2013 Outlook, part 7

By Randell Tiongson on January 21st, 2013

It will be interesting to know the outlook of a seasoned investments expert and the Chief Investment Officer of the country’s largest family of funds. With over 3 decades of solid experience managing the largest investment funds in the country, Mr. Marvin Fausto experience all the many cycles of the volatile investment world and not lose his shirt, as the saying goes. Marvin is also a marathon runner where he applies the same discipline as he does in investment management. Marvin Fausto likewise shares our advocacy of empowering Filipinos through financial education.

The 2013 Outlook of Marvin V. Fausto

My view for the year 2013 will likewise be optimistic as in 2012 due to the continued confidence in the present administration as well as the business environment in general. The country’s Gross Domestic Product is expected to be robust with a growth rate higher than historical average and most likely range the 6-7% growth level. With better management of their finances, the Government has greater flexibility in funding developmental programs in infrastructure, tourism, education and social services. This will result in more economic capacity and jobs for the Filipinos. Complemented by the already stable inflows from Oversees remittances and strong revenues from business process outsourcing, domestic consumption spending will accelerate for the coming years. I believe our per capita income could reach more than the $3,000 in the next two years and will bring personal spending at higher levels.

As for the investment markets, there will be less and less opportunity to generate better than historical gains in the fixed income investments as interest rates will remain low and is expected to stay low for most part of the year. Liquidity will be abundant putting more pressure on the Central Bank to siphon out inflation causing excess cash in the system and thus leaving the BSP Special Deposit Accounts very much available to all as the highest yielding deposit instrument in the market.

For equities, the stock market is expected to be more volatile for 2013. Stronger bias due to liquidity and increased potentials for gains on one hand and the relatively high valuations on the other will be the opposing forces that will make stock investments this year more volatile than usual. This year would most likely form the base consolidation and prepare for better returns for the coming years as earnings catch up with stock prices on  more acceptable levels. Investors should be more disciplined in their purchases this year, buying at reasonable discounts to fair valuation as well as having a strict time horizon only for the long term. Having these in mind will generate rewarding returns for investors.

Happy investing in 2013!

 

Marvin V. Fausto is the Senior Vice President and Chief Investment Officer of thecountry’s largest bank, BDO Universal Bank and in charge of the Investments unit managing approximately P600 Billion under the BDO Trust Banking Group.

Prior to this, he held the position as head of the Trust Banking Group of Equitable PCI Bank from 2002 to 2007 primarily responsible for its overall business and operations. He also held the position of Vice President and Investments Head at Citytrust Banking Corporation. He started his career as an analyst at the former Far East Bank & Trust Co.

After having served as President and director, Mr. Fausto is currently a Board Adviser to the Trust Officers Association of the Philippines, the umbrella organization of the Trust Industry. He was also the Founding President and current Director of the Fund Managers Association of the Philippines.

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2013 Outlook, part 7