FINANCIAL MARKETS

Local financial markets remain bullish despite political noise
ACI Philippines says positive developments sustainable

(Manila, Philippines, March 28, 2006) - Despite a pronounced increase in the chronic political noise that characterizes life in the Philippines, the reinvigorated Philippine peso has persevered, and even appreciated to P50.89 at one point. "This is a positive sign that the currency markets have matured, and are behaving more like markets in more advanced countries," said Jose Emmanuel Hilado, ACI Philippines president and BDO Private Bank treasurer.

According to Hilado, the peso's sustained strength suggests that investors have started to take the Philippines more seriously in spite of all the political bickering. "Our foreign exchange rate has continuously declined from the P39 level in 1999 due to fiscal crisis and political instability. But today, from all indications, it looks like political instability no longer affects the financial industry."

"We were pleasantly surprised to see the peso remain steady despite the political disturbances of the past weeks," said Jose Arnulfo Veloso, ACI World Congress chair and treasurer for Philippines of HSBC. "This signifies the growing confidence of investors in the Philippine financial markets, much of which is a result of the government's bullish attitude when it comes to solving the fiscal crisis."

According to Veloso and Hilado, the financial sector showed signs of strengthening after the government finally implemented the Expanded Value-Added Tax Law, despite criticisms and objections from many fronts. "It was an unprecedented, non-populist move, but it was a move that showed the rest of the world that the government is dead-serious about fixing the budget deficit," said Veloso.

Now that the worst is over, local financial industry players are banking on a sustained industry growth, which is not at all impossible, according to Hilado, because the Philippines is likely to withstand any political crisis as long as the fiscal measures are in place. "We used to be called the 'Argentina of Asia' - because we were following Argentina's pre-default debt path. Now, we have shaken that tag off and emerged as the new darling of the global financial market," said Hilado. "Everybody is very upbeat on the Philippines."

The recent positive developments make it an opportune time for the Philippines to host the 45th ACI World Congress to Manila. Scheduled May 25-27, the Congress will be held at the Philippine International Convention Center and is expected to draw around 400 financial markets leaders from ACI organizations worldwide. ACI The Financial Markets Association is a Paris-based international umbrella organization of local financial markets associations.

"This year's Congress carries the theme 'Rising to the Challenge'," said Veloso, who serves as chairman of the 45th ACI World Congress Organizing Committee. "We find the theme very timely, as it highlights the new challenges that we face each day in our evolving business environment."

The 45th ACI World Congress is being organized by ACI Philippines, the local member association of ACI The Financial Markets Association, and managed by marketing consultancy firm TeamAsia.

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