Saturday, 27 December 2003

The Year That Was: Punishment For Treason

TRIVIAL. Looking back at one year that seems to have been dominated by one single subject is not particularly easy. Against the backdrop of Iraq, Saddam Hussein, Osama bin Laden and the continuing fight against global terror in all its forms, everything else that transpired over the last 12 months almost seems trivial in comparison.

But a lot did take place in 2003. Away from the daily news of ambushes in the streets of Baghdad, the global economy has moved on, albeit in fits and starts, to what looks like the beginnings of a recovery that everyone has been waiting for at least for two Christmases already.

In Europe, and particularly in the UK where consumer demand has remained buoyant despite the economic problems on the mainland, retail figures over Christmas are expected to show a strong recovery for the sector. Official statistics are as yet unreleased, but if the horde of holiday shoppers is to serve as a good proxy indicator, I would have to say “aye” to prospects of a better year ahead.

US ECONOMY. The good news is that the US economy looks set to power ahead in the next year.

In his last economic briefing—which we discussed at some length over the last two weeks—Dennis Turner, HSBC’s chief economist, pointed out that the last two quarterly growth figures for the American economy shows it emerging from hibernation. This is good news to everyone from Manila to Manchester—with many businesses set to benefit from a higher volume of US trading ahead.

It does not hurt that many investors’ pocketbooks would have been just that little bit fatter at the close of this year than they would have been at the last.

The most patriotic investors among us that chose to keep money onshore would have had the broadest of smiles—the Philippine Stock Exchange (PSE) composite index is up 40 percent over where it was the same time last year.

Those less patriotic suffered for their treason.

Holding money in US dollars would have only realized four percent, and even if the same money were invested in American equities, it would on average most likely not have returned anything above 30 percent.

Many other foreign currency/equity investment combinations would not have found the PSE that easy to beat.

The one exception would have been for those that held their funds in the UK currency and equities. The combined return to the UK pound and the FTSE is 50 perccent for 2003!

EXUBERANCE. The individual investor’s general feeling of exuberance cannot be underestimated as a key component for any sustainable economic recovery to take place.

This is the reason economic slumps follow massive disasters and catastrophes, such as the one that took place after 911. This is also why boom times trail in the wake of euphoric periods of celebration, like that following the end of the last world war.

But what of 2003? Did the year end on a positive note, high enough to signal an upturn for the year to come?

On balance, it probably did. Granted, even the capture of Saddam Hussein has not yet quelled the restiveness in the region. Bin Laden remains on the loose, and getting on and off airplanes is still like being cleared to enter the underground vaults at Fort Knox.

But the worst does seem to be genuinely over. There are no more fears of equity bubbles waiting to burst, of overvalued dotcom shares, nor of corporate scandals looming on the horizon. Fingers crossed, it may yet be a really good year ahead.

Our best wishes for a happy new year to all!

Published in the Sun Star Daily, Saturday, December 27, 2003 (

Saturday, 22 November 2003

Terror economics

TAME NO MORE. The train ride home to Glasgow from Edinburgh is nothing special to write home about. As far as home-from-work journeys go, it is relatively tame and sedate compared to traversing Edsa in rush hour, or even trying to get out of Cebu City between the hours of five and seven. If anything, I find it a de-stressing journey, a chance to gradually relax and leave my workday behind me.

Thursday night’s trip home, however, was quite out of the ordinary. For one, I had just come home from one of the endless swirls of corporate networking events that I have to attend, especially at this time of the year. Tonight’s was the launch of this year’s batch of Beaujolais Noveau, and so was well attended by members of the British-French business community. That, apart from the fact that I quite fancy a taste of the new tipple, especially at its introduction, was reason enough for me to be there.

A few sniffs, snips and exchanges of business cards later, I was comfortably on the express train home, earphones in place, busily trying to find my relaxing (meaning not rap or hip-hop) music channel, to begin the de-stressing routine I had become accustomed to.

The news I heard made sure a relaxing ride it was not to be.

No, I am not referring to the lambasting the Scotland football team received from the press, after exiting from the Euro 2004 qualifiers with a resounding 6-0 defeat at the hands of The Netherlands. Though I now quite like football, and do support the on again-off again national team of the place where I currently reside, the Filipino in me never really gets as fired up with football as the rest of our readers are when it comes to matters about basketball.

It was not even the news that Turkey—where our family had lived for over seven years—had also exited the Euro qualifiers via a shocking 3-2 defeat to a lightweight Latvian team at home in Istanbul. To put matters in perspective, Turkey placed third in the last World Cup, so not even making the Euro qualifiers would be like the LA Lakers not even making the cut for the Pacific Division playoffs in the NBA. Mighty shocking indeed!

But no, it was the other news about Turkey that jolted me out of my otherwise homeward bound mood. My recollection of Turkey—despite the frenetic chaos of Istanbul, was of a surprisingly serene and beautiful place—which made the news I was hearing sound too incredible to be true. But it was, unfortunately.

Twenty-seven people confirmed dead, 450 people injured, many of them seriously.

The blasts were well timed, striking at the heart of British interests in this very secular and pro-Western Muslim country, at exactly the same time that the meeting between George Bush and Tony Blair was taking place in London.

Hallmarks of Al-Qaeda, you say. The symbolic timing, the precise execution, the ruthless devastation of it all bears the signature of the dreaded organization’s handiwork.

However, behind the blood and debris is another Al Qaeda specialty—striking at the heart of Western economic interests, where it hurts most.

Nine-eleven was the coup de grace to the current recession in the United States—this one may yet derail the long awaited upturn the world has been waiting for since the twin towers came down. Let’s look at the out-of-pocket costs of this latest terror strike next week.

Published in Sun Star Daily, Saturday, November 22, 2003 (

Saturday, 4 October 2003

Still An Uncommon Market

Ever had Refosk before? What about Rebula? Or perhaps Sipon? Neither did I, that is until last week, when I attended the inaugural meeting of the European Business Enlargement Club, sponsored by the Glasgow Chamber of Commerce.

The club aims to bring together in one forum nationally based businesses who are looking to enlarge their businesses within Europe, in order to take advantage of what is now almost a borderless European market. And so it was that our whole evening was spent sampling nationally famous but little known (Europe-wide) delicacies, in order to promote them to a wider continental audience.

The new accession countries were well represented, particularly Slovenia, where the three wine varieties Refosk, Rebula and Sipon hail from. Victimized by the monopoly of the French varietal wines like Chardonnay and Sauvignon Blanc, I was quite delighted to discover the quirky but otherwise very quaffable Slovenian wines. Of course a lot of work still needs to be done to promote them to the status enjoyed by the French vintners. Many English families have now started giving their daughters names like Chardonnay, but I think it will not be anytime soon that we start hearing of baby girls named Refosk.

National tastes die hard, except those of the British, who never had national tastes to begin with. But while work to promote goods influenced by national palates across borders seems a daunting task, less resistant to change are corporate activities that are now seeing a massive reconfiguration, driven by the widening of the European market.

Another large segment of organizations represented in the meeting, for example, was shared service center providers and contractors, whose businesses have seen a massive boom since the opening of the common market, and especially after the adoption of the common currency.

Shared Service Centers are the accounting "super factories" where multiple sites of an organization throughout Europe process all their accounting activities in one location. The savings in terms of manpower and facilities costs are enormous for many businesses, prompting many to join the trend. Today, when one orders goods from France, chances are the actual delivery will come from say Italy, the invoice may be issued in Scotland, and the payment collected in France.

Yet for all the changes towards market convergence, parts of Europe are still very much national. The job market, for example, is still quite fragmented. Basic issues such as common qualifications throughout the continent remain a distant reality. So much as a professional from Greece wants to work in the UK, as he has been told that employment across borders is now unrestricted, chances are that non-recognition of his Greek qualifications would prevent him from pursuing his pan-European ambitions.

Clearly, a lot of work still needs to be done to give life to a truly common European market. And it is good for us in the Philippines to watch and see how it all takes shape. After all, Asean may well decide to become a unified trading bloc like Europe, in order to have more muscle and critical mass in the world market. And when that happens, if would be good if we could avoid the innumerable start-up problems, such as we now see in Europe.

Published in the Sun Star Daily, Saturday, October 04, 2003 (