NASDAQ: Flooding Not a Reason for investment Panic about Philippines

 

Western investors are gradually starting to become aware of the strength of the Philippines economy.

Those that follow ETFs by now know the iShares MSCI Philippines Index Fund (NYSE: EPHE ) has been a stalwart among emerging markets ETFs in 2012.

EPHE's mettle has been tested recently as the Philippines is coping with severe flooding. The floods have caused 85 deaths and highlight one of the risks of investing in emerging markets. Due to poor infrastructure, many developing nations are ill-equipped to deal with natural disasters. The problem is many developing nations are found in corners of the globe where natural disasters have a tendency to strike with some frequency.

Not surprisingly, EPHE has been punished a little bit. Despite trading modestly higher today, the ETF is down about 1.1 percent in the past week. How the floods will impact the already robust Philippine economy remains to be seen, but the experience of other emerging markets ETFs following natural disasters can be instructive for those looking to buy EPHE on a dip. Consider the following:

Market Vectors Indonesia ETF (NYSE: IDX ) Indonesia, Southeast Asia's largest economy, is a risky place when it comes to "acts of a high power" events. Not only is the country vulnerable to earthquakes, but those earthquakes can trigger tsunamis. In September 2009, an earthquake killed nearly 60 people in Indonesia.

Granted, this was after the S&P 500 had put in its March 2009 bottom, but the Market Vectors Indonesia ETF responded well after the earthquake. IDX, which debuted in January 2009, was trading at $17 on September 4, 2009. By the end of the year, the ETF was flirting with $21.

iShares MSCI Chile Investable Market Index Fund (NYSE: ECH ) Chile is incredibly vulnerable to earthquakes. On January 2, 2011, a 7.1 earthquake struck the world's copper-producing country. That was followed up by a 6.8 quake in February and a 6.2 earthquake in March.

ECH did tumble mightily following the January 2011 quake and did not find a bottom until a couple of weeks after the March 2011 upheaval. The bounce from there was impressive, about 20 percent in a month, but the fund would struggle along with the rest of the emerging markets complex for the bulk of 2011.

iShares MSCI Turkey Investable Market Index Fund (NYSE: ) A deadly 7.2 earthquake ravaged Turkey in late October 2011. By some estimates, the death toll came to 1,000. Somewhat surprisingly, the iShares MSCI Turkey Investable Market Index Fund jumped in the days after the disaster, but by late November the ETF had plunged almost 25 percent.

In fact, investors kept punishing TUR until January 2012. Admittedly, it would have been difficult to have held TUR from November 2011 through today, but that would have been a winning trade. Hindsight aside, there is a lot to like about the . The cautionary tale is that this ETF did not act well following a major natural disaster.

iShares MSCI Thailand Investable Market Index Fund (NYSE: ) Even those Americans that do not invest in Thailand probably remember the severe flooding that hit the country in late 2011. Those floods crippled hard-drive suppliers operating there, sending shock waves throughout the technology sector.

The iShares MSCI Thailand Investable Market Index Fund was volatile following the floods and by the end of November, the ETF had lost about six percent from its October percent. As was the case with IDX in 2009, a little bit of patience went a long way with THD. The fund had regained its October peak by early December and has added almost 18 percent year-to-date.

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COMELEC to probe ₱91,000.00 overpriced & extravagance beds to Millions

People's tax for cases of Extravagance and Overpriced are NOT acceptable for Philippine Government Agencies.

Commission on Election (Comelec) chairman Sixto Brillantes promised to answer all allegations regarding overpriced beds and curtains procured early this year by the agency.

Brillantes said he will first order an investigation on the alleged overprice which Senate minority leader Alan Cayetano pointed out during the agency's initial budget hearing for 2013.  The Comelec's budget was set at ₱8.4-billion.

"We will have to check. I don't believe there is a bed worth ₱91,000.00. Nahigaan ko na yun," Brillantes said, adding he will look into the documents submitted by his regional director on the procurement. The items were procured for the Comelec rest house in Baguio City.

"The problem is I might have signed the check. But what I signed there is entire thing. I have to look into every detail. A probe is in the process if the allegations are true," Brillantes said. "I will answer all these when we return on August 30," the Comelec chairman said.

Senate finance committee Franklin Drilon said he will await for the Comelec chairman's response on the issue raised by Cayetano.

"They will have to explain that in the next hearing," Drilon said. "I didn't say it is a non-issue, it was not my issue. Yes, they have to explain that on August 30."

Earlier in the day, Cayetano confronted the Comelec chairman over the alleged show of extravagance of the agency following the purchase of about ₱ 4.3-million in beds, mattresses, curtains and blinds for the Comelec rest house in Baguio City.

Cayetano was alarmed over the price of a king size bed with mattress at ₱91,250 each and procurement of ₱340,552.35 worth of blinds and curtains pegged at ₱694,589.72 for the Comelec mansion in the summer capital of the Philippines.

"Dalawa kasi ang issue diyan: 'yung overpricing, meaning mas mahal siya sa dapat. 'Yung pangalawa, 'yung extravagance," Cayetano said after the Senate committee suspended the hearing for the Comelec budget.

"Right now, I'm not accusing them yet of overpricing. But I'm saying hingi sila nang hingi ng budget, 'yon pala, Camry pa ang sasakyan ng Chairman, tapos 'yung kama ₱91,000. Tingin ko, hindi naman tama," Cayetano said. "'Yung millions of pesos na para sa cottages lang nila, siguro 20-25 na classroom sana ang nagawa sa mga schools," the minority leader added.

Cayetano asked Brillantes over the issue during the initial deliberations of the agency's ₱ 8.4-billion at the Senate yesterday.

Documents showed by Cayetano revealed the Comelec awarded to Paula's Furniture the contract to supply and deliver 20 sets of double deck bed with mattresses at ₱15,840 each or a total of ₱316,800, one set of rectangular dining table with chars for ₱74,180, a set of round table with chairs for ₱78,000, three sets of reception table with chairs for a total of ₱59,500 and seven sets of king size bed with mattresses at ₱91,259 each for a total of ₱638,750.

There was also a purchase of 17 sets of queen size bed with mattresses for ₱84,600 or a total of ₱1.438-million, 30 pieces of accent chair with armrest worth ₱17,280 or ₱518,400 and three sets of living room showcase.

All the purchases for furniture reached a total of P3,350,210 while the total amount spent for blinds and curtains reached P1.035-million. Raddy's Construction and Supply, based in Pasig City, supplied the blinds and curtains.

Cayetano also asked Brillantes over the purchase of new service vehicles, which involved some ₱7.4-million and the Comelec chairman's use of three service vehicles.

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