What’s happening at the PSE?

The five-hour stoppage of trading at the Philippine Stock Exchange last Tuesday is worrisome, to say the least, with traders, analysts and observers not thoroughly convinced that a simple “computer glitch” caused the halt in trading – the longest so far in the history of the local bourse.

Just what kind of technical glitch caused the five-hour stoppage has yet to be made clear. We tried to get in touch with PSE president Hans Sicat but it seems there is also some kind of technical glitch on that end. The Tuesday episode was not the first time that such “technical issues” – the term used by Sicat in an interview – happened. Last Monday, trading was also halted just when the PSE index sharply plummeted at 6.7 percent, wiping out the record gains made earlier this year. Are these glitches intentional?

Last Aug. 18, trading was also suspended for close to an hour when an error in the online platform of the PSE registered errors in the reference prices that were reflected in the PSE Tradex. Sicat maintains though that the “technical issues” that the bourse has been experiencing lately has nothing to do with the fact that the PSE recently adopted the new trading engine PSE TradeXTS just this June. Despite assurances that the problem has been isolated, one can’t really blame traders if they continue to be apprehensive.

Monday was actually dubbed “Black Monday” as stocks went crashing with the Dow going down by more than 500 points in two consecutive days as a result of the crash in China – with sentiment remaining negative. And as we all know, the market is sentiment driven, and fears are growing that the weakening of the Yuan could adversely affect many economies including the Philippines’.

In China, one of those that was thoroughly affected by the Monday bloodbath was Wang Jianlin, Asia’s richest man who has lost an estimated $13 billion in the Chinese stock market crash, with $3.6 billion lost in Monday and Tuesday’s trading. The big question now is whether the country’s “strong fundamentals” will be able to withstand the negative sentiment and the continuing slide in the global market.

‘Something fishy’ with UAE air talks

Something fishy is in the air with the government’s dogged insistence in continuing the air talks with the United Arab Emirates, our insider spy told us. Local carriers Philippine Airlines and Cebu Pacific – both of which are showing a united front – has issued an appeal for government to resist pressure to grant “unfair advantages” to Emirates airlines “in the form of unjustified ad unnecessarily disruptive additional flights to serve Manila,” the local airlines said in a joint statement.

“The UAE request for additional Manila entitlements is unjustified and unnecessary because the supply of airline seats is well in excess of actual demand for the Philippines-UAE market. Instead, the government owned and state-supported UAE airlines will gain insurmountable lead vs. Philippine carriers,” the statement further read. Both PAL and Cebu Pacific strongly feel that the air talks scheduled today and tomorrow should not even be held until such time as all available entitlements to UAE have been utilized by the local carriers.

As pointed out by PAL president Jimmy Bautista, increased entitlements to the Gulf carriers would undermine the substantial investments made by the flag carrier in opening up new routes for tourists and overseas Filipino workers. Even in the US, American carriers are protesting the undue advantage that the state-owned gulf carriers are enjoying because of the billions in subsidies that they have been receiving over the years.  American carriers are demanding a review of air agreements over allegations that the Gulf carriers – in particular Emirates – have been exploiting the open skies agreement that has been in place since the 1990s, saying the undue subsidies have violated the spirit of the open skies agreement. In the Philippines, Qatar Airlines was recently granted six additional flights per week between Doha and Manila starting October 26. Our contact in Qatar told us the addition was a reasonable increment, aside from the fact that the additional frequencies are during times when air traffic is at a minimum (Flights departing Doha arrive to Manila at 10:15 p.m., while flights depart Manila at 11:59 p.m.).   Clearly, Qatar’s request is fair and reasonable. It has also indicated willingness to work with both PAL and Cebu Pacific for code sharing flights.  

Oshkosh wins $6.7 billion US military contract

Oshkosh (not the kid fashion label but the American industrial company) edged out Lockheed Martin, AM General and other rivals in the contract to build 17,000 joint light tactical vehicles (JLTVs) that would replace the ageing Humvees. The $6.7 billion contract for the US Army and Marine Corps will certainly boost the sagging fortunes of the company whose profits declined by 20 percent, with share prices soaring to 12 percent hours after announcement of the win was made.

Sources say Lockheed Martin – which is the top US government contractor as of 2014 – is considering a protest although it is unclear as of yet on what grounds. AM General however is reeling from the loss since it was the builder of the 120,000 Humvees that were used in Iraq and Afghanistan. Oshkosh, which has been building military vehicles for the US Department of Defense for several decades, offered a design that would meet Army requirements for a four-wheel truck that can resist mines and roadside explosives, but also light enough to be transported by air.

Abaya misses engagement due to traffic

MAP members told Spy Bits that Transportation Secretary Jun Abaya was supposed to be the principal speaker at a Management Association of the Philippines forum yesterday but missed the engagement because he was stuck in traffic. If that doesn’t open Abaya’s eyes on the critical and “fatal” traffic in Metro Manila, then we don’t know what will.

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