High Heeled Traders

UPDATE : China manufacturing contracts. Germany unemployment down. You see here that Germany benefitting from “cheaper goods” from weak euro and seriously encroaching on China’s export markets.

I don’t want to immediately write-off China, but here’s the thing, other countries with weak currencies (euro and yen) and better quality goods are so competitive AND they are just not doing the right thing at all when it comes to what they should be doing for their long-term economic growth and prosperity. I thought before that with the kind of financial muscle they have, like owning the most amount of US Treasuries at 1.4 Trillion dollars that they can just go from strength to strength. But it is easy to make mistakes — like selling assets so they can spend the money on things that go down in value. It’s been widely reported that they are supporting the already expensive stockmarket. Only for the natural consequences of the market to pull it down. There are reports but let’s say they spent $20 Billion for stockmarket rescue last week alone, that’s definitely not going to last very long. And a question just in time for this week’s military parade — how will those fancy guns and firepower help the environmental, social and human development needed for growth?

United States — ahh the economy is the world’s largest and showing promise at growth so it still has a strong pull as far making money is concerned. However, rate cut looming poses risk in investments (USD strengthening) plus of course many of the biggest companies has exposure to slow-growth countries like Japan and EU, China are causes for concern. But then again, there is always attraction for companies with strong domestic focus and dividend plays.

Bloomberg article by Mr Pesek just confirmed what I said / wrote about as the next best investment destination – Philippines and accdg to him, South Korea are the big winners from the China slowdown. No more BRICS. Coin a new acronym, quick!
How about SoKorPhilUS? PhilSoKUS? SKUP?

I posted a video that the Philippines can even surpass China’s growth. I was in the Invest ASEAN event organized by Maybank Kim Eng (Malaysian bank now expanding aggressively in the Philippines — see what I mean?!) Check it here.

Now just a quick list why Philippines is the best investment destination post-China :
(Facts and figures from CIA World Factbook)
Philippines https://www.cia.gov/library/publications/resources/the-world-factbook/geos/rp.html
South Korea https://www.cia.gov/library/publications/resources/the-world-factbook/geos/ks.html

1. More income earning potential of the unstoppable USD –
a) Tourism – value-for-money destination featuring natural wonders (Perfect cone volcano), biodiversity (No.1 in the world), history and art from centuries of Spanish rule, American and Japanese occupations, fresh food, vibrant city life and rural fiestas and idyllic islands and beaches!

English-widely spoken attracting travellers from US / Western countries 4-5 Million migrants that recurringly visit their families and most of them area also bringing their foreigner friends.

Environmentally — Philippines also has a more welcoming environment, enjoying tropical / warm weather year-round.

c) Remittances – the overseas workers and migrants (10Million worldwide and high concentration in US / OECD countries)
Services / Outsourcing industry – the value proposition and talent pool is even attracting more and more clients. Major global banks like Citibank, JP Morgan has call centers and back offices in Manila.

2. Geopolitics –

a) Philippines – part of ASEAN block with a market of 600Million people, important strategic partner of the US Military vs China
South Korea – got a pesky neighbour with nuclear arms

Maybe even as a blessing in disguise, Philippines has a tepid relationship (resulting to low level of investments from China) because of territorial disputes. China, thousands of miles away is claiming territories within the 200 nautical miles exclusive economic zone as provided by international agreements.
http://www.un.org/depts/los/convention_agreements/texts/unclos/part5.htm

3. Demographics –

Philippines is 100M, South Korea is 50M – Philippines has double the size of the population translating to bigger market / workforce also.

Philippines also has a younger more energetic workforce with median age 23.5 vs Korea’s 40.2 and rapidly aging population with .14% growth rate

Education – American-style education has many Filipino professionals reaping relatively easy skill accreditation even with countries with the most stringent requirements like Engineers for many Middle East countries, Health professionals (Doctors, Nurses, Medical Technologists), Information Technology jobs (programmers) in the US, UK, Australia, Canada. The Philippines are also getting more and more business processing / knowledge processing jobs, many foreigners even US-based children of Filipino migrants there, have been coming to the Philippines to get their professional education here because it is inexpensive and high-quality.

For decades, South Koreans have been coming to the Philippines to study English. More Koreans are also living and conducting business in the Philippines.

Migration – while many Filipinos migrate out to work and live abroad, Filipinos continually come back to their motherland. Many have also inter-married to other nationals most of whom prefer living / retiring in the Philippines. Cebu, Dumaguete, Baguio. Manila and many rural areas have multi-racial families providing a dynamic linkage (and importantly the USD remittances ) to the Philippines from other OECD economies.

South Korea registers 0 migrants per 1000 population.

——————–

The Philippines’ economy, as part of the global financial world is not selloff proof, but its economy is not in danger of being dragged down by commodity exports like what’s happening to Canada, OPEC countries, Brazil and Australia. Despite having an abundance of natural resources due to its geographical location / Pacific Ring of Fire — the Philippines is not a big commodity producer that drags down the slowing demand of gold / copper / oil.

As an end note, with the election year coming, there will be further “stimulus” from the government. It doesn’t matter who gets elected. Most of the politicians are corrupt. It’s not the government but the people, resilient and self-reliant who make the Philippine economy go from strength to strength..

Mr. Pesek’s article
http://www.bloombergview.com/articles/2015-08-30/two-big-winners-from-china-s-big-slowdown

A sneak peek about the Philippines
2015 Tourism campaign

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