It is a pleasure to present the outlook of an esteemed colleague and a veteran in the investments industry, Mr. Ricky So. Ricky has extensive experience in the arena of investments which dates back to over two decades. Today, Ricky is an advocate of investment education as he helps make many Filipinos a real investor.

The 2013 Outlook of Ricky So

The year of the snake bodes well for the financial markets as the book says people born in the year of the snake are fortunate with finances. This is the astrology part. I do not mind the source, for as long as it is positive, I tend to believe it.

For the Philippines economy and markets, 2013 will be a great year of milestones as we are likely to achieve the most coveted and once elusive investment grade status from leading global credit ratings companies.  (Never mind, their questionable past during the global crisis of 2008, this time they are doing well with us.)  This milestone will be a catalyst to more positive developments for the Philippines. Foreign direct investments will most likely pour in bigger investments than before perhaps rising more than 100% over the coming years.  Portfolio investment will likely follow suit with a bold outlook of about $10 bln for this year along.  This will pave the way for the equity markets to record new highs towards Q2 to Q3 rising another double digit gains as inflation continues to be tame with interest rates possibly lowers a few basis points more.  I predict the PSEi to reach record levels beyond 6500 but not 7000, somewhere in between.

The continued challenges in US and in Eurozone economies bode well for our BPO sector generating more dollars (my estimate is it growing 15%) and employment as well. I can see the unemployment rate moving another 1% lower from the present rate of about 7%.   Alongside, the perennial winner OFW remittances will provide additional inflow of 1 to 2 billion dollars from 2012’s estimate of $21 bln. The result of which is a stronger peso moving towards P38-39 per greenback towards the end of 2013.

Over-all the PHL economy will be well this year and perhaps over the coming years. It is time to invest in the Philippines and attract more foreign investments and rekindle the local investors both onshore and offshore.

Ricky So’s professional credentials:

• SEC Licensed Commodity Futures & FOREX Solicitor, 1987 to 1996

• SEC Certified Investment Solicitor (CIS), 1997 to present

• Investments Lecturer, Insurance Institute for the Asia and the Pacific (IIAP), 2004-2005

• Lecturer, Investment Company Representative Certification Seminar, 2000 to present

• Founder and Facilitator, PAMI Investment Clubs, 2003 to present

• Alternate Member, Fund Managers Association of the Philippines, 2007 to 2011

• Director, Association of Registered Financial Planners in the Phils., 2008 to 2009

• Registered Financial Planner (RFP®), 2008 to present

• Stock Market & Technical Analysis Lecturer, Global Investor’s Center Phils. Inc., 2009 to present

• Portfolio Management Lecturer, AIM-EXCELL Strategic Inv. Mgt. Program 2009 – present

• Training Faculty, RFP Philippines – July 2011 to present

• SEC Certified Securities Representative Eligible – March 2011

• Lecturer, Managing Equity Portfolio, Chartered Wealth Manager (CWM®), July 2012 to present

I am pleased to present the 2013 Outlook of my friend and comrade, Dr. Alvin P. Ang. Alvin is an established economist and have been one of the active movers of the Philippine Economic Society and the University of Santo Tomas. I often seek Alvin’s counsel especially on matters of the economy. Alvin is not only a well esteemed analysts and professor, he is also an advocate of financial education of the Filipinos.

The 2013 Outlook of Dr. Alvin P. Ang

Last year we said that 2012 is a breakout year for the Philippines.  We were not disappointed.  By the time of this writing, accolades here and there have flooded the world about the revival of the Philippine economy. 2012 indeed is a good year.  We have seen unprecedented levels of growth in the equities market and incredibly low interest rate regime hovering for most of the year.  These happened despite challenges in the global economy – the problems that continue to plague the Eurozone, the threat of the US fiscal cliff, among others. Locally, not even the negative impacts of the successive typhoons and monsoon rains have dampened the improved business climate.  The promise to clean the bureaucracy and change the way of doing things undoubtedly have reached investors as confidence have strengthened.  The passage of administration measures such as the RH Bill and the Sin Tax and the removal of the Chief Justice show the resolve to move beyond the usual.  The preliminary peace agreement in Mindanao also helped assure that peace and order issues will be settled.   We are seeing strong double digit growths in capital formation in the last two years – a pattern observable in the Philippines when confidence in the administration is high and up.  Because of these, GDP for 2012 likely hit 6.5%.  This growth is not a blip unlike 2010 or 2000 which are base effects due to a weak prior year.  It is backed up by confidence, resilience and political will.  For 2013, the economy is on a step up.  At current investment levels, growth can match 6.5% and even up to 7%.  Current growth continues to be sustained by the remittances which year by year continue to increase albeit at a slower pace.  The services sector led by the BPO and Tourism continue to make headways for growth.  Last year, construction, finance, real estate, transportation and communication proved to be the growth factors.  This year, these same sectors will benefit from the large foreign inflows of investments pulling with it local investors.  Communication will push further especially as consumers have shifted from mere texting to using mobile internet – as evidenced by the lower text volumes during the holidays.  Real estate is going to be on the overdrive – the competition for the lower to upper middleclass residential housing and condominiums catering to OFWs, will now be supported strongly by the demand for foreign locators.  Data from the BSP shows that direct foreign investments are building up at the real estate sector.  This in turn is supporting the strong construction growth.  These are signs that beyond the BPOs, foreign locators are building base.  The Japanese have finally put substantial investments here in 2012. Canon, Brothers and Bandai are among the big ones that have already established base.  Substantial investments are also seen in the wholesale and retail sectors which are bouyant when economies are in an upswing.  The low interest rate regime will remain especially as inflation continues to hover about 3%.  It also helps that the government is making good in its finances and have no need to borrow heavily. With excess cash, the much vaunted PPP projects and large infrastructure projects can easily be put online this year.   All of these will be bouyed further by the much awaited confirmation of an investment grade within the 1st half of the year!  In addition, the mid-term elections spending could help boost local demand.

Despite these good and positive expectations, there remain challenges.  First, the strong confidence in the economy is bringing in unprecedented foreign exchange inflows from all sides – direct investments, portfolio investments, remittances, touris and BPO income.  This has made the peso appreciate  faster – this could potentially erode the confidence and competitiveness we are enjoying.   The BSP is surely doing a good job of ensuring that the inflows will shift the direction of inflation and interest rates.  They will most likely see a small room to have more easing if the peso continues its appreciation.  Second, the sectors that are benefiting from the growth are not directly linked to where large number of unemployed are.  Hence, it will take a bit of time before the mass base benefit particularly agriculture.  Nonetheless, agriculture have already shown resiliency amidst natural calamities – signifying that productivity is improving in the sector.

Thus, on an overall perspective, 2013 is the go ahead year for the Philippine economy!  On a sector basis, the building blocks for setting base should be the sectors that will go overdrive – these will be supported by tourism, the BPO sector and remittances as internal strength.  Investment-wise, equities will continue to dominate especially as many listed firms are in the overdrive sectors.  Fixed rate investments will remain slow.  This is actually the best time to borrow for housing.  It will be a good time to renegotiate loans and debts.  Finally, we have to believe what we are seeing. I choose not to doubt the sustainability of this growth.  This is something that we have desired to happen in the past. Answered prayer indeed!

Alvin P. Ang has more than 20 years of professional experience in both public and private sectors.  He started his Economist experience with the National Economic and Development Authority (NEDA) of the Philippines where he developed his skills in Development Planning, Policy Formulation and Analysis.  He also worked in Investment Research and Economic Forecasting with his stints at the Philippine National Bank and All Asia Capital as Chief Corporate Planner and as Economist, respectively.  Within those periods, he has been teaching part-time at the University of Santo Tomas in Manila.  In 1999, he joined the academe as full-time Faculty member after completing his Master in Public Policy at the National University of Singapore as a Scholar of the Singapore Government.  He went on to complete his Ph.D. in Applied Economics at Osaka University in 2006 as a Japanese Government Scholar.  He has published in renowned journals such as the Review of Development Economics, Asia Pacific Social Science Review, among others.  His research fields are in Labor and Development Economics and his research interests include Privatization and Development Finance.  His researches on Remittances and Economic Growth in the Philippines have been widely circulated.  He has also consulted for the World Bank, World Health Organization, the European Union, Asian Development Bank, International Labor Organization and the USAID on policy matters. He recently won the first prize (together with Jeremaiah Opiniano) in the Outstanding Research for Development in the 2011 Global Development Awards (besting 400 entries worldwide)  held in Bogota, Colombia.  He is a lifetime member of the Philippine Economics Society where he currently is Vice President.  He is an advocate of responsible personal finance and has lectured on this topic in many fora.  Presently, he is a Full Professor of Economics at the University of Santo Tomas and Visitor Professor at the Ateneo School of Government.

To start off our outlook series, it is such an honor to present the views of one person I admire and respect much, Mr. Henry Herrera. 

An actuary by training, Mr. Herrera has become one of the most influential figures in financial services industry. He is one person who truly practices what he preaches and allowed him to retire from the corporate life at a young age of 50, largely because of proper investments throughout the years.

2013 Outlook of Henry Joseph Herrera

2013 will be interesting for the financial markets – the Philippines included. The US and a number of EU nations face strong headwinds on fiscal challenges and rising debts. We may see more nations see the sovereign ratings downgraded as a result of these issues. As such, markets in these countries may experience increased volatility in 2013.

The contagion from developments in these advance nations in the US and EU will surely impact other economies, Philippines not excluded.

However, the Philippines may continue to be in a sweet spot of continued economic growth without the attendant rise in inflation given that the economy is largely domestic consumption driven.

As such, we can expect a continued low interest rate environment. Thus, investors may continue to flock to investments in real estate and stocks. The Philippine peso will likely remain stronger against the US dollar and may end the year below the P40 level.

Mr. Henry Joseph Herrera was the former President and CEO of Sun Life Philippines and a well sought after expert in his field.

Henry joined Sun Life in 1998 and has held a number of senior positions including EVP & Actuary, VP & Actuary, and SLAMC COO.  He was AVP, Actuarial for the Region in 1998.  Prior to his career at Sun Life, Henry was the President and Director of Philippine Asia Life Assurance Corporation.

Henry has over 28 years experience in the life insurance industry. He holds an MBA degree major in finance and a B.S. in Statistics, cum laude, from the University of the Philippines. He is also a Fellow and past president of Actuarial Society of the Philippines and a member of the International Actuarial Association.  He is a past president of the Philippine Life Insurance Association.

Mr. Herrera has recently been appointed as Chairman of the Board of Pru Life U.K.