Market Update

RSA QUARTERLY MARKET UPDATE:

The general outlook on the global economy is weaker. Both the IMF & World Bank expect that in the first half of 2009, global economic slowdown will deepen. It might take time to break the negative feedback loop. Yet, as economists always say, there is no crisis that was not followed through by a recovery. And so, by year 2010 global financial and economic conditions are expected to rebound. This is due to many stimulus factors. One of which is that there is going to be stronger international policy measures that will facilitate faster restoration of market confidence, however world GDP may still remain below the 4% 10-year average annual growth in the next few years. Many analysts say, despite crisis, Philippine economy will to continue to grow however at a slower pace. Factors that will support domestic growth would be, slower inflation, OFW remittances, and fiscal spending.

Our 6-month outlook is that interest rates may continue to decline as inflation drops and Monetary Board maintains its policy easing stance. On the equities side, the catalysts for recovery of the PSEi would be oversold valuations (near historic lows, that would be attractive to investors), sustained foreign investor buying interest, however recovery may be stalled due to more negative news from the US and Europe.


RSA’s recommended investment strategy:

Fixed-Income – gradually make additional investments to bond funds and allocate at least 10% to USD placements as Peso is seen to weaken in the next few months (ideal to put these in Dollar Bond Funds)

Equities – for those who have direct investments in the stock market, maintain bias towards defensive names and high dividend-paying stocks i.e. telcos and utilities, maintain an active trading portfolio (liquidity/cash is king) to take advantage of price swings; for equity mutual fund investors, maintain peso cost averaging strategy. That is a personal wealth-building strategy that involves investing a fixed-amount of money (does not have to be big amounts) for as long as it is at regular intervals (monthly/quarterly) over a long period (5-10 years-positioned for retirement). A methodology wherein you buy fewer shares when prices are high and buy more shares when prices are low. This ultimately reduces volatility risks and allows you to participate in the potential share value returns of fast growing and dynamic corporations. In this connection we would like to re-introduce to you our:


“Hassle-free Investment Program (HIP)”.

This facility will allow you to submit post-dated checks so you can be assured of automatic regular savings no matter what. You may choose to invest in any of the mutual fund products we advice our clients to invest in. The program includes automatic text or email message reminders to prompt you whenever a check falls due, so the issue of unfunded checks will never be a problem. With this facility, you need not go directly to mutual fund head offices or contact agents every time to submit investments. You may choose from bi-monthly, monthly or quarterly post-dated checks monitoring. What is best is, there are no enrollment fees! For clients located within Metro Manila, investment pick-ups will even be free of charge! Imagine that for as low as Php1,000.00*, you may already be assured of regular savings in high-yielding and actively managed funds even as they are in the convenience of your own home or office.
The key is to take the emotions out of investments. Your main task is to set money aside for your future, not to manage whether it is a “good time” for any instrument or investment vehicle. While the market can still stay low for some months, it accords you the opportunity to take a position at the best possible time.