Asian markets up on recovery hopes, yen sinks after BoJ decision

HONG KONG - Asian markets rose Wednesday to maintain their strong start to the year, with Tokyo soaring and the yen tumbling after the Bank of Japan decided against further tweaking monetary policy.

Weak earnings from banking titan Goldman Sachs, a jobs warning by Microsoft, and a plunge in manufacturing data highlighted the bumpy road ahead for the United States, the world's top economy, even as optimism over inflation and the interest rate outlook improved.

Still, hopes for China's recovery continued to provide much-needed support, with Vice Premier Liu He telling the Davos forum that growth will likely rebound this year as the country reopens from zero-Covid while adding that Covid infections had peaked.

His comments came after data showed the economy expanded last year at its slowest pace since 1976 -- excluding pandemic-hit 2020 -- but beat forecasts.

The news added to hopes for a global recovery after last year's pain caused by rising prices, rate hikes, China's economic woes, a spike in energy costs and the war in Ukraine.

"Last fall, there was broad consensus that China was in the wrong place, Europe was slipping into a recession, and the Fed was ultimately caught 'wrong-footed' by very sticky inflation," said SPI Asset Management's Stephen Innes.

"But fast-forward to these early weeks of January, and China's reopening has put the country on a path to much better growth, investors are far more optimistic about Europe's recovery, and the bane of all ills US inflation is even starting to recede."

Hong Kong, Shanghai, Sydney, Singapore, Wellington, Manila, Bangkok, Mumbai and Jakarta were all on the rise, though Seoul dipped.

Tokyo was the standout, however, piling on more than two percent after the Bank of Japan left its key policy rate unchanged.

But the yen tumbled from around 128.50 per dollar to more than 131 Wednesday after the move. It also tumbled against the euro and sterling.

Traders had been keenly anticipating the decision, which came after the BoJ last month shocked markets by announcing a tweak that allowed its tightly controlled bond yields to move in a wider bracket.

Clifford Bennett, chief economist at ACY Securities, said the decision indicated the BoJ was "acting appropriately in what is still an uncertain economic growth path, and still low inflation levels".

While other central banks have hiked rates, "Japan has long been a different story and remains so", he added in a note.

The move in December sent the yen soaring, and while the bank held firm Wednesday, there is a growing expectation that officials will eventually move away from the policy of buying up bonds to keep yields in check.

"Speculation will remain that it will eventually review its policy," said Takahide Kiuchi, executive economist at Nomura Research Institute and a former BoJ policy board member.

"Market focus will now shift to the appointment of a new governor," he told AFP, noting that the bank needs to "make its policy flexible" whoever is appointed.

However, other observers said if the BoJ continued to stick to its position, the Japanese unit could fall back to around 135 per dollar.

The strategy has been in place for years as the BoJ has attempted to boost the stuttering economy by keeping borrowing costs low, but with other central banks hiking rates, the yen came under immense pressure and hit a three-decade low of around 152 per dollar in October.

Key figures around 0520 GMT 

Tokyo - Nikkei 225: UP 2.5 percent at 26,790.52

Hong Kong - Hang Seng Index: UP 0.2 percent at 21,616.17

Shanghai - Composite: UP 0.1 percent at 3,228.60

Dollar/yen: UP at 131.40 yen from 128.13 yen on Tuesday

Euro/dollar: DOWN at $1.0772 from $1.0794 

Pound/dollar: DOWN at $1.2283 from $1.2285

Euro/pound: DOWN at 87.70 pence from 87.85 pence

West Texas Intermediate: UP 0.9 percent at $80.89 a barrel

Brent North Sea crude: UP 0.8 percent at $86.58 a barrel

New York - Dow: DOWN 1.1 percent at 33,910.85 (close)

London - FTSE 100: DOWN 0.1 percent at 7,851.03 (close)

Agence France-Presse

Asian markets rise again on recovery hope as inflation data looms

HONG KONG - Asian equities pushed higher Wednesday as investors were buoyed by China's reopening and optimism that key data due this week will signal a further slowdown in US inflation.

Traders tracked a Wall Street advance as they brushed off fresh warnings that Federal Reserve rates would continue to rise and a World Bank decision to slash its global growth forecast.

After a stumble Tuesday, regional markets resumed the upward push that has characterized the start of the year thanks to China's emergence from nearly three years of zero-COVID isolation.

The reopening, easing of Beijing's tech crackdown and moves to help the property sector have raised hopes for the world's number-two economy, a crucial driver of world growth.

SPI Asset Management's Stephen Innes said: "Despite a solid start to the year, there should be a lot more upside to China's stocks, with earnings upgrades to drive further outperformance.

"Although we are not pitching a tent in that camp just yet, many investors are starting to believe China's reopening could be faster than expected on pent-up demand, a robust economic rebound and fewer supply constraints."

In early trade, Hong Kong again led the gains by piling on more than one percent, having already added about eight percent in 2023. Shanghai, Tokyo, Sydney, Seoul and Singapore were also in the ascendancy, though there were small losses in Wellington, Taipei and Manila.

Focus this week is on Thursday's US consumer price index, which is expected to show that price gains eased further in December.

But while that could possibly allow the Federal Reserve to take a lighter approach to its monetary tightening campaign, policymakers continue to push back against any pivot away from rate hikes.

Markets were battered last year by fears that almost a year of hikes will tip the economy into recession.

Bank boss Jerome Powell said that "restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy".

Meanwhile, Fed governor Michelle Bowman said that while inflation was coming down, "we have a lot more work to do" and that once rates had peaked they would have to stay there for some time. 

She added that "unemployment has remained low as we have tightened monetary policy and made progress in lowering inflation".

"I take this as a hopeful sign that we can succeed in lowering inflation without a significant economic downturn," she said.

And JP Morgan Chase CEO Jamie Dimon said borrowing costs could actually go higher than the five percent priced in by markets, suggesting they could hit six percent.

There was little reaction to the World Bank slashing its 2023 global growth forecast by about half and a warning that the economy was "perilously close" to recession owing to high inflation, rising interest rates and Russia's invasion of Ukraine.

Economists have warned of a slump in the world economy as countries battle soaring costs and central banks simultaneously hike interest rates to cool demand amid ongoing disruptions from the war in Ukraine.

The World Bank's latest forecast points to a "sharp, long-lasting slowdown", with growth pegged at 1.7 percent this year, roughly half the pace it predicted in June, according to its Global Economic Prospects report.

Key figures around 10:30 a.m. in Manila 

Tokyo - Nikkei 225: UP 1.1 percent at 26,457.56 (break)

Hong Kong - Hang Seng Index: 1.5 percent at 21,642.27

Shanghai - Composite: UP 0.3 percent at 3,177.88

Dollar/yen: UP at 132.44 yen from 132.21 yen on Tuesday

Euro/dollar: DOWN at $1.0733 from $1.0739

Pound/dollar: UP at $1.2156 from $1.2153

Euro/pound: DOWN at 88.31 pence from 88.34 pence

West Texas Intermediate: DOWN 0.8 percent at $74.54 a barrel

Brent North Sea crude: DOWN 0.7 percent at $79.51 a barrel

New York - Dow: UP 0.6 percent at 33,704.10 (close)

London - FTSE 100: DOWN 0.4 percent at 7,694.49 (close)

Agence France-Presse

Porsche to enter stock market before the end of 2022: VW

FRANKFURT, Germany - German auto group Volkswagen said it would go ahead this year with a highly anticipated stock market entry for its premium sports brand Porsche, despite less than perfect financial conditions.

"The Board of Management of Volkswagen AG today resolved... to pursue an initial public offering of the preferred shares of Porsche AG with the target to list them on the regulated market of the Frankfurt Stock Exchange... at the end of September/beginning of October 2022," a statement said.

"In the event of a successful IPO, Volkswagen AG will convene an extraordinary general meeting in December 2022 at which it will propose to its shareholders that a special dividend amounting to 49 percent of the total gross proceeds from the placement of the preferred shares and the sale of the ordinary shares be distributed," it added.

The auto giant officially signalled its intention to go ahead with the IPO on February 24, the day that Russia began its invasion of Ukraine.

"This is a historic moment for Porsche," new Volkswagen CEO Oliver Blume said, adding that Porsche could have "greater independence" and be one of "the richest sports car makers in the world".

The outbreak of the war has sown uncertainty in financial markets, sending stocks tumbling and clouding the outlook for the economy.

But the luxury brand continues to attract the attention of investors, who value Porsche between 60 and 85 billion euros, according to Bloomberg News.

Suitors including the Qatari sovereign wealth fund and luxury brands group LVMH have registered an interest in the high-end carmaker, according to the news agency.

Shift towards electric vehicles 

Under the spin-off plan, Volkswagen's main shareholders -- the Porsche-Piech family -- would take a share of 25 percent plus one share in the luxury carmaker. 

In doing so, the family would hold a blocking minority that will allow them to steer the future of the group that bears their name.

Market investors would be given the opportunity to buy preferential shares in Porsche that have no voting rights but receive a boosted dividend. 

The potential spin-off of the iconic carmaker, named for the Porsche family, from the larger group would help Volkswagen finance its own shift towards electric vehicles.

The Wolfsburg-based group is pumping tens of millions into the strategy, including building a clutch of battery factories across Europe and the US.

The potential gains from the IPO would give Volkswagen "greater flexibility to accelerate the transformation" of the group, chief operating officer Arno Antlitz said in an interview on Monday.

Volkswagen's recently departed CEO Herbert Diess launched the legacy carmaker on the headlong electrification strategy, bringing it into competition with the likes of American battery vehicles pioneer Tesla.

Blume was elevated to his new role last week from Porsche itself, where he still holds the title of chief. 

Blume, a Volkswagen group veteran, has said he wants to "keep up the current pace and where possible, increase it" on electrification.

Agence France-Presse

Apple retreats again, after valuation tops $3 trillion again

Apple Inc's stock market value peaked on Tuesday for a second day above a $3 trillion, but the iPhone maker's shares again failed hold that gain by the session's end.

Apple shares ended down 1.3 percent at $179.70, leaving its market capitalization at $2.95 trillion.

On Monday, Apple's stock market value rose briefly above $3 trillion for the first time ever, and it repeated that again on Tuesday before losing ground. The world's most valuable company has yet to end a session at that level.

Apple accounts for nearly 7 percent of S&P 500 index's value, according to Refinitiv data, the highest for a single stock in the index at a time when the benchmark is perched at a peak.

Surging demand for iPhones, MacBooks and iPads during the pandemic helped push the Cupertino, California company's market capitalization past $2 trillion in August 2020.

"Apple has been one of the key pandemic trades for a lot of people and as we exit the pandemic. ... the iPhone maker is going to struggle a little bit," warned Edward Moya, senior market analyst at Oanda in New York.

Apple's massive share repurchases in recent years have also fuelled its stock rally.

The company has bought back $348 billion worth of shares in the 5 years through the September quarter of 2021, reducing its share count by 23 percent over that period, according to Howard Silverblatt, senior index analyst at S&P Dow Jones Indices.

"You know there's going to be buying," Silverblatt said. "From an investor point of view, it's very important."

With Tesla now the world's most valuable automaker as Wall Street bets heavily on electric cars, many investors expect Apple to launch its own vehicle within the next few years as it looks to reduce its current reliance on iPhones for about half of its revenue.

Notably, Apple is worth more than any of Europe's main regional indexes including Britain's FTSE 100, France's CAC 40, Germany's DAX, Spain's IBEX 35 and Italy's FTSE MIB.

Apple's stock is now up 1 percent in 2022 after gaining 34 percent last year. It is trading at about 31 times expected 12-month earnings, which is expensive compared to its five-year average of 20 times expected earnings, according to Refinitiv data.

-reuters-

What to do with your money instead of buying an iPhone X

MANILA - This holiday season, financial planners urged Filipino consumers to invest instead of buying an iPhone 8 or an iPhone X.

In the Philippine an iPhone X retails from P78,000 to P98,000 from authorized resellers, a price considered hefty by most Filipino consumers. Yet many still aspire to get their hands on the latest Apple-made mobile device.

But it's better to invest in oneself instead of the instant gratification a person could get from buying the iPhone X, said Genecia Alloura Luo, founder of Soul Rich Woman, an online platform that offers business mentorship for women entrepreneurs.

“Use this money to find a mentor, find a good program, a good network and a good platform so that you can invest in yourself, because investing in yourself you'll know that the future is secure," Luo told ANC's "On the Money."

Online financial guru Chan Peng Joon noted that consumerism is the problem.

"That’s what makes people stuck. They are making their money and they’re spending it on stuff to impress people that they don’t even like and stuff they don’t really need in the first place. That’s the problem," Joon said.

  

Instead of buying things, Joon believes that investing in oneself "is the best investment one can make."

Meanwhile, some encourage consumers to split and allocate their money with investments still part of the pie.

When asked, Sun Life Asset Management Company Inc.'s chief operating officer Valerie Pama said she would split the money on gifts, donations and investments.

source: news.abs-cbn.com

Tips for Investing in Your 20s

It’s a great idea to begin investing as early as possible. However, many people are a bit too timid to begin investing in their 20s, fearing they aren’t skilled or knowledgeable enough. For others, the idea of putting money into investments seems silly when there are more important things to do with that money, like pay bills. However, if you really want to secure a strong financial future for yourself, then it is well worth getting into investing early. Here are some tips you can use as you get started.

Don’t Buy Into the Limited Resources Myth

As mentioned, many 20-somethings don’t even think about investing because they believe they don’t have the extra money to do it. This isn’t really true, though. For most people, this is the time when they have some extra cash because they don’t have kids, mortgages or other obligations that can drain finances. It is probably going to be easier for you to find extra money now than in the future.

Start Small

Another cause for hesitation is often a fear of not knowing what to do. You don’t have to jump in with both feet right from the start and probably shouldn’t. A good starting place is with your 401k if your employer offers one. You can try out different options and see how things go. You may even be able to learn a bit about corporate finance, like the information from UAB Online, which will be super helpful down the road. As you begin to work more with investing, you’ll begin to learn more, which will lead to more confidence and the ability to branch out with your investing.

Take a Few Risks

Since you are young, you have time on your side. A few losses won’t really hurt you in the long run because you have a lot of years ahead of you to make things up. Going with bigger risks allows you to have the chance to get big returns. If things pay off, you can get a great start to saving for your future. You should avoid sticking with just investments that have little risk because the returns are way too small. While you have time for them to add up, you still won’t be able to earn anywhere as much as you would if you took a risk every now and then.

Don’t Be Afraid to Ask for Help

You shouldn’t be afraid to get help with your investing. In fact, it is a smart idea. Despite starting out small and with easy investment, getting a professional to weigh in can be tremendously helpful. Even if you are currently enrolled in a business course, like on from Northeastern, you still can benefit from help. Not only will they be able to direct you properly, they will teach you a lot about investing that will come in handy in the years ahead.

Following these tips can help you to get started with investing now. Doing it while you are young can be incredibly beneficial to your future. The bottom line is to not let fears hold you back and to take some risks now while you have the time .

source: 20smoney.com

Modern Advancements in Forex Trading

The world of forex is ever-changing. The markets move at lightning speed, and trends emerge in an instant. Fast-paced, volatile, and tempestuous, trading is a game that will always keep you on your toes.

 Like the markets it represents, forex-based technology also continually evolves. The past decades have seen the rapid emergence of wave after wave of new developments, each of them improving the way that we trade, and making everything better, faster, and more competitive.

Here, we look at just three of the ways that technology has transformed the markets….

#1: Speed

In times gone by, currency trading was a different game entirely. Without the computers and smartphones that so easily enable us to trade, every move had to be made in person through a broker, and it was a laborious process. Today, this has changed completely. Where once information was outmoded, the data on display a snapshot into a past that had already altered, trades can now be conducted in the blink of an eye, and the figures that we see are entirely contemporaneous. Take a glance at your screen and you’ll have a perfect picture of the markets. Press a button and your dreams will be made material. Everything happens in an instant.

#2: Software

Even in the last couple of years, technology has progressed at a remarkable speed. In the days of old, trading was limited to sitting in front of a specially set-up computer, and when you weren’t beside it, you couldn’t make a move. Luckily, this is no longer the case. Now, you can trade from almost any device that you desire, whether it’s your MacBook or your smartphone. Brokers like OANDA make sure that every software option you could dream of is available to you, so that you can trade whenever and wherever you wish to.

#3: Flexibility

As we briefly touched on above, this ever increasing array of software trading options has made one very dramatic difference to a lot of people: it has improved the flexibility of investing. Where once this would have been almost impossible for those who had to leave their house to work each day, now, people can fit it in whenever they have a spare moment, whether this is on the train during their morning commute, or in their office during their lunch hour. Trading can be worked around your timetable, because when you can trade anywhere and at any time, it’s entirely up to you.

With so many exciting developments already revolutionising the world of the foreign exchange, just imagine what tomorrow might bring.

source: 20smoney.com

Salve Says: A beginner's guide to investing in stocks

The stock market is fraught with risk, so it is important to arm yourself with investing smarts before you part with your hard-earned cash.

When you buy a share in a company, you become a part owner without worrying about running its daily operations.

You make money when the company earns a profit. However, you also lose money when the company does.

You can make a profit from the stock market by selling your stocks when the market prices them higher than when you bought them, Marvin Germo, a registered financial planner told ANC's "On The Money."

Share prices fluctuate every trading day depending on how the company performs. When there's negative news about a company, like when it reports a loss instead of a profit, its share price can go down.

An investor can also earn through dividends, which the company pays existing shareholders at specific periods.

"If you're a person who wants to be more passive, you want to get dividends, the more shares you accumulate, the more blocks you get, later on, the more dividends you will get also," Germo said.

The first step in investing in equities is to open a brokerage account and choose the right stock broker, said Salve Duplito, resident financial adviser of "On The Money,"

A directory of stockbrokers is available on the Philippine Stock Exchange (PSE) website.

Duplito said investors should find a broker whom they trust and works for a well-managed brokerage house that will allow them to transact easily online, which can be cheaper.

source: www.abs-cbnnews.com

Want to invest in the stock market? Read this

MANILA - Be careful when investing in the stock market.

The Philippine Stock Exchange (PSE) issued this warning amid reports that scammers who are not licensed to solicit funds have been targeting potential stock market investors.

"We are alarmed by reports that have reached us on unscrupulous practices that are perpetuated to scam potential stock market investors. These practices not only cheat the victims of their money but also unduly stains the reputation of the stock market among retail investors," PSE president and chief executive Hans Sicat said in a statement.

The PSE advised investors to open their own account with PSE-accredited brokerage firms and to transact only with employees of their chosen brokerage firm.

The investing public is also being urged to be wary of investment solicitations that offer share prices at discounted prices as some of these schemes may include offering supposed shares of employee stock option plans.

"While it is true that some employee stock option plans may be offered at discounted prices, the PSE approves these provided their distribution is confined to employees of companies offering the plan as part of their benefits. Also, always ask for a receipt when making investments in the stock market and the receipt must be issued by the licensed broker," Sicat said.

The public is also warned against solicitations for stock market investments that guarantee returns on investment.

PSE said that to attract investors, the scammers make it appear that opening an account with a broker is a complicated transaction and that the process can be made easier if the investment is made directly in the account of the perpetrators than with an accredited broker.

"All information about PSE-accredited brokerage firms are posted on the website of the Exchange. Inquiries on how to invest may be coursed through the PSE through telephone number 819-4100 or via email at pird@pse.com.ph. Complaints on stock market investment scams may also be raised through the contact information mentioned," the PSE said.

source: www.abs-cbnnews.com

From saving to investing: 5 tips for OFWs

MANILA - Most overseas Filipino workers (OFW) leave their homeland and loved ones to work abroad in pursuit of financial prosperity. If you are now working abroad, it is not enough to simply save up your money. Instead, you should invest these savings so that your money can grow faster.

For OFWs, the need to invest smartly is particularly urgent since your opportunity to raise funds is linked to the length of your contract. Once your contract of work is over, it is possible that you would find yourself without having a source of income, until you find a contract again. For this reason, you need to come up with the right investment choices that match your circumstances and make your money work harder for you.

Essentially, OFWs should be guided by the same investment principles as Filipinos who are working and based at home, save for a few considerations to reflect your circumstances, in particular not being in the country.

Here’s a simple five-step guide to help you in making your investment decisions:

1. Consider liquid and professionally managed investments.

Shop for investment products that are easy to purchase and dispose off even if you are not in the Philippines. The nice thing with today’s technology is you can scan online, start by looking at the individual websites of financial institutions. Your choices include the following:

· Mutual funds – These are pooled funds invested in different types of assets to match your desired time frame and level of risk. Some may have the potential for high gains but will also come with higher risk. These are available to retail investors for a beginning account of as low as P5,000.

· Unitary investment trust funds – These are also pooled funds invested in various assets to match your risk profile and investment horizon. These are available to retail investors for a beginning account of as low as P5,000.

· Insurance-linked investments – This is an insurance product combined with an investment fund, fulfilling your need for protection and capital gains. Your monthly payment would depend on the amount of coverage you purchased, as well as the type of asset you chose to invest in.

· Equities – These shares represent shareholdings in a company. You profit from the trading of these shares in the stock market. Online brokerages can facilitate your trades, with some of them requiring an opening balance beginning at P10,000.

· Bonds – These represent debt taken by either the Philippine government or companies. They usually have a fixed return and are therefore safer. They may be purchased through most banks for as low as P5,000.

2. Keep your papers in order.

Ensure that you have proper documentation to open and maintain these accounts, either while you are visiting the Philippines, or from abroad. Download their online forms, then mail a clear copy of your required IDs. Before sending these documents over, it may be helpful to personally contact the financial institution through their emails so that they can review your signed forms and requirements before you send these. This will save you a lot of time and effort.

3. Use safe and direct channels for sending money.

Find a secure and cost-effective way to put money into your investment from where you are. Online banking services, which are now available to those with accounts in local banks, are among the safest channels you can use. You can also use bank-to-bank transfers. If you wish to go through remittance channels, consider companies with long track records and recommended for customer service if something should go wrong. Unsafe ways of sending money are physically through people, no matter how much you trust them; through other people’s bank accounts; or by sending the money in the mail.

4. Make your payments or remittances regularly.

If you send money to the Philippines, it would be good to do so following a schedule, so that you and your loved ones back home can plan your cash flows better. Have the discipline to send money on schedule so that your loved ones can make payments on time, letting you avoid penalties in the process. Luckily, major financial institutions all allow you to make payments or transfers online. You may want to check out https://remittanceprices.worldbank.org/en to know how much it costs to send money from one part of the world to another.

5. Ensure the legality and integrity of your planned investment.

OFWs are often the target of investment scams. Check out the site of the Commission of Filipinos http://www.cfo.gov.ph/ to read the latest news and updates on legitimate and illegitimate business deals. You may also have relatives luring you into get-rich-schemes that offer nothing but false promises. While you may trust your loved ones, it is but prudent to check out everything about the proposed investment deal before you turn over your hard-earned money.

source: www.abs-cbnnews.com

5 'golden rules' in franchising

MANILA - You dream of getting into business. You're waiting for a big break to finally say to yourself and others that you are an entrepreneur. But before further jumping and investing, better be sure that you have read these five steps, as I will always share with readers to remember the acronym IFBI or Investigate First Before Investing.

"Buyers beware!" Or better yet, "franchisees beware!" Since franchising became popular in the Philippines, the failure rate has doubled from only 6 percent in 1995 to about 12 percent today, indicating that potential investors must do their homework well before signing an agreement.

I’ve had over 20 years of experience in franchising myself, and I’ve discovered a set of “golden rules” that entrepreneurs can use when evaluating a franchiser or franchise business. I’ve used these rules to advise numerous franchise applicants and these guidelines have proven effective both in the local and international scene.

BELIEVE IN THE BUSINESS CONCEPT

Look closely at the business concept. If you believe in it, you’ll be able to overcome the challenges of operating the franchise branch and motivate you to manage the business yourself.

To know whether you’ll like the concept, visit the branches. Be a customer not once, but many times. While you do this visit, ask yourself whether you want to do this particular business. Will you be happy and proud of it? Will you not hesitate to do any of the tasks you see being done? Do you foresee a good future for the business concept? Positive answers to these questions will be necessary for you to continue with the application process.

Years ago, my wife Lyndah and I met a couple who wanted to franchise a business. They agreed to look at various concepts available and as soon as they picked one, they visited its store for three months. They observed and studied all aspects of its operations from a customer’s point of view. By doing this, they learned it was indeed the business they would be happy to do. They applied and were eventually granted a franchise.

Even as franchisees, they were often times mistaken as manager or busboys as they would wait on tables or sweep the floor. But their hard work and confidence in their chosen franchise concept would pay off handsomely; recently they opened another branch, their third in three years.

GET TO KNOW YOUR FRANCHISER
Prospective franchiser evaluates you, do your own qualifying process as well. Insist you meet the franchiser face-to-face despite the presence of employees in the franchise organization. Be sensitive to the feelings you have of the person in front of you. Can you have a relationship with him for the term of the franchise?

Remember, franchising is more than a contractual relationship; it is a personal relationship between you and the franchiser. Your positive feelings should encourage you to continue on or stop when you have negative feelings.

Granting you decide to pursue the application, get more information about the franchiser, his business track record, and his commitment to pursue the growth of the business concept, his ability to retain people and how other business people view him.

TALK TO EXISTING FRANCHISEES

Request from the prospective franchisor a list of existing franchisees, and distance yourself from one who’s not willing to do this. He may be hiding something--like unhappy franchisees, for instance.

A good franchiser will allow applications to talk to existing franchisees. Visit the branches and inform the franchisee you are an applicant. Normally, they would share with you their experiences. Ask what process they went through to get the franchise. Are they happy with it and with the support services provided by the franchisers? Considering the Filipino culture, they may not tell you about their sales. Use indirect questions such as: Would they open another branch of the same franchise?

Experiences and comments from franchisees can help you in your decision-making process. There will always be concerns and problems but the organization can grow if there issues are used to strengthen and improve the system.

We have a client who requires applicants to visit and talk to at least five of its existing franchisees. To this franchiser, these visits will help applicants understand the realities of the franchise system and will put them in a better position to make an informed decision about whether to pursue the application. The visits benefit both parties because the franchiser also asks the existing franchisees to assess the applicants.

UNDERSTAND THE FRANCHISE AGREEMENT

The franchise agreement is a comprehensive contract that spells out details of the relationship during the term of the contract. In my experience, there are two things people normally do when they are handed a franchise agreement: they skim over the pages and sign or give it immediately to a lawyer. I have frequently discouraged both.

When you get a franchise agreement. Take time to read it page by page. Your lawyer will not live with it but you will. No matter how long the contract is, read through. Have a paper and pen ready, and write down your comments, questions and other items that you don’t understand. Then and only then should you give it to your lawyer.

Sit down with your franchiser and discuss the notes you made while reading the agreement. It is good to clarify matters before you sign. Most franchisers welcome the opportunity to explain the provisions of the franchise agreement. Bear in mind, however, that it usually protects the interest of the franchise system, though it must likewise indicate the responsibilities of the franchiser to you as well as your obligations as the franchisee.

A franchiser once requested my assistance because of an ever-complaining franchisee. The issues involved deficiencies in the support of the franchiser. We called a meeting with the franchisee and asked him to bring a copy of the franchise agreement he signed. I did allow the franchisee to narrate his litany of complaints again, which I simply pointed to the section on the responsibilities of the franchiser, and the franchisee had his signature on both pages. His reaction amazed me, because it was as if it was the first time he was reading those provisions. Afterwards, he became a cooperative franchisee and his branch is now successful.

DO A MARKET STUDY

International franchise principles indicate that the franchiser must do the projection and market study. I advocated and used this during the initial years of my work in the industry. But my experiences with Filipino culture have shown, however, that franchisees become dependent on the franchiser, even blaming the latter when sales fall short of projections.

Because of these observations, I encouraged franchisers to make a paradigm shift. Let applicants do the market study on the proposed site with certain data and directions from the franchiser. As applicants, you should convince the franchiser there is a market for the franchise concept in your intended location. You can go further and project sales based on the data and information in your market study.

There was a bank officer who retired early and looked for a business she could invest in. When she applied for a franchise, she was asked to count until midnight the number of persons and vehicles passing by her proposed location. She demurred but the franchiser told her it was part of the application process.

Acquiescing in the franchisers wishes, she did as she was told and got her franchise. Three months later, she said she had understood the rationale for the study. It helped her identify her market and counting the vehicles turned out useful in timing her flyer distribution.

There are franchise shows held every year. Just in time for readers of today’s issue, one can catch the 14th Business and Franchise Show in World Trade Center in Pasay City. There will be around 300 various business models and with entrepreneurs present to answer questions.

source: www.abs-cbnnews.com

PH shares too expensive - Credit Suisse

MANILA - Credit Suisse on Wednesday said Philippine shares are still too expensive.

Right now, with the Philippine Stock Exchange index (PSEi) at 7,000, Philippine shares are trading at an average price to earnings ratio of 18 to 19 times, meaning investors are paying roughly 18 times what the company earns per share.

That is one of the most expensive in the region.

Credit Suisse said many investors are waiting for the price-earnings (PE) ratio to fall to 15 times and below.

"You can achieve that drop two ways, either through a price correction or through improved corporate earnings. The one theme over the next six months for the Philippines, I think, and this is where you are going to get positive surprises, is in corporate earnings, whether it be through consumer companies, because I think domestic consumption will remain strong, or through companies that benefit from these low commodity prices," said Robert Parker, senior advisor for investment strategy and research at Credit Suisse.

A local broker estimates the PSEi would need to fall 1,400 points to get to a 15 price earnings ratio--a 20 percent drop.

Counting on rising earnings may be difficult because earnings growth has been mostly disappointing.

COL Financial says two-fifths of the 56 listed companies it covers reported weaker than expected profit in the first half.

Meanwhile, a Philippine broker said the fall in PE doesn't have to be so big, estimating a PE of 16 to 17 would already be attractive. -- ANC

source: www.abs-cbnnews.com

Red Planet investing P4-B to expand hotel chain

MANILA, Philippines - Red Planet Hotels Ltd. is investing $85 million (about P4 billion) to double the size of its budget hotel chain in the Philippines over the next five years, its top executive said yesterday.

In an interview, Red Planet chief executive officer Tim Hansing said the hotel operator plans to bolster its operations in the country through its new Red Planet hospitality brand by building 10 new hotels until 2020.

The expansion is expected to double the company’s current hotel network of 10 as well as more than double the number of its rooms to about 4,000 from its current 1,720, Hansing said.

Of the 10 new hotels to be built, Hansing said three sites have already been secured in Cubao, Manila Bay and Binondo, with construction of the hotels expected to commence within the year, he said.

“The Philippines has been a great market for us. We came in just at the right time. There was an under-supply of value hotel accommodation. It’s just been fantastic for us to be at the right place, at the right time,” Hansing said.

Red Planet Hotels, formed in 2010, is a privately-owned regional hotel company focused on Asia’s expanding value hotel sector.

The company recently ended its global franchise partnership with Tune Hotels, the value hotel chain of the Tune Group of Malaysian entrepreneur Tony Fernandes. It has already rebranded all of its existing Tune Hotels into the Red Planet brand since July 10.

In the Philippines, Red Planet’s 10 operating hotels are located in Makati, Aseana City, Ermita, Quezon City, Ortigas, Angeles City, Cebu, Cagayan de Oro, and Davao.

“We already have hotels in Davao, Cebu, Cagayan de Oro and Angeles so at the moment we’re really going to continue expanding mostly in Metro Manila,” Hansing said.

“We started here about three years ago. We already opened 10 hotels and we have 1,720 rooms which I think is a record in the Philippines to open so many hotels in such a short span of time,” he added.

He said the company has already invested some $80 million in the Philippines over the last three years.

He said their investments did not go to waste as Red Planet is now the market leader in value hotels in the country.

He said the occupancy rate of Red Planet Hotels locally ranges from 85 percent to 100 percent depending on the location.

Hansing added the hotels have also been receiving strong patronage from the local community as almost 90 percent of their customers are Filipinos.

“This market is very strong. It’s the biggest category in the hotel supply so there are more people wanting to stay at this end of the market than anywhere else. If it’s a five-star hotel, there are not many people who’d stay so it’s a smaller market,” Hansing said.

For this year, Hansing said the company expects a 30 percent increase in revenue for its Philippine operations.

Read more on The Philippine Star

source: www.abs-cbnnews.com

So You Want to Trade Forex Online?

One of the largest complaints American tourists have when visiting Europe is the high costs of everyday items from bottles of Coke to hotel rooms.

However, Americans visiting Europe this summer will find items a little bit cheaper because of the drastic shift in the exchange rates, and not businesses lowering their prices.

During the summer 2014 months American tourists were able to exchange one American dollar for 0.75 Euros.  By summer 2015, American tourists could exchange the same American dollar but receive 0.88 Euros in exchange.

What happened?

All major currencies trade on the foreign exchange market.  The exchange market assists international trade, investments and tourisms by enabling the conversion of one currency to the other.  Fluctuations in the foreign exchange market result in changes in exchange rates.

The top eight most widely traded currencies in the world include the U.S. Dollar, Euro, Japanese Yen, Great British Pound, Swiss Franc, Canadian Dollar, Australian / New Zealand Dollar and the South African Rand.

Returning to our discussion of an American tourist visiting Europe for a vacation.  Suppose the tourist began planning his 2015 trip in 2014 and acquired 1,000 Euros it would have cost him around $1,250.  If the tourist would have waited until summer 2015, the same 1,000 Euros would have cost $1,100.

Many economists and foreign exchange experts are now predicting the Euro will reach parity with the U.S. Dollar.

How Did That Happen?

In simple terms, demand for a currency determines its values.  As we have seen in the news headlines throughout the year, various European nations (most of which use the same centralized currency, the Euro) were facing difficult economic periods.

Greece’s economic future remains a large concern as the country is stepping up efforts to reach an accord with its creditors in time to avoid a default.  Productivity and labor concerns out of Germany and France also remain a concern.

With that said, investors, banks and financial institutions (such as hedge funds) realize there is a higher degree of uncertainty within Europe than there was a year ago.  As such, demand for the Euro has fallen while demand for the U.S. Dollar has risen as it is viewed as a safer currency to hold.

Naturally, other factors that determine a foreign exchange rate include the country’s GDP outlook, pricing changes in a major commodity export (such as oil, gold, or even coffee), political stability, among others.

You Don’t Need To Be A Tourist To Exchange Money

Converting one currency to another is most certainly not limited to travelers.  In fact, millions of individuals make a living by taking advantage of fluctuations in exchange markets through online trading.

Most financial intuitions offer their clients access to trade in the foreign exchange market.  If your bank does not offer access, there are many online brokers that offer online forex trading.

Setting up a foreign exchange account is straightforward and many companies offer sign-up bonuses or other incentives.

Once a foreign exchange account is set up and properly funded, the user now has access to buy and sell virtually every global currency.

Investors could make use of the foreign exchange market to supplement their already existing investments in the stock market.  On the other hand, a basket of multiple currencies offers investors a diversified investment tool.
As an example, investors who want to bet on the price of oil rising could consider buying a combination of oil-related currencies such as the Canadian Dollar or Mexican Peso.

Approximately $3 trillion worth of currencies change hands on a daily basis, making it the largest trading market in the world.  As such, the exchange is considered to be very liquid (that is every buyer is likely to find a seller and vice versa) and lucrative for day traders that seek to repeat small gains over and over again.  Naturally, investing in foreign exchange isn’t without risks that need to be fully understood before investing and trading.

source: everybodylovesyourmoney.com

Just married? Here are 7 money tips

Now that your dream wedding is over, what's next? To keep you in the honeymoon stage as long as possible, it may help to know that money problems are one of the most common causes of friction in married life.

It doesn’t matter if you have loads of cash or just have enough to get you by. Now that you’re married and all your money and assets are conjugally-owned (unless you had a prenuptial agreement), you may one day find yourselves running into arguments over how to manage your finances and assets on a day-to-day basis.

To avoid these issues and set your marriage off to a good start, especially on the money front, here are some tips to help you:

Discuss your life goals

To plan and manage your finances together, you need to know each other’s goals in life since these will determine your spending and your investment strategy. Do you want to have children? If so, how many and how soon? Do you plan to buy a house? If so, what is your time table for this? Do you plan to relocate? Pursue further studies? Start a business together? Travel? Goals can evolve with time, and make it a habit to revisit your goals every so often.

Set your priorities

This is directly related to the first. Money issues usually begin when spouses cannot agree on their priorities. Before these issues come up, have a conversation so that you would know what matters to each of you as individuals and as a couple. Let’s say you both decide that starting a business is your top priority for now, then both parties would understand that most of your joint funds will be going to the business, and that purchases of big-ticket items such as a house or car may have to take a back seat in the meantime.

Set a monthly budget

Now that you know each other’s life goals and priorities, set a monthly budget that you can live with. This will be based on your joint monthly income. Determine how much you would spend on the basics (utilities, housing, transportation) as well as on non-necessities (entertainment, leisure). Make sure to set aside an amount for savings. Determine how much each one would contribute to this budget (if applicable) and agree to regularly review this budget.

4. Decide on your bank accounts. Discuss if you would want to have separate bank accounts, a joint account, or both. Most likely, both of you already have individual accounts. If you are employed, then you would continue to have your own personal bank account. You may also wish to talk about how you would regard each other’s money. Some couples may prefer to have freedom to use their own money, while others may be more comfortable consulting each other on various expenses. This would differ greatly among couples, so you need to know what you are both most comfortable with.

Have a record filing system

Records are often overlooked by most people, but this is very important so that you can study your finances and have quick access to all the important records you need to have available. This would include bank statements, real estate titles, billing statements, etc. Make sure that both of you know where to find these records. You can also keep electronic copies of these records using various shared programs and apps that both of you can access anytime.

Start investing

Investing early in your marriage gives you one great advantage: time. You don’t need large amounts of money to invest especially in mutual funds or other investment products for retail investors. What you invest in will depend on your circumstances and your strategy, of course. Make sure you top up as you go along. Find a financial adviser you both trust and are comfortable with.

Set up a sinking fund

Both of you can contribute to this fund on a regular basis. Agree on how this will be used—as an emergency fund, to purchase a large-ticket item that you are planning for, to pay for childbirth expenses, etc.

As with almost anything concerning your marriage, your joint finances will run smoothly if you both remain open and honest to each other about the direction you want it to take. All it takes is a little careful planning—and a whole lot of communication.

source: www.abs-cbnnews.com

The Why and How of Investing in a Second Home

If you already have money invested in stocks, bonds or higher-­yielding savings products, it might be time to consider alternative investments and diversify your portfolio.

There are several options to consider, such as investing in commodities, peer-­to-peer lending or buying a franchise. But if you’re somewhat familiar with real estate — or if you’re willing to learn the ins and outs — purchasing a second home might be the right investment for you.

Here are three benefits of investing in a second home, as well as financing tips.

1. You Can Earn Rental Income

If you’re seeking a long-­term investment strategy, buying real estate and renting out these properties can be profitable. This investment strategy can provide steady monthly income, increasing your cash flow and helping you achieve other goals. Income from rental properties can go toward paying off debt, increasing your emergency fund, or you can put this cash toward growing your retirement account.

In addition, if you buy a second home as a vacation rental in a touristy area, this offers the perfect vacation spot for you and your family when you need to getaway or escape. Since you’ll pay taxes on rental income, plan accordingly and seek advice from a real estate tax professional.

2. You Can Turn an Immediate Profit

Maybe you don’t like the idea of being a landlord. If so, there’s another way to invest in real estate. You can purchase a second home on a short-­term basis and then resell for a profit.


Many novice and experienced investors have made quick profits buying distressed properties like foreclosures. They hold onto the property for a few months, fix up the property and then sell at fair market value.

The only downside to flipping real estate is that you need sufficient income to afford a remodeling project. However, some banks offer short­term real estate loans specifically for real estate investors. Speak with a loan officer to learn and compare options.

3. You Can Take Advantage of Tax Deductions

As mentioned, you have to pay taxes on income earned from your rental property. But you can also take advantage of landlord tax deductions. You’ll undoubtedly spend a lot of money over the years maintaining and repairing the property. There’s also the expense of traveling back and forth to the property.

These expenses can cut into your profit. Deducting expenses associated with owning an investment property reduces your tax liability and you can keep more of your profit.

Financing Options for a Second Home

Unfortunately, purchasing a second home for investment purposes limits your financing options. Some people prefer FHA home loans because they feature a low down payment of only 3.5 percent. However, these loans are only for owner-occupied residences. For an investment property, you can apply for a conventional home loan. Just know that some lenders require a minimum down payment between 10 percent and 20 percent for investment properties.

The lender will also review your credit history and income to ensure you can afford the additional mortgage payment. As a general rule of thumb, this mortgage payment along with all your other monthly debt payments must not exceed 36 percent of your gross monthly income.

Another option for financing a second home involves taking out a home equity loan on your primary residence. This might be an option if your primary residence is paid off, or if you have substantial equity in the house. You can tap your equity and use this money to pay cash for a second home.

Just know that getting a home equity loan will either create a new mortgage on a paid off house, or increase the mortgage balance on an existing home loan. So make sure you can handle the extra expense.

Bottom Line

Buying a second home as an investment can put quick cash in your bank account or provide steady cash flow. But getting started can be expensive, and as a landlord, you’ll be responsible for two properties. However, if you’re up for the challenge, a second home is an excellent investment that can increase your net worth.

source: totalmortgage.com

 

How to franchise a foreign brand

MANILA - With the economy booming, never before have more brands wanted to come into the Philippine market.

Every week new foreign franchise brands have been opening, and a question we always get is, what would smaller scale business owners have to do to become master franchisees of foreign brands?

Contrary to popular belief, big conglomerates are not always the top franchise partner of foreign brands, what’s important to them is to find someone who is an able, suitable and willing franchise partner.

Able:
A would-be master franchisee would need sufficient business experience in order to start, grow and run a foreign brand. A good understanding of customer service, marketing and financial & business acumen would be important for a would-be partner. Equally important is of course the ability to fund the capital requirements and get locations.

A foreign brand will look to you to develop multiple locations, and would rely on you to find the right locations for the brand and fund the development of the first few stores. So when evaluating your capital, it is best to ensure that you have enough capital to open a few stores and not just one.

Suitable:
Foreign brands would be looking at someone who can follow the systems they have developed. They would look for someone who can help localize, but still keep the essence of the brand. And as with any partnership, they would look at your values and your company’s values. It is critical that there is a fit in brand values as this would ensure a smoother partnership.

Willing:

Foreign brands would prefer that as the owner and investor, you would be actively participating in the business. They know there’s no substitute to an owner being involved in growing his business and his investment, so they will want to understand how involved you will be. This is the advantage of smaller scale business owners, as oftentimes, acquiring foreign brands is a significant step for your group and will surely merit a lot of your attention and expertise.

If you think you are an able, suitable & willing master franchisee, then do take the next step and pursue a foreign brand. It helps if you show initiative – whether flying to meet the franchisor or already pre-selecting locations and preparing a business plan. In addition, introductions or referrals go a long way, whether getting introduced by a partner, consultant or franchise brokers. Also, make sure you attend franchise shows where foreign brands are participating, as it’s your chance to talk face to face with multiple foreign franchise brands and find the right one for you.

source: www.abs-cbnnews.com

Want to invest in the stock market? Learn this first

When it comes to investing, knowledge is key. So if you're a first timer in the stock market, you better not be investing blindly. Good thing there are several how-to-guides, books, and even seminars that can help you get started.

ANC On The Money

source: www.abs-cbnnews.com

PSEi down nearly 3 percent this week

MANILA, Philippines - Philippine stocks fell almost 3 percent this week as the government released its worst GDP report in 3 years.

Government took the blame for continued weak public spending despite repeated pledges since last year to step on the economic gas pedal.

It was the PSE's second straight week down, with the first quarter earnings season ending last week with few stellar results.

On Friday, the PSE index closed at 7580.46, up 1.01 percent for the day but 2.9 percent down for the week.

Gainers on Friday were led by Bloomberry, Megaworld and Ayala Land.

Bloomberry, owner of Solaire Casino, and Megaworld made back some of their big losses this week. Bloomberry rose 4.4 percent to P9.70, while Megaworld jumped 3.7 percent to P4.75. It was Megaworld's second gain in two weeks.

Also up were shares of Pepsi Cola Products Philippines, after saying it would start making PepsiCo snacks, which include Cheetos, Lay's and Ruffles.

Decliners on Friday were led by Manila Water (-6.7 percent) and Puregold (-1 percent). Manila Water's rate cut, which it disputed, takes effect on Monday, though this was known weeks ago.

Friday's quick recovery from Thursday's GDP slump may indicate investors are hopeful the economic slowdown was blip or won't hurt this quarter's earnings, at least not much.

source: www.abs-cbnnews.com

Are you ready to be a global investor?

MANILA, Philippines - After reading about equities and mutual funds in our recent reports, it’s time for you to explore the world.

That’s right - given the various opportunities that exist for investors in the global capital markets, you may want to take part in the action. After all, the global markets offer a great deal more options for any investor – but don’t forget they also have attendant risks.

Investing directly in global markets is a more difficult process for a retail investor than investing in domestic markets. This is because there are different government restrictions (such as those governing the outflow of money from the Philippines), as well as the difficulty in getting foreign currencies for purposes other than business and travel.

Moreover, not all investment funds are open to all nationalities; there may be administrative requirements that a Filipino national may not be able to meet. Also, the required investment amount may be large. Add to this the challenges that may come with transacting with someone in a different continent and a different time zone.

These, however, should not keep you from looking at investing in global markets. In fact, there are ways that you can do so using local channels and brokerages, by tapping into those funds that are invested in global markets. Of late, larger banks and financial institutions have been offering unit investment trust funds (UITFs) and other funds invested in these vehicles, providing the Philippine-based investor with a convenient way to tap into the much larger global capital markets.


Here’s a guide to help you get started on investing in global markets:
 
Assess your diversification needs. 

Before you choose to invest in the global markets, it is important to have a thorough understanding of your financial goals, investment needs, and financial status. Also know how much risk you want to take on. Investing using a different currency, which is usually required when investing in global funds, may or may not be appropriate for your needs. Therefore, you would have to assess if investing in global funds is the right step to take at this stage in your life, in view of your financial objectives and related considerations. If you don’t know how to proceed, this may be a good time to consult a professional financial advisor.

Do your research. 

Know what is being offered out there for retail investors. If you are thinking of global funds, there are plenty of options to choose from to suit various preferences—bonds, equities, and many others. These may be denominated in dollars or in euros. You will also have to think of what your investment strategy is, and what type of investments is best for your needs. In the Philippines, financial institutions can give you access to exchange traded funds (ETF) and UITF, invested in different vehicles to meet various investor profiles. You can also open an individual brokerage account. Check out what the brokers have to offer and if these products dovetail with your financial goals.

Obtain the needed currency for your fund. 

Most global investment funds require that the invested funds be in a foreign currency, most often the US dollar. If you have a dollar account, then withdraw this now. If you do not have the needed currency and plan to purchase these, be mindful of rules pertaining to this. Note that banks have restrictions on dollar purchases, especially for those related to investments.

Open your investment account with the financial institution of your choice. 

You will be asked to sign documents to signify your understanding of and compliance with government rules (especially pertaining to anti-money laundering) and fill up an investor profile assessment. The latter will help the brokers know your needs and will enable them to recommend appropriate funds. Make sure you check out the required holding period and transaction fees.

Monitor the performance of your fund. 

Most funds report their performance daily on their company websites. Also monitor the currency exchange rate from time to time. When you invest in global funds, you should be looking at both the performance of the fund and the currency it is invested in. By monitoring your funds, you will know if you should top up or diversify into another investment vehicle. If you have questions or concerns regarding how to move forward, seek professional advice.

Investing in global funds requires doing your homework and research, to ensure that you meet your financial objectives and that your investment decisions support these. By investing in global funds, you can diversify your investments and spread your risks beyond one country, hopefully to get the best returns for your money and help you meet your financial objectives.

Diversification is one of the most important pillars of effective investing and should be well thought of. Next week, we will discuss why it is never a good thing to put all your eggs in one basket.

source: www.abs-cbnnews.com