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The International Monetary Fund (IMF) announced a new reduced GDP growth forecast for the Philippines. Now the IMF expects that the economy in the Philippines will grow by 5.2% in 2008, after they reduced their early forecast from 5.8%. Last week the IMF has finished its mission to the Philippines, which is confronted with higher inflation triggered by higher food and oil prices and a slowing global economy. Nevertheless the Philippine government still expects GDP to grow between 5.7% and 6.5%. Previous estimates even predicted up to 7% GDP growth.

In 2007 the economy grew by 7.2%, the highest rate in more than 30 years.

In May 2008 Mark Mobius, Templeton Asset Management Ltd.’s top manager for emerging market equities, recommended to invest into Thailands stock market. On May 26th, an article on Bloomberg.com titled Mobius Expects Thai Stocks to Extend Gains on Tax Cuts, Exports painted a bright picture of the Thai stock market. On the same day the SET index closed at 856,80 points. Today, less than one month later, the Thai stock market dropped again, leaving the SET index at 742,46 another loss of 23.28 points compared to the day before. A loss of more than 13% in less than one month does not really encourage investors!

While today Finance Minister Surapong Suebwonglee speaks at a seminar on Thai stock market at the Grand Hyatt Erawan Hotel in Bangkok, investors might have to ask themselves several questions.

How will Bank of Thailand’s Monetary Policy Committee decide, when it meet to discuss interest rates on July 16th and August 27th? How will any decision influence GDP growth and inflation? A year on year GDP growth of 6% was still in favour of stock investors while the inflation rate of 7.6% in May 2008 already raised fears about the future.

What will happen when anti-government marches planned for tomorrow will surround Prime Minister Samak Sundaravej’s office and do not leave until he resigns from office? Will Thailand’s police be able to handle the protesters or will protest turn violent and might the army take action again?

In 2006 Prime Minister Thaksin Shinawatra was ousted in a military coup and on May 29st, 2008 The Economist reported that protest and coup rumours return. A wellknown investor recommend once to buy stocks, when the streets are full of blood. Hopefully the street protests will not turn violent, but it seems that brave investors should start to buy Thai stocks, mutual funds or simple index certificates.

Those who invested on January 10th, 2007 into SET certificates at 622.27 could earn more than 45% until October 31st, 2007, when the SET index closed at 907.28 points. As a matter of fact the situation in not clear at all. But if the market falls below 700 points, it is time to start with investments and to accumulate even if the markets continues to drop!

Today Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad informed the public that consumer prices rose by 3.8% in May 2008.

After the increase of fuel prices on June 5th, Malaysia’s central bank Governor Zeti Akhtar announced that Malaysia’s inflation rate may reach 5% in June 2008. For next month analysts expect electricty rates to rise. This will put additional pressure on Bank Negara Malaysia to increase interest rates to curb inflation. The next regular meeting of the central bank is scheduled for July 25th, 2008.

Today the National Statistics Office released the latest employment report based on the Labor Force Survey (LFS) April 2008. Regarding to the report the unemployment rate climbed to 8% in April 2008 compared to 7.6% in April 2007, while the employment rate dropped to 92% in April 2008 compared to 7.4% a year ago.

In April 2008 the number of unemployed persons was reported at 2.9 million. The total employed population was registered at 33.5 million. While 49.6% of the employed were in the services sector, 35.5% were in the agriculture sector and 14.9% in the industry sector.

Since the beginning of 2008 most of the Asian governments had to cut their fuel subsidies because skyrocketing crude oil prices threatened their budget balance.  As a result inflation rates increased to their highest level in may 2008. The central banks of India, Indonesia and the Philippines already raised their key interest rates this June and Malaysia and Thailand are expected to follow at their next central bank meetings.

At the moment the GDP is still growing at a respectable level but recent data already shows a remarkable decline in consumer confidence. With high inflation and further possible rate increases investors will have to find better places to invest their money than in the stock market.

^a) since 31.12.2007

¹⁾ On June 5th, 2008 Bank Indonesia raised its key interest rate by 25 basis points to 8.5%.

²⁾ On June 4th, 2008 the Reserve Bank of India raised its key interest rate by 25 basis points to 8%.

³⁾ On May 26th 2008 Bank Negara Malaysia kept its key interest rate unchanged (no change since April 2006)

⁴⁾ On June 5th, 2008 Bangko Sentral ng Pilipinas raised its key interest rate by 25 basis points to 5.25%.

⁵⁾ On May 21st, 2008 Bank of Thailand kept its interest rate unchanged (no change since August 2007)

Today Bangko Sentral ng Pilipinas (BSP) released their latest Consumer Expectations Survey (CES). The overall consumer confidence index (CI) is determined by the average of the 3 measures, namely, outlook on
macroeconomic condition, family financial situation and family income.

The overall consumer confidence index (CI), fell by 11.7 index points to -43.8% (quarter-on-quarter) and by
17.8 index points (year-on-year). The main reason for the drop in consumer confidences was higher fuel and food prices and the fear of lower income.

Nevertheless 21.1% considered buying a house and/or lot a timely investment for Q2 2008 because of lower interest rates on home loans and the expectations of further appreciation of real estate properties. The highest buying intentation was recorded for consumer durables at a rate of 10.6% followed by house and/or lot at 8%.  Only 5.3% of the particants of the survey intends to buy a motor vehicle in the next 12 months.

Today the University of the Thai Chamber of Commerce announced the Thai consumer confidence index for May 2008.

The consumer confidence index dropped to 78.8 from 79.9 in April 2008. This is the second consecutive drop of the index. Index values are between 0 and 200 with a result of 100 neutral, above 100 positive and a reading below 100 is negative.

Global record oil prices and the recent anti-government protests had a negative impact on consumer confidence after the index increased every month from 75.5 in October 2007 to 80.7 in March 2008 

On June 21st and 22nd, 2008 the SMART Investment & International Property Expo will take place at the Hong Kong Convention & Exhibition Centre, Hongkong. It is one of the biggest and longest established expo of its kind and showcases attractive investment opportunities from the real estate and financial sectors.

Private investors may focus on the following presentations:

Phuket - Post Election Opportunities: What investors should look for in a property related investment
Graham Bibby, Chairman Richmond Group

The Philippines - the hottest market in South-East Asia
Rick Santos, Managing Director CB Richard Ellis

Updates legal matters for property investment in Thailand (Top 10 Tips)
Desmond Hughes, Partner Belmont Limcharoen

Malaysia My Second Home (MM2H)
Lorraine Kijvanit, Country Manager Promotevest (MM2H) Sdn Bhd

Prospects of investing in the luxury condominium market in Malaysia
Chee Meng Tang, CEO Henry Butcher Marketing Sdn Bhd

China Property Market Overview 2008
Sherman Lai, Deputy Chairman Centaline

You can get a free pass to the expo and seminars.

Today the National Statistics Office released the consumer price index for May 2008.

The year-on-year headline inflation rate at the national level further jumped to 9.6% in May from 8.3% in April 2008. This marks the highest inflation since January 1999 when inflation rate was at 10.5%.

The food, beverages and tobacco (FBT) index was up by 13.7% in May 2008 compared to 11.4% in April 2008 while the fuel, light and water (FLW) was up by 8.2% compared to 8.0% in the previous month, contributing most the overall inflation rate.

In May 2007 inflation was only 2.4%. The Philippines as a net importer of rice and oil are highly effected by the skyrocketing prices of these commodities and today Bangko Sentral ng Pilipinas decided to increase the key interest rate by 25 basis points to 5.25% to fight a further increase in inflation rates.

Bangko Sentral ng Pilipinas (BSP) raised its key interest rate by 25 basis points to 5.25%. BSP Governor Amando Tetangco announced that the central bank is ready to take further actions to control inflation.

In its assessment, the Monetary Board noted that emerging baseline forecasts, which reflect more recent data on inflation and output, indicate a likely breach of the inflation target for 2008. The BSP forecasts 2008 average inflation to reach 7.0-9.0 percent. For 2009, average inflation is expected to decline to 4.0-6.0 percent.

This increase in interest rates was the first increase since October 2005. Today Bank Indonesia announced also a 25 basis point increase for the key interest rate to 8.5%.