S&P: Recommend Investors switch away from Indonesia in favor of the Philippines!.. Why?

Both Indonesia and the Philippines have some weaknesses to overcome before they break into the investment-grade rating category but are making steady progress, Standard & Poor's Ratings Services said in a report.

"The positive outlook on Indonesia recognizes ongoing improvement in the government's balance sheet and the country's income metrics. A modest improvement in the country's political and policy dynamics, combined with Indonesia's other credit attributes, could lead to an upgrade," credit analyst Agost Benard said on Thursday.

The stable outlook on the Philippines indicates that risks to the ratings are balanced, S&P said.

"The Philippines has narrowed its fiscal deficits, lessened its reliance on foreign savings, and rationalized the public sector. A more conducive political setting has replaced the turbulent and obstructionist environment that prevailed for well over a decade."

Indonesia faces key rating constraints due to the perception that reforms have stalled due to a lack of policy initiatives. The abandonment of a planned electricity tariff rise, inability to cut fuel subsidies and a rising trade deficit has added to this view, it said.

A positive outlook on the Indonesia rating suggests at least a one-in-three chance of an upgrade, S&P said, adding there is more upward than downward pressure on the rating.

At 11.41 a.m (0441 GMT) the Indonesian index was up 0.32 percent, while the Philippines index was up 0.06 percent

STOCKS NEWS INDONESIA

StanChart cuts stocks outlook to 'underweight' Standard Chartered Equity Research lowered its outlook on the Indonesian equity market to 'underweight' from 'neutral' citing concerns over lower corporate margins as food prices rise and commodity prices remain under pressure.

"We forecast this trend to continue and recommend investors switch away from Indonesia in favor of the Philippines, which we believe is only halfway through the same four-year re-rating process that Indonesia experienced between 2006 and 2010," analysts Clive McDonnell and Benjamin Wong said in a note on Thursday.

Investors have been steadily decreasing exposure to the Indonesian market as they look to reallocate to markets with lower valuation risk as recovery expectations revive in Asia, the research unit said.

Standard Chartered also cut its Jakarta Composite Index 12-month target to 4,400 from 4,500. At 10.55 a.m (0355 GMT) the Indonesian index was up 0.28 percent, while the Philippines index was up 0.11 percent.

Continue reading here http://goo.gl/Xk0Zh (Reuters)

Reuters 

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OFW Remittance Peaked up $15.3 Billion USD for 8 Months 2012 – More than 1 Million Deployment waiting

Overseas Filipino remittances sustain growth momentum, reaches US$15.3 billion

 

Philippine Economy Army (PEA/OFW) continues surging of 0.3 Million deployed with awaiting for deployment of more than 1 Million as of September 2012; Dollar remittances keeps growing up to $15.3 Billion USD.

 

Personal remittances from overseas Filipinos (OFs) continued to rise in August 2012, posting a growth of 7.9 percent from the year-ago level to reach US$2 billion, Bangko Sentral ng Pilipinas Officer-in-Charge Juan D. De Zuñiga, Jr. announced today.

This favorable development brought the cumulative personal remittances during the first eight months of the year to US$15.3 billion, higher by 5.6 percent compared to the level registered in the same period last year. Growth in remittances was sustained by higher personal transfers from land-based OF workers (OFWs) with work contracts of one year or more (by 3.3 percent), as well as sea-based workers and land-based workers with short-term contracts (by 13.3 percent).

 

Cash remittances from OFs coursed through banks likewise expanded by 5.5 percent to reach US$13.7 billion for the first eight months of 2012 relative to the level registered in the comparable period last year. The steady influx of remittances was observed from both sea-based (US$3.2 billion) and land-based workers (US$10.5 billion). Key sources of remittances were the U.S. (43.1 percent of total cash remittances), Canada (9.5 percent), Saudi Arabia (7.7 percent), the United Kingdom (4.9 percent), Japan (4.9 percent), the United Arab Emirates (4.2 percent), and Singapore (4 percent).

 

Preliminary reports by the Philippine Overseas Employment Administration (POEA) indicated continued demand for skilled Filipino workers. For the period January-September 2012, a total of 231,316 job orders mostly for service, production, and professional, technical and related workers were processed in response to the manpower requirements in Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, and Taiwan. The POEA also reported that workers with processed contracts and those awaiting deployment reached 1,081,513 for the first semester of 2012. However, this was lower by about 35 percent than the level recorded in the same period last year. Meanwhile, the Department of Labor and Employment (DOLE) reported last month that the Philippines ratified the Maritime Labor Convention (MLC), 2006, dubbed as the "Seafarers' International Bill of Rights" and the International Labor Organization (ILO) Convention No. 189 or the "Decent Work for Domestic Workers Convention." These measures should provide better work opportunities abroad through strengthened protection for OFs.

With expectations of sustained demand for skilled Filipino workers overseas, remittances are projected to continue to boost economic activity and provide a steady supply of foreign exchange. Moreover, the increasing use of financial channels for transfers and the continued introduction of innovations in remittance products are expected to contribute to the steady flow of remittances into the country.

Asian Journal

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