2016 Outlook, part 1

By Randell Tiongson on January 14th, 2016

econ

2016 started on shaky grounds largely lead by external factors such as the China concerns, issues in the middle east, oil prices, etc. wiping out all the gains of 2015 and with negative stock indexes world-wide.

In the Philippines, the PSEi traded to a low of 6300 a few days ago causing jitters among many investors. 2016 is also an election year so a lot of people would be naturally concerned. I have been getting a lot of messages from a lot of people and my answer remains the same, if you invested according to your objectives and you are invested for the long-term then stick to your convictions. Stock traders are obviously concerned because of the nature of their strategies but alas, the stock market behaves like it is supposed to – with much volatility.

The stock market, although one of the indicators, is not the economy… and it does not fully reflect the state of the economy. Stock markets are all about perception of value and they are decide optimistically or pessimistically, depending on what the investors see. After all, it still operates on the law of supply and demand.

The Philippine economy, although far from being a stellar economy, is a fundamentally sound economy. There are many macroeconomic numbers that can prove that soundness and we are a consumer-driven economy that is not that much affected by China unlike others. The top stocks in the index are likewise fundamentally sound; they remain profitable and have good prospects of the future. It is widely expected that the Philippine economy will continue to grow and because of that, many top publicly listed companies will continue to rake in profits.

However, times like these also calls for caution and recalibration of one’s investing strategies, albeit not as drastic as some doomsayers are recommending. The largest economy (U.S.) in the world is beginning to show signs of growth and it will definitely have a positive impact, although not immediately.

The elections remain to be as expected – people debating who the better candidate is left and right and who will better steer the nation towards progress. Regardless of who wins, what is important is the political exercise of the transition of administration. The economy will continue to grow and investments will continue to grow after the May elections so long as the process is a credible one.

Just like in previous years, I will be presenting the views of many of the experts whom I really look up to. Their opinions may differ from each other and they will also differ from mine but they are all valuable insights nonetheless. I do not believe that anyone, no matter how intelligent he or she is, has the monopoly of absolute wisdom. It is now up to you as the reader, who will read, understand and form your own convictions for 2016 and beyond.

As before, I implore upon all of us to continue to pray for our nation…

“Blessed is the nation whose God is the LORD, the people whom he has chosen as his heritage!” (Psalm 33:12, ESV)

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2016 Outlook, part 1