2013 Outlook, part 3

By Randell Tiongson on January 10th, 2013

It is an honor to present the outlook of one of the columnists & analysts I truly admire. I have been a reader of his column for many years now and his views are those I truly respect. Mr. Mangun has an uncanny in the accuracy of many of his forecasts.

The 2013 Outlook of John Mangun

There was a significant event in 1997 called the Asian Financial Crisis. The Philippines came through that better than the others because: 1) The economy was not export oriented, 2) The banking system was strong, and 3) The Bangko Sentral did not artificially value the peso pre-crisis.

All those same factors apply today even with the BSP’s current peso intervention. That is why the Philippine economy will continue to outperform as will the stock market.

The reasons are twofold and those factors are not going to change.

Interest rates are so low as to create a negative net return. The Philippines has always been a high interest rate economy in comparison to our neighbors. With low rates, the only available liquid investment is the stock market. The other markets have always priced low rates into stock prices; not so here. Interest rates will stay historically low. Further, low rates allow easy borrowing for economic development.

None of our neighbors stock market listed companies are making the kind of profits as here. Philippines companies are leaner (low debt) and meaner (sensible but aggressive expansion) and therefore have long term sustainable and growing profitability.The PSE index will go to 6,900 as corporate profitability continues. The economy will show sustainable growth as corporate profitability continues.

The Peso will move counter to the US dollar which will see a large depreciation mid-year to near year end.

2013 is the year of the Philippine Eagle, not the Chinese Snake.

 

Interest in the stock market first hit John Mangun when he was in his early teens, following the stock price action of major companies in the daily newspaper long before the computer.

In 1976, Mr. Mangun earned his license as a stock broker on the New York Stock Exchange as well as being licensed and registered for the Options and Commodity markets.

After working for two major Wall Street firms, Mr. Mangun went to England as head of foreign exchange trading for a British asset management company.

Upon his return to the United States, he formed his own investment advisory company administering to the investment needs of corporations and high-net worth individuals.

Mr. Mangun has actively analyzed and traded the Philippine Stock Exchange since 1989, making his first stock purchase (and losing trade) buying shares of San Miguel Corporation on Friday, November 24th, one week before the 1989 coup attempt.

He has been a regular newspaper columnist, writing about the Philippine economy, business, and stock market since 1996. His website is MangunOnMarkets.com.

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2013 Outlook, part 3