Vol. XXII, No. 39
Thursday, September 18, 2008 | MANILA, PHILIPPINES
Today’s Headlines
Uncertain times call for investor caution
WITH GLOBAL financial markets in bigger trouble due to woes surrounding Wall Street heavyweights, investors should remain conservative and wait for the eye of the storm to pass before taking any more risks, regional officials of financial services firm Citi yesterday said.
CITI CEO for Southeast Asia and the Pacific Piyush Gupta gestures as he speaks to journalists yesterday. The Citi executive, in town for a visit, cautioned investors to be mindful of where they park their funds. — Jonathan L. Cellona
"The markets are going to stay turbulent until next year," Piyush Gupta, Citi CEO for Southeast Asia and Pacific, told journalists.
"Be thoughtful and cautious. It’s not the time to take undue risk because a lot of things can go wrong," said Mr. Gupta, in Manila for a brief visit.
With wild market swings a constant threat, investors should put their money where there is a guarantee the initial investment will be recovered.
"It’s the time for principal protection. Look for stuff where the principal is safe," Mr. Gupta said, adding "It’s a very difficult market, both on the fixed-income side and the equities side."
That goes without saying that stock markets are particularly not a good place to park money for now. "Take this as an opportunity to wait. It’s better to err on the side of caution," he said.
Citi, which had its share of woes late last year amid the US credit crisis but was able to raise $50 billion in capital since January with some help from Middle East money, is still safe to do business with, Mr. Gupta said.
After writing off a lot of subprime-related assets, divesting non-strategic businesses like a German consumer unit and foreign capital infusion, "capital adequacy is stronger than last year," he claimed.
"We don’t have the monoline model of other Wall Street firms who have high leverage and poor sourcing of liquidity," he added, boasting of $800 billion in deposits, of which two-thirds are outside the US.
Citi is exposed to Lehman bonds but "it’s insignificant," Mr. Gupta said. "It’s not a concern for us at all ... We can manage the process better than out competitors."
The Citi executive said the bank would be putting more capital in Asia now than elsewhere, adding that the Philippines has become a "fantastic market from a demographic standpoint," pointing to a growing middle class and a developing corporate debt market.
The bank gave credit to the government’s improved fiscal position, which has allowed the Philippines to continue investing in infrastructure to shore up economic activity amid the global slowdown.
"The better sociopolitical and economic climate gives us a lot of confidence now than the early part of this decade," Mr. Gupta said.
Sanjiv Vohra, Citi’s Philippine chief, said there were bright prospects in the property and the oil, gas and natural resources sectors.
Hopefully, legislators will be able to pass the law on real estate investment trusts or REITs before the year ends to perk up the domestic market, he added.
Mr. Vohra said Citi would be pushing all of its local activities — cash management for corporate clients, business process outsourcing where it has 2,000 workers, savings through a 50-strong branch network, and credit cards where it controls 30% of the market.
In the Philippines, Citi was number two in profits last year, Mr. Vohra noted.
It helped facilitate the Philippines’s only successful initial public offering this year: San Miguel Brewery.
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