Bright forecast for Asian stocks, currencies

ASIA IS STILL NEAR THE “SWEET SPOT” of the cycle for stocks, currencies and corporate credit as economic growth will likely rise in the next two to three quarters supported by low interest rates, US-based investment banking giant Merrill Lynch said.

In a Sept. 11 commentary titled “Trading the Cycle,” Merrill Lynch said several Asian economies were already moving to the “overheat” phase of the cycle—China, Hong Kong, Taiwan and Thailand. On the other hand, it said the Philippines, along with Korea, Malaysia and Singapore, remained in the “recovery” expansion marked by “strong growth but only modestly rising inflation.”

Merrill Lynch kept its gross domestic product growth forecast for the Philippines at 1.4 percent this year and 2.5 percent next year, cited as among those avoiding a recession this year along with Indonesia, which was projected to grow 3.6 percent this year and 4.8 percent in 2010.

But Malaysia, Thailand and Singapore were seen contracting this year by 3.8 percent, 3.5 percent and 5 percent, respectively, before returning to positive territory next year (at 4.2 percent, 2.9 percent and 4 percent).

Driven by China, it said emerging Asia led the global recovery and would probably help spearhead the monetary tightening cycle. But as the Asian upturn matures, concerns were growing about the sustainability of growth, the return of inflation and the potential for rate increases, the research said.

“Asian stocks and currencies do well in periods of high or rising growth. Policy tightening only matters if it is intense enough to affect the growth outlook,” it said.

It said China would likely grow 8.7 percent this year and 10.1 percent in 2010, noting that this large economy was already pulling its weight on the rest of the region.

“The next driver of demand is the much-anticipated turnaround in the G3 (United States, Japan and Europe). Our work on Asian trade shows that exports to the G3—which traditionally lead the global manufacturing cycle by a few months—have remained disappointingly flat. However, confidence, lead indicators and shipment-inventory ratios suggest a sharp turnaround in Asian exports within the next few months,” it said.

Merrill Lynch said it did not expect a return of goods price inflation as there was too much spare capacity in the global economy.

However, it said central banks could begin exiting from the emergency monetary stimulus introduced late last year. The tightening process, it noted, would likely be led by Australia, China, India and Korea. China’s tightening would probably take the form of restrictions on credit and investment rather than adjustments in benchmark policy interest rates.

(http://business.inquirer.net/money/topstories/view/20090921-226165/Bright-forecast-for-Asian-stocks-currencies)

Philamlife sells pre-need, healthcare units to STI group

Philamlife sells pre-need, healthcare units to STI group
MANILA - Local financial services firm Philippine American Life and General Life Insurance Co. (Philamlife) has sold its stakes in its pre-need and healthcare units as part of its continuing efforts to focus on its core businesses.

According to Philamlife, Filipino-owned firms Systems Technology Institute Inc. (STI) and Philippines First Insurance Co. Inc. (PhilFirst) are set to acquire Philam Plans and PhilamCare through a share-sale agreement,

Both deals are still subject to regulatory approvals. Deutsche Bank was the sole adviser in both transactions.

The announcement did not include the terms of the deals.

This is the second set of deals that Philamlife, a leader in the local life insurance industry, has announced since its fate as a subsidiary of American Insurance Group (AIG), the world's largest corporate mess, has turned.

Philamlife was put on the auction bloc last year to help pay for AIG's massive loans. It was eventually spared after the global strategy changed into pooling Philamlife with other Asian assets of AIG under American International Assurance Co Ltd (AIA).

With the sale of its pre-need and healthcare units, and previously its thrift banking arm and leasing unit, Philamlife is now focused on its diversified insurance and investment businesses.

Philamlife has beefed up its insurance business by expanding its distribution network through a 51% recently acquired stake in Ayala Ayala Life Assurance. The 2 now have a bancassurance partnership.

Synergies

The sale of Philam Plans to the STI group creates a new twist to the usual business model of pre-need firms. Usually, a pre-need firm is part of a portfolio of products of a financial or property conglomerate.

For years, the pre-need industry has been hit by bankruptcies and legal troubles as some firms, including the industry's key players, failed to meet their financial obligations to clients.

The pre-need woes have snowballed into lesser sales in the insurance industry, which is erroneously considered to be in the same business as pre-need.

Philam Plans, however, is one of the 22 surviving pre-need firms. It said in its website that it has a liquid trust fund of P29 billion. It is now the leader in the pre-need industry

It has over 300,000 plans in force, according to its website. Of these, educational plans are its key product.

With the sale of Philam Plans to STI, a synergy is formed.

STI, an eductional institution, could now effectively integrate financing, through educational pre-need plans in its product portfolio.

"While other pre-need plan firms rely on third-party schools for the provision of education, STI provides the education services itself. It can also increase Philam Plans's product portfolio by accessing STI's network of education services," STI Executive Committee Chairman Eusebio Tanco said.

At present, STI operates a network of 95 tertiary schools which offer information technology, engineering, healthcare, business administration, and hotel management courses.

Health care

The sale of PhilamCare is also seen as a good fit for the 2 Filipino-owned firms, given STI's presence in the health care business.

PhilamCare is one of the country's leading health maintenance organizations, offering healthcare products and services to about 160,000 cardholders.

A couple of years ago STI, which strarted as a school focused on Information Technology, has branched out into offering courses in the medical services field.

STI, through affiliates, also operates the De Los Santos-STI (DLS-STI) MegaClinic in Mandaluyong city, the DLS-STI Medical Center in Quezon city, and the DLS-STI College of Health Professions. The education service provider also manages the Dr. Fe del Mundo Medical Center.

"We believe STI can further enhance PhilamCare's growth since we are in the process of developing our network of health care professionals and affiliated hospitals and clinics nationwide," STI President and Chief Executive Officer Monico Jacob said.

For his part, Philamlife Vice Chairman Jose Cuisia said: "The divestment of PhilamCare is part of our strategy to focus on our core life insurance and wealth management operations, as we move towards becoming part of the AIA Group."

STI group

The STI group was founded in 1983 by 4 enterprising friends: Augusto C. Lagman, Herman T. Gamboa, Benjamin A. Santos and Edgar H. Sarte. Starting with just 2 schools in the 1980's, then called Systems Technology Institute was addressing the increasing demand for computer professionals. At the time, the information technology (IT) was just booming.

Twenty five years after, STI has grown to more than 100 campuses here and abroad. It has also expanded its network to provide education at the basic, secondary, and tertiary levels. It has one of the largest networks of nursing colleges in the Philippines.

The STI group is now led by individuals well-known in the business industry. On the board are Eusebio Tanco (a stockbroker, investment banker, insurer, property developer and educator) and Monico Jacob (former head of National Housing Authority, Pag-IBIG Fund, Petron Corp, and Philippine National Oil Company)

STI's portfolio includes an overseas recruitment and staffing agency, Global Resource for Outsourced Workers, Inc. (GROW), a stake in Bank of Commerce, and in Philippine Insurance Co. (PhilFirst).

One of the parties in the transaction with the Philamlife Group, PhilFirst is a provider of non-life insurance coverage to individuals and corporations. It is said to be the first domestic non-life insurance company, founded way back in 1906

Philamlife, BPI forge joint venture on bancassurance

Philamlife, BPI forge joint venture on bancassurance

The Philippine American Life and General Insurance Company (Philamlife), the largest life insurer in the Philippines, and Bank of the Philippine Islands (BPI) have agreed to enter a strategic bancassurance joint venture.

As a result, Philamlife has agreed to acquire a 51% stake in Ayala Life Assurance Inc. (Ayala Life), BPI’s life insurance subsidiary. Ayala Life will serve as the platform for BPI and Philamlife’s strategic bancassurance partnership.

The joint venture is expected to benefit from the combined synergies, first-class resources and strength of two leading companies in the Philippines’ financial industry.

Philamlife will bring insurance distribution, product development, and innovation to the joint venture, particularly in the area of bancassurance, while gaining exclusive access to BPI’s customer base via its extensive branch network. Philamlife’s President and CEO Trevor Bull said, “This partnership is a direct result of our strategy to focus on the core life insurance and wealth management business. Philamlife and BPI are strong and trusted brand names in the industry. This is an exciting and positive development that will significantly increase our distribution footprint and offer a substantially wider selection of quality life insurance products to BPI’s customers, which are keys to success under the growing popularity of bancassurance in the region.”

BPI President and CEO Aurelio Montinola III said that this joint venture is fully in-line with BPI’s vision to offer a full range of financial products and services to its customers. He said, “We always look for quality partners and we are excited about the prospects of this partnership with Philamlife. We believe that there are significant cross selling opportunities on both sides. We feel that in the same way that Philamlife will have access to our customer base for life insurance products, BPI will have reciprocal access to Philamlife’s customers for banking products. ”

Philamlife is currently in the process of becoming part of the AIA Group, subject to regulatory approvals. The AIA Group is a leading pan-Asian life insurance organization with a unique heritage of serving the world’s most dynamic region for 90 years, with over US$60 billion in assets and a large base of over 20 million customers.

US stocks end mostly flat after rally

NEW YORK – US stocks ended mostly flat Monday, reversing early gains following a four-day winning streak that had pushed markets to 10-month highs amid hopes of a global economic recovery.

The Dow Jones Industrial Average rose 3.32 points (0.03 percent) to close at 9,509.28, paring a double-digit point gain in early trading.

The tech-heavy Nasdaq composite dipped 2.92 points (0.14 percent) to 2,017.98 while the broad-market Standard & Poor's 500 index fell 0.56 points (0.05 percent) to 1,025.57.

"Stocks today initially seemed poised to continue Friday's rally, but the euphoria faded sometime around midday," said Elizabeth Harrow of Schaeffer's Investment Research.

"Despite last week's stronger-than-expected home sales data, many analysts are now warning that benchmark economic reports have been skewed by government stimulus efforts -- including the tax credit for first-time home buyers, which concludes November 30, and the "Cash for Clunkers" program, which wraps up today," she said.

Wall Street had soared Friday at the end of a four-day rally on growing evidence that the global economic recession is ending. Federal Reserve chief Ben Bernanke, in his clearest signal yet that the global recession will soon be over, said Friday that prospects for growth "appear good" despite financial market strain.

Stock analysts cautioned that the bull run could face sharp corrections, as stocks were now up some 17 percent during the last six weeks despite weak US consumer confidence and rising unemployment clouding recovery prospects.

"The persistent rise in the stock market may be signaling an end to the recession or investors may be whistling past the graveyard," said Paul Nolte, director of investments at Hinsdale Associates.

"We are concerned that investor sentiment is getting bullish and valuations remain very high, but rising prices are begetting rising prices," Nolte said.

Some analysts said the investor fear of missing out on further gains had been fueling stock buying.

"We continue to have reservations about chasing stocks at this point and would urge investor caution in doing so knowing there hasn't been a lot of conviction behind the buying in recent weeks and that economic fundamentals aren't as strong as the stock market would have you believe," said Patrick O'Hare of Briefing.com.

Among stocks in focus, Procter & Gamble slipped 0.45 percent to $53.34 on news that Irish pharmaceuticals group Warner Chilcott has agreed to buy the prescription-drug unit of the US consumer products giant for $3.1 billion.

The deal was expected to close by the end of the year, subject to regulatory approvals, and result in a one-time gain for P&G of $1.4 billion, or 44 cents a share.

Women's apparel retailer Charlotte Russe jumped 25.91 percent to $17.35 after it said it would be acquired by private equity firm Advent International Corp.

Energy stocks also rose on buoyant oil prices fueled by global recovery prospects.

ExxonMobil gained 1.97 percent to $71.30 while Chevron rose 1.48 percent to $70.76.

The bond market advanced. The yield on the 10-year Treasury bond fell to 3.494 percent from 3.556 percent Friday and that on the 30-year bond dropped to 4.288 percent from 4.359 percent. Bond prices and yield move in opposite directions.

Microsoft Philippines appoints new managing director

MB-Microsoft Tuesday announced the appointment of John Bessey as the new managing director of its Philippine subsidiary, Microsoft Philippines. Bessey will officially take on his new role on October 1, 2009.

Bessey will be taking over from Rafael “Pepeng” Rollan who has been Microsoft Philippines’ managing director since 2007. Under Rollan’s leadership, the local subsidiary experienced consistent growth and saw the expansion of its citizenship initiatives aimed at enabling underserved communities to get access to technology, as well as the implementation of projects dedicated to enhancing local education.

“I feel very fortunate to have the opportunity to lead a very strong and dedicated team in the Philippines,” said Bessey. “At the same time, I am excited at the prospect of further exploring opportunities where our customers, partners and the country can benefit from technology. Over the years, we have seen how technology can impact people’s lives and we will continue our initiatives in empowering the underserved sectors and helping improve the Philippines’ IT infrastructure.”

With a career spanning some 20 years in the IT industry, Bessey joined Microsoft New Zealand in 2006 as partner director for small and medium-sized businesses. As part of the leadership team, Bessey was instrumental in making New Zealand a successful Microsoft subsidiary.

Prior to Microsoft John spent more than 10 years at Gen-i, one of Microsoft’s largest partners in New Zealand, working in both New Zealand and Australia. John was involved in running every part of the large systems integrator, giving him deep insights into how Microsoft can really connect and add value to our partner business.

John has a Bachelor of Arts in Political Science from Auckland University and a Post Graduate Diploma in Business (Marketing) from the Auckland University Business School.

Founded in 1975, Microsoft is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

BSP okays BDO's bid to accept GSIS deposits

MB-The Monetary Board of the Bangko Sentral ng Pilipinas (BSP) has approved Banco de Oro Unibank’s request to start accepting deposits from the Government Service Insurance System (GSIS).

It has not been disclosed how much of GSIS’s estimated P20 billion cash deposits, bulk of which is currently with Union Bank of the Philippines, will be transferred to BDO.

Sources have confirmed that BDO’s request for authority to accept government deposits from GSIS has been approved by the BSP last week.

BDO, a private commercial bank owned by the Sys and the country’s largest in asset size, will have to be accredited as an official government depository bank, the same sources noted. The bank has over 700 branches and 1,300 ATMs.

BDO joins United Coconut PlantersBank and Philippine National Bank as private banks also authorized to accept government cash. State-controlled Land Bank of the Philippines and Development Bank of the Philippines are official government depository banks.

In fact Land Bank used to be GSIS’s main depository bank. But in 2004, the pension fund closed its accounts with the GFI and transferred all its funds to the Aboitiz-owned Union Bank, which it claimed was the successful bidder for the GSIS eCARD. GSIS still has a maintaining balance of about P5 billion with Land Bank.

In 2004, GSIS had P16 billion in deposits with Land Bank. Besides the bank, GSIS releases pensions through DBP. The Aboitiz family, which controls Union Bank, is a Cebu-based clan running one of the country’s conglomerates.

GSIS has 1.5 million members and pensioners. In 2008, it registered an income growth of 30.39 percent to P46.42 billion from loans and investments.

Asian economies outpace US and Europe on growth track

Asia is outpacing the United States and Europe in the rebound from the global economic slump, thanks to multi-billion dollar stimulus packages and robust demand from China, analysts said. Second-quarter indicators showed the region's recession-hit economies such as Singapore and Hong Kong have returned to the growth path despite sluggish demand from the US and European markets, their main export destinations.

Countries with bigger domestic populations, including China, India, Indonesia, South Korea, the Philippines and Vietnam, have been growing during the global downturn although the pace has slowed.

Japan, the world's second largest economy, lumbered out of recession in the second quarter and Prime Minister Taro Aso credited the government's stimulus package for the achievement.
In contrast, US gross domestic product was estimated to have shrunk 1.0 percent in the second quarter, and the eurozone economy dipped a milder than expected 0.1 percent after Germany and France emerged from recession.

US-based credit ratings firm Standard and Poor's said that five of the 14 Asia-Pacific economies it covers will post positive growth this year, with nine expected to report contractions.
But by next year, all 14 should post year-on-year growth, led by China's projected expansion of 8.0-8.5 percent.

The US economy is forecast to contract by 2.9 percent this year and grow 1.5 percent in 2010, it added.

Asian economies were hammered after a crisis in the US housing market sparked global financial and economic turmoil late last year.Some analysts said the impact on Asia showed that the region's fortunes remain largely linked to the West and that there would be no recovery until after the industrialised economies had rebounded.But the speed and strength of the region's recovery showed it is not entirely dependent on the US economy.

U.S. Economy: Consumer Sentiment Falls, Prices Steady (Update1)

Aug. 14 (Bloomberg) -- Confidence among U.S. consumers unexpectedly fell in August as concern over jobs and wages grew.

Today’s figures, including an unchanged reading in the cost of living, underscore the damage that the biggest drop in gross domestic product in any recession since the 1930s has had on households and retailers. With little sign that $1 trillion of injections into the banking system is feeding through to inflation, Federal Reserve policy makers are forecast to sustain their efforts until a recovery is secured. Stocks tumbled.

“If consumers are lacking confidence, then they will not be able to help us spend our way out of this long, dark recession,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “Households are still concerned about the jobs outlook, and certainly, Fed policy is also gearing off of the labor markets as no Fed has lifted interest rates while the unemployment rate is rising.”

The Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.2 this month, the lowest since March, from 66 in July. The measure reached a three- decade low of 55.3 in November. The Labor Department said its consumer price index was unchanged from June as forecast, and dropped by 2.1 percent -- the most in six decades -- from July 2008.

Economists had forecast the confidence index would rise to 69, according to the median projection in a Bloomberg News survey. Estimates ranged from 64 to 75.

Stocks, Treasuries

The Standard & Poor’s 500 Index declined 0.9 percent to close at 1,004.09. The gauge yesterday reached the highest level since October. Treasuries rose after the consumer price report showed no sign of inflation, and benchmark 10-year note yields fell to 3.57 percent from 3.60 percent late yesterday.

The worst employment slump in seven decades has caused salaries to stagnate, rocking even Americans who still have jobs. The need to rebuild savings following the record drop in wealth from the plunge in stocks and home values will keep limiting spending in coming months, analysts said.

Retailers including Nordstrom Inc., Abercrombie & Fitch Co. and American Eagle Outfitters Inc. have used discounts to lure consumers on tight budgets.

Wal-Mart Stores Inc., the world’s largest retailer, said yesterday that sales at U.S. stores open at least a year fell 1.2 percent. Eduardo Castro-Wright, the company’s U.S. stores chief, attributed the drop to stronger than expected deflation in grocery prices.

Tame Inflation

“I don’t really see inflation as being much of a threat over the next several months because there’s just too much slack in the economy,” said Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Florida.

The inflation report from Labor showed that excluding food and energy costs, the so-called core index rose 0.1 percent, also as anticipated.

Separate figures showed that industrial production rose for the first time in nine months in July as a federal “cash- for-clunkers” program spurred demand for cars and automakers completed mid-year overhauls of their factories. The Fed said output at manufacturers, mines and utilities increased 0.5 percent increase after a 0.4 percent drop in June.

“It’s a start of the recovery in manufacturing,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. “A lasting recovery in manufacturing depends on whether the pickup in auto demand can be sustained.”

Capacity utilization, the proportion of factory volume in use, rose from its lowest level since record-keeping began in 1967, increasing to 68.5 percent from a revised 68.1 percent the prior month.

Economists track plant operating rates to gauge factories’ ability to produce goods with existing resources. Lower rates reduce the risk of bottlenecks that can force prices higher.

China Billionaire Huang Faces Hong Kong Probe for Alleged Fraud

Aug. 8 (Bloomberg) -- Hong Kong’s securities regulator accused Huang Guangyu, China’s second-richest man, of committing stock-market fraud causing losses of about HK$1.6 billion ($206 million) for a company he founded and its shareholders.

The former chairman of Gome Electrical Appliances Holdings Ltd. and his wife Du Juan are accused of organizing a share repurchase by the company in January and February last year so Huang could use the proceeds to repay a HK$2.4 billion personal loan, the Hong Kong Securities and Futures Commission said.

“This transaction was a fraud or deception in a transaction involving securities,” the commission said in a statement on its Web site late yesterday. “The share repurchase had a negative impact on Gome’s financial position and was not in the best interests of the company and its shareholders.”

Huang, a peasant’s son who became China’s youngest self- made billionaire, was detained by Beijing police in November for “economic crimes” and has not made a public statement since. The police haven’t responded to a fax asking about his whereabouts. Du is also under investigation, Beijing police said in a faxed statement in January. Repeated calls to her Hong Kong mobile phone have been diverted to a voice mailbox.

Gome, China’s second-biggest electronics retailer, fell 7.8 percent to close at HK$2.37 in Hong Kong trading yesterday, the most in almost eight months. The stock resumed trading June 23 after a seven-month trading halt following the detention of Huang, Gome’s largest shareholder.

Hearing Date
Hong Kong’s High Court ordered Huang, Du and the two companies through which he holds his stake in Gome not to remove from the city assets worth as much as HK$1.66 billion, legal documents showed. The court will hear the commission’s case on Sept. 8, according to the Hong Kong judiciary’s Web site.

The securities commission is continuing investigations into the assets, it said. The injunction will ensure there are sufficient assets to satisfy any restoration or compensation orders, the statement said.

Gome, which had 859 stores in China at the end of last year, isn’t a defendant in the case, and its assets aren’t subject to the court order, it said in a statement. “The business of the company or its subsidiaries is not and will not be adversely affected by the Court Order,” it said.
The electronics retailer will report first-half earnings in about a week’s time. “We do not think this will affect the company’s operation,” Deutsche Bank AG analysts Anne Ling and Chen Feng said in a note to clients yesterday. They have a “hold” rating on Gome’s stock.
Earnings Growth

Gome posted a 7 percent decline in net income to 1.05 billion yuan ($154 million) last year, after at least three years of annual profit growth in excess of 33 percent.
The Hong Kong watchdog is seeking orders that Huang, Du and the two companies owned and controlled by them reimburse the parties who lost money in the buyback, in particular Gome, or pay damages to the retailer, according to its statement. The other two defendants named in the court order are Shinning Crown Holdings Inc. and Shine Group Ltd.

Huang, ranked by Forbes magazine as China’s second-richest man last year worth $2.7 billion, is also known as Wong Kwong Yu. He was Gome’s chairman until January. Nicknamed “China’s Sam Walton” after the Wal-Mart Stores Inc. founder, Huang dropped out of school at 16 and traveled to Beijing with his brother, Huang Junqin. They carried a bag of radios, batteries and other electronics devices from factories in their native Guangdong province, to sell in the capital.
Gome, founded in 1987, was China’s biggest electronics retailer until last year, when it was overtaken by Suning Appliance Co.

P&G Philippines appoints new country President-GM

Consumer goods manufacturing giant Procter & Gamble Philippines, maker of household-name brands such as Safeguard, Downy, Pampers, Pantene and Olay, announced Tuesday a change in management roles aimed at further sustaining the growth of its business in the Philippines.
Turkish national Mr. Siddik Tetik formally assumed the role of President and General Manager of the P&G Philippines operations starting July 2009. Mr. Tetik will succeed the company’s chief of three years, American Mr. James M. Lafferty.

With the change in leadership, Lafferty says the company is poised to take on more challenges ahead and is geared to become a stronger player in the market. “We have been operating in this market for close to 75 years – and our brands continue to occupy leadership positions in the market. Mr. Tetik is a seasoned P&G leader, who is coming from his role as leader of our Gillette business in GreaterChina. He has vast experience in developing markets across the world, and he is the perfect fit to succeed me to take the P&G Philippines business to the next level,” adds Lafferty.

Lafferty will remain in the company for the next six months to ensure a smooth and effective transition within P&G Philippines, after which he will retire to pursue other interests. A formal hand-over ceremony will be made in January 2010.

Siddik Tetik meanwhile says he is thankful for the new role that has been assigned to him and is prepared to lead the Philippines operations.

(Manila Bulletin: http://www.mb.com.ph/articles/215408/pg-philippines-appoints-new-country-presidentgm )

BSP reports seven-fold rise in FDI inflows

MANILA, Philippines – Foreign direct investments posted a net inflow of $379 million in May, in what monetary officials said was an indication the economy would weather the crisis this year without sinking into recession.

“These inflows were more than seven times higher than the year-ago level, and reflected the favorable sentiment of foreign investors following earlier signs of stabilization in the global economy,” BSP Governor Amando Tetangco Jr. said in a statement yesterday.

According to the BSP, net inflow of FDIs stood at only $50 million in May last year.
In the first five months of the year, total net inflow of FDIs reached $1.03 billion, up 86 percent from $552 million in the same period a year ago.

One of the biggest sources of FDI was the equity infusion of Japanese firm Kirin Holdings Corp. to beverage giant San Miguel Brewery.

Earlier reports said that, under an agreement between the two parties, Kirin increased its stake in San Miguel to 48.3 percent after buying an additional 5.05-percent stake in the company for P6.89 billion ($143 million).

Apart from manufacturing, other sectors that benefited from inflows of FDIs in the first five months were real estate, construction, financial intermediation, and trade and commerce.

The Philippines saw a decline in foreign investments—both portfolio and direct—shortly after the United States sank into a recession. The US economic turmoil had affected even appetite for investments in emerging economies like the Philippines.

But according to officials, risk appetite has gradually been improving amid signs that the world economy is on its way to stabilization.

Tetangco said reports of gradual movement toward stability would continue to sustain inflows of investments to the Philippines.

The World Bank and the International Monetary Fund have projected that the Philippine economy would contract this year by 0.5 and 1 percent, respectively. They cited the ill effects of the global crisis on the domestic economy.

Analysts said the Philippines is affected by the turmoil on several channels, including investments, remittances and exports.

The economy, measured in terms of gross domestic product, grew by a measly 0.4 percent in the first quarter, the slowest rate in a decade.

However, the country’s economic managers said the Philippines would not fall into a recession this year and that growth would be faster in the succeeding quarters.

The government expects GDP this year to grow between 0.8 and 1.8 percent.

(Philippine Daily Inquirer)