Tuesday, October 30, 2012

Things To Be Careful About While Investing


Things To Be Careful About While Investing

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Mutual funds are certainly ways that you can grow your money. But everything has a flip side, and so does a mutual fund. There are some things that you want to keep an eye out for, just to make sure that the problem doesn't snowball into something you can no longer control. One such thing is your own savings and investment. Generally, once you get your pay, you do your best to ration it out to fulfill all your needs. The problem here is that you may not believe your mutual funds need to before some of the things on your list. The answer here is simply to make your payment an automatic one. Make your payments to the mutual funds companies every month automatic, so that you don't really consider whether or not to lay aside that amount for the month. It's already been done in the time you would've spent deciding.
You might also want to keep an eye on your investments. Everyday sighting doesn't help. It'll only depress you. But if you were to look at your investments on a monthly basis, you could see a change. Whether for positive or negative, this change will mean that you don't have to put out your money to be spent on little or nil returns. To avoid losses, you want to diversify. This way even if one of your investments fails because the sector fails another investment in another sector likely stops you from having to drown in losses. While you're investing, watch out for fees that jump out at you from seemingly nowhere. Watch out for things like sales load, or other kinds of management fees that you might have to be burdened with. If these go up, it means that you have less money for yourself, because you're using most of your money to maintain the fund company.
At the end of the day, you have to remember that mutual funds are a risky business. They aren't insured, and no matter how much you diversify your investments, there are chances that you could lose your money. Another thing you want to prepare yourself for is the inevitability that somewhere along the line, you will lose your money. There is no guarantee whatsoever that you must or will receive money when you receive in the market. Many times, the funds perform well below what they should and end up showing poorly on the balance sheet as well. This just goes to show that fund managers aren't omniscient; they will make mistakes at some point. Don't be shocked by it.
Different mutual funds companies offer you various types of mutual fund investment options.
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Monday, October 29, 2012

Sovereign-wealth fund to speed up government programs


Sovereign-wealth fund to speed up government programs

Written by Lito U. Gagni / Special to the BusinessMirror

(Conclusion)
The rationale for a Philippine wealth fund can be found in the host of Asian and other countries that have established their own sovereign-wealth funds (SWFs) just to induce economic growth. A rise in the level of economic activity, after all, induces a ripple of benefits that range from increased income to higher government revenues, exemplified by higher tax collections.
Vietnam conceptualized its own SWF on June 20, 2005, after its own reserve level rose. It started its own fund in August of the    following year and called it the Vietnam State Capital Investment Corp. (SCIC).
SCIC’s primary objectives are to facilitate reforms of state-owned enterprises and improve efficiency of the state capital utilization.  It was mandated to represent state capital interest in various types of business areas, including financial services, energy, manufacturing, telecoms, construction, transportation, consumer products, health care and information technology.
It has since contributed capital to various ventures and agreed in the equitization, or the reverse of privatization, of other enterprises.
This Vietnam model can serve as the Philippines’s own as the Aquino administration puts up a buffer fund that would contribute to the pursuit of public-private partnership projects.
There is, however, a legal hurdle that the Aquino administration would have to contend with as the present Bangko Sentral ng Pilipinas (BSP) charter frowns on constituting such a wealth fund as what other sovereign nations have done.
This, though, is easy to deal with, as Mr. Aquino appears to have a firm grip on both chambers of Congress, which can then allow the BSP, through legislation, to amend its charter. The members of Congress, we are sure, would not do anything to defer the advancement of the country’s economy and what better way to show this than by approving posthaste the first hint of the BSP that it wants to change its charter to enable it to put up a sovereign-wealth fund.
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The putting up of such a fund as soon as possible would be very timely. The recent signing of a framework agreement for the cause of lasting peace in Mindanao would need economic activities that could only be realized with the government having its own sovereign-wealth fund. By way of explanation, if the government has its own SWF, it need no longer suffer the consequences of agreeing to a disastrously high investment return as in the case of the MRT 3 project. That private endeavor, not too many may know, resulted in the punching of a huge hole in the government’s deficit levels as the ridership was not enough to pay for the costs of maintaining the line and assuring the 15-percent return.
The SWF acts as a buffer fund of sorts to insulate Filipinos from the consequences of lower allocations for government services, as the money intended for such, like the construction of schoolbuildings and new roads, is diverted to the MRT proponents.
Outside of Vietnam, the other Asian countries that have their own SWFs are Malaysia with its Khazana Nasional, New Zealand with its Super Annuation Fund, Singapore (Temasek Holdings), Indonesia (Government Investment Unit), China with its three SWFs, namely, the China National Security Fund, China Investment Corp. and China’s Africa Development Fund; Brunei with its Investment Agency and Australia with its Future Fund.
According to the influential Sovereign Wealth Fund Institute,  which charts the course of SWFs all over the world, there has been a shift from the “traditional reserve management to sovereign-wealth management.”
The institute said, “Many central banks possess reserves massively in excess of needs for liquidity or foreign-exchange management.”
Studies done by the BusinessMirror show that the BSP can apportion $20 billion as a start-up fund and still leave more elbow room for the monetary authority to flex its muscles in making sure that inflation does not rear its ugly head, its very reason for being.
After all, the start-up fund amounts to just a little over a year of remittances from the army of talented Filipinos.
The BusinessMirror extrapolations show that the remittances had an average growth of 14.2 percent in the last six years owing to a diversity of skills and destinations. In 2010 the record high of $18.8 billion in remittances accounted for 10 percent of the country’s gross domestic product. 
With a Philippine wealth fund, the overseas Filipino workers would be indirect participants in a government push to achieve double-digit growth. That alone would give the OFWs the added pat on the shoulder that they richly deserve.
Indeed, many bankers I talked to agree that the anti-corruption agenda of Mr. Aquino and the growth that the country is experiencing relative to the downturn in other economies, as well as the push for infrastructure projects, would have an added dimension when the Philippine wealth fund is established.


When in Cebu City, please visit gregmelep.com for your real estate and retirement needs. 

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Time ripe for sovereign wealth fund


Written by Lito U. Gagni / Special to the BusinessMirror

First of two parts
IN less than a decade, the Bangko Sentral ng Pilipinas (BSP) saw its gross international reserves (GIR) surge from $15.02 billion as of end-2002 to $80.1 billion as of end-September 2012—with the country’s unsung heroes, the overseas Filipino  workers, steadily increasing their remittances.
This fivefold rise in the GIR, with three months to spare, has resulted in a very comfortable margin of safety for the BSP’s reserve-management push, since the end-September GIR already account for more than a year of imports.
Usually, a country’s reserve level should be able to finance three months of imports. For prudent levels, a central bank’s reserves of six months are seen as enough buffer for any financial hiccup that could hit the country.
Continued streaming of and expected yearly rise in the remittances from the OFWs have been fueled not just by an increase in the number of workers but also by a dramatic shift in the kind of talents employed.
This marked change in the jobs of the country’s  OFWs from household services to technical ones in information technology, hotel management, engineering  and oil drilling that account for more than half of our overseas workers has given rise to suggestions that the country put up its own sovereign-wealth fund (SWF) from the GIR.
One senior banker told the BusinessMirror that time is ripe for the Philippines to have its own country fund with the seed money coming from the BSP. The banker said the country could initially have $20 billion as start-up fund.
A $20-billion sovereign-wealth fund would mean that the country could still have a $60-billion reserve level, which is more than enough to finance 10 months of imports—well above the prudent level of six months of imports.
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It could be used for some of the so-called PPP (public-private partnership) projects that the government has identified to jumpstart the economy. More than 15 PPP projects are on the pipeline and ready for bidding from foreign investors from China to Australia and Thailand to the United Kingdom.
With ready government funding from the SWF, foreign investors are immediately assured that the projects could be pursued with no need for those government guarantees that usually mean higher costs to be borne by Filipino taxpayers, such as the Metro Rail Transit system, which meant a 15-percent guaranteed return for  investors resulting in a subsidy so huge that the government had to bear the burden of added costs.
With its own sovereign-wealth fund, the government need no longer have to worry about guaranteeing unconscionably high-investment returns for investors. It would also mean the added advantage of making the government earn a bit more as a partner in PPP projects.
The buzz for an SWF for the country started with the continued surge in remittances that now average $1.5 billion a month.
The BSP data showed that it took seven years for the reserve level to double from $15.06 billion as of end-2000 to $33.75 billion in end 2007.
But it took just half that time for the reserve level to double again to $67.78 billion as of end-April this year.
The reserves topped $40 billion in July 2009, and raced to $53.75 billion in September 2010. Two months hence, the BSP reserves would hit $60.56 billion.
The need for the Philippines to have its own SWF is premised on the use of the excess reserves to fund economic activities that would result in substantial economic growth. One such activity could involve financing a new roadway that would  open up economic opportunities in Bangsa-moro, the territory that the country’s Muslim minority got under a recently signed peace agreement between the Aquino administration and the Moro Islamic Liberation Front (MILF). This roadway and other possible projects would catapult the Mindanao region in the Philippine South to economic pre-eminence fueled, no doubt, by peace dividends that would accrue as a result of the signing of the PHL-MILF agreement.


When in Cebu City, please visit gregmelep.com for your real estate and retirement needs. 

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Friday, October 26, 2012

Financing Firm Bullish In Rp


Financing Firm Bullish In RP

October 26, 2012, 5:21pm
Esquire Financing, Inc.,  a local financing firm which caters to the credit needs  of small and medium-enterprises (SME) is  bullish about its growth prospects in the Philippines.
Sandeep Chandiramani, Esquire Chief Finance Officer (CFO)  said: “We are seeing a very good momentum in the Philippine economy based on strong economic fundamentals -- excellent gross domestic product (GDP) growth at 6 percent, record-levels of investments in fixed deposits, securities and foreign currency reserves, plus inflation at the low range of the 3-5% target range.”
He said businesses will be more aggressive in pursuing respective expansion strategies against this economic backdrop.
SME's will be requiring more options for financing, consultancy and related services. Being the specialist in growth stage financing, we are very dynamic in building the infrastructure through "Powered by Esquire" partner network so we can be well-positioned to address these various needs, he said.
The powered by Esquire represents EFI’s program of forging partnerships with businesses.
First of which is Capitalife Lending Inc., an expert in personal lending. Capitalife also brings EFI’s business loans to more clients as the latter’s sales and marketing arm. The partnership, together with Buy-A-Car, has recently launched the Buy-and-Drive fast and hassle-free auto loan.
EFI has also partnered with rising software company, IntelliTech Business Solutions Inc., a software provider offering business IT solutions, including applications and systems integration, mobile systems integration, e-commerce solutions, web hosting and design, consulting and outsourcing, to SMEs.
The collaboration links IntelliTech to Esquire’s vast network of small and medium enterprises, all of whose growth will eventually require a reliable technology system.
DB Express, a timely offshoot of one of its long-time clients, is another of the newest ventures that are powered by Esquire, which shares in the business’ vision of making fresh flowers and flower arrangements for all occasions affordable, accessible and quick.
Three kiosks are now operational in SM malls in Sucat, Sta. Mesa and Bicutan, and at least seven stores are set to open in the many other SM malls within the year.


When in Cebu City, please visit gregmelep.com for your real estate and retirement needs. 




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Fallout from the PLDT ruling


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4:09 am | Friday, October 26th, 2012
From bad to worse.
This was the common sentiment of the companies that stand to be affected by the ruling of the Supreme Court on the motions for reconsideration filed on its earlier decision in the case of “Wilson Gamboa vs Finance Secretary Teves, et al.”
By way of background, Gamboa was a minority stockholder of PLDT who questioned the legality of its ownership structure. He argued that since 64.27 percent of PLDT’s common shares are owned by foreigners and only 35.73 percent by Filipinos, it is in violation of the constitutional provision that requires the capital of public  utility companies to be, at least, 60 percent owned by Filipinos.
PLDT countered that these percentages should be viewed in the context of its authorized capital stock where common shares represent only 22.15 percent of that totality and the balance of 77.85 percent is taken up by preferred nonvoting shares, of which 99.4 percent are owned by Filipinos.
Thus, PLDT pointed out, 85.27 percent of its capital stock should be considered Filipino- owned and therefore compliant with the ownership requirement of the Constitution.
The tribunal rejected this argument. It ruled that “full beneficial ownership of 60 percent of the outstanding capital stock, coupled with 60 percent of the voting rights is required” to meet the 60-40 capital ownership benchmark.
Interpretation
The motions for reconsideration cited, among others, earlier opinions by the Securities and Exchange Commission interpreting “capital” as referring to the company’s capital stock without distinction on whether its shares of stocks are voting or nonvoting.
Invoking the constitutional mandate that “the State shall develop a self-reliant and independent national economy ‘effectively controlled’ by Filipinos,” the tribunal stressed the importance of putting a vital segment of the economy, operation of a public utility, in the hands of Filipinos, not foreigners.
It also cited the Omnibus Investment Code and Foreign Investments Act, which use ownership by Filipinos of at least “60 percent of the capital stock outstanding and entitled to vote” of a corporation as determinative of its classification as a Philippine national for purposes of capital ownership.
Not content with reiterating its earlier interpretation of “capital” in relation to common or voting shares, the tribunal expanded the scope of the nationality requirement to include all other kinds of shares that a partially nationalized corporation may issue.
Other stocks
It stated that “… if a corporation engaged in a partially nationalized industry issues a mixture of common and preferred non-voting shares, at least 60 percent of the common shares and at least 60 percent of the preferred non-voting shares must be owned by Filipinos.
“In short, the 60-40 ownership requirement in favor of Filipino citizens must apply separately to each class of shares, whether common, preferred non-voting, preferred voting or any other class of shares.”
The justices reasoned out that this interpretation ensures compliance with the constitutional command that ownership and operation of public utilities should rest in the hands of corporations whose capital is at least 60 percent owned by Filipinos.
From the point of view of the executives of companies engaged in partially nationalized industries, the earlier ruling that common shares should be used as the basis for determining compliance with the 60-40 ownership requirement was painful enough, the inclusion of preferred shares and other forms of stocks in the nationality requirement was a killer.
With this new standard, the affected companies will have to review their stock structure to make sure all the kinds of shares they have issued conform to the 60 percent Filipino ownership requirement.
Trades
If their present stock composition meets the nationality benchmark, fine. All they have to do is make adjustments in the General Information Sheet they are required to submit every year to the SEC to show the nationality of their stockholders.
In case their shares are traded in the local stock exchange, their transfer agents have to be put on strict notice to ring the alarm bells immediately whenever trades on their shares are close to breaching the 60 percent ownership cutoff.
The administrative and civil penalties that attach to any breach of the nationality rules, which apply to both the transfer agent and issuer company, are not something to sneeze at.
The monitoring responsibility becomes problematic if the company’s stocks are traded in the New York Stock Exchange, NASDAQ or other foreign bourses where trades are initiated and completed at the flick of a finder on a computer key.
The shares of Philippine corporations traded in these exchanges may have to be placed in a separate portal or board, with its own unique trading parameters, to ensure compliance with the nationality ownership rules. This arrangement could put a damper on their stocks.
Then there is the issue of “depositary receipts” that some nationalized companies earlier issued to raise funds from foreign investors and are traded in the US stock market.
A depositary receipt is a negotiable financial instrument issued by a bank or investment company that represents ownership in securities of a foreign company.
Designed to go around the constitutional prohibition on ownership by foreigners of stocks of companies engaged in nationalized industries, the stocks are, in theory, owned by the issuing company although beneficial ownership rests with the foreign receipt owners.
Are these receipts covered by the ruling on Filipino ownership? If so, what will happen if these receipts breach the ownership requirement and there are no interested Filipino buyers?
Can the company be compelled to buy back these receipts? What if it does not have the unrestricted retained income that the law requires before any such buyback can be done?
More on the effects of the PLDT ruling in next week’s column.
For comments, send your e-mail to rpalabrica@inquirer.com.ph.

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The Basics of Investing in Mutual Funds


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No doubt you've got some plans for your future. Even if you don't, you're likely aware that you'll need some money for the future to meet your growing needs. But your needs aren't going to be met with the interest you get on savings accounts or your fixed deposits. So what do you do? You could try investing in mutual funds instead. There are various kinds that you could look up and pick the ones which are most likely to serve your own needs. The one thing you need to keep in mind is that you'll have to understand your mutual fund investments - and you can't do this if you don't know anything about what the company does. If you don't know squat about a company's product, then you don't want to invest in it. This is because you don't know whether the company's product is strong, is likely to survive competition and so on. For starters, it's best to stick to things you know best.
Once you've narrowed down the companies and the products you can identify and know enough about, you can move to the next step: comparing the pricing. You want to look at how the company has performed, yes. But you should also look at how friendly the company is to share-holders and how well priced the shares are so that you can buy them. Even when you're looking at a company's past performance - don't invest because you see the profit is good. You're not looking at the profit but checking the volatility of the fund when you do this research. If you've noticed very high fluctuations, you might want to not invest, or at least invest very little in it - it is certainly a risky venture. Look at the fund ranking when you're researching, but take the ranking with a handful of salt - if the person managing the fund has changed then it is likely the results will as well.
You want to opt for diversified funds as much as possible. Don't invest in multiple companies in the same sector - that isn't what qualifies as 'diversified'. The whole idea is to invest in entirely different sectors. This is because if a single sector goes into troubled waters, another sector which performs well is likely to make sure you don't drown. At the end of the day, you just need to do your research well and look for a competent fund manager to handle your investments. But make sure that you also keep an eye on them and that you ask questions when you don't understand something.
Among many mutual fund options you may invest in diversified funds to complete your financial goal.
When in Cebu City, please visit gregmelep.com for your real estate and retirement needs. 
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