WORLD markets will remain to be very volatile
in the coming weeks but the global banking system is past
meltdown. That’s the good news.
The bad news is that world recession is a
certainty.
Philippine share prices closed 1.14 percent
lower yesterday, chalking up losses of more than 8 percent in
the past week.
The peso, after dropping past 48 to the US
dollar last Thursday, edged higher to 47.89 but closed at 48.08,
two centavos better than the Thursday close.
The BSP reported that in September alone,
investors took out $829 million from local bank deposits, stocks
and government securities. That was when the world financial
rout was just starting.
Asian policymakers held emergency talks to
find ways to bolster their banks yesterday while Europe and the
US talk of "refoundation of capitalism."
Regulators demanded tougher financial rules
to guard against a repeat of the worst financial crisis in 80
years, with the chairman of Britain’s financial watchdog saying
it was time "to wipe the slate clean."
Adair Turner, chairman of British Financial
Services Authority, said the global banking system was past the
danger of systemic meltdown although the world faced recession.
"There’s no chance of a 1929-1933 depression.
We know the lessons, and we know how to stop it happening
again," he said.
French president Nicolas Sarkozy said a
meeting with US President George W. Bush on Saturday would help
lay the groundwork for a global summit that should make early
decisions on transparency, global standards of regulation,
cross-border supervision and an early warning system.
Most markets edged higher and closed the week
high after a dizzying roller coaster ride the past week.
The Philippine Stock Exchange index (PSEi)
shed 24.11 points to 2,098.26, a 1.14 percent drop.
Losers edged gainers 83 to 24 with 32 stocks
unchanged.
Trading reached P2.52 billion.
Analysts said confidence in the market
remains jittery while investors remained unconvinced about the
current market prospects. Many investors were greatly hit by
this week’s huge drop as many short-term traders bet on many
stocks going up after past week’s decline. Most actively traded
Philippine Long Distance Co., (PLDT) was up P15 to P2, 290.
Bank of the Philippine Islands (BPI) was up
P1 to P41.5. Ayala Corp. (AC) was down P3 to P242.
Ayala Land, Inc., (ALI) was down P0.40 to
P6.70.
SM Prime Holdings, Inc., (SMPH) was down
P0.04 to P7.20.
Manila Electric Co., (Meralco) was down P1.50
to P47.
The Bangko Sentral ng Pilipinas also reported
that in September, $829 million was pulled out of the financial
markets, 43 percent of which were withdrawals from bank deposits
29 percent from equity investments, and 28 percent from
government securities.
The Philippines had a net foreign portfolio
outflow of $312.2 million in September after net inflows in the
previous two months as risk-averse investors dumped local
assets, the central bank said.
Foreign portfolio inflows in the first nine
months of the year dropped to a net $521.7 million against $3.4
billion net inflow in the same period of 2007.
"This was due primarily to the meltdown in
the US financial markets, the effects of which have spilled over
to other countries, and subsequent fears that a recession in
major economies is imminent," Bangko Sentral governor Amando
Tetangco said.
Equity investments accounted for 67 percent
of September inflows of $517.3 million.
The central bank expects net foreign
portfolio investments of $700 million in the whole of 2008, way
below net inflows of $3.5 billion last year.
European shares opened higher, buoyed by
investors picking up low-priced bank shares and following gains
in the United States and Asia.
Asian governments scrambled to find ways to
shore up their banks and try to combat an economic slowdown.
Australia’s prime minister held a summit with
industry leaders who gave a grim assessment of business
conditions. They said credit was drying up and smaller firms
were collapsing despite government assurances the economy was in
good shape.
Singapore, one of Asia’s richest economies,
and Malaysia both said they would guarantee all bank deposits
until 2010, following similar moves by other governments.
After world governments pledged $3.2 trillion
to stabilize the financial sector, money markets have shown
tentative signs of healing, though interbank lending is still
tentative at best.
The world’s richest nations are in or close
to recession and Bank of Japan Governor Masaaki Shirakawa said
there was growing uncertainty over the bank’s view that the
economy would return to moderate growth.
"We must be mindful of how recent global
financial market turmoil could, through worsening world economic
conditions, affect Japan’s economy," he said.
European Central Bank policymaker Guy Quaden
said the euro zone’s economic prospects had deteriorated over
the last week amid the latest leg of the financial crisis,
Signs of trouble in China increased
uncertainties about the world’s main source of growth.
Listed Chinese firms put more than $1 billion
of fund-raising plans on ice as the global credit crisis and
falling share prices begin to cast a chill over China’s
fast-growing economy.
And hundreds of workers gathered outside a shuttered toy
factory in southern China, after a Hong Kong-listed toymaker
closed as tough times were made worse by US economic weakness.
