Search Results for: www

2015 Outlook, part 9

Interest rates, heightened geopolitical risks, global growth and many other factors will have an effect on 2015 and yet, Riza Mantaring, the CEO of the country’s number 1 life insurance company (Sun Life) feels that Philippine outlook is still positive. Ms. Mantaring’s company has been in the forefront of getting Filipinos financially abled and she views that there is still a lot to be done.

 

The 2015 Outlook of Riza Mantaring

Giving an outlook for the year almost seems like a shot in the dark given how wrong most people were last year — equities market expected to be slow in anticipation of higher interest rates and a global slowdown, but the PSEi ended the year up 22.8% and close to its all-time high; US interest rates expected to be up with the end of quantitative easing, but ended the year much lower; Philippine treasuries expected to move past 5% but ended at 4.5%; oil prices hit an all-time high mid-year at $107/barrel but ended at $53, a price not seen in years.

Again, this year, interest rates are expected to move up, and heightened geopolitical risks and global growth dragged by Europe and China may cause some volatility, but for the Philippines, our outlook is quite positive. Abundant liquidity, lower oil prices, and a slightly weaker currency will all contribute to strong domestic consumption. Aside from this, anticipation of election spending and increased government spending on infrastructure and public works can all contribute to higher GDP.

 

 

rizaRiza is a member of the Sun Life Asia Executive Team. She has also participated in various international special projects and teams such as the task force for worldwide restructuring of the company, the task force for business processes, and special teams for Mergers & Acquisitions.

In 2010, on the occasion of the 100th anniversary of the University of the Philippines College of Engineering, she was selected one of the 100 Most Outstanding Alumni of the past century. In 2011, she was named by Moneysense Magazine one of the 12 Most Influential in Personal Finance. She is also a recipient of the 2011 CEO EXCEL award given by the International Association of Business Communicators. Riza was recognized for bold and innovative programs anchored on a five year strategy, “Route 5”, and harnessing the power of communication to implement these programs, including the multi-awarded and pioneering “It’s Time!” financial literacy advocacy. The strategies and programs put in place have resulted in unprecedented growth for Sun Life in sales, assets under management, and provincial presence.

In February 2011, the company announced the acquisition of 49% of Grepalife Financial Inc, creating Sun Life Grepa Financial and opening up the bancassurance channel for Sun Life.

Riza graduated with a B.S. Electrical Engineering degree (cum laude) from the University of the Philippines, and an M.S. Computer Science from the State University of New York at Albany. She has also attended numerous executive development programs conducted by Harvard University, The Wharton School, Duke University, Oxford University, Asian Institute of Management, and The Niagara Institute. She is a Fellow of the Life Management Institute (with distinction).

She was a board director of the Philippine Life Insurance Association from 2011-2013, serving as Secretary in 2012 then Treasurer in 2013. She served as a board director of the Philippine Federation of Pre-need Companies from 2006-2008.

Riza also serves as an independent director of Ayala Land Inc., the country’s largest real estate firm, and Microventures Foundation Inc., which runs the Hapinoy social entrepreneurship program.

 

 

 

 

 

 

 

 

Share

2015 Outlook, part 8

There has been a rise in the interest of Filipinos with regard to stock market investing. Financial advisers often recommend stocks to be in one’s portfolio and for a good reason, it has given the investor good returns for sometime now. However, stocks are also one of the most volatile investments and many have ‘lost their shirt’ in the stock market, so to speak.

Are we seeing a continued bull run in the Philippine Stock Market for 2015? Marvin Germo, one of the country’s most popular stock market enthusiast shares his views on where the market is heading for 2015.

 

The 2015 Outlook of Marvin Germo

I love watching basketball. I love the part where the underdog, who has been trailing massively in the first 3 quarters start to turn things around and shift things toward their favor. I just love seeing that sight, to see people who have been battered and forgotten move forward and shift from losing to wining.

I believe that this is what is happening in the Philippines. I believe we are surging like never before. The economy may not be perfect and there are things that I think still need to be changed. But like the basketball team I know we are moving up instead of falling down. All the cards are stacking right towards our favor.

What has changed?

1. Our GDP is still strong, relatively higher than most of our peers in region and also as compared to its historic average. The economy was flying prior to Yolanda but it slowed down a bit in 2014 due to its effects of the typhoon. But I believe this year our economy would pick up further. Our GDP is still and will be consumption driven, this means that as more Filipinos spend our economy would grow as a whole.

2. Two years ago we moved from speculative to investment grade but not just that over the past few months we have proven that we can go higher than that as evidenced by more and more upgrades.

3. Inflation is still low, as oil prices continue to drop worldwide, I believe this would further slow down inflation in the country.

4. Interest rates are also low, this means more people are taking loans. More loans allow other sectors in the country to grow. In spite of more people taking loans our Non Performing Loans ratio is still relatively low, this means that people are paying their loans and not defaulting on them. As interest rates are low, this also means more liquidity in the market. It shows that more people would be taking more risks to get more gains. This is good for people involved in stocks and equity funds.

5. We are the top 23rd in the world in gold reserves and top 25th in US dollar reserves beating other 1st world countries.

6. Our unemployment rate is relatively lower, meaning more jobs are being created for our countrymen but aside from that we are seeing also more OFW remittances that help energize our consumption driven economy.

7. More money is also heading the government’s way as they are now able to collect taxes more effectively, which in theory can be used to further our economy.

8. Aside from this our debt to GDP ratio also has continued to drop.

I could go on and on about how things are doing well for our country. However as what I mentioned it is not a perfect economy and certain adjustments need to be made.

What needs Improvement?

1. I believe the government still needs to increase spending and infrastructure spending needs to be a priority. More infrastructures built would bolster business, tourism, and make growth inclusive to everyone.

2. We also need to see more foreign direct investments that will create real jobs and not just money flowing in and out of the stock market.

How does this fit our investments?

Given that interest rates are still low and there is so much money moving around. I believe equities would still take the helm this year. If you are an investor try to align your investments with anything that is related to stocks. Either via direct stock investing or via an equity fund.

Will the PSEI hit 8,000?

I believe no one has a crystal ball to determine where the market will go. Stocks over the short term still move with respect to sentiment and supply & demand. However, given the fact that the fundamentals of the Philippines remain to be amazing, I believe its not a question if the PSEI will hit 8,000 but rather a question of when.

Also as an investor, you should ask your self the question, should the market hit 8,000, would you be buying, holding, or selling? The technique to earning in the market is by having your own strategy and sticking to it.

If you who want to maximize the growth of our economy, I suggest to invest in stocks that are consumer related (Read: Stocks and our Consumption Driven Economy) or if you are entrepreneurial create businesses that will cater to consumption. At the end of the day as more Filipinos spend businesses aligned to consumption will produce more earnings. In stocks, stock prices follow earnings that move up.

Is our market relatively higher?

Yes it is. The PSEI is more expensive compared to other foreign markets in the region. This means that more investors may be more cautious to come in and may wait for the market to go a bit lower before they start investing.

As our market is relatively higher and for those who are a bit more conservative, you may still go for stocks. However, go for stocks that give higher dividends and are less volatile. This is so if the market would correct you still get your dividends and you don’t get hit much by the volatility.

Technicals

On a technical analysis level the market is still in a good uptrend from its reversal in 2009. The 200 day moving average support (as of this writing) is at 6,960. As long as we stay above the 200 day moving average I believe the market can still push up further, however if this breaks downward, you may consider taking profits.

germoslides

While as of this writing, the peak of 7,400 has been broken twice this year. What I would like to see is that the PSEI stays above 7,400 and builds a support there. If 7,400 holds, over the short term we may see the market move towards 7,600 then eventually 7,800. After that the road to 8,000 doesn’t seem so far off.

Will the market move up on a straight line up? Not necessarily! As always markets drop, when majority of investors take profits. You may also want to consider that the PSEI has been more than 27% up since the start of 2014 and a lot of investors are also waiting for a proper time to take profits.

At the end of the day, it is you as an investor who will make the decision on what to do and how to trade your portfolio. If you are a trader stick to your technical analysis and your trading plan. If you are an investor buy reasonably priced stocks that are cheap, growing and stick your fundamental analysis.

If you are investing in equity funds, either via UITFs or Mutual Funds stick to your financial plan. Don’t just take out funds because of emotion and just because the market is super high or low. Stick to your fund knowing that your fund manager knows what they are doing and that’s the reason why you are invested with them in the first place. Only take money out when your plan or goal has been hit.

At the end of the day I believe 2015 will be a great year for you as an investor. The Philippine economy which used to be an underdog is reversing, moving forward and surging higher. It’s time to be invested and to take part of the progress. God has great plans for you to prosper and to succeed in life. It’s time for you to step into them!

Have a great 2015 ahead!

 

marvin germoMarvin Germo is an engineer by education and a Registered Financial Planner. He is one of the country’s most prolific stock market enthusiast and an advocate of stock market education. He is the author of two best selling books  (Stock Smarts) on the stock market, a columnist for Business Mirror and Rappler and speaks locally and globally.

Share

2015 Outlook, part 7

In this installation of the 2015 Outlook series, my friend James Lago of the PCCCI once again gives us his highly valuable views on many factors that will affect 2015 — Economic growth, stock market, US dollars, interest rates, liquidity and more. His outlook will be very helpful as to those who are taking a closer look at their portfolios.

 

The 2015 Outlook of James Lago

Economy – For 2015, our initial GDP growth forecast range is 6.0% – 6.6%. This baseline assumption is premised on the following growth rates of the major industry groups: industry growing by another 6.5%, services expanding by 6.0% and agriculture posting a 2.5% growth. On the expenditures side, we firmly believe that the substantial decline
in energy prices will translate to increased disposable income which in turn will translate to household spending (HFCE) projected to rise by 5.5% – 6.0%.

The major dividend from lower energy prices is lower inflation. Factoring in our anticipated peso-dollar exchange rate this year, our initial average inflation forecast for the year ranges from 2.1% – 2.5% using the 2006 base year.

PSEi – The bullish trend since its recovery in 2009 remains intact. A fresh historic high of 7,413.62 was achieved as the bull market completed its 6th consecutive year last year.

2015 starts with the leading and trailing relative valuations above its historical averages, as well as the regional average again. The lower energy price benefits will certainly be this year’s major driver. Investors are optimistic that the Philippine economy could post a 6.0% GDP growth rate, at least, for this year. Corporate
earnings will most certainly improve as a result of margin improvement and higher volume sales. Our base case scenario for the PSEi this year is a rise to 7,500 – 7,800. Healthy corrections in between is expected and we see the supports at 6,800 and 6,650.

Peso – US dollar – For this year, with the dollar index firmly above the key level of 90, and as funds flow back into USpeso-dollar dollar assets, we see the peso probably depreciating to 46.00 or even 47.00. It will result in a 61.8% to 66.0% retracement of its October 2008 – January 2013 appreciation. On the appreciation side, an appreciation to 44.50 or even 44.00 cannot be discounted within the year as the country will continue to attract both FDI and portfolio inflows given its continued growth prospects and its investment grade rating.

Domestic Fixed Income Yields – Real returns on the short-term yields remained negative anew in 2014 despite the sell-off in the latter part of the year. The year ended again with a normal yield curve whose steepness was reduced as the spread between the average short and long-term yields narrowed sharply to 160.30 bps, way below its 250 – 300 bps range.

Excess liquidity and portfolio flows into peso-denominated fixed income securities will most likely keep the continued rise of domestic yields gradual overall. The negative real returns on short-term yields in 2014 might not be absurd compared to the past few years. The flattening of the country’s yield curve, a historical first, is a possible scenario. The spread between the average short-term and long-term yields will most likely move within a 200 – 250 bps range within the year as investors will continue to find ways around the yield levels. The yield curve is also seen to remain essentially normal in 2015 with yields in between 2009 and 2012 yield levels.

Portfolio Strategy – Our overall core equity strategy for this year continues to be anchored on the soundness of a firm’s core business model and its stock’s key relative valuations, PER and PBV, trading at a discount to the PSEi’s averages. Cognizant of the benefits of lower energy prices on consumption spending and the fact that consumer-related or proxy stocks’ relative valuation are trading at a premium to the market’s averages, we chose only those whose premiums are reasonable enough to give investors a better upside potential. As a whole, lower energy prices will be beneficial to most firms by way of improved margins and increased volume sales. Several of the stocks in our short list also have attractive, above market average dividend yields.

Given the potential of a near flattening of the country’s yield curve, driven by the normalization of short-term yields and the low inflation scenario, corporates are seen to continue taking advantage of still affordable medium to long-term yields. We continue to encourage investors to take a serious look at the existing PSE-listed preferred
shares and possible new offerings in 2015 as the yields will remain attractive. For fixed income securities, investors will have to be opportunistic again, taking advantage to purchase, when yields touch attractive levels within the year. It is still best to diversify the fixed income portfolio across various tenors to optimize the portfolio yield. The suggested average tenor or duration of the portfolio must be within the short to middle-tenor ranges as yields on the long dated instruments are not attractive for now.

 

JFL_2011Joseph James Lago is the Head of the PCCI Securities Brokers Corp. He has over 2 decades of experience in the investments industry in various capacities. He is also a professor of the De La Salle University Graduate School teaching in Management and Economics. He is a much sought after researcher, economist and analysts. He is a Registered Financial Panner.

Share

2015 Outlook, part 6

How_the_bubble_burst_LGIs the Philippines now entering a turning point? Is the Philippine economy in a bubble or have we achieve a self-sustaining economic growth? Presenting the views of Business Mirror columnists, investment advocate and seasoned stock market expert John Mangun!

 

The 2015 Outlook of John Mangun

Philippines 2015: a turning point

“A turning point” in literature is defined as the point of highest tension or drama when the solution or climax to the story begins to unfold. That is what the world and the Philippines faces in 2015.

Two events occurred in the financial markets as we closed 2014. The spot price of Brent crude oil hit its lowest price since May 2009. The US Dollar Index, measuring the exchange rate for the US dollar against a basket of currencies, reached its highest level at 90.64 since December 2008.

While we are all looking at the price of crude oil as it affects local gasoline prices, the bigger picture is the general price of most commodities. Virtually every index that measures a broad basket of global commodity prices is trading at or near its 2009 level.

To have this situation can only mean one thing. The global economy is in such bad condition that demand is falling rapidly. If it were only crude oil prices that were falling, then we might be able to make the argument that this is being caused by increased supply. But it is across the board for other critical commodities.

The turning point for the globe is twofold. The first is the uncovering of how bad the global economy really is as the commodity prices fall. The second turning point is how much of the ‘emerging economies’ like Brazil and that class of countries has been dependent on dollars flowing out of the US into their economies.

The same thing happened in the 1997 Asian crisis but the major emerging countries did not account for 50 percent of the global economy like they do now.

The ‘gloom-and-doomers’ have been saying that the Philippine economy is in a bubble and all the growth of the last five years is because of foreign money supporting the economy. I do not believe that. Foreign money as investment coming into this country has been dismal. Remittances from outsourcing companies and from overseas Filipinos are significant. But with domestic sources accounting for 90 percent of all new investment, we are not dependent on the foreigners and their money.

But in the next 12 months we are going to resolve the question if whether or not the Philippines is in a bubble or has finally achieved a self-sustaining growth economy that can handle global economic shocks. I believe we have.

If the Philippine peso can maintain is relative strength and narrow sideways movement in the face of the appreciating dollar, we have finally come to economic maturity. If the interest rate that top corporations must pay on the debt does not widen in relation to the US corporate borrowing rate, we are in great shape.

For stock market watchers, caution is still the strategy. Either we will see a move on the Philippine Stock Exchange Index (PSEi) above 8,500. Alternatively we will see 2015 take the PSEi to below 5,500.

This year will bring new meaning to “It’s more fun in the Philippines”. I’m looking forward to it.

 

Interest in the stock market first hit John Mangun when he was in his early teens, following the stock price action of John Mangunmajor 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

 

 

Share

2015 Outlook, part 5

In this 5th installment of the Outlook series, a discussion on the government’s role in the economy is discussed. While there has been admirable growth in the Philippine economy, one can wonder if the growth is because of or despite of the government. We are presenting the views of one of the country’s most distinguished and revered investment expert, Mr. Gus Cosio. With his many decades of experience in the finance industry both here and abroad, Gus Cosio has become an icon in the investing industry. He is currently the CEO of First Metro.

 

The 2015 Outlook of Gus Cosio

Our economy could have done much better in 2014 had the government put significant effort in improving the country’s infrastructure.  The country’s private sector has been doing most of the heavy lifting in terms of contributing to growth.  Businesses are hiring more people such that annual employment increase looks to be sustainable so far at the one million level, this in spite of little help from government both national and local.  Red tape continues to stifle businesses who would like to expand rapidly while lack of long-term government planning imposes more difficult challenges for enterprises to streamline operating costs.

A glaring example of the combined ineptitude of government units was the fiasco at the Port of Manila which wreaked havoc not only to traffic in the metropolis but also dragged down the operations of importers and exporters alike through a major disruption of the national supply chain.  Of course, the MRT/LRT situation is another example of government inaction which creates frustration to both users and non-users of the system.  In spite of it all, the government made some points in its favor.  I particularly like the Conditional Cash Transfer program which to my mind gives tremendous hope to the poorest of the poor.  I also observed good quality highways having been built in Mindanao and other rural areas.  The DepEd had also embarked on a massive classroom building program which delivered good quality school facilities to many places in the country.  I hope the responsible agencies continue to be productive in their programs.

Nevertheless, the Filipino has proven himself in terms of resilience, and Philippine business likewise, in the face of all these hurdles.  This gives me confidence that the national economy can do better in 2015.  There may be a slowdown in the real estate market due to the new regulations imposed by the BSP which lowers the loan to value of mortgages.  So while a housing backlog continues in the country, with financing becoming more difficult in 2015 compared to 2014, property companies will need to be more creative in their marketing and affordability schemes.  Banks will also feel the brunt since they would have to limit exposures to property resulting to slower loan production in this sector.

The bright spot is industry and manufacturing.  News of new manufacturing facilities being set up in the country has been plentiful.  In fact, most of the industrial estates that were set up in the late 1990’s are only seeing their capacities running full last year.  This means that new industrial estates need to be developed in the coming years.  Consumer spending will likely be robust.  Growth in this sector had been sustained in 2014 and given that 2015 is a year prior to national elections, we can expect consumer spending to even be greater.  I will not be surprised if I see our malls bursting with shoppers and restaurants filled to the brim.  The lower petroleum prices should leave more cash in the pockets of consumer as the pay less in running their cars and motorcycles.

I remain positive in my outlook for the Filipino consumer and investor in general.  The looming power shortage in the dry season this year is bringing attention to the longer term power supply situation in the country.  This is good because the need for additional generating capacity is being recognized.  Investment opportunities in the sector has also become available to the individual investor as a number of power producers are listed in the stock exchange.  Since employment is growing among the middle class, surely the various listed consumer companies should present good investment opportunities as well.  I am sure a lot of positive economic and business news will crop up in the country this year.  Given the credit rating upgrade last December, more investors – both financial and direct investors – will be giving the country a second look.  With more people getting involved in our country, economic activity can only grow.  I only hope that the government does not become a dampener.

 

_DSC0009Augusto M. Cosio, “Gus” as he is more popularly known, is a known advocate for the development of the Philippine capital markets. Having gained a wealth of experience in the global capital markets after working in Hong Kong and Singapore for global investment banks such as Deutsche Bank and BNP-Paribas, he is a passionate crusader for investment literacy among Filipinos. He is a regular resource speaker for the Philippine Stock Exchange Certified Securities Specialist Program and for capital market topics at the University of Asia and the Pacific. In the First Metro Group, Gus had spearheaded The Capital Market Seminar Series conducted regularly by First Metro Securities Brokers and First Metro Asset Management Inc. (FAMI) in their offices Makati, Binondo, Cebu and Davao.
He is the president of FAMI – the First Metro Asset Management Inc. – a multi awarded fund Management Company with 14 billion pesos of Assets under Management (AUM).

Share

2015 Outlook, part 4

Many foreigners have been positively interested in the Philippine performance and of them is a Dutch who runs one of the country’s largest insurance company, AXA Philippines. Rien Hermans is a Dutch national but you can say that he has a good insight on the inner workings of this country with his many years working here. AXA is the world’s largest insurer and their local subsidiary in the Philippines is a joint venture with Metrobank.

 

The 2015 Outlook of Rien Hermans

In 2015 the markets will strongly be influenced by a strengthened dollar, the lower cost of oil and the low interest rates. On top of that we will see a strong influence on the index of the coming elections, especially in the last months of 2015. As share prices reflect the net present value of future expected profits of the companies, it is understandable that the political climate is a very important factor in determining the right price of a stock.

So with a stronger dollar improving the attractiveness of the BPO industry, inflation remaining in control supported by the lower oil prices and interest rates returning to the very low levels of the past two years, equities remain the most attractive asset class and I maintain my expectation that the PSEi will continue its path towards 10,000 before 2020. For this year I do predict that the index will move up and I would have expected the PSEi to hit between 7,800 and 8,000 by year-end. The big unknown however is how the candidates for the presidency will execute their strategies and how this will influence the business sentiment, which can have an effect of 500 points up or down in my opinion.

In my opinion the best strategy therefor is to diversify both in sectors as well as in markets. Overweight in equity compared to bonds, overweight in dollars compared to peso and balancing the investments in high growth markets like the Philippines with more mature markets like Europe and the United States. My medium term view would be an overweight in Europe as I believe that we will see mergers and acquisitions increasing there, followed by a recovery of the economies.

 

rien-hermans-ceo-axa-phils-580x333Convinced of the value that financial products deliver to customers Rien has spent over 2 decades  in the financial service industry in the fields of product development, distribution, marketing, strategy and general management.  

In 1990 he started with ING Bank in the Netherlands, where he was responsible for developing and implementing Life insurance as a new product group offered by the bank. His analytical skills and strategic vision were recognized and for 4 years he was vice president Strategy & Planning advising the Board of ING on strategic issues.

In 1999 he moved to Asia and after a short stint in Hong Kong he was assigned as the CEO of ING Life as well as CEO of Aetna Life & Healthcare in the Philippines, Executive Director and General Manager of ING Malaysia and the last position he held in ING was Board Member of ING Financial Services Poland.

In 2009 Rien ‘crossed the line’ and joined AXA with the assignment to transform AXA Philippines into a strong player on the domestic market with a sustainable position in the top 5. Focused to be the best in the eyes of the customers the company has strengthened its position in the growing life insurance and investment market in the Philippines.   

Share

Francis Kong’s Level Up Leadership

The country’s top motivational speaker, a strong force for leadership learning and my mentor Francis Kong will be running his new program for 2015 — Level Up Leadership!

The programs are Francis Kong are beyond valuable, they are life-changing!

FJK 2015 Event

 

Level Up Leadership with Francis Kong

Steve Jobs once said, “Innovation distinguishes between a leader and a follower.”

If you’ve previously attended a leadership program, now’s the perfect time to update and upgrade your leadership skills, continue to grow and become a better leader.

Start the year right and join one of the most prominent inspirational  speakers in the country, Francis Kong this January 21 and 22 at EDSA Shangri-La.

Level up and become a person of influence in ways you have never imagined.

For details, visit http://www.inspireleaders.com.ph/

Share

2015 Outlook, part 3

There has been a lot of attention with regard to the Philippine stock market today than it was a few years ago. Thanks to great performance of the Philippine stock market, more people are opened in growing their wealth through equity investing. Will the rally of the past continue in 2015?

I am proud to present the 2015 Outlook of a former co-worker, a stock market advocate and the person behind the growing Traders Apprentice Pilipinas (TAP) — Mr. Tony Herbosa!

————–

The 2015 Outlook of Tony Herbosa

2015 is “make or break” year and we do not really know moving forward.

As of today, I have been consistent that we are on the final stages of a bull market rally that started in 2009, specifically that we are on Wave5. For most of 2014, this view that mostly “greed stocks” move on a wave5 rally vs. “Index stocks or heavyweights” was confirmed specifically in nickel plays ($NIKl, $Marc, $Ore, $CMT volume), gaming ($LrW, $PLC, $Bloom) and some property stocks like $MEG that still climbed in 2014. As we ended the year, a few IPO’s even sucked the liquidity out of the directionless PSE/market causing a retest of the 7,000 critical floor.

The US$ is expected to be stronger which is not bullish on Emerging Markets or EMs ($EEM) in general and it never happened that weakening peso, medium term, was bullish on the PSEi. My advice, we break 7,400 then the issue of “global de-leveraging” is postponed and the would signal the continuation of our Wave5 rally for most of 2015. If we do not break 7,400 in next two to three months something is very off. This has nothing to do with how the PHL economy is doing. This is all about the global shifting of funds, either foreign money stay in EMs, be selective with EM currencies or stocks which are strong like EM-PHL vs. EM-Argentina, or mainly leave for US$ assets. Already global investors are moving to risk-less US treasuries, not good.

My advice: I would get out of stocks if we go below 7,000 once again if not focus on just a few nickel stocks which will be spared given global nickel projections/prices for 2015. But the PSEi is less predictable in 2015, given foreign funds make up 60% plus of our trading. The ground is somewhat shaky underneath.

 

imageWith more than 2 decades in the financial industry, Tony Herbosa is one of the country’s most active and noticeable stock market advocates. With an MBA from the prestigious Wharton School in the U.S., Tony has worked for many financial institutions both here and in the U.S. such as Citibank, Solomon, PCI Bank, Ernst & Young, and as CEO of PNB Capital. Tony is the influential person behind one of the most active stock market education forums in the country today, the TAP. Tony Herbosa has been actively engaged with the Philippine Stock Market since 1992.

Share

2015 Outlook, part 2

Kicking off this 2015 Outlook series is the views of one the country’s most respected investment expert, Marvin V. Fausto. Mr. Fausto was formerly the Chief Investment Officer of the Philippine’s largest bank and also the largest funds. His decades long experience in fund management makes his investment views sought after. He and his wife Rose Fres Fausto has also embarked an advocacy with financial education for families.

 

The 2015 Outlook of Marvin V. Fausto

2014 turned out to be quite within people’s expectations with the general trend of the economy growing above historical averages and the financial instruments behaving towards the path most analysts expect. GDP growth should end above 6%, interest rates inched up while the stock market did not disappoint exceeding expectations with the PSEi increasing by more than 22%.

2015 however may bring in mixed expectations. Despite general positive long term outlook both in the domestic and the now growing positive sentiment in the global environment, the bottlenecks in stimulus spending experienced by government towards the latter part of 2014 and the coming Philippine elections in 2016 may keep investors’ on the sidelines waiting for how the economic variables pan out before deploying the increasing liquidity in peoples bank accounts.

Investment deployment will be data dependent and market sensitive. Should the economy falter and bring in below average GDP growth, the premium that investors give to the Philippines may be given a second look and will be adjusted accordingly.

On the other hand, the extent of the effects of the decline in oil prices in commodity raw material inputs that may keep inflation within the BSP’s expectations could leave interest rates steady despite the increasing expectations of higher US interest rates.

Domestic bond investors therefore may have better opportunities this year than during the last with government and corporate bond prices moving within a range given the favorable benign inflation expectations. The stock market, on the other hand, will present investment opportunities both for trading and long-term investing. With valuations remaining above historical levels and as trading volumes decline, stock market traders should remain selective and increase positions during market downturns and reduce holdings during market rallies. Long-term investors may well deploy heavier on declines and buy consistently and regularly using the cost averaging method as the stock market rise.

2015 should present opportunities with investors cognizant of the events that unfold. As we enter the demographic sweet spot this year that many are anticipating to be the start of a long period of above average growth for the Philippines, people should deploy their cash wisely and invest prudently. With information available faster through the internet, people should continue doing their research and reserve some attention to set aside funds more specifically with targeted objectives for emergencies, for future financial goals, and even for retirement. Apportion tactical positions for each goal matching risk appetite with investment instruments horizon.

Let 2015 be the year goals are set and wisely implemented. Happy investing!

——

rfp (964)Marvin V. Fausto is the former Senior Vice President and Chief Investment Officer of the country’s largest bank, BDO Universal Bank and in charge of the Investments unit managing over P700 Billion under the BDO Trust Banking Group. He recently took his early retirement having worked for over 30 years in the fund management industry and is now embarking on a new venture as a consultant to COL Financial to launch the first fund supermarket in the country making funds available online and easily accessible to everyone.

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 Board adviser of the Fund Managers Association of the Philippines. He is also a member of the Board of Advisers of the CFA Society of the Phils.

Share

2015 Outlook

phil economyThe Philippine economy has been performing admirably in the last 3 years or so. Most macroeconomic indices, stock market, and many other indicators confirms how the country is faring economically speaking. Spending power of the Pinoy has also gone up as evidenced by more robust trade and higher consumption. As in previous years, the OFW and the BPO sectors have been a big positive factor with regard to economic activity and income building but there has been growth in other sectors too such as manufacturing, services and tourism. Unfortunately, the agriculture sector seems to be a laggard, which is unfortunate because the bulk of our unemployment is agrarian in nature. There are a lot more room for improvement and we just scratching the surface in unlocking the true potentials of this beloved nation. The continuous credit upgrades we have been seeing is a testimony to what we have done and we can do in the future.

Will 2015 see the same trend of the past years? Many of us believe so. The momentum of the nation is in full gear and we can build on many of our accomplishments. A lot of concerns has been raised with the coming 2016 elections. Clearly, the next administration will be crucial in the sustainability of our growth trajectory. However, we also believe that the reforms instituted by the Aquino administration and the previous ones will play a big role with regard to our economic performance and can safeguard our gains regardless of whoever runs the nation after 2016. In fact, the credit raters feel that our growth will continue beyond 2016 which is why they are giving us the upgrades.

Beyond the OFW remittance, growth in the BPO sector, renewed vigor in the manufacturing, tourism and services sectors, what can we expect from 2015? In 2015 there are exciting things for us to look forward to – the integration of the member-countries of the Association of Southeast Asian Nations and our entering the demographic sweet spot’, among other things.

Asean integration will begin in 2015, and the creation of an economic community will give us many opportunities depending on how we handle ourselves. There are sectors where we will have competitive edge over our neighbors, but there are also sectors where we will be at a disadvantage.

The demographic ’sweet spot’ is the period when the majority of the population of the country reaches its most productive stage: between 15 and 65 years old. Studies have shown that countries that enter this ’sweet spot’ experience the highest economic growth in their history. The experiences of Japan, Korea, Hong Kong, Singapore and China support this theory. Our demographic ’sweet spot’ starts in 2015 and will run for about 30 years or until 2045.

As in previous years, I will be featuring the 2015 Outlook of many experts whom I admire and whose opinions I trust. The views will be coming from a diverse field – from investment analysts, economists and others from the financial services arena. Make sure you visit this site often as I will be putting up their views regularly in the next two weeks.

As we remain bullish with 2015 and the coming years, it is always a good idea to be optimistic but with a dose of caution. Continue to be prudent with the way you handle your money – diversify your wealth and make sure you understand the risks in any endeavor you are getting into.

Further, may we not forget that all these are blessings from the Lord. After all, wealth, and the ability to create wealth come from the Lord; and it is not for our purpose but for His.

———–

You can still avail my books with discounted bundles up to January 7, 2015. Click HERE for details.

Share