Naturally, we can only hope for the best and prepare for the worst. We should have had some favorable or neutral corporate numbers coming in for the third quarter. Unfortunately, that shutdown of the NCR in early August was an economic disaster. Apparently, the decision-makers had no clue how real world businesses operate. It takes at least a few days to get supply chains, employees, and other logistics in order before a company can reopen. Then a week or so later to shut it down again was beyond comprehension.
As a result, government lost the trust of the business community. Now we have another occurrence that eroded trust with the announcement and then un-announcement of the public transport social distancing.
How do I know? On August 3, the local stock market closed at 5,715. The August 18 close was 6,156. Now we are around 5,800. The first thing is that the market started pricing in the go-stop-go situation just around the time we went back to GCQ from MECQ. But more
importantly, the realization came that policy announced on Saturday could be changed a week later.
September 12, 2020: “Relaxed physical distancing in public transport starts September 14.” September 19, 2020: “Duterte keeps 1-meter distancing in public transport.”
Every parent, elementary school teacher, and company president knows you cannot do that. Not once. Not ever. The credibility lost from that sort of U-Turn takes an equally incredible amount of time to recover.
The third quarter corporate numbers are not going to be good, as I said. But then again, I could be pleasantly surprised. The problem is that we have been under siege for so long without the “invaders taking over” that we are beginning to doubt the severity of the crisis.
Despite the very negative view of the Philippines’s response, the nation still ranks number 95 in deaths per 1 million population and ranks 103 in cases per capita. Even the increasing number of cases is not being reflected in hospitalizations as we were warned in July that the health-care system was being overwhelmed. July 29, 2020: “Hospitals running out of Covid-19 beds—DOH.”
While we are still restricted, particularly in restaurants and the like, people are starting to go out. Some restaurants in some “rich” areas are reporting good sales despite the 50 percent seating protocol. Customers are willing to wait in line for an outside meal. In the past two weeks, mall traffic is slightly higher.
Consumer demand through all economic groups is strong. But two things need to happen. People have to fully go back to work for their income to increase and they have to have a place to spend that income. That is obvious. Unfortunately, there are forces that are working against that in the name of public health. They had better be right.
Metro mayors have been very reluctant to allow businesses to reopen. They, too, better be right. When they count their cities’ 2020 revenues and have to significantly cut programs in 2021, they may wish they had been a little more proactive in finding economic answers in the face of health concerns.
E-mail me at mangun@gmail.com. Visit my web site at www.mangunonmarkets.com. Follow me on Twitter @mangunonmarkets. PSE stock-market information and technical analysis tools provided by the COL Financial Group Inc.