Starting to enjoy the ride

AS of this writing, the Philippine Stock Market Index (PSEi) has just breached the 7300 level. Though further corrections are still expected, analysts say that it will hover around 6,900 to 7,300 levels before it breaks another threshold by yearend.  

This means that if you’re one of those who have been regularly investing this 2021, your portfolio has most likely grown by around 10%. But if you’re one of those who got into the market when everyone was pulling out during the early months of the pandemic last year, your investment growth must have reached at least 50%. Now, if you’re one of those who didn’t do any investing since last year, you must be probably wishing “sana all”. But it’s not yet too late…you can still participate in the uptake as the market price is projected to climb even more in the coming months.  

Where is the confidence coming from?

Market experts are saying that investors are becoming more optimistic because daily counts of new COVID cases continue to trend lower. From a high of about 22,000 daily counts of new cases due to the spread of the Delta variant, we are now seeing an average of 5,700 new cases for the last 30 days.  

Add to this is the ongoing vaccination program of the country which to date has administered a total of 59M+ doses. Of these, 27.6M accounts for full vaccination, benefiting around 25% of our population. With a more steady supply of vaccines, the daily vaccination count is expected to increase. The recent move to start inoculating children (at least 12 years old) is proof that we are assured of enough vaccine doses. Barring any major roadblocks, the DoH is optimistic that we will reach herd immunity (70% of the population) by June 2022. That’s just a few winks from today. 

With the above, investors expect quarantine restrictions to be more relaxed, thus more economic activities happening. And we already saw these activities resuming these past weeks.  With more people vaccinated, many are confident to go out, travel, eat out and shop. This means more money spent. Traffic on major roads and highways are building up again, which can be a sign of increasing economic activities. As we approach the Christmas season, more spending can be expected as Filipinos are extra generous and lavish during this favorite time of the year. This will certainly give our local businesses that much-needed boost.

Any day now, 3rd quarter corporate earnings are also expected to be released and are certainly keeping investors more watchful. Earnings are important for investors because they ultimately drive stock prices. When companies beat the stock analysts'  earning estimates, stock prices move higher. Consequently, when actual earnings are below the estimates, the price moves lower. With an improved economic activity happening during the 3rd quarter, investors are looking forward to some earnings surprise. 

The optimistic outlook continues in 2022 as the country holds its national election in May. You see, as history will show us, come election season, we can expect more spending which can further spur upward movement in the market, regardless of who wins the election. Market projection is more bullish for 2022, with Phisix reaching the 8000 level. 

The confidence for a rosier future is there, but we still need to stay more vigilant to make it a reality. We still need to do our share: observe health protocols and get the jabs.  Let us show the rest of the world that Filipinos can have safe and disciplined fun. That we can resume our pre-pandemic activities with much caution and care for ourselves and for the people around us. The only way we can make this work!

While investors are already starting to enjoy the ride, it is not yet late for many of us to join the joyride. The market is poised to grow significantly but it is not yet there. For me, this gives us the best window to get into the ride, not when the market has realized its potential because by then, prices will already be expensive. Remember the basic investment principle: Buy low, sell high!  

The season for the 13th month pay and bonuses is just around the corner. While the temptation to splurge is very strong, pls be mindful of the biggest lesson the pandemic has taught us… financial preparedness.   

Have we learned our lessons?