Fine Living 5 MIN READ

Is your standard of living commensurate with your standard of giving?

Should you give more? Give less? Or should you give at all? As we welcome the new year and think of meaningful things to do, Peter Singer, a philosopher, offers some suggestions, along with arguments to give more.

December 29, 2022By Anthony O. Alcantara
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Imagine a small child, a boy, trying to cross a street. He’s oblivious of the oncoming 18-wheeler truck, whose driver was distracted by a message on his mobile phone and didn’t see the child.

You are just a few feet away from the child and could grab him by his shirt to save him. Would you save the child?

You probably would. No sweat. Doing so would take only a few seconds. You wouldn’t ruin your outfit or derail your busy schedule. Besides, saving the child when you have the power to do so, even if you’re not related to him, feels right.

A similar situation was presented by Peter Singer, a philosopher and the founder of effective altruism, in his book The Life You Can Save, which was published in 2010.

He argues that there seems to be a disconnect when we think of it this way: Consider the cost of your favorite drink at a coffee shop. The cost of that drink could save a child living in dire poverty somewhere in Africa or in some impoverished area in the Philippines. If you just donate that amount.

And yet, few of us do it. Those who give think of giving as something they do when they have enough. Some think we’re giving too much.

Basic argument

Here is Singer’s basic argument, verbatim:

First premise: Suffering and death from lack of food, shelter, and medical care are bad.

Second premise: If it is in your power to prevent something bad from happening, without sacrificing anything nearly as important, it is wrong not to do so.

Third premise: By donating to aid agencies, you can prevent suffering and death from lack of food, shelter, and medical care, without sacrificing anything nearly as important.

Conclusion: Therefore, if you do not donate to aid agencies, you are doing something wrong.

Of course, we can think of objections to such a conclusion. Then again, ancient values, as pointed by Singer, have endured through millennia. For Christians, giving “is not a matter of charity, but of our duty and their rights.”

“The Hebrew word for ‘charity,’ tzedakah, simply means ‘justice’ and, as this suggests, for Jews, giving to the poor is no optional extra but an essential part of living a just life,” said Singer.

Muslims are required to give zakat in proportion to their assets.There is also sadaqa, which is optional and includes both money and labor.

Objections

Some objections are worth mentioning here.

Some say there is no black and white and that people are entitled to their own beliefs about giving.

For Singer, that is “moral relativism, a position that many find attractive only until they are faced with someone who is doing something really, really wrong.”

“We can and do try to stop people who are cruel to animals, just as we stop rapists, racists, and terrorists. I’m not saying that failing to give is like committing these acts of violence, but if we reject moral relativism in some situations, then we should reject it everywhere,” he said.

To paraphrase another argument: We may be responsible for the evils that we directly inflict on others, but there is no plausible argument that we owe something to those to whom we have done nothing wrong.

“At first glance, it seems perfectly reasonable. Yet there is a callous side to a philosophy that denies that we have any responsibilities to those who, through no fault of their own, are in need,” said Singer.

If we think this way, then probably we should abolish all those programs to help the poor, the jobless, and the oppressed since, after all, we have done them no harm.

The argument also doesn’t hold up if we consider climate change and the countries who caused much of the global warming. When we use products or benefit from schemes that benefit us despite the unethical practices behind them, we cause injustice unknowingly.

Here’s another one: Giving makes the world a better place, but “it is like a little kid buying a pack of candy, keeping one piece, and giving the rest away. It just doesn’t happen.”

That’s precisely the behavior that we want to change. What we do or how we behave is different from what we ought to do.

Strengthening the case for generosity

A 2021 report by Oxfam, a group of 21 charitable organizations, found that the 10 richest men in the world have more than the combined wealth of the bottom 3.1 billion people. Their wealth doubled during the pandemic.

Credit Suisse, in its Global Wealth Report 2021, said that the richest adult population, comprising 1.1%,owns 45.8% of the world’s total wealth, an increase of 4.8% from 2013. As for the bottom half, they own only 1.3% of the total wealth, a decrease of 1.7%.Talk about the rich getting richer and the poor getting poorer.

The World Bank, in a report titled “Overcoming Poverty and Inequality in the Philippines: Past, Present, and Prospects for the Future”, released in November 2022, said that while poverty fell from 49.2 percent in 1985 to 16.7 percent in 2018, inequality is still high. Approximately 17 percent of national income belongs to just 1 percent of earners, and 14 percent of income is shared by the bottom 50 percent.

What you can do

If you feel compelled to give, here are some steps you can take based on Singer’s suggestions:

  1. Check out www.TheLifeYouCanSave.com to find out more about effective altruism and which organizations have the most impact on the poor. You can also buy his book.
  2. Get a list of charitable organizations in the Philippines, do your research, and find an organization to support.
  3. Get your income tax return or an accounting of your assets and decide how much to give—whether it’s 1%, 5%, or 10% or more of your income or assets—and set how often you would like to give.
  4. Tell your friends about what you’re doing and try to convince them to give more, too.

What’s in it for you?

For a start, giving will make you happy or happier. A survey from the Social Community Benchmark Survey in the US revealed that those who gave to charity were 43 percent more likely to be “very happy” compared to those who were tightfisted.

Another study, the University of Michigan’s Panel Study of Income Dynamics, showed that those who give are 68 percent less likely to feel “hopeless” and also 34 percent less likely to be “so sad that nothing could cheer them up.”

Making money may make you happy. Giving more, however, may make you even happier, without necessarily making you feel poor.

Besides, you wouldn’t want that truck to run over the child, would you?

ANTHONY O. ALCANTARA is the editor-in-chief of Wealth Insights. He has over 20 years of experience in corporate communications and has a master’s degree in technology management from the University of the Philippines. When not at work, he goes out on epic adventures with his family, practices Aikido, and sings in a church choir.

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Economy 3 MIN READ

Are the country’s credit ratings important?

If an app, book, or hotel has good ratings, you will be more inclined to download, buy, or make a reservation. In the same way, the Philippines’ credit ratings can influence global investors when they allocate capital.

December 28, 2022By Anna Cudia
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Simply put, credit ratings are informed opinions assigned to issuers of securities to assess their relative creditworthiness. These serve as a guide for investors to develop their views on whether or not they should invest in a security, given the relative ability of the issuer to pay its debts on time and in full.

An issuer may be a sovereign, private company, publicly listed corporation, or non-profit organization, among others.

In general, companies cannot have higher credit ratings than the country where they operate in because it is assumed that the country’s economic performance affects both the public and private sectors. This is sometimes referred to as the “sovereign ceiling.”

Who assigns credit ratings?

Credit rating agencies are the ones who officially decide on the credit ratings of an issuer based on the latter’s financial strength and level of default risk.

Letter-based credit ratings reflect the agency’s level of confidence that the issuer can meet the agreed upon debt obligation.

Moody’s Investors Service, S&P Global Ratings, and Fitch Ratings are the big three credit rating agencies globally. These agencies were also identified by the US Securities and Exchange Commission as the Nationally Recognized Statistical Rating Organizations (NRSROs) in 1975.

Different credit rating agencies have their own labels to describe the creditworthiness of a country or entity. (Sources: Trading Economics, Fitch Ratings, Moody’s Investors Service, S&P Global Ratings)

Benefits of credit ratings

In general, credit ratings are used to evaluate the risk premium to be charged on loans and bonds.

Entities with high credit ratings typically have lower default risks and are therefore assigned lower rates of interest. On the other hand, those with low credit ratings are considered to have a higher default risk and are given more expensive rates.

Having a good credit rating makes it easier for an issuer to raise funds from the public or borrow from financial institutions at lower interest rates.

Credit ratings support the development of capital markets by providing risk measures for issuers that let investors understand the issuers’ credit risk.

Philippines’ credit ratings

The Philippines currently has investment grade credit ratings as assigned by the big three credit ratings agencies. This means that the country’s government-issued securities are considered safer than those of countries without investment-grade credit ratings.

The Philippines enjoys investment-grade credit ratings. (Sources: Fitch Ratings, Moody’s Investors Service, S&P Global Ratings)

Impact on assets of a potential downgrade

If an issuer’s credit rating is downgraded, it only means that there are heightened risks in terms of the financial stability and capability of that issuer to meet its debt obligations. This may be due to several reasons, including economic and political uncertainties, and may be specific to that issuer alone or to a number of other issuers.

Credit ratings are most relevant to fixed income securities. The higher the credit risk is, the larger the risk premium charged to the fixed income asset, and the higher the rate or yield asked for by investors to compensate for that risk. Therefore, if the Philippines is downgraded, there will be higher rates for its government and corporate bonds, and it will be costlier for the Philippine government and companies to borrow.

While there are also other factors that affect equity prices, capital-raising activities for both common and preferred shares are expected to be cheaper for issuers with higher credit ratings.

In terms of the foreign exchange, there is no direct impact, as there are other factors that matter more such as the country’s current account balance, which is primarily driven by the balance of trade.

ANNA DOMINIQUE CUDIA, CSS, is the Head of Markets Research at Metrobank’s Trust Banking Group, spearheading the generation and presentation of financial markets insights to internal and external clients. She used to be with Metrobank’s Investor Relations, where she brought in international awards and took part in various multi-billion peso and dollar capital raising activities. She has a Bachelor of Science in Business Administration degree, cum laude, from the University of the Philippines. She is also a CFA Level I exam passer, a Certified Securities Specialist, and a Global MBA (Finance) candidate at the University of London. She is a naturally curious person and likes to travel here and abroad.

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Economy 4 MIN READ

The world is watching China’s pivot from zero-COVID

Some may rejoice over China’s decision to abandon its zero-COVID policy. However, the impact on global economies will depend on how well China manages the said pivot.

December 27, 2022By Anna Isabelle “Bea” Lejano
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China has had one of the most stringent COVID-19 measures in the world for nearly three years, aptly called the “zero-COVID” policy.

This policy is characterized by regular polymerase chain reaction (PCR) tests, which are usually required before entering a facility; isolation at a government quarantine facility for potential or suspected cases; immediate lockdowns of buildings, communities, or even entire cities; and the closing of borders to most international visitors, among others.

This zero-COVID strategy has severely affected not only China but also the rest of the world. As a major trading partner of global economies as evidenced by its “Made in China” trademark, its lockdowns have affected factory activities and operations in key ports, causing its exports to slump. Imports have also fallen because of low consumption demand amid COVID-19 curbs and lockdowns.

Moreover, it was pointed out that when China contracts by 1%, the global economy shrinks by half a percentage point; that’s how big China’s influence is on the global economy. Because of this important role, China’s situation also affects the global prices of key commodities such as oil.

When China relaxes COVID-19 curbs, oil prices rise as markets become optimistic about the country’s reopening. However, because of low vaccination rates, cases also spike. Because of this, strict lockdowns are reinstated, and what usually follows is a fall in energy prices due to recession worries. (Data from the World Health Organization as of December 22, 2022)

Is China prepared for a drastic pivot?

On December 7, China announced some substantial and drastic changes to its COVID-19 policy. Infected people are now allowed to stay at home (not in a government facility). Testing and mandatory quarantine for cross-regional travel are no longer required, as are negative test results or health code scans for entering most public places. Lockdowns are only enforced in high-risk areas and imposed in smaller scopes (e.g., lockdown of a single building or floor instead of the whole residential complex).

However, because the zero-COVID policy has been in force for so long, China lacks herd immunity, with infection rates only at around 0.13%. Moreover, China has low vaccination rates among the elderly and vulnerable (only 40% of those aged 80 and above had received a booster by late November).

Since the policy shift, there have been only a few officially reported deaths, but many are doubting this figure. China’s official cumulative death toll since the outbreak of COVID-19 is just over 5,000 deaths, but the WHO reports that there have been 31,341 deaths already since January 3, 2020.

Outlook

COVID-19 cases as well as deaths are seen to spike after this policy shift. As much as 60% of the population could be infected before stabilizing, and the cumulative death toll is seen to reach about a million by next year, according to various research studies. If this happens, this could delay or limit the benefits of reopening, and consumption may remain low.

Energy prices initially rose due to optimism about the country’s easing of COVID-19 curbs, but lackluster demand and depressed growth due to the high number of cases and deaths may leave oil prices minimally changed in the coming months.

We are already seeing this, where news of a spike in COVID-19 cases, crowded crematoriums and funeral homes, long lines at the hospital, and dwindling medicine supplies in China have kept oil prices from rebounding substantially. This might translate to lower inflation in the Philippines in the near term because of depressed energy prices.

However, if COVID-19 cases and deaths become relatively stable soon, energy prices may rebound and recover due to higher demand. This may lead to an inflation surge due to the acceleration in consumption. Central banks around the world, including the Bangko Sentral ng Pilipinas (BSP), may then need to continue hiking policy rates for a much longer time to rein in consumption and arrest rising prices.

And with China being the world’s biggest importer of natural gas, the global energy crunch may worsen, as China imports more and reduces supply away from Europe and other Asian nations, including the Philippines.

Whatever effect the policy pivot has on the world, a lot will depend on how well China manages and handles the transition to its reopening.

ANNA ISABELLE “BEA” LEJANO is a Research & Business Analytics Officer at Metrobank, in charge of the bank’s research on the macroeconomy and the banking industry. She obtained her Bachelor’s degree in Business Economics from the University of the Philippines School of Economics and is currently taking up her Master’s in Economics degree at the Ateneo de Manila University. She cannot function without coffee.

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Equities 2 MIN READ

Stock Market Weekly: Pre-Christmas window-dressing activities

Oil price hikes and the central bank’s hawkish remarks about softer rate hikes will bear on the market this week. However, a rally fueled by window-dressing may give a boost later this week.

December 19, 2022By First Metro Securities Research
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WHAT HAPPENED LAST WEEK

After a volatile week, the Philippine Stock Exchange index (PSEi) fell by 1.27% week-on-week to close at 6,496.50 (-83.62 points). The benchmark index started the week on a positive note as investors anticipated 50-bp hikes from the US Fed and the Bangko Sentral ng Pilipinas (BSP), a much lower magnitude compared to prior hikes. The local bourse dropped at the latter part of the week, as the market was surprised by the still hawkish language from US Fed Chair Jerome Powell. In addition, the sell off on PLDT Inc. (TEL) amid rumors of cost overruns further weighed on index performance.

Top index performers were Alliance Global Group Inc. (AGI) (+7.0%), Puregold (PGOLD) (+6.1%), and JG Summit Holdings Inc. (JGS) (+5.4%), while index laggards were PLDT (TEL) (-14.6%), Converge (CNVRG) (-14.1%), and Megaworld Corporation (MEG) (-6.2%). The index breadth was negative, with 12 gainers versus 18 losers. The average daily turnover value was PHP 5.2 billion. Foreigners were net sellers by PHP 1.9 billion.

WHAT TO EXPECT THIS WEEK

We expect some downward pressure on the market in the earlier part of the week given:

(i) the anticipated oil price hike by as much as PHP 1.90 – PHP 2.10/liter on diesel and PHP 0.10-PHP 0.30/liter on gasoline; and

(ii) BSP’s hawkish remarks on need for more but softer rate hikes until 1Q 2023 as inflation remains elevated and above the government’s target.

The market, however, may rally at the latter part of the week amid possible window dressing activities. On the international front, the growing recession fears in the US may continue to drag on both sentiment and risk appetite of investors.

PSEi TECHNICAL ANALYSIS

Resistance: 6,600

Support: 6,400

The PSEi pulled back last week and is now trading back below the 200-day moving average (MA). Once the market hovers below 6,442, it will form a lower low which could result in a break below 6,400. Those looking to enter should await the rebound from the current support level of 6,400 since a break below the said level could push the market to retest 6,200.

TRADING PLAN

Accumulate once the market rebounds from the 6,400 level. Set stop limit orders below 6,300.

KEY DATA RELEASES

Monday, December 19, 2022
– Overall balance of payments (BOP) position for November 2022

Thursday, December 22, 2022
– US GDP annualized quarter-on-quarter for 3Q 2022 (consensus estimate is 2.9%, while actual for 2Q 2022 is 2.9%)

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Investment Tips 3 MIN READ

Will we have better prospects in 2023?

With the year about to end, investors are asking if there will be more of the same things next year – more rate hikes, more inflation, more supply chain woes, and other hindrances to growth and prosperity. Here’s what our research and investment team at Metrobank has to say.

December 15, 2022By Anna Cudia, Ginny Pecaña, Emuel Olimpo, and Jon Munsayac
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This article is exclusive to Metrobank preferred clients.

Log in your Wealth Manager account to get access to investment insights, bank views, and webinar videos.

After the heightened risks this year because of soaring inflation, rising interest rates, war between Ukraine and Russia, and still ongoing COVID-19, among others, things are looking bright in 2023 for emerging markets.

We see three factors that may lead to a comeback for emerging markets next year, particularly for the Philippines: fading global risks, less aggressive monetary tightening, and strong earnings fundamentals.

All these point to a rosier 2023 despite some volatility.

Waning risks

The risks which caused the highly volatile markets in 2022 are expected to be carried over to next year, but with waning effect. This could lead to a bullish outlook for domestic-driven economies such as the Philippines.

We foresee US Fed rate hikes to peak in the first half of 2023 and cuts implemented beginning in the fourth quarter.

As for the power crisis in Europe, gas storage is already at 87% as of December 12, 2022, versus the target of 80%. We also see US oil production normalizing next year, with global demand slowing amid recession fears.

Global commodity prices have also declined since the start of the Russia-Ukra

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Economy 1 MIN READ

December 2022 Updates: Expect high prices to remain a bit longer

High prices are seen to stick around, pushing continued intervention from the central bank as supply-side pressures and global headwinds persist. Nevertheless, expectations of a less hawkish US Fed and seasonal OFW remittances and exports may prevent a weaker peso.

December 14, 2022By Metrobank Research
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Philippine inflation was at a record high of 8.0% in November, the highest in 14 years, primarily driven by a spike in the prices of food and non-alcoholic beverages due to the impact of Typhoon Paeng and other weather disturbances on food supply, among others. Inflation is still expected to climb in December, largely because of increased spending during the holiday season and second-round effects.

As for the peso, it has gotten stronger against the US dollar, trading in the PHP 55 to PHP 57 area around the end of November or the beginning of December as markets appear to have already factored in expectations of a less aggressive Fed.

Moreover, an expected seasonal increase in OFW flows and exports is seen to keep the peso from further depreciating.

Considering these new developments, we have revised our USD/PHP exchange rate forecast for 2022 and 2023, with a noted downside bias for 2022 in the table below as we continue to monitor further movements:

For more information on the performance and outlook for several macroeconomic indicators, as well as local and global macroeconomic news, please download the full report here.

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Equities 2 MIN READ

Stock Market Weekly: Is Christmas cheer coming soon?

Investors will be keen on the interest rate decisions of the Bangko Sentral ng Pilipinas (BSP) and US Fed as well as other major data releases this week. Expect the market to move sideways with an upward bias.

December 12, 2022By First Metro Securities Research
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WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) rose by 1.39% week-on-week to close at 6,580.12 (+90.47 points). The market initially fell as investors evaluated the Development Budget Coordination Committee’s (DBCC) downward revision of their 2023 local GDP forecast to 6-7% from the 6.5-8.0% range, as well as their higher estimate of 2022’s inflation rate at 5.8% from 4.5-5.5%.

Nonetheless, the local bourse surged afterwards, despite the hotter-than-expected November 2022 local inflation print at 8.0% (consensus estimate: 7.8%; Bangko Sentral ng Pilipinas’s (BSP) forecast: 7.4% to 8.2%) and BSP’s wider balance of payments (BOP) deficit expectations for 2022 and 2023. The loosening of COVID-19 restrictions in China as well as the strengthening of the peso may have lifted investor sentiment.

Top index performers were Wilcon Depot Inc. (WLCON) (+5.3%), International Container Terminal Services Inc. (ICT) (+3.2%), and PLDT (TEL) (+1.8%), while index laggards were Monde Nissin (MONDE) (-11.5%), Globe Telecom (GLO) (-8.1%), and Aboitiz Equity Ventures (AEV) (-6.1%). The index breadth was negative with 7 gainers versus 22 losers. The average daily turnover value was PHP 5.3 billion. Foreigners were net sellers by PHP 1.5 billion.

WHAT TO EXPECT THIS WEEK

We expect the market to trade sideways with an upward bias as investors await multiple major data releases before the holidays. Investors will be keen on the interest rate decisions of the BSP and the US Fed, with each central bank expected to increase interest rates by 50 basis points (bps), lower than the 75-bp rate hike from their prior meetings.

STOCK PICKS FOR THE WEEK

Universal Robina Corp. (URC) — BUY

URC is on the verge of breaking above its seven-year downtrend line. Given how long the downtrend line has existed, a break above the downtrend line could propel the stock to a sharp rally, specifically towards PHP 170.00 and PHP 200.00. Regarding fundamentals, we retain our demand assumptions amid the high inflation environment, given URC’s diversified portfolio offerings (across ASEAN markets) and given that it is a downtrading beneficiary (catering to low-to-mid-income households). Margins should continue to recover as commodity prices continue to ease, price increases are likely to remain sticky, and the Philippine peso is likely to stabilize.

Post the Oceania divestment, URC enjoys an unlevered balance sheet with a net cash position of PHP 2.1 billion as of September 2022. This enables URC to be on the lookout for M&A opportunities, which have been a share price catalyst in the past. Accumulating once URC breaks above PHP 140.00 is advisable. Set stop limit orders below PHP 130.00. Take profit at around PHP 170.00/PHP 200.00. For long-term investors, our target price for URC is PHP 150.00 (+9.8% upside from recent close).

Century Pacific Food Inc. (CNPF) — BUY

CNPF formed a diamond bottom, a long-term bullish reversal pattern. The measured price target after CNPF broke out of its pattern is PHP 30.25 to PHP 31.00, according to Technical Insight, our automated chart pattern recognition program. Regarding fundamentals, we like CNPF due to the company’s: (i) diversified product portfolio that is well positioned to capture changing consumer preferences and weather macroeconomic headwinds; (ii) pricing power can partially cushion cost pressures; (iii) OEM export business that mitigates weak currency impact; and (iv) robust operating cash flows and strong balance sheet. Accumulating once CNPF breaks above PHP 25.00 is advisable. Set stop limit orders below PHP 23.50. Take profit at around PHP 28.00/PHP 30.00. For long-term investors, our target price for CNPF is PHP 29.00

Robinsons Land Corp. (RLC) — BUY

After a recent rally, RLC is looking to retest its immediate resistance level of PHP 17.00 and the 100-day MA at around PHP 17.03. RLC tracked the bullish price action of the PSEi amid the net foreign buying and the appreciation of the Philippine peso against the US Dollar. The stock is now trading above the 50-day moving average price. The MACD technical indicator also confirms the bullish momentum.

However, we are of the view that a clear bullish signal will be indicated by a break above the 100-day MA (~PHP 17.03) especially as it acted as strong support around August 2022. Accumulating once RLC breaks above the 100-day MA is advisable. Set stop limit orders below PHP 16.40 and take profits at around PHP 18.00/PHP 19.00.

PSEi TECHNICAL ANALYSIS

Resistance: 6,600

Support: 6,400

The market managed to rebound last week, with the 6,400-level acting as a support. The PSEi now must break above 6,600 in the next trading sessions for the short-term uptrend to remain intact.

TRADING PLAN

Look to accumulate at current levels. Set stop limit orders below 6,300.

KEY DATA RELEASES

Tuesday, December 13, 2022
– Philippine exports year-on-year (YoY) for October 2022 (consensus estimate is 5.5%, while the actual for September 2022 is 7.0%)
– Philippine imports YoY for October 2022 (consensus estimate is 15.3%, while the actual for September 2022 is 14.1%)
– US Consumer Price Index (CPI) YoY for November 2022 (consensus estimate is 7.3%, while actual for October 2022 is 7.7%)

Thursday, December 15, 2022
– US Federal Open Market Committee (FOMC) interest rate decision (consensus estimate: 50-bp rate increase)
– BSP interest rate decision (consensus estimate: 50-bp rate increase)

Friday, December 16, 2022
– US S&P Global preliminary manufacturing Purchasing Managers’ Index (PMI) for December 2022 (consensus estimate is 47.9, while actual for November 2022 is 47.7)

Saturday, December 17, 2022
– OF cash remittances YoY for October 2022 (actual for September 2022 is 3.8%)

Announcement: Today’s Weekly Market Blueprint (December 12, 2022) will be our last for the year. We would like to thank you, our dear clients and partners, and wish you the best of luck in 2023. We will resume publication on January 3, 2023 (Tuesday).

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Equities 3 MIN READ

November Equities Update: Relief, revaluation, dollar weakness

The local stock market did better than most markets in November owing to various reasons, including foreign flows, which turned positive for the first time in 10 months. Emerging markets likewise got a boost from the dollar’s weakness. Expect a Christmas rally and embrace a flexible strategy for 2023.

December 12, 2022By Ricky Maddatu, CFA
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This article is exclusive to Metrobank preferred clients.

Log in your Wealth Manager account to get access to investment insights, bank views, and webinar videos.

The most auspicious thing that occurred in the Philippine Stock Exchange index (PSEi) in November was the foreign flows that turned positive for the first time in 10 months.

While year-to-date, foreign investors have exited another USD 1.14 billion, there was a modest inflow of USD 99 million in November, covering a broad-enough list of index heavyweights.

In peso and dollar terms, the PSEi outstripped most markets as a result of a softer inflation print for the US (October inflation +7.7% year-on-year vs the expected +7.9%), a softer US dollar versus major currencies, and the US Federal Reserve opening the discussion for a taper and pause in interest rate hikes starting in December.

Regional risk sentiment also saw relief from China relaxing its COVID-19 restrictions, as citizen unrest came to a boiling point in November.

Strong earnings results for the first nine months of 2022 also reflected strong consumer demand fueled by the lifting of mobility restrictions and the return of face-to-face classes.

Christmas rally

We believe this strong consumer demand will continue in December and may result in a Christmas rally.

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Fine Living 2 MIN READ

Eye-catching pieces: The seductiveness of investing in jewelry

The enduring allure of jewelry goes beyond symbols of wealth and status. It could embody something priceless that you can pass on to your heirs.

December 9, 2022By Chelsey Keith P. Ignacio (BusinessWorld)
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Dressing up, for some, may seem inadequate without matching pieces of jewelry. But beyond adding sparkle and completing one’s style, jewelry may have a manifold significance for every wearer. It has been that way for thousands of years.

Jewelry is one of the earliest art forms, with the oldest piece discovered dating back between 142,000 and 150,000 years ago. It was 33 beads made from sea snail shells, each measuring around half an inch long. Unearthed by archaeologists between 2014 and 2018 from a cave in western Morocco, these beads were believed to be part of how people expressed their identity through their clothing a long time ago.

Some of the other pieces of jewelry in prehistoric times were made from stones and bones. When social disparities became more apparent among people in the Neolithic period, jewelry also became a means to distinguish individuals and reflect their status.

Jewelry, throughout millennia, continue to hold value to the wearer. (Source: Pixabay)

Value of jewelry

Today, jewelry is cherished for various reasons. For one, people hold wedding rings dear to them as symbols of commitment and devotion. Engagement rings became more valuable and popular as well in the past decades, thanks to iconic engagement rings such as the Van Cleef & Arpels 2.88-carat diamond and 2.84-carat emerald ring of Jacqueline Kennedy, as well as Princess Diana’s 12-carat oval Ceylon sapphire ring from Garrard.

Some people also value lucky charm bracelets, which they believe can bring good fortune, wealth, or love into their lives.

Jewelry also remains to be valued because of its link to wealth. And this is not only because they can manifest the status or power the owner holds. They could be worth millions and may contribute to one’s assets.

They can be eye-catching investments, but, like other asset classes, the value of jewelry may not significantly increase through the years. Looking closely at the qualities or factors that could affect the value of jewelry could be helpful, especially if one wishes to treat such pieces as investments.

Wedding rings have become a symbol of commitment and devotion. (Source: Pixabay)

Checklist before you buy

Russell Fogarty, former head of Christie’s jewelry department in New York and partner of Kazanjian & Fogarty, has a checklist that could help assess the investment worthiness of a piece of jewelry — vintage, high quality, in good condition, beautiful, and containing the manufacturer’s signature.

“If you check all those boxes, whatever you’ve purchased is going to increase in value over time,” Mr. Fogarty told Bloomberg.

Josef Sagemuller, a jewelry specialist at Salcedo Auctions, also noted the value of researching the jewelry that you wish to procure and invest in.

“Jewelry hardly ever depreciates in value, but you have to be aware of what it is you are buying, and do your research,” he said in a BusinessWorld report.

“When you choose to invest in quality stones and pieces, you will be able to hedge your savings and money from inflation, hyperinflation, and economic crises,” he added.

Wearing jewelry can be an explicit way to signify wealth, status, and power. (Source: Pexels)

Choose the rare ones

Known jewelers such as Cartier, Bulgari, and Tiffany may seem like good investments, said Sagemuller, as they usually hold on to their value as time passes. However, there is another factor to consider for widely-made jewelry pieces.

“The more common pieces that are mass produced will not appreciate as much as their haute joaillerie or high-end jewelry counterparts,” he said. “Always buy stones of high quality in as big a size as you can afford.”

As you look for jewelry to consider as an investment, experts also remind you to have patience, for it may take time for the value of some pieces of jewelry to appreciate. It is not easy to foresee whether a piece of jewelry could maintain or surpass its value.

Ask experts

You may check in with professional experts, and reach out to auction house specialists or collectors, who could share reliable insights into purchasing and investing in jewelry.

But while there are myriad considerations when looking at jewelry as a valuable asset, several experts agree that you should, of course, invest in jewelry pieces that you would love.

Beyond its monetary value, jewelry could signify something that is priceless to you. These precious pieces will stay with you for a long time and then eventually be passed on to your heirs to be cherished by them as well.

Now that’s a worthy investment you could make, too.

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Currencies 3 MIN READ

USD/PHP 2023 outlook: Don’t bet on a sustainably stronger peso

For those watching the movement of the dollar-peso exchange rate, the recent strengthening of the peso, while desirable for some, may be fleeting.

December 8, 2022By Patty Membrebe
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In the past week, the peso strengthened 1.12% versus the US dollar. Year-to-date, however, the local currency has weakened by as much as 13.6%.

The current dip in the dollar-peso exchange rate comes on the heels of a downward momentum in the broad US dollar index, as markets become more optimistic about the US Fed slowing the pace of rate hikes and a possible China reopening next year.

After trading at 20-year highs this year, the US dollar has come off its peak. Now, the question is: Will the US dollar continue to weaken in the coming months?

We cite three main reasons why we think the answer is no.

 1. Negative real rates and a still narrow interest rate differential (IRD).

Our base case for the US economy in 2023 is a “bumpy” soft landing, characterized by modestly positive GDP growth (0% to 1%, in line with 2022 levels) and moderating inflation. We estimate 2023 full-year US average headline inflation to slow to 4.3%, from an estimated average of 8.1% in 2022.

After four consecutive 75-bp hikes since June, we expect the US Fed to slow their tightening by 50 basis points (bps) to 4.5% (from 4% currently) in the n

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