Overused baloney

Editorial

Noynoy has been bragging about the 25 or so times that the Philippine Stock Exchange index had topped records thus far under his administration, saying that it was a show of the high confidence of investors in his administration.

The stock market index growth has been an overused baloney of Noynoy and other past administrations, including the past regime of President Arroyo which Noynoy loves to contrast as being crooked as opposed to his straight path.

Whenever confronted by wrong policies, Noynoy does not differ much from Gloria in immediately rattling off the number of times the stock index had breached record highs.

Based on the latest Bangko Sentral ng Pilipinas (BSP) figures on portfolio investments or which is alternately called hot money because of their flighty nature showed that practically nothing stays in the country in the form of stock investments as soon as profit is collected.

The foreign capital responsible for the surge in the stock market was shown in the BSP data as likely speculation money which leaves as fast as it earns stock market profit or gains from other local money markets.

The October figure showed hot money being only $40 million in the black as a result of $1.538 billion in inflows but was offset by the $1.498 billion in outflows.

There was even a net outflow of $256 million in stock market investments during the month, negating whatever Noynoy has been claiming about the stock market being a bellwether of investor confidence.

Moreover, weak regulation on the local bourse by the almost invisible Securities and Exchange Commission (SEC) always gives to rise to suspicions that the market can be used for self-serving political purposes.

During the move to oust former President Joseph Estrada during his incumbency that started 1998, the drop in the stock index along with the weak peso was exploited to the hilt by the elite conspiracy to force him out of office, citing his supposed mismanagement of the economy, despite growth posting respectable levels of 3.4 percent in 1999 and four percent in 2000 despite a vicious financial crisis that hit the Asian region.

The Philippines was also then among the few Asian countries that have escaped the economic turbulence in the region and still registered yearly growths.

A combination of incessant pummeling on Estrada’s supposed incompetence on the economic front and what was then believed to be a concerted effort among the Makati business backers of former President Gloria Arroyo to picture a dwindling confidence among investors through the pullout of capital was responsible for the drop in the stock index.

Now the reverse could be happening, it would not take much for the well-connected economic managers of Noynoy to persuade fund managers to make a fast profit in the stock market through speculation which anyway is the global trend focusing on the Asian region as a result of the still weak economies of the United States and Europe.

The more reliable gauge of investor confidence is the foreign direct investment (FDI) which the latest figures also from the BSP for August showed a net inflow of a negligible $13 million out of $58-million inflows and $45-million outflows.

Up to August, total capital inflows to the country reached $1 billion which was the least among the major Southeast Asian economies.

The FDIs, thus, are the ones that matter while hot money is largely ephemeral.

Noynoy’s stock index record breaking streak boast is nothing but hot empty air.