Philippine Stock Exchange (PSE) experts again optimistic for 2020. They said, the Philippine Stock Exchange Index (PSEi) will perk up this year and surpass the 10K, all I say is, here we go again… and hopefully, the stocks doyens are correct this time.
In my opinion, the local shares continued its sluggish performance for 2020.
Firstly, due to local political issues. President Duterte showed no qualms about confronting oligarchs and conglomerates who dominate the Philippine economy. The President further said that "The only way for deliverance of this country is to remove it from clutches of the few people who hold the power and money," and I think this sends a strong message to the business community to cooperate or else suffer the consequences!
Secondly, due to geopolitical events. Trade tensions between the United States and China are casting a shadow over trade competitiveness worldwide. Since the start of the trade war, the two sides have raised import taxes on hundreds of billions of dollars worth of exports, unnerving markets and hurting global economic growth. Unless this 18 months old pact would resolve soon, the uncertainties generated by the tensions are enormous.
Thirdly, Bangko Sentral ng Pilipinas (BSP) continuous cutting rates. The BSP cut its benchmark borrowing rate to 4.00% from 4.25% and the corresponding lending rate to 4.50% from 4.75%, the third reduction in 2019. The company’s borrowings supposedly to boost their CAPEX, to increase productivity inorder to enhanced profitability. My only concern is that the borrowed funds are mostly used in buying back their shares that create havoc than capital growth to their stakeholders.
DISCLAIMER: I'm not a Certified Financial Planner. Published herein is my personal opinion and should not be construed as a recommendation, an offer, or solicitation for the subscription, purchase or sale of these securities.
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