Strange happenings

WATCHING an action movie with many plot twists and turns can be very enjoyable. You never know who to trust and, sometimes, the bad guys are really the good guys. If it is really done well, it can be like a roller-coaster ride.

However, in real life, we sort of expect things to follow logically, to follow a pattern that we can make sense out of. In fact, when events do not follow a reasonable course, or seem far out of the ordinary, we may begin looking for explanations that, in themselves, are as bizarre as what we are trying to figure out. This leads to all kinds of conspiracy theories, which could involve super powerful global organizations or space aliens.

Author Arthur Conan Doyle wrote his character Sherlock Holmes as saying, “Once you eliminate the impossible, whatever remains, no matter how improbable, must be the truth.” Except that, with regard to the recently released economic-growth numbers, I am not sure what is impossible. Therefore, it is difficult to find the explanation that is only improbable.

I am still troubled by the fact that the government and private-sector economists and policy experts were off by so much in the estimates for first-quarter economic growth. The Philippines is not that complicated an economy. A large portion of the business activity may be off the books, but that makes it even easier to understand, since all the government looks at is what is officially receipted.

Further, there is so much red tape and paperwork in this country that I would think it is pretty hard to hide a 30-story condominium, even in a far-flung province. I am also confused about the lack of good growth in the construction sector, as the cement industry posted an 8.6-percent increase in sales for the first quarter. Maybe that cement was used not for construction, but for special shoes for some bad guys now lying at the bottom of Manila Bay.

On April 14 Gil Beltran, undersecretary and chief economist at the Department of Finance, said this to reporters about the first-quarter economic numbers: “I’m sure it will be very close or will be above 7 percent.”

Maybe things changed a lot between the middle of April and two weeks ago. President Aquino spent hours at the recent World Economic Forum on East Asia telling the world repeatedly how great the Philippine economy was doing. Then, a week after that, the numbers were revealed to be less than exciting, making his statements sort of hollow.

The stock market tumbled 2 percent in two days, apparently in reaction to the economic news. But that bothers me also. A week before the market fell, a major Philippine bank announced its intention to maybe sell a large portion of its local stock holdings. I don’t manage $18 billion, but when I bought a used Tamaraw FX, I did not walk up to the buyer and start the conversation with “I want to buy at any price.” Likewise, he did not tell me that he was going to sell the vehicle, even if he did not get the price he wanted.

Then there is the fact that net foreign buying in the local stock market for May was at least P8 billion. That is not all the money in the world, but it does show that more money is coming in than leaving.

All the expert “gloom-and-doomers” jumped with joy over the weekend, some with big, red headlines on their websites that seemed excited to say “I told you so” about the lower economic growth and the crashing stock market. Maybe they will turn out to be right. Or maybe not.

This movie is not over.

As far as the stock market is concerned, either this is the greatest buying opportunity you could hope for or the market is headed to the Fourth Circle of Hell. According to Dante Alighieri’s 14th-century poem “Divine Comedy,” that is where all the greedy people spend eternity.

At this point, my longer-term positive view of the Philippine stock market has not changed. However, if and when certain conditions arise that will move my analysis in the opposite direction, then my outlook will also move.

In the meantime, I am still trying to figure out who to trust and what will happen next. Too bad there’s no fast-forward button in real life. –John Mangun, Businessmirror