2014 Outlook, part 2By Randell Tiongson on January 8th, 2014
To start the 2014 outlook series, it is both an honor and a privilege to be featuring the views of the Chief Investment Officer of the country’s largest bank, BDO – Marvin V. Fausto. Marvin is one of the most respected and most admired fund managers of the country and he also steers perhaps the largest investment funds in the Philippines. A marathon runner, husband to Rose Fausto (also a finance advocate) and father of the now famous Fausto Boys, the often featured young investors.
The 2014 Outlook of Marvin V. Fausto
2014 will be mixed given the developments we have seen in 2013. While the macro fundamentals of the economy continue to perform above historic trends, our financial markets have priced in much of the gains and may just undergo a period of consolidation with a downward bias this year. Interest rates are expected to pick up and thus may affect bond prices while the stock market continues to trade at a premium versus other markets and thus may just trade within a narrow range for most part of the year. These expectations, however, can change should external markets react differently given the winding down of the quantitative easing from the US.
More importantly however, the macro positives have yet to be felt in a more meaningful way by majority of the Filipino population. Poverty figures remain elevated having more than one fourth of our population considered poor with unemployment relatively high. Even with the employed and those with sufficient source of living, they continue to grind just to live by and survive, as they have done in the past. The challenge then is to break that vicious cycle and uplift the general public to a higher level in achieving the prosperity that all Filipinos deserve. After all, the only way the country can be prosperous is for each and every Filipino to be prosperous. With the low interest rates expected to be prevalent for some time, my view is for more and more Filipinos becoming aware of the investment instruments available to them and eventually participate in a more meaningful way to lift their financial well being over the long term.
So as we move to the new year in 2014, there is much hope that things will improve for the better. The economic growth is projected to remain at above trend of 6-7% with inflation be within controllable levels. Government has generated sufficient funds to stimulate growth through infrastructure spending and government consumption that are expected to pump prime economic activity. This is coming at a time when theorists believe will happen at a most ideal time to prepare the country to stimulate improving demographics where majority of the Filipinos will reach their most productive age when more than 65% will reach ages from 15 to 65 years old that is projected to start in 2015 and will run in the next 20 to 30 years.. These were levels when other countries as well reached their most productive growth cycle in their economic history such as Japan, Malaysia, China, and Indonesia.
This year should therefore be the time to seriously plan for the future by investing in ourselves and in financial instruments that will greatly benefit them in the future. Even with challenging market views, opportunities abound and will reward those disciplined enough to participate.
Marvin V. Fausto is the 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 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.