Dismal corporate performance spooks investors - DEMAND AND SUPPLY

Last Monday, the Philippine Stock Exchange turned over less than P200-million worth of trades. For the past few weeks, trades were less than a billion pesos a day, often less than half a billion. Erap's being under housewife arrest in Polk St. and no longer holding midnight Cabinet meetings didn't perk up the market for long. It didn't seem to matter that in his place, is a workaholic bundle of energy and propriety named Gloria Macapagal-Arroyo. What are investors waiting for?

Positive news. Investors are waiting for positive news. This is what the string of analysts interviewed by ANC's business programs say daily. But of course… investing is all about making money. Unless you are Chuckie Arellano who blindly plunks down our pension fund money in a high-risk venture like Belle Resources because Boss Erap told him to, you would look for positive news… signs that you could make some money before you risk your money.

Kicking Erap out is positive news, and so is that story about the IMF forecasting a rebound this year. But apparently, they are not enough to drown out the negative news that's all around us. Domestically, there's the budget deficit that continues to yawn embarrassingly. With corporate profits down or non-existent, the BIR can't collect much this year in taxes.

Abroad, the Japanese economy is on the verge of collapse, and the Japanese government suffers from the absence of a leader who can carry them through a serious crisis. And the Americans are nervously waiting for a recession, confused by economists and their daily debates about its inevitability and whether it will be short or long.

Worse of all are the discouraging news from the corporate front. Domestically, local corporations are just finding out how badly they did in the last year of Erap. Abroad, the corporations are reeling from the impact of the dot com collapse. Warehouses in the US are brimming with excess inventory. Consumers are holding on to their money in the midst of news about lay-offs and hard times ahead.

Investors are waiting for the annual reports and the first quarter reports for positive news. Finding the right words to describe the past year's performance is probably almost like pulling teeth, no, make that doing a root canal.. Trying to sound encouraging but honest, should test the best of corporate wordsmiths.

That's why the stock market feels like Manila on Holy Week. There is time for traders to read a good book, feel sorry about past sins and recite a novena to St. Jude for the good times to roll again. You simply can't believe that the whole exchange traded a volume that's less than what one large foreign broker used to trade in a day.

Maybe things will pick up after the May elections, assuming it isn't postponed and it isn't too bloody. I am not too confident about Comelec's ability to run this election as it should because most of its members are new and there is this added complication of a new registration for voters. I think it will be messy and that will give a negative signal to investors.

In the next few weeks as local corporations report their year 2000 performance, expect the market to react by doing nothing. There will be very few corporate stars deserving of the investor's trust. Investment advisers will still tell their clients to remain liquid or be very absolutely selective.

But on the positive side, we are lucky to have someone who understands economics and who is trying very hard to lead by example. Imagine how worse things would have been if you-know-who was still by the river drinking Petrus with his shady friends way past midnight and plotting how to get more deposits into Jose Velarde's account.

All I am saying is, count your blessings folks. Could have been absolutely worse.

Benny Tan

Bizarre things do happen in this country, like Benny Tan being found guilty of graft. Someone like Ambassador Tan, known for his sense of decency and honesty, can't be guilty of graft unless something went amiss in the whole justice system. Then again, who can understand lawyers and the judicial system's workings? We saw all those lawyers arguing during the impeachment trial and it scared us how someone obviously guilty can be technically innocent.

What happened to Benny Tan is a nightmare that will haunt potential Cabinet members. We all know how the bureaucracy works and the buck stops at a high official's desk. You can hope your staff did their work well and are honest but you sign that mountain of papers with almost blind faith everything had been screened before the papers got to your desk.

Mr. Tan is a lawyer so I guess he knows what went wrong better than laymen like us. It is just that what happened to him made it clear that you can be legally and technically guilty just as you can be guilty as hell but technically innocent. It is just a matter of how the lawyers argue your case and how the court appreciates the evidence presented.

If I didn't know how things really work in this country, I would give the judicial system the benefit of the doubt. But something in me tells me there must be some miscarriage of justice in Mr. Tan's case. Hopefully, the Supreme Court sees that and gives justice to one of the country's upright citizens.

Love

Dr. Ernie E's contribution today is about love.

"Darling," she whispered, "will you still love me after we are married?"

He considered this for a moment and then replied, "I think so. I’ve always been especially fond of married women."

(Boo Chanco's e-mail address is [email protected])