months of the stock-price run-up during which the Federal Reserve raised interest rates six times. The era of the cheap money was over as was the stock-price bubble.

The Philippine Stock Exchange is not experiencing an asset-price bubble. Stock prices may go lower in the future but not because of speculative exuberance.

The mining stocks have been advancing because metal prices are in a strong uptrend and expected to go higher. Banks are booming because good quality lending is growing and interest-rate margins are favorable for earnings growth. Consumer-oriented companies are up because consumer-spending growth doubled from 2010 to 2011. Property companies are seeing appreciation because margins are high and personal-wealth creation is providing stable demand.

These price increases are being driven by common sense, not wild speculation. Further, no investor in the Philippines is mortgaging their financial soul to the banks to borrow money to buy shares. There are, of course, issues that may be considered “speculative” in that they may not have a solid financial track record to warrant the current price increases. But so far none have announced they have found a way to turn lead into gold, attracting share buyers.

There is a building boom in the Philippines. Is it a bubble?

For property prices to collapse, all those newly built units would have to be sold at a much lower price. But the developers do not have to reduce prices. They can wait for demand to catch up over time. Ayala Land’s net-profit margin is over 25 percent. SM Development Company operates at over 30-percent net margin. These are amazing financial numbers. They can easily afford to discount to sell units or they can sit on the inventory as the property companies did after the 1997 crisis. And their share prices are justifiably going higher.

Property speculators may individually run into trouble. Too bad. That is life in the free markets and they are a small minority. The amount of foreclosed property that the banks are currently carrying proves that point.

All the “bubble” talk is good. It keeps us prudent and sensible. Invest in the stock market and buy property to live in. That is proper money management.




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

Wednesday, 8 February 2012

Peso rises to 42.41 as $ reserves top $77b


by Roderick T. dela Cruz
Manila Standard
http://www.manilastandardtoday.com/insideBusiness.htm?f=//2012/february/8/business3.isx&d=/2012/february/8

The Bangko Sentral accumulated another $1.7 billion worth of foreign exchange last month on strong dollar inflows from abroad, pushing the gross international reserves to a new record level of $77.04 billion as of end-January.

The figure was up 2.3 percent from $75.3 billion recorded in December and 21.3 percent from $63.54 billion in January 2011.

The peso, meanwhile, strengthened Tuesday to 42.41 against the US dollar after the Reserve Bank of Australia unexpectedly kept interest rates on hold, signaling it is optimistic the global economy is recovering.

The local currency rose to an intraday high of 42.28.

Bangko Sentral Governor Amando Tetangco Jr. attributed the buildup in the reserves level to the proceeds from the government’s dollar-denominated 25-year global bonds issuance, revaluation gains on gold holdings as well as income from investments abroad of Bangko Sentral.

The government in early January raised $1.5 billion from the issuance of 25-year global bond registered with the US Securities and Exchange Commission.

“The end-January 2012 GIR could cover 11.3 months worth of imports of goods and payments of services and income. It was also equivalent to 10.8 times the country’s short-term external debt based on original maturity and 6.9 times based on residual maturity,” said Tetangco.

The reserves also exceeded the total foreign debt of the Philippine government and private sector, estimated at $62.4 billion as of end-September 2011.

Tuesday, 7 February 2012

The Philippines needs PSE investors



JOHN MANGUN
OUTSIDE THE BOX
Business Mirror
http://www.businessmirror.com.ph/home/opinion/22931-the-philippines-needs-pse-investors

DURING the last couple of weeks, the green haze of envy has touched my heart.
All the nonbusiness columnists have been able to feast at a five-star buffet of subject matter surrounding the impeachment, with the public hanging on their every written word. Even the Showbiz and Lifestyle people have a new presidential girlfriend that everyone is interested in. Now, the hard-news folks have the Negros earthquakes to cover.

All I have to write is that the Philippine stock market has reached the highest level in its 84- year history on trading value of an unprecedented $175 million (not pesos) per day. Tweet about the impeachment and have 5,000 followers. Tweet about the stock market and have…significantly fewer followers.

Nevertheless, that is exactly the way it should be.

You see, we are not interested in something unless we have a vested interest, some skin in the game, so to speak.

For the political participants in the impeachment hearing, this is an opportunity to present themselves to the electorate, in a way a thousand times more exciting than talking about all the things they did for the republic in the legislature.

Media practitioners have the chance to display their insight while showing their wisdom in discussing a sometimes complicated subject. The opinion writers can rally those of a simple point of view to the cause whatever it might be.

And everyone else who is interested is only an observer because they do not necessarily gain anything from the proceedings. But anyone who is interested in the stock market is there because they have some money in the market. We are not observers; we are participants. We are the 1 percent. Well, actually we are the 0.01 percent of the Philippine population with an invested stock-market interest.

Stock-market investors are misunderstood. Nonparticipants really do not understand why we buy shares.

Someone asks if the increase in Philippine stock-market prices reflects the state of the Philippine economy.

The state of the economy is only a minor part of the price of listed issues. The stock market does not trade the Philippine economy. It trades the ownership of Philippine companies. The economy grew at 3.7 percent last year. BPI’s profits grew over 13 percent in 2011. And the share price of BPI reached a historic high yesterday.

There are economic worries about a property glut. Ayala Land just announced a 25-year, P60-billion investment in Fort Bonifacio Global City. The Ayala Land share price traded at a historic high yesterday.

Stock investors are criticized for merely being speculators and not building businesses. Excuse me. When I put my money into any venture from which I strive to reap a profit, it is a business. Sure, I could buy and sell dead pig meat, but I know more about buying and selling shares than I do about swine. And the piggery owner and I do our business for the same reason—to make money that we then spend on goods and services provided by other people who also spend their profits and income.

“But stock-market investors do not create anything.” Not true. We help create corporate value and wealth. The foundation of any business is the money put into that business. Businesses are given birth because of capital: money.

When you buy shares at a higher price than the day before, you have increased the value of that company. The company is worth more today because of your buying. That fact affects their borrowing costs as well as their book or intrinsic value.

The bottom line is that a person invests in the stock market to create personal wealth the same way that any business owner does. But isn’t the stock market a clear indication of non-inclusive economic growth? Yes, absolutely. And absolutely not.

Yes, absolutely in that no economic group has a direct share in my profits any more than at Shoemart.

Absolutely not in that all personal-wealth creation makes the economic pie larger and directly provides at least some inclusive growth. Where did part of the P21 billion come from to pay for the cash transfer to the poor? Investors, check your stock-transaction confirmation. You paid VAT. Your stockbroker pays taxes on the commission you paid.

The Philippines needs you, PSE Investor.


On a personal note, my one-day stock trading seminar “Your Money: Preservation and Profits” on March 3 in Cebu. E-mail me at john@mangunonmarkets.com and I will send you a brochure. Registration is strictly limited to insure you have the opportunity to get all the answers and information that you need.

Monday, 6 February 2012