peso dollar rate

[ahock]

Kuya Danny or kung sino mang magaling sa eco

How come that yung stocks ay sensitive sa speculations meaning pag may rumor whatsoever it could go up kagad worst go down? While yung currency exchange rate like sa peso once bumaba yung value ang hirap pataasin like sa atin agaisnt the dollar. pweden lang mag level but ang hirap tumaas.

[Hulk]

Originally posted by ahock
Kuya Danny or kung sino mang magaling sa eco

How come that yung stocks ay sensitive sa speculations meaning pag may rumor whatsoever it could go up kagad worst go down? While yung currency exchange rate like sa peso once bumaba yung value ang hirap pataasin like sa atin agaisnt the dollar. pweden lang mag level but ang hirap tumaas.

I will answer the currency part and leave the equity part to the experts. :D

It's not really true na hindi nag-a-appreciate dramatically yung peso. It has in the past but you're probably too young to remember it. It reached P 30 before during the late 80's/early 90's and creeped back to 25.

There are a lot of inter-acting factors affecting the currency but I will try my best to discuss and isolate some of the more significant ones.

Bangko Sentral ng Pilipinas (BSP) - one of the BSP's primary objectives is stability, not currency appreciation, but stability. The reason for this is that there are a lot of sides in the movement of the currency. Importers want a stronger currency (cheaper cost of imports) while exporters prefer a weaker currency (since the peso is cheaper, their goods will be more competitive since it will be cheaper relative to other countries). It is in the best interest of the BSP to keep parties both satisfied. Furthermore, for business palnning purposes, it's always better to have a stable currency for companies so that they can properly forecast their finances.

Balance of Trade (BOT) - this is the amount of trade going on between the Philippines and its trading partners. The more we import (a dollar outflow) versus the amount we export (a dollar inflow), the more the currency depreciates.

Now, we don't really have a strong export sector aside from electronics. Unfortunately, our electronics sector is also heavily import-dependent (component parts). So you see in the long-run, we have what we call a trade gap (more imports than exports) which could only lead to a steady depreciation of our currency. That's the reason why may mga campaigns to "buy Filipino," for the purposes of reducing our imports.

Investments flow - together with the BOT forms part of the Balance of Payments (BOP). Anyway, investment flows are the amount of dollars going in and out of the Philippines from... duh :D... investments. The more money coming in from investments abroad, the stronger our currency becomes.

There are two types of investments, they are:
Permanent investments - these are long-term in nature like companies opening up plants in our country.

Temporary investments - commonly referred to as "hot money." These are the investments of foreigners in our local stock and fixed-income market. They are short-term in nature and could easily be pulled out of the country.

As you can see the important thing to increase here are permannent investments. That's why the gov't. is spending so much in promoting the Philippines to other countries. (Now you understand why Ramos goes to all those trips abroad).

Now ang probably naabutan mo is somewhere between 1997 and now. When the Asian crisis hit, most of the "hot money" went out of the country seeking investments elsewhere. The reason for this is that when a currency depreciates tapos may investment ka sa country na ito, liliit din yung investment mo (i.e. X invested $1 at P 25. Peso depreciates to P50/$1. X gets $0.50 when he withdraws his money.). Although most countries have won portfolio investors back, tayo hindi pa rin, because of the bad rep the Philippines has been getting especially after the Erap administration.

On the permanent investment side, mas crucial yung mga peace and order issues. You won't invest kung maraming rebelde sa isang country (NPA, MILF, MNLF, etc.), at malaki ang risk na ma-kikidnap yung mga expats mo (Abu Sayaf, other hostage gangs).

As you can see, medyo bad yung prospects natin in terms of our currency, that's why puro depreciation nakikita mo. We still have a lot of work to do as a nation. Now other factors that I haven't discussed but are likewise important are: tariffs and quotas (free-trade agreements); deregulation issues in both industries at sa currency; tax issues; etc.

Hope that helps.

Kuya Danny wala ba kaming honorarium nina richyuppie and spyfrat from PEx? :lol:


:frank:

[KuyaDanny]

Eto honorarium ninyo:

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TY

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:)

[nance]

eto pa:

thank you!

mas marami pa yata akong natutunan sa post mo kaysa sa economics class ko nung high school (i'm not exaggerating).

[richyuppie]

ahock, stocks are volatile because it is very sensitive and is directly proportional to economic factors. To understand the securities business, we should have a basic understanding of economics and how it affects securities as a source of investment. It’s quite long to explain everything, so I’ll just gonna give you a brief outline.

Economy
1) Laws of Demand and Supply
2) Economic Factors (Internal and External)
3) Economic Indicators
- GNP and GDP
- Philippine Consumer Price Index (PCPI)
- Money Supply (narrow money, broad money, and domestic liquidity)
- Interest Rates
4) The Business Cycle (Expansion–Peak–Recession–Trough)

Financial Statements
1) The Balance Sheet (Assets = Liabilities + Capital)
2) The Income Statement
3) The Accumulated Retained Earnings Statements
4) The Statement of Cash Flows

The money market is not that volatile because the Central Bank has foreign currency reserves to make sure that our Peso is stable, just like what Hulk mentioned.

If you have anymore questions or you want to me to elaborate more on the outline I gave you, just feel free to ask here.



Kuya Danny, I prefer cash. Hehehe



Indeed!

[Hulk]

Maraming salamat Kuya Danny and nance! :wave: Wala bang convertible feature or cash surrender value yung TY? :lol:


:frank:

[ahock]

thanks guys madami pa akong tanong about eco eh pero sleep muna me I'll follow you up

[Spyfrat]

stock nang pex sa akin hehe

its a hard fact na most of our stocks is rumor driven. ang mentality nang investors natin ay short term investments lang. why profit long term if u can profit short term d ba? most traders here ignore any fundamental aspects nang isang stock, kung baga deadma kami sa mga pe ratios, gnp, gdp, inflation figures, mga ganun. since the market lacks volume, rumors can create volatility sa isang stock, at yung ang binabantayan nang mga traders. without much volatility, nagiging boring ang market.

[richyuppie]

ahock, I forgot to mention these:


Factors Involved in the Movement of Stock Prices:
· Fundamentals or the profitability of the company
· The general state of economy
· Socio-psychological factors such as investors’ confidence and political events
· Snowball effect of the present trends in the market, both local and international

Methods in Choosing the Right Company to Invest:
· Fundamental Analysis
– Is the study the company's current management and position in the market
– Economic, social, and political factors
– Accounting-related factors
– The potential to generate earnings to determine whether stock prices are valued correctly, undervalued, or overvalued
· Technical Analysis
– The study of price and volume based mostly on graph and chart patterns to identify trends


Indeed!