Where to invest in 2015
The year 2015 is a banner year for the Philippines as the Personal Equity Retirement Account (PERA) will be implemented – finally – after it was signed into law in 2008.
As such Filipinos onshore and offshore should consider getting into investments in order to take full advantage of the benefits of the program.
For those who are investing already, they will only have to transfer or register their investments to their respective PERA account and have a more long-term investment outlook. Moreover, one will be able to participate in the economic gains of the country over the next few years or decades even.
In doing so, one helps in providing sustainability to the country’s prosperity by channeling long-term funds to more productive use. The willing participant will be able to augment one’s retirement fund when this eventual life stage happens.
While the PERA account of an individual will only consider financial products or assets, it is worthy to know the outlook for the coming years as a guide to making sound investment decisions.
While some of the assets to be mentioned are not the usual, some financial institutions have integrated these assets in their products.
Without further ado, here is my outlook covering various assets or investment options for 2015:
Definitely stocks today at the Philippine Stock Exchange (PSE) can still be viewed as attractive for medium- to long-term investment horizon.
Despite the present apprehension that stocks are quite “expensive” based on its price earnings ratio (PER) of about 20x and seemingly high PSE index above 7,000 points, the outlook for the stock market has never been as positive as it is on several accounts.
Our macro economy also continues to be positive and conducive to further expansion. The increased consumer and government spending coupled with an optimistic capital formation from the private sector are enough impetus for a growing economy.
The prospects of a global recovery and growth will also further boost our local values as more trade is made.
In tandem with stocks, bonds are expected to regain attractiveness as the monetary authorities are able to curb the threat of inflation and manage benchmark interest rates to desired levels.
The expected improvement in our system could also pave way to further boost our credit score which could bring down yields and push up bond values. The stellar monetary and fiscal management of the government proves to be a bankable position for bond exposure.
Japan, after suffering a long, stagnant economic performance is now in the verge of real recovery after some landmark government policies bent on propping up its economy. The continued weakness in Yen and the recent uptick in inflation support positive economic prospects.
US stocks, meanwhile, still have some room to grow further despite the quantitative easing ending and the hint of interest rates hike next year. Their improving gross domestic product (GDP) numbers seems to persist.
On the other hand, Russia is being battered right now. Their equity market has a long-term prospect of growth. A little exposure on this country will be worthwhile in the long-term when their conflict is resolved.
Meanwhile, China is very happy nowadays with a very attractive oil price and is showing some optimistic signs of sustained growth. The Shanghai Stock Exchange Index broke out of a long consolidation pattern now nearing 3,000 points which is way before the pre-global crisis record high of about 6,000 points.
Gold has continued to enjoy its status as the best alternative investment will likely continue in the years to come.
Despite a negative vote by the Swiss parliament not to allocate 20% of their reserves to gold, the yellow metal did not lose so much of its luster to investors. The geopolitical tensions in various parts of the globe keep this metal afloat for a safe haven status.
Silver, on the other hand, dropped significantly from a record of about $48 an ounce in 2011 to about $16 today making it a good candidate to accumulate.
With the prospects of global economy improving, the demand for silver will likely rise apart from being an alternative investment for some. On the other hand, the misconstrued uranium is regaining some traction after a huge slide brought about by the nuclear disaster in Fukushima after the tsunami in 2011.
At present, prices are slowly improving with a glimmer of optimism after Japan recently decided to reopen two nuclear reactors. Thus, this metal is here to stay.
Corn and soybeans are two staple agricultural commodity that were beaten the past few months due to good harvest and cheaper crude oil.
While these commodities have yet to find bottom after sliding almost 50% and 30% respectively over the past two years, they are worth a monitor these days.
As we similarly watch how the world crude oil will perform, which is now nearing $60 a barrel coming from $115 few months ago, the corn and soybeans tandem will follow where the oil will move.
Foreign exchange (forex)
The Japanese Yen, the Euro, the British Pound all weakened against the mighty US dollar. It did not spare out our very own peso despite the huge dollar inflow from various sectors.
The US dollar’s recent strength can be attributed to the fact that commodities gold and silver, corn and soybean and even crude oil, their prices have softened. This lead to US dollar gains in the past which likewise made its presence felt in the foreign exchange markets.
The US dollar will continue its strength until 2015, as the prospect of the Federal Reserve increasing the interest rates will further boost the greenback’s value.
However, my belief is that the terminal is in sight. – Rappler.com
Ricky So, CIS, RFP® has 25 years of experience in the financial services industry and is currently an independent financial adviser at Rampver Strategic Advisors and the Chief Knowledge Officer for Investment Planning of Wealth Management Center for Research and Communications, Inc. He is also very active in the financial services community, using his expertise in training financial professionals. Follow his blog, Reap What You Sow.
All investment-related images from Shutterstock