PSEi 30 6,700: Organized and Concentrated Pumps; China’s Launches Massive Stock Market Rescue

 

The ultimate result of shielding men from the effects of folly is to fill the world with fools—Herbert Spencer

In this issue

 

PSEi 30 6,700:  Organized and Concentrated Pumps; China’s Launches Massive Stock Market Rescue

I. PSEi 30 Bested ASEAN Peers; China’s Government Launches Massive Stock Market Rescue

II. PSEi 30’s Organized and Concentrated Pumps: Muted Volume and Selective Winners

III. Renewed Pumps on PSEi 30 Banks

IV. Concentrated Activities: Centralization of Broker Activities, Lack of Retail Participation

V. Foreign Inflows, Rising Yields of T-Bills, and a Flattening Treasury Curve

 

PSEi 30 6,700:  Organized and Concentrated Pumps; China’s Launches Massive Stock Market Rescue

 

A slice-and-dice perspective of the Philippine PSEi 30's weekly 2.8% gains before the 2023 GDP announcement.

I. PSEi 30 Bested ASEAN Peers; China’s Government Launches Massive Stock Market Rescue

 

Figure 1

 

In the face of drastically loosening financial conditions, the Philippine PSEi 30 surged by 2.8% to reverse the 2.1% loss from the other week that stole the thunder of its ASEAN peers. 

 

Notably, benchmark stocks of the Asian region were mixed—10 of 19 up with an average of .43%, mainly from the biggest winners. (Figure 1, upper graph).  East Asian and Australasian bellwethers closed higher, while profit-taking pulled most ASEAN and South Asia indices lower.

 

Weekly advances in the national equity indices of Hong Kong (HSI +4.2%) and China (SSEC 2.8%) also led the advancers and buoyed the region's average returns. (Figure 1, lower charts)

 

A seemingly desperate Chinese government announced several substantial measures to stem the $6 trillion stock market rout, including a widening ban on short selling, bigger-than-expected RRR cuts, talks about a $278 billion stock market rescue package, targeted lending, easing of regulatory restrictions on home purchasing, and more coming.

 

However, from a five-year perspective, this week's rally in China and Hong Kong’s stocks emerged from substantial oversold conditions.

 

From our humble perspective, bailouts only kick the proverbial can down the road with nastier consequences.  This band-aid approach barely deals with the issue of malinvestments and instead contributes to the erosion of savings.

II. PSEi 30’s Organized and Concentrated Pumps: Muted Volume and Selective Winners

 

Back home, although the PSEi 30 appears to be testing its resistance level, it's hardly a generalized speculative frenzy.  This week's gains pushed YTD and November 2023 returns to 3.7% and 12.15% (as of January 26th).

 

The outperformance of the principal PSEi 30 seems to be a product of organized, coordinated, and concentrated pumping.

 

Aside from easing conditions, the PSEi 30's sugar high could signify a frontrunning of the pre-announcement of the 4Q and 2023 GDP on January 31st.

Figure 2

 

The PSEi 30 has been rising in the backdrop of declining volume. 

 

This week, the average daily main board volume dropped 17.4% from Php 5.01 billion to Php 4.14 billion.  (Figure 2, topmost chart)

 

Though the average daily gross volume jumped by 11.6% from Php 5.99 billion to Php 6.68 billion, special block sales comprised 38%.  Cross trades have also bolstered the main board volume.

 

The primary winners were the largest market capitalization heavyweights.

 

And though 18 of 30 issues closed higher with one unchanged, five of the top 6 market cap issues delivered an average weekly return of 4.32%.  (Figure 2, middle window)

 

In turn, the top 5 issues (SM, SMPH, BDO, BPI, and ICT) now command a 48.15% share of the PSEi 30.  The top 10 has a 71% share.  Briefly, these elite issues led the path to 6,700.  (Figure 2, lowest graph)

Figure 3

 

As a result, the selective pumps have exacerbated the skewed distribution of market cap weighting. The weight distribution resembles and depicts the Power Law. (Figure 3 topmost graph)

 

SM's 6.32% spiked its market cap share to 14.61%, as well as the Sy Group's 33.35%.  (Figure 3, middle pane)

 

The Sy Group's share of the main board's volume also increased to 24% from 19.8% a week ago.  The Sy Group has been amassing buying interests from institutional entities since December 2023. (Figure 3, lowest pane)

 

III. Renewed Pumps on PSEi 30 Banks

 

The surging share of PSEi 30 banks via outsized weekly returns has also been a factor. 

Figure 4

 

Banks' share of the PSEi has risen to 20.61% (as of January 26th), fast closing in on its record 20.75% last September 2023.  (Figure 4, topmost graph)

 

Up by 5.2%, the financial index outperformed the other sectors. (Figure 4, middle window)

 

Thanks to the BSP's Php 2.2 trillion injections, subsidy on deposit liabilities via historic low rates, and the various relief measures, the trio’s bank (BDO, BPI, and MBT) share of the PSEi 30 surged by 62% from August 2020 through last week. 

 

Notably, the bidding spree was limited to banks of the PSEi 30.  Similar to 4Q 2022 until 2Q 2023, were the buyers the non-bank financials?  The BSP has yet to report on the 3Q conditions of the Other Financial Corporation survey.   

 

Essentially, the October-November trough coincided with the sharp drop in bank loans to the financial sector.   Have banks reopened their lending spigot to their non-bank peers? (Figure 4, lowest chart)

 

IV. Concentrated Activities: Centralization of Broker Activities, Lack of Retail Participation

 

Broker activities also manifest the concentration of trading activities.

 

Figure 5

 

While the average daily share of the top 10 brokers fell from 65.2% to 57.9%, the elite (mainly institutional) brokers remain significant.  (Figure 5, topmost window)

 

These elite firms are responsible for a chunk of cross-trades.

 

The remaining 113 or so brokers compete for the morsels.

 

It is not a surprise that end-session pumps or dumps have become a regular feature.

 

Despite the 12% surge of the PSEi 30 from 4Q 2023, the lack of participation of retail money remains apparent.

 

The average daily traded issues bounced while remaining on a downtrend.  Or the increase in trading coverage comes with low volume. (Figure 5, middle graph)

 

On the other hand, decliners have led advancers for the last three weeks while the average daily trades continue to flounder.  Incredible. (Figure 5, lowest chart; Figure 6, topmost chart)

Figure 6

 

Though there were minor improvements on the retail side, January's trades remained a game for the big boys—who have been trading among themselves.

 

V. Foreign Inflows, Rising Yields of T-Bills, and a Flattening Treasury Curve

 

The index managers got some help from foreigners.

Foreign money reported inflows of Php 793 million and Php 4.31 billion in 2024.  (Figure 6, middle graph)

 

Global financial easing may have prompted some overseas funds—via carry trades—to chase returns here.

 

Ironically, despite the inflows, volume remains lackluster.

 

As a caveat, in a world of globalization, trades by offshore entities or direct and indirect affiliates of listed firms may be counted as foreign money.

 

The PSEi 30s' recent ramp tells a story of stage-managed trading activities (organized, coordinated, selective, and concentrated), which is hardly a sign of a bull market.

 

Rising T-bill yields, amidst a flattening curve, also hardly translate to a sustained Risk-ON scenario.  Instead, it lays the groundwork for negative surprises. (Figure 6, lowest chart)

 

 

 

 

 

China’s 760 Million Lockdown Crashes February’s Car Sales, Duterte’s Travel Ban Backfires, COVID-19 Infection Free Not Guaranteed by Negative Test Results!

Demagoguery is the attempt to convince the People that they can be led into the Promised Land – it is the trick of the snake oil salesmen, the “energy therapists,” the purveyors of “health water,” and, on the other side of the spectrum, the politician and that dictator into which he will evolve absent a vigilant electorate to admit its errors—David Mamet

In this issue

China’s 760 Million Lockdown Crashes February’s Car Sales, Duterte’s Travel Ban Backfires, COVID-19 Infection Free Not Guaranteed by Negative Test Results!

-China’s Xi Regime: COVID19 Infection Rate is Going Down! Browbeats Opposing Journalists, and Suffers from the Crowding Out

-The Initial Impacts of the Stunning 760 Million Lockdown is In: China Car Sales Collapse as US Manufacturing Retrenches!  

-COVID19’s Transition to a Pandemic: The Economic and Geopolitical Consequence

-Duterte’s Travel Ban Backfires: Faced with Falling Tax Revenues, Admin Implores Public to Take Unnecessary Health Risks to Spend!

-Why Negative Test Results ARE NO Guarantee of COVID19-Free Infections!

-To Offset Tourism Losses, Phil. Economic Managers Push for Demand Side Policies as January Auto Sales Plunge!

China’s 760 Million Lockdown Crashes February’s Car Sales, Duterte’s Travel Ban Backfires, COVID-19 Infection Free Not Guaranteed by Negative Test Results!

China’s Xi Regime: COVID19 Infection Rate is Going Down! Browbeats Opposing Journalists, and Suffers from the Crowding Out

The Chinese Government claims that the incidence of COVID19 infections has been going down.

Not only has there been a problem with the construction of its statistical methodology, but their actions speak louder than words.  

Let us hear from some experts:

Ms. Laurie Garrett, Recipient of the Pulitzer Price and former senior fellow of the CFR, noted in a recent tweet, “Chinese authorities have revised the definition of a "case" of #COVID19 six times in Hubei, and the cases there are defined differently from all of the rest of the country. This poses serious credibility questions over the daily case counts.”

Ms. Lisa Beilfuss at the Barrons (February 13) wrote: “A statistical analysis of China’s coronavirus casualty data shows a near-perfect prediction model that data analysts say isn’t likely to naturally occur, casting doubt over the reliability of the numbers being reported to the World Health Organization.”

In a summary of a Wall Street Journal article “Patients without Coronavirus Struggle to Get Urgent Care in China” @V2019N tweeted “- cancer patients in Wuhan can’t access key treatments -pregnant women w/ medical conditions turned away from full hospitals -people infected w/ HIV have run short of essential drugs -medical access challenges”

Statistics have not fully accounted for many of the infected or casualties due to the lack of facilities. Instead, to manage information, the Xi regime has been said to use repression.

According to the Epoch Times-China Insider tweet, #Chinese authorities set up a 9-person national #Coronavirus control team, which does not include any medical professionals. The goal of this team is not to prevent and provide treatment, but to focus on #Propaganda, arrest people, and block information.

The Xi regime has become resoundingly bellicose in the face of criticism.

It has sparred with journalists.

From the South China Morning Post: “China has stepped up its criticism of overseas media reports and commentaries on the coronavirus outbreak and said it reserved the right to take action against material it deemed “ignorant” or “prejudicial”. On Tuesday, Beijing’s ambassador to Nepal accused the chief editor of The Kathmandu Post, Anup Kaphle, of publishing views biased against China – a complaint that resulted in a rebuke from 17 editors across the Nepalese media. The spat between China and Nepalese editors began on Tuesday, when ambassador Hou Yanqi said Beijing “reserves the right to further action” after The Kathmandu Post suggested China’s secrecy had made the virus outbreak worse.

The Xi regime also expelled from China writers of the Wall Street Journal over what Beijing deemed a racist headline, in one of the harshest moves against foreign media in years, noted the AFP/Jakarta Post.

Earlier, the Chinese government accused the US government of sowing fear and panic by preventing people from crossing borders.

With infection statistics supposedly declining, why is the Xi government rushing to build makeshift hospitals? According to the state-owned Global Times: (February 20) Wuhan, the epicenter of the novel coronavirus outbreak, plans to build another 19 makeshift hospitals to receive more infected patients, local authorities said Friday. Upon their completion, all the makeshift hospitals in Wuhan are expected to offer 30,000 beds on Feb. 25, said Hu Yabo, deputy mayor of Wuhan at a press briefing on epidemic prevention and control. To date, Wuhan has converted 13 existing venues into temporary hospitals, with a total of 13,348 beds, and about 9,313 beds have been put into use to treat patients with mild symptoms, said Hu.

And why send seven luxury cruise ships, which had been converted into 1,469-bed medical “water hotels” to “house medical workers battling against #COVID19 in Wuhan, epicenter of the epidemic outbreak”, according to a tweet from the state-owned People’s Daily?

And why the need to add to the lockdown list four districts from the North China city of Harbin?

It is interesting to see how the crowding out syndrome applies to a healthcare crisis.

China’s draconian approach to contain COVID19 has resulted in “a second wave of suffering...In China, patients with serious but non coronavirus-related illnesses are turned away by overwhelmed hospitals devoting resources to the outbreak. Hospitals outside Hubei are also rejecting patients, fearing the virus' spread”, tweeted Bloomberg’s Mrs. Haidi Lun Strout-Watts.

In short, desperate political efforts to contain COVID19 translates to increasing health costs/fatalities on other pathologies unrelated to the pandemic, which will barely be captured by statistics and by mainstream media’s attention.

The Initial Impacts of the Stunning 760 Million Lockdown is In: China Car Sales Collapse as US Manufacturing Retrenches!  

The initial impact of the stunning 760 million lockdowns has arrived!

China’s car sales plunged by a staggering 92.8% in the first half of February!

Also, “China has issued 3,325 force majeure certificates as of Friday to protect companies from legal damage arising from novel #coronavirus epidemic, data released by the China Council for the Promotion of International #Trade showed”, according to the China Daily. China’s government has justified the rampant violations of contracts!

The US manufacturing sector showcased the initial disruptions in the global supply chain. The Markit reported on the “first output contraction since October 2013” this February, “Adjusted for seasonal factors, the IHS Markit Flash U.S. Composite PMI Output Index posted 49.6 in February, down from 53.3 in the opening month of 2020. Although only fractional, the decrease in business activity brought to an end a near-four year sequence of expansion following a contraction in service sector output and a slower rise in manufacturing production amid supplier delays following the outbreak of coronavirus.”

In the attempt to reverse the unforeseen economic shock from a large scale lockdown of the population, the Chinese government has ordered many enterprises to reopen!

For instance, the Global Times tweeted, “More foreign-invested companies in #Shanghai have resumed operations amid the #coronavirus outbreak: 90% from service industries 70% from manufacturing industries 90% of fortune 500 companies 93% of multinational corporate headquarters 87% of foreign-invested R&D centers”

But CNBC’s maverick Beijing based reporter Eunice Yoon observed from the frontlines: “But word of caution: manufacturers tell me even though they have “resumed work”, they are not filling production lines. A lot of migrant workers (who sit at assembly lines) have not returned due to travel restrictions. Local workers back but not as if factories near normal again”. Also, “But the bigger picture is SMEs are suffering & restaurants hard hit. They’re cash-based & small biz have fewer funding options. China says it will help but unclear how loans/subsidies/breaks will be distributed.”

Has the COVID19 been contained to normalize economic activities? Or will forcing people back to work induce the next wave of outbreaks?

COVID19’s Transition to a Pandemic: The Economic and Geopolitical Consequence

COVID19 has not only spread overseas, but as previously discussed, has reached phase three, or has seen “community breakouts” overseas.

Phase 1: Wuhan the epicenter, Phase 2: the rest of China. Phase three: the world.

From the Reuters (February 23): “But new infections outside of China continued to worry world health authorities, with South Korea on Sunday reporting a fourth death due to the virus and 123 new cases, bringing its total to 556, having doubled from Friday to Saturday. Cases in Italy, Europe’s worst hit country, more than quadrupled to 79 on Saturday, with two deaths. Ten new cases in Iran took the total to 29 there, and six deaths, deepening unease at home and in neighboring countries in the Gulf. The World Health Organization said it was channeling efforts into helping to prepare vulnerable countries, including 13 in Africa. It expressed concern on Saturday about the number of new infections that had no clear link to China, such as travel history or contact with a confirmed case.

Following Vietnam, Italy imposed a lockdown on a dozen towns. From the BBC: (February 23) Prime Minister Giuseppe Conte announced the emergency plan late on Saturday as the number of cases rose to 79. The measures were imposed after two Italian citizens were confirmed to have died from the virus. A dozen towns in the northern regions of Lombardy and Veneto have been effectively quarantined under the plan. Around 50,000 people from towns in two northern regions have been asked to stay at home by authorities.

Earlier, the World Health Organization warned that the time has been running out and that the "window" of opportunity to contain the virus was "narrowing." From the Business Insider (February 22): The World Health Organization signaled on Friday that time may be running out to contain the worldwide spread of the novel coronavirus. "The window of opportunity is narrowing to contain the outbreak," WHO Director-General Tedros Adhanom Ghebreyesus told reporters on Friday during a press conference in Geneva. "We still have a chance to contain it. But while doing that, we have to prepare at the same time for any eventualities because this outbreak could go any direction. It could even be messy." 

Some experts said that the lack of knowledge on the COVID19 could bring about more damage to the population. Tweets from:

-Dr. Tom Frieden President & CEO @ResolveTSL, Former Director @CDCgov & Commissioner @nycHealthy

No one can predict what's going to happening with #COVID19. Even if containment fails (which is increasingly likely) we don't know how many people would be infected, have severe illness, or die.

-Tom Inglesby, Director, Johns Hopkins SPH Center for Health Security, working to protect people from epidemics & disasters. Inf diseases, pub health, research, policy

For most part countries still not testing widely for community transmission, focusing predominantly on returned travelers from China. So we do not have clear sense where COVID is circulating. Can't say w/ confidence that any given country has no community transmission.

-Josh Michaud Associate Director Global Health @KFF. @SAISHopkins

With community transmission of #COVID19 in multiple countries it appears that containment of the virus in China will not happen (this outcome was not unexpected). Emphasis in many places could turn from containment to “mitigation”. What does mitigation mean?

The political path dependency indicates that we should expect more mobility walls ahead from all over the world.

Yet, the erection of more and more mobility walls will lead to expanded dislocations in the global division of labor.

And since the pandemic has morphed to become a political issue, increased funding requirements for political undertakings are required given the character of measures undertaken. As such, funding depends on the sustained buildup of the debt pyramid in support of the global economy.

Hence, on this account, the synchronized actions by global central banks become clear.

However, the scale of disruption could be so forceful to unsettle any orderly transition. Importantly, should the debt-financed global bubble keel over before a working vaccine is introduced, the shortfall of funding on public health infrastructures and logistics may accelerate the pandemic’s growth!  

And geopolitical tensions should escalate as more walls are erected.

Duterte’s Travel Ban Backfires: Faced with Falling Tax Revenues, Admin Implores Public to Take Unnecessary Health Risks to Spend!

Back home.

The economic damage from the political response to COVID19 has emerged.

From the Inquirer (February 19 and 20): International passenger volume at the Ninoy Aquino International Airport terminals dropped by 16 percent (300,000 passengers)  while domestic passenger volume dropped by 3 percent t (50,000 passengers) due to the coronavirus disease (COVID-19) threat, airport authorities said on Wednesday. “We have tracked down since January 25 up to two days ago, February 17, ang kabawasan po ng mga pasahero sa international base ho sa aming pagtatala ay umabot na ho ng almost a little over 16 percent on that particular period,” Manila International Airport Authority (MIAA) General Manager Ed Monreal said in a press briefing…The number of flights also saw a 22-percent drop.

Appalled by the unintended effects, and most importantly, the expectations of lower tax revenues, the National Government embarked on several offsetting measures.

With the counter-threat to revoke the Visa-Free entry extended to the country, the Philippine government removed the temporary travel ban it initially imposed on Taiwan.

It partially lifted travel proscriptions by allowing OFWs to return to Hong Kong and Macau.

It is now considering the total lifting of the travel ban on Hong Kong and Macau.

By promising his presence to select sites as a way to attract travelers, the leadership will join in the marketing of domestic tourism.

Organized by the government agencies, shopping malls all over the country are to launch a month-long nationwide sale and shopping festival in March.

Curiously, in the face of COVID19, this February, the Department of Health (DOH) warned people of attending large events and mass gatherings.

However, eight days later, the DOH had an astounding U-Turn; they asserted that it is safe to do so provided the precautionary measures they recommended will be observed.

Is the DOH certain that the public will practice their prescribed precautionary measures? What if they don’t? Are they not sacrificing the public weal for temporary GDP and taxes? Have they considered that the probability of an outbreak? If so, will this be GDP and tax revenue positive?

Are people just dollops of statistics to them?

Why Negative Test Results ARE NO Guarantee of COVID19-Free Infections!

The experiences from the evolving pandemic provide four valuable insights: asymptomatic transmission, testing errors, unstable incubation period, and susceptibility to relapse.

The following anecdotes illustrates these factors.

From Reuters: (February 22) A 70-year-old man in China’s Hubei Province was infected with coronavirus but did not show symptoms until 27 days later, the local government said on Saturday, meaning the virus’ incubation period could be much longer than the presumed 14 days. A longer incubation period could complicate efforts to contain spread of the epidemic that has so far killed more than 2,000 people and spread outside China.

From NPR.org (February 5): Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, had cited that case last week at a White House meeting in which health officials announced a quarantine for people returning from the disease's hotspot in China. He says the errant letter in the journal doesn't alter his view. Fauci says he's been talking to trusted colleagues in China about this issue, and "they told me without a doubt there is some degree of asymptomatic transmission."

Dr. Eric Feigl-Ding, Harvard Epidemiologist and Public health scientist February 20 tweet, 2) The viral load study of asymtomatic patient supports yesterday’s other study confirming transmission during asymtomatic incubation period: bottom line is this makes containment much harder.

From CNN (February 11): Errors by the US Centers for Disease Control and Prevention and a hospital in San Diego led to a woman with the novel coronavirus being sent back to Marine Corps Air Station Miramar instead of being sent to isolation at the hospital, according to a health official familiar with the situation.

New York Times reporter in China Sui-Lee Wee’s tweet on cruise ship Westerdam: 1. An American woman who left a cruise ship in Cambodia last week and flew to M'sia has tested positive for the coronavirus. Hundreds of passengers from the ship have already departed for several countries. Health experts say they are alarmed. 2. Eyal Leshem, a public health expert from Israel, called the disclosures “extremely concerning” and said the passengers’ travel onward from Kuala Lumpur increased the risk of a pandemic. “We may end up with 3 or 4 countries with sustained transmission of the virus.”

BEIJING (Reuters) (February 21): A coronavirus patient initially discharged after recovering in southwestern Sichuan province’s Chengdu city has been readmitted after testing positive during a quarantine period at home, the city’s public health clinical center said on Friday. The patient tested positive during a check-up 10 days after being discharged, the center said in a statement. Similar cases have been reported in other regions.

From Global Times (February 17): All recovered patients in #Shanghai are required to rest at home for 2 weeks. Medical staff will visit the patients for follow-up examinations. As of 12 pm Mon, 161 people in the city have been discharged from hospital: local authority

Now that we have such perspectives, let us apply them to the recent political developments.

First, the repatriation of OFWs from Wuhan, the epicenter of COVID19.

From CNN (February 22): All 49 Filipinos from Wuhan, the Chinese city at the center of the coronavirus outbreak, have been allowed to conclude quarantine in the New Clark City in Capas, Tarlac, on Saturday. Among them is a Filipina evacuee who gave birth to a "healthy and strong" baby boy at the Jose B. Lingad Memorial Regional Hospital in San Fernando, Pampanga, the Department of Health announced in a statement. The evacuees were all given certificates that they have completed the 14-day quarantine period. These documents also state that they "did not develop any signs and symptoms" of the coronavirus disease officially called COVID-19.

It never dawned on me that viruses will recognize “quarantine clearance certificates” from the bureaucracy. LOL!

Next, the return of OFWs from the cruise ship, the petri-dish of COVID19 quarantines, the Diamond Princess.

From GMA7 (February 23):

Foreign Affairs Secretary Teodoro Locsin Jr. on Sunday said the Filipinos on board the Diamond Princess cruise ship docked in Japan will be repatriated on Tuesday. “So far 25 Feb is repatriation day,” he posted on Twitter. This was despite a report from Agence France-Presse saying Japan revealed that 23 passengers mistakenly left the ship before testing.  A Japanese woman who disembarked from the cruise ship on Wednesday later tested positive for COVID-19 after returning to her home in Tochigi Prefecture.

According to the AFP report on Sunday, a 14-day quarantine is expected to start for the more than 1,000 crew still onboard the cruise ship. Japan Health Minister Katsunobu Kato apologized for the "operational mistake." "We deeply regret that our operational mistake caused the situation," Kato said, adding that the passengers would be tested again.

Department of Foreign Affairs (DFA) spokesperson Ed Meñez on Sunday said the 14-day quarantine can be done in Japan or in the Philippines. According to Meñez, the test results will come out on Tuesday too. “Our government has decided to bring them home but hoping that all are declared COVID-free before doing so. We expect all the test results will be issued by 25 February,” he told GMA News Online.

“Those already declared COVID-positive are in Japanese health facilities and will be brought back after they recover,” he added. According to DFA on Saturday, 49 out of the 538 Filipino crew and passengers aboard the said cruise ship tested positive for COVID-19. "Two of them were successfully treated and discharged," Foreign Affairs Undersecretary Brigido Dulay said, while the others are admitted in hospitals in Japan.

The repatriated Filipinos will be brought to the Athletes' Village in New Clark City in Capas, Tarlac for their 14-day quarantine period.  The DFA is already coordinating with Japanese authorities for clearances, permits for disembarkation, land transfer and chartered flights for the repatriation of the Filipinos.

All it takes is ONE error, probably from an undetected super spreader, similar to the UK and the South Korean experience.

Here is a comment on tweeter, last February 22^nd, from Dr. Kevin Purcell, Liverpool Surface Science PhD. Scientist, Programmer, QA. N7WIM, comparing the public health systems of Iran, the Philippines and Indonesia following the COVID19’s outbreak in Iran.

Iran is in the middle of the IDVI (96/195: close to Indonesia, better than the Phillipines). But their public health score is good. So not a place you’d expect an epidemic? The biggest problem is political: ideological hubris and authoritarianism. Very similar to China?

IDVI stands for Infectious Disease Vulnerability Index

And they are likely to join the shopping spree this March!

Good luck to us!

To Offset Tourism Losses, Phil. Economic Managers Push for Demand Side Policies as January Auto Sales Plunge! 

 

Furthermore, to cushion the impact on tourism, the measures embraced by the NG have been anchored on the belief that the source of disruption has been from the supply-side.

This Keynesian belief holds that disposable income remains, and or banks can freely finance spending with little costs, and or a profusion of savings is available to siphon. Hence, the all-out promotion for consumers to spend!

As we have been repeatedly been pointing out here, banks have been under increasing liquidity strains and the consumer spending GDP trend has been steadily heading south, even as they are increasingly dependent on credit. Per capita GDP and spending have also been slowing significantly!

Moreover, the government’s sustained deficit spending has left consumers tapped out.

After all, there is no such thing as a free lunch (forever).

 

Proof?

From the Inquirer: (February 20) “Automotive companies sold fewer new vehicles in January after Taal Volcano turned violent last month and rained ashfall on assembly plants and dealership networks in South Luzon, car and truck manufacturers said. A joint report by the Chamber of Automotive Manufacturers of the Philippines Inc. (Campi) and the Truck Manufacturers Association (TMA) showed sales dropping nearly 12 percent last month. In total, the groups sold only 23,723 units in January, 11.8 percent lower than the 26,888 units sold in the same month a year ago. Campi said the decline was due to Taal Volcano’s eruption at the start of the year.”

Unit sales dropped to a FOUR year low!

Ever since the NG slapped substantial excise taxes on the industry through TRAIN in 2018, vehicle sales hardly recovered. The Taal eruption represented a convenient excuse for the weakness. It may have been a factor, an aggravating one but a statistical noise at that.

Easy money from the BSP has done little to ameliorate their angst.

As an aside, the BSP reported a boom in bank lending data to the sector last December, where did the money go?

More proof?

From CNN (February 22) “Automobile maker Honda announced on Saturday that it will stop production operations in the country by next month. Honda Cars Philippines, Inc. said the company will close its production plant in Sta. Rosa, Laguna in March. The company is known to produce passenger cars and models such as the BR-V and City. HCPI said closing the plant was necessary to meet customer's needs through "efficient allocation and distribution of resources. "As such, after consideration of optimization efforts in the production operations in Asia and Oceania region, Honda decided to close the manufacturing operations of HCPI," said HCPI in a statement.”

Robust domestic demand? Where?

When you tax something, you get less of it!  

The fact that Honda is pulling out says that domestic operations have neither been optimal nor even profitable here.

Falling car sales, and a major producer closing shop are symptoms of the crowding out syndrome in motion. The NG gets the money and the resources at the expense of the productive sector and the consumer!

Will the political response to the COVID19 impact the coming sales? Your guess should be as good as mine.

Now with the retrenchment of Honda’s employees, where will these employees get the means to spend in the mall festivities?

And so goes with one of the four largest US banks operating locally: the Wells Fargo.

From the Inquirer (February 15): One of the biggest banks in the world is laying off 700 tech jobs that are currently outsourced in the Philippines, leaving stakeholders in a struggle to make sense of the wider implications of this massive job loss. US-based bank Wells Fargo & Co. is downsizing its operations in the Philippines, leaving only 50 tech workers out of 750 by the end of the year, according to a report from Bloomberg on Friday. Some of these jobs would be transferred to India instead, the Philippines’ main competitor in the information technology and business process management industry. Wells Fargo currently has about 12,000 workers in India.

Wells Fargo operates mainly as an offshore outsourcing entity for its parent in the US. As such, business cost should be its major concern. The downsizing has been most likely indicative of the loss of competitiveness advantage from its domestic operations.  Aside from the recent tax hikes, the second leg of the Tax reform, the CITIRA and or, even the security of property rights, given the current arbitrary assaults on business contracts by the political leadership, may have been factors of influence.

Aside from the crowding out, costs borne out of more interventions by the government are likely culprits to the loss of competitive edge.

COVID19 should help expose the true state of the domestic demand, especially once liquidity dries up further.

As a disclosure, my son is one of the affected IT employees, but he has nothing to do with this analysis.