Investors of peso government securities (GS) may be pleased to see that the prices of their long-term bonds in the 12- to 20-year tenor buckets have richened over the past few weeks.

The appetite for peso GS significantly picked up, thanks to slower inflation, an influx of liquidity from bond maturities, and the Bureau of the Treasury’s resolve to cap awards in recent auctions.

March 2023 initially had the US Dollar on a strong start as Federal Reserve Chair Jerome Powell testified before US Congress that inflation figures were still too strong and that policy interest rates had to move higher for longer.

However, this was followed by the closure of Silicon Valley Bank (SVB) and Signature Bank while First Republic teetered on the edge. The banking crisis that started in the US made its way to Switzerland as investors were once again skeptical of Credit Suisse, which had already been struggling over the last two years.

Markets abandoned the US dollar for other safe haven assets such as US treasury bonds, gold, and the Japanese Yen. Even when the US Federal Reserve and Swiss National Bank stepped in to restore confidence in the banking system, a slew of weaker-than-expected US economic data in Producers Price Index (-0.1% vs. 0.3% est.), Retail Sales (-0.4% vs. -0.3% est.), and 4Q 2022 Gross Domestic Product (GDP) (2.6% vs. 2.7% est.) continued to push the dollar to its lowest level year-to-date.

The Japanese yen (JPY) appreciated all the way to 132.86. However, demand for JPY as a safe haven currency has dwindled as markets have started to move past the banking crisis, especially after the top US banks released better-than-expected earnings for the 1st quarter of 2023.

Markets had also expected the new Bank of Japan (BOJ) Governor Kazuo Ueda to initiate discussions on reducing Japan’s ultra-loose monetary policy, but he has instead lowered these expectations in the near term, preferring not to make any sudden changes to policy.

Both the euro (EUR) and British pound (GBP) rallied following SVB’s collapse and were relatively insulated from the Credit Suisse issue after Swiss regulators stepped in and arranged the bank’s sale to its rival UBS.

The European Central Bank (ECB) met market expectations by hiking its three policy rates by 50 basis points (bps). ECB President Christine Lagarde continued to point towards stubbornly high inflation as the main focus, with Germany’s Consumer Price Index (CPI) for February remaining the same as January at 8.7% year-on-year.

The pound sterling was the clear winner last month as the United Kingdom’s (UK) February CPI rebounded to 10.4% vs. 9.9% estimate and 4th quarter 2022 GDP grew by 0.6% vs. 0.4% estimate. The Bank of England (BOE) hiked its policy interest rates by only 25 bps to 4.25%, but with UK inflation still in double-digit territory relative to its peers, the central bank still has some ways to go to bring down inflation.

EUR/USD and GBP/USD closed the month at 1.0839 and 1.2337, respectively.

The Canadian dollar had a rough start as it tracked weaker oil prices and was weighed down by a dovish Bank of Canada (BOC). The BOC decided to pause its hiking cycle for the first time in nine months.

Its policy interest rate stands at 4.5% as its governing council believes that current borrowing costs are restrictive enough to bring inflation down to the 2% level. Canada’s February CPI printed lower at 5.2% vs. 5.4% estimate.

USD/CAD went lower after a bounce in oil prices and the currency pair closed the month at 1.3516. With OPEC+ cutting its supply of oil, this should help the Canadian dollar continue to outperform.

The Australian dollar and New Zealand dollar took opposite paths in March, following the divergent tones of their respective central banks. The Reserve Bank of Australia (RBA) kept its policy rate steady at 3.6% in order to monitor the effect of higher rates on the economy.

AUD/USD closed slightly lower at 0.6685, aided by stronger Employment Change (64.6k vs. 48.5k estimate) and Retail Sales (0.2% vs. 0.1%). On the other hand, the Reserve Bank of New Zealand (RBNZ) hiked its policy rate by 50 bps to 5.25% when markets were expecting only 25 bps. NZD/USD made its way higher to 0.6258. However, the view for both of these currencies is slightly bearish as global investors slowly return to the US dollar.

The Offshore Chinese yuan became a pseudo-safe haven currency as solid economic data helped it stand out in a month when markets could not turn to the US and Switzerland.

China outperformed in its manufacturing and non-manufacturing Purchasing Managers’ Index (PMI) figures, bringing the currency pair down to 6.8703 from highs of 7.0000. This also helped indirectly lift other emerging market currencies in Asia.

FX Traders’ Forecasts

The above forecasts are the foreign exchange traders’ personal opinions and may not reflect the official views of the bank.

The month of March saw a complete reversal in the US dollar after weaknesses were found in the country’s financial system. But after the initial panic, prudent investors were quick to realize that these weaknesses were also brought about by the regional banks themselves.

SVB was an isolated case as the bank’s client base was too concentrated on technology startups. The bank was also a victim of high interest rates after it had to sell some of its bond holdings at a loss in order to fund withdrawals.

Eventually, the US government stepped in to protect depositors, introduce new liquidity tools, and restore confidence in the banking system. Withdrawals from regional banks went to the large banks, which produced better-than-expected earnings for the 1st quarter of 2023. The US dollar may have lost in March but it is starting to climb its way back up.

EARL ANDREW “EA” AGUIRRE  is a Market Strategist at Metrobank’s Financial Markets Sector and has 10 years of experience in foreign exchange, fixed income securities, and derivatives sales. He has a Master’s in Business Administration from the Ateneo Graduate School of Business. His interests include regularly traveling to Japan and learning its language and culture.

Core inflation recently climbed to its highest level in over two years, to 8.0% in March 2023, from 7.8% the previous month and 2.2% in the same period last year, despite headline inflation already decelerating to its lowest level in six months.

The highest contributors to core inflation in March were food commodities—particularly milk and other dairy products as well as sugar and desserts—housing, water, electricity, gas, and other fuels, particularly housing rentals, restaurants and accommodation services, and transport (see below).

Food commodities and other necessities such as housing, water, electricity, gas, and other fuels continue to contribute the most to inflation.

If headline inflation measures the year-on-year movements in the overall consumer price index (CPI), which is the average price of a basket of goods and services that is commonly consumed by a Filipino household, what does core inflation measure?

Headline vs core

Core inflation also calculates the changes in the average prices of a certain basket, but this basket excludes commodities with volatile prices such as rice, vegetables, meat, and petroleum and fuels for personal use, among others.

A common misconception is that core inflation excludes food and energy commodity prices altogether. But this is not the case, as only certain food and energy commodities are removed from the calculation of core inflation. As seen in the graph above, food commodities and other energy items are still the top contributors to core inflation.

Headline inflation is affected by factors that are historically volatile and are usually beyond the scope of economic policy. Because of this, core inflation is used as a side-by-side measure as it depicts underlying, or long-term, trends of price movements, stripping away the effects of temporary shocks and disturbances, such as a shortage in agricultural inputs or a surge in global oil prices.

Why is core inflation still up?

The still-elevated and still-increasing core inflation in the Philippines is due to broadening price pressures. It is also influenced by the impact of second-round effects. The higher prices of volatile groups have affected and have seeped into other commodity groups.

For example, a shortage in food commodities may elevate the prices of restaurants and accommodation services since the former are used as inputs for the latter.

The effects of higher transport fares and above-average wage adjustments in 2023 (second-round effects) have also started to spill over to other commodity groups, particularly non-volatile groups. Note that transport is usually the fourth-highest contributor to core inflation, while higher wages encompass different commodity groups, ultimately translating to higher prices of various products and services to make up for the higher labor expenses.

Core inflation is still seen to be elevated, given the continued impact of the second-order effects of inflation. Particularly, prices of non-volatile items may remain sticky as inflation becomes more entrenched despite headline inflation slowing.

Nevertheless, core inflation is expected to decelerate as headline inflation is already easing, but at a later time and at a more gradual pace, similar to the behavior of both measures in 2008-2009 and 2018-2019, where core inflation declined at a more muted pace than headline inflation.

Core inflation eases more gradually than headline inflation.

The Bangko Sentral ng Pilipinas (BSP) looks at core inflation as a complementary measure to headline inflation, as the former represents the more permanent trend in the behavior of consumer prices, while the latter involves short-lived price disturbances in the Philippines.

Thus, monetary policy may help alleviate core inflation, just like it does with headline inflation. However, remember that core inflation is not intended to replace headline inflation. The two should be taken together to assess the overall state of the inflation environment.

Outlook

Because of the still-high core inflation, rate hikes may still be on the table. The overnight reverse repurchase (RRP) rate may further peak at 6.5% (from 6.25% at present), but headline and core inflation are expected to trend downwards towards year-end, which could give way to rate cuts.

That is to say that the local inflation environment is expected to improve, especially in the second half of this year, barring any further supply shocks and should the interest rate hikes prove to be effective.

Despite faster core inflation still on the cards in the next few months, overall, we expect the RRP rate to end at 6.0% this year in light of lower inflation expectations toward year-end.

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.

WHAT HAPPENED LAST WEEK

It was relatively quiet for the peso government securities (GS) market last week due to the lack of significant news to move the market. As such, dealers were mostly seen managing client flows for the better part of the week.

Heading into the Fixed Rate Treasury Note (FXTN) 13-1 auction last week, selling interest was still seen in short-dated bonds, possibly on the back of high dollar-peso exchange rate and clients just freeing up liquidity.

The Bureau of the Treasury (BTr) partially awarded the first 13-year auction at a high of 6.35%, setting the coupon rate of FXTN 13-1 at 6.25% or at the lower end of market indications. With the BTr capping the awards of the auction as they are still ahead of their borrowing program, decent buying interest both from dealers and clients occured in the afternoon session, pushing prices up to cut early losses seen in the day.

Overall, yields of short-dated peso GS pushed higher on a week-on-week (WoW) perspective. Retail Treasury Bond (RTB) 3-11 rose by around 5 basis points (bps), whereas RTB 5-12 rose by 15 bps for the week. Treasury Bills (T-bills) were also generally higher by around 5-

A few leaders from the BRICS nations—Brazil, Russia, India, China, and South Africa—are again challenging the status of the US dollar as the world’s most dominant currency. They have been vocal about creating a common currency to settle payments for the bloc’s trade of goods and services.

This clamor for de-dollarization is not new. Countries have been attempting to reduce their dependence on the US dollar for years now. And yet, despite America accounting for only 10% of global trade, 40% of international trade in goods is still invoiced in US dollars, and over 58% of the world’s foreign exchange reserves are in US dollars—the Euro comes as a far second, with a 20% share.

Defense against the dollar

What belies the recent worries on the decreasing use of the dollar is a slate of sanctions imposed on Russia for its invasion of Ukraine, which has necessitated their search for alternative currencies. The latest financial sanctions include freezing Russia’s foreign currency reserves, which, unlike most countries, have actually long been de-dollarized.

In 2014, Russia’s annexation of Crimea prompted the US to lead the imposition of sanctions that would cut off Russia’s access to financial infrastructures. Shortly thereafter, Russia dumped its holdings of US Treasuries and significantly reduced the share of US dollars in its reserves to hedge the damage from further financial sanctions. It has since turned to alternative stores of value such as gold, the yuan, and the euro.

The latest western sanctions have prompted Russia to increase the volume of transactions in yuan, which is now its most traded currency. This is no surprise, given that China is now the top buyer of oil from the sanctioned producer, and it bodes well for China’s long-running campaign to internationalize the yuan.

Elusive alternatives

China has been central to this discussion, with its efforts to speed up de-dollarization and the broader use of the yuan. Contrary to most claims, however, China has not totally rejected the US dollar. According to Bloomberg, only 17% of overall trade was settled in yuan in 2022. The share of crude oil was only 13% of China’s total imports.

Therefore, the decreased use of the petrodollar (and a shift to “petroyuan”) is unlikely to erode the dollar’s overall importance, at least for now. In financial assets, even though China’s holdings of US Treasuries have dwindled significantly, it has reportedly merely shifted to higher yielding securities that are still dollar denominated.

It could really take a while before the yuan comes close to the dollar in terms of market share in global transactions.

Banking on gold

Gold has also gained attention as more central banks have reportedly been stockpiling on the precious metal. But will this lead to the dollar’s eventual demise? Not exactly.

Large amounts of gold purchases can end up being unreported, which sanctioned economies take advantage of, to circumvent the restrictions imposed on them.

While it is likely that some central banks shift to gold to hedge their economies from sanctions, it is also highly likely that the current macroeconomic backdrop has attracted them to diversify their portfolios with more gold.

Our technical analysis of the price of gold, according to Kyle Tan, Metrobank Trust Investment Officer, shows upside momentum to USD 2,300 to 2,800 per ounce, because of broad dollar weakness, negative US real interest rates, growth slowdown concerns, and geopolitical risks.

To the downside, short-term dollar strength could trigger a pull-back to USD 1,950. Whereas sentiment drives demand for gold, the breadth of use and the depth of markets solidify real money demand for the dollar.

Dollar is still king

Assessing how the dollar is so entrenched in global trade and in financial markets, and how no other currency comes close as a viable alternative, a reduction in the use of the dollar may challenge its dominance, but it will take a very long time for it to be trumped.

For the foreseeable future, it is highly unlikely for the US dollar to be dethroned as king of currencies.

PATTY MEMBREBE is a Financial Markets Analyst at Metrobank – Institutional Investors Coverage Division, under the Market Strategy and Advisory Section. She communicates strategies on fixed income, rates, and portfolio solutions for our high-net-worth individual and institutional clients. She holds an AB Economics degree from Ateneo de Manila University and is currently pursuing graduate studies. In her free time, she enjoys watching indie films and attending gigs to support local indie music.

The Philippines posted a trade deficit of USD 3.88 billion in February, declining by 2.7% versus the same month in 2022, as both exports and imports contracted.

Exports dropped by USD 1.1 billion, or 18%, year-on-year and are on their third consecutive decline since December 2022. Meanwhile, imports slipped to USD 8.95 billion from USD 10.17 billion in February 2022, not sustaining their rebound from last month following three straight months of negative growth.

Historically, weak global demand partly explains a trade slowdown apart from structural reasons. Here we take a look at the numbers to see whether global demand is indeed softening and is already manifesting itself in our trading activity.

Graph of Philippine export and import growth where the latter dipped in February while exports continued to decline.

Major traded goods are tumbling

Exports of manufactured goods, which capture the largest portion of total exports among major types of goods, have been falling since November 2022 and further dipped in February, pushing overall exports down. Agro-based products have also yet to rebound and have been sustaining negative year-on-year growth since September 2022.

Growth of top PH export and import goods by major type of goods. Mineral exports declined year-on-year, as with imports of mineral fuels, lubricants, and related materials.

Meanwhile, top PH import goods such as capital goods, raw materials, and mineral fuels altogether posted a decline versus the previous year, bringing down overall imports in February.

Less demand from major trading partners

The Philippines’ export activity with advanced economies such as the US (PH’s 2nd largest export destination) has dipped sharply since December 2022 and has yet to recover, even inching further down in February. The growth of total US imports, on the other hand, slowed down in November last year, growing year-on-year by only a modest 2% on average since then, suggesting softening demand from the said major economy (see Figure 3).

The recent data on weaker retail sales and slowing manufacturing output in the US can likewise vouch for its slumping domestic demand, prodding businesses to slow down their inventory purchases.

Comparative chart of US and China’s import growth and the Philippines’ exports to US and China. In both cases, imports from the rest of the world has declined affecting PH exports.

Meanwhile, China – the country’s third largest export destination – posted better-than-expected first quarter GDP (gross domestic product) growth of 4.5%, propelled by increased consumption as the country fully reopened. However, the country’s Q1 imports declined vs the previous year, which could explain why PH exports to China have been in negative growth territory in January and February.

While China’s manufacturing activity is recovering, it does so at a moderate pace as the slowdown in global demand is said to weigh in and dampen the processing demand in China. This then impacts its import of raw materials from other countries like the Philippines.

Not only in the Philippines

Declining exports is not a Philippines-only challenge, as other neighboring Asian countries, such as Singapore, Thailand, and South Korea, among others, are facing this, thus bringing a stronger case of a global slowdown already happening.

What lies ahead?

Apart from the peso strengthening in the first two months of the year, weak global demand has indeed manifested itself already in the Philippines’ trade numbers.

The fight against inflation has not been won yet in the Philippines and globally. Until then, higher interest rates will continue to temper spending, therefore constricting overall demand, which has actually been the goal of monetary policy tightening.

The good news is that global inflation is seen easing this year. Should there be no new supply shocks to detour inflation towards its downward path, global demand and therefore global trade are set to rebound in no time.

Photo courtesy of Alexander Villafania

INA CALABIO is a Research & Business Analytics Officer at Metrobank in charge of the bank’s research on industries. She loves OPM and you’ll occasionally find her at the front row at the gigs of her favorite bands.

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) marginally inched by +0.59% (+38.53 points) week-on-week to 6,520.44. The benchmark index started the shortened trading week in the green, tracking stronger Asian peers.

The market fell on Tuesday and extended its decline midweek as investors digested lower-than-expected February OFW remittances (actual: 2.4% year-on-year; consensus estimate: 3.9% y-o-y) and as the peso continued to weaken against the greenback, breaching the PHP 56 level during the week.

The local bourse rebounded on Thursday following a wider balance of payments (BOP) surplus for March 2023 and as earnings season kicked in with BDO Unibank Inc. (BDO) and Bank of the Philippine Islands (BPI) reporting strong 1st quarter 2023 earnings results.

Top index performers were Wilcon Depot Inc. (WLCON) (+5.9%), Bank of the Philippine Islands (BPI) (+3.5%), and JG Summit (JGS) (+2.6%), while index laggards were GT Capital (GTCAP) (-4.0%), San Miguel Corporation (SMC) (-2.5%), and Semirara Mining and Power Corporation (SCC) (-2.1%).

The index breadth was positive with 18 gainers versus 12 losers. The average daily turnover value was PHP 3.4 billion. Foreigners were net buyers by PHP 275.3 million.

WHAT TO EXPECT THIS WEEK

We expect the market to trade sideways with a slight upward bias as investors await more corporate earnings releases and the oil price rollback by as much as PHP 0.60-PHP 0.70/liter on diesel and PHP 1.40-PHP 1.50/liter on gasoline.

However, gains may be capped by recent hawkish remarks by US Federal Reserve officials, bolstering bets for another rate hike in May. Investors will also be on the lookout for major data releases, including US initial jobless claims, Q1 advance estimates of US GDP, and Personal Consumption Expenditures (PCE).

STOCK CALLS FOR THE WEEK

The Keepers Holdings, Inc. (KEEPR) — BUY ON BREAKOUT

Year-to-date, KEEPR’s share price has risen by 21.2%, outperforming the Industrials index (-0.7% YTD) and the PSEi (-1.5% YTD). Despite the market trending downwards since mid-January 2023, KEEPR has managed to rally. Currently, the stock is mostly consolidating within PHP 1.45 to PHP 1.60, managing to stay above its key moving average prices (50-day, 100-day, and 200-day MA). We think that KEEPR can sustain its positive price trend if the stock breaks above PHP 1.60. Accumulating once KEEPR breaks above PHP 1.60 is advisable. Set cut loss below PHP 1.47. Take profit at around PHP 1.84/PHP 1.90.

Cebu Landmasters, Inc. (CLI) — BUY

CLI is now trading at near oversold levels, after dropping 5% following the recent dividend ex-date. It is worth noting that CLI usually bounces once trading at or near oversold levels. That said, aggressive short-term traders/bargain hunters can take advantage of the stock trading at oversold levels to ride the probable bounce.

CLI declared a regular and special cash dividend of PHP 0.15 and PHP 0.03 per share on March 20, 2023, with ex-date (ex-dividend date) last April 13, 2023, record date of April 18, 2023, and payment date set on April 28, 2023.

CLI reported core net income of PHP 3.17 billion (+32% y-o-y), driven by double-digit growth across its business segments. Consolidated revenues increased by 40% y-o-y to PHP 15.7 billion from PHP 11.2 billion in 2021. As for management guidance, CLI is set to expand further in 2023, banking on the positive economic growth and high demand for properties in the VisMin region.

The company has a pipeline of projects worth PHP 29.75 billion that are expected to boost reservation sales this year. Accumulating CLI at current levels is advisable. Set stop limit orders below PHP 2.26. Take profit at around PHP 2.80/PHP 2.85.

GMA Network, Inc. (GMA7) — BUY

GMA7 is now trading at oversold levels and due for a probable bounce. GMA7’s share price dropped 6% on the recent PHP 1.10 cash dividends per share announcement date (April 18, 2023) since it was lower than the PHP 1.45 dividends per share declared last year.

Aggressive short-term traders/bargain hunters may take advantage of the stock trading at oversold levels to ride the probable bounce. As for fundamentals, the company is well positioned to post stable earnings as it captures more ad placements for television and radio with GMA7 leading in the free-to-air space. Accumulating GMA7 at current levels is advisable. Set stop limit orders 8% below average cost. Take profit at least 16% above average cost.

PSEi TECHNICAL ANALYSIS

Resistance: 6,600 / 6,800

Support: 6,400

The PSEi rebounded last week despite value turnover averaging only at PHP 3.8 billion. On a positive note, the PSEi managed to break back above the 200-day MA. Nevertheless, we believe that only once the PSEi breaks above 6,740/6,800 will there be a reversal of the market’s short-term downtrend.

TRADING PLAN

Gradually accumulate once the PSEi trades back above 6,800.

KEY DATA RELEASES

Monday, April 24, 2023
– Corporate Earnings: Manila Electric Co. (MER)

Thursday, April 27, 2023
– US Initial Jobless Claims as of April 22, 2023
– US GDP annualized quarter-on-quarter for the 1st quarter of 2023 (consensus estimate: 2.0%; actual for 4th quarter of 2022: 2.6%)
– US Core Personal Consumption Expenditures (PCE) q-o-q for 1st quarter of 2023 (actual for 4th quarter of 2022: 4.4%).

WHAT HAPPENED LAST WEEK

Ahead of the scheduled 10-year auction last week, selling interest was initially seen on the 10- to 20-year tenors, which led yields 2 to 7 basis points (bps) higher. The Bureau of the Treasury (BTr) then fully awarded the re-issuance of FXTN 10-69 at an average rate of 6.142% and a high of 6.18%, or near the higher end of the market’s expected range.

Last Wednesday, despite lower US Treasury yields following the US inflation data, slight profit-taking and de-risking were seen in the GS space as yields proceeded to trade higher by 2 to 2.5 bps.

Decent demand for medium- to long-term GS continued to support yields in these tenors for the remainder of the week. However, investors continued to sell short-dated T-bills and bonds in anticipation of higher short-term yields. Overall, short-term GS rose 10 to 12 bps while medium and long-term bonds rose 3 to 7 bps.

Market Levels (week-on-week)

While financial advisors, colleagues, friends and family, and of course, your personal experience could give insights about building wealth to finance your retirement, you could also turn to books.

From the classics to the recently published, here are some sources of wealth knowledge that you should read and learn from before you turn 50.

The Richest Man in Babylon

Several authors have come up with stories and ideas proven to be timeless, impacting generations succeeding them. On the subject of wealth, George S. Clason’s “The Richest Man in Babylon” is one of such books.

Considered as one of the most inspirational books on wealth, “The Richest Man in Babylon” was first published in 1926. But the stories that made up the book are set in ancient times. Clason gave financial lessons in the form of Babylonian parables, which uncovered the secrets to keeping and building one’s wealth.

It was in 1926 when Clason started to write finance-focused pamphlets told through parables with ancient Babylon as the milieu. Such parables were handed out by banks and insurance firms. The book is a compilation of his famous stories.

Through storytelling, The Richest Man in Babylon turns financial principles into memorable nuggets of wisdom.

Think and Grow Rich

Across the different lists of books dealing with wealth, Napoleon Hill’s Think and Grow Rich is almost always included.

This classic self-help book holds lessons not only for wealth but success as well. Think and Grow Rich is based on Hill’s Law of Success philosophy. He elucidated his principles in the book by using the stories of the most successful people of his generation, including Thomas Edison, Henry Ford, and Andrew Carnegie.

The book was originally printed in 1937. Even after Hill died in 1970, Think and Grow Rich has continued to be sold and remains influential to many people.

Rich Habits: The Daily Success Habits of Wealthy Individuals

Just like Napoleon Hill, Thomas C. Corley also looked at wealthy individuals to examine what leads to financial success. He formulated 10 principles from years of research on his wealthiest clients, particularly their success habits in the day-to-day.

If you are curious about the habits of the wealthy and how you can incorporate them in your life, hopefully to become financially successful as well, the Rich Habits can be your guide.

9 Steps to Financial Freedom and The Ultimate Retirement Guide for 50+

Having the financial freedom to live the life you desire upon retirement is perhaps one of your financial goals. Suze Orman might be able to help you through her book, 9 Steps to Financial Freedom.

Orman’s book takes an emotional and spiritual perspective in approaching money matters. Her philosophy reminds you that “you are worth more than your money.” The book can transform the way you “think, feel, and act” on money.

But aside from helping pave the way towards gaining your financial freedom, Orman can also support you in planning your retirement in another book, The Ultimate Retirement Guide for 50+.

Seeing that retirement has changed and become more complex nowadays, she imparted advice and tools you might need.

Quit Like a Millionaire: No Gimmicks, Luck, or Trust Fund Required

Maybe you are not planning to retire after 50. Maybe you want to do it earlier.

Take Kristy Shen and Bryce Leung as examples. They retired in their early 30s and now spend their time travelling around the world. At 31, Shen retired having a million dollars. So how can you also “quit like a millionaire”?

A guide to wealth-building and retiring early, Quit Like a Millionaire holds a formula towards financial independence. The book covers developing a million-dollar portfolio, bolstering investments, and reducing expenditures without lessening quality of life, among others.

If you are also one of those who want to spend retirement seeing the world, you might want to prepare for that adventure by delving into this book of Shen and Leung.

Passive Income, Aggressive Retirement: The Secret to Freedom, Flexibility, and Financial Independence (& how to get started!)

This is another book to teach you about retiring early, with a focus on passive income.

Author Rachel Richards left her job and retired at 27 years old. But she could depend on passive income streams of more than USD 10,000 each month. So, in her book Passive Income, Aggressive Retirement, she provided lessons on how you could also be financially free earlier than you have imagined.

The book included 28 passive income models. Among the ways they could help are attaining “Financial Independence, Retire Early” without being a penny pincher, as well as establishing a consistent, long-term residue income to enable you to live life according to what matters to you.

(Photos courtesy of their respective authors and publishers)

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) slipped by 0.10% week-on-week and ended the week at 6,481.91 (-6.60 points). The market started on a bearish note amid holiday-thinned volumes, weighed down by lower Asian markets and cautious sentiment from global markets ahead of the US inflation for March 2023.

The market managed to bounce back at the latter part of the week, following improved sentiment from markets abroad, as investors speculated that interest rates have peaked after US jobless claims came in higher than expected, while inflation (actual: 5.0% year-on-year; consensus estimate: 5.2% y-o-y) and producer price index (actual: 2.7% y-o-y; consensus estimate: 3.0% y-o-y) were lower than expected.

Top index performers were BDO Unibank (BDO) (+6.3%), San Miguel Corporation (SMC) (+3.1%), and Metro Pacific Investments Inc. (MPI) (+2.7%), while index laggards were JG Summit (JGS) (-5.3%), DMCI Holdings Inc. (DMC) (-5.1%), and Ayala Land Inc. (ALI) (-4.3%). The index breadth was negative with 12 gainers versus 18 losers. The average daily turnover value was PHP 4.7 billion. Foreigners were net buyers by PHP 973.5 million.

WHAT TO EXPECT THIS WEEK

We expect the market to trade sideways with an upward bias as the index managed to find a support at the 6,400 level last week. The market sentiment may also be lifted by the optimistic consumer sentiment for the next 12 months as the consumer confidence index (CI) marginally increased to 22.7% in the 1st quarter of 2023 from 21.7 percent in the 4th quarter of 2022.

The year-ahead positive outlook of consumers was supported by their expectations of more available jobs, stable prices of goods, higher income, additional sources of income, and effective implementation of government policies and programs to ease inflation on basic commodities and to help low-income households cope with higher prices of goods.

Additionally, a report by the Board of Investments (BoI) showed a 155% increase in approved investments for the 1st quarter to PHP 463.3 billion, with 68 approved projects, primarily in the renewable energy sector. Internationally, investors will be on the lookout as US earnings season will be in full swing next week, as results may affect global market sentiment.

STOCK CALLS FOR THE WEEK

Robinsons Land Corp. (RLC) — BUY ON BREAKOUT

The outlook for RLC’s main business segments remains positive. We expect operational conditions should continue to improve amid further reopening and backed by full reinstatement of mall rental rates beginning the 2nd half of 2022, supported by the faster-than-expected recovery of tenant sales now hitting above pre-pandemic levels.

As for the office segment, RLC’s steady office leasing segment remains to be supported by its quality tenants (mostly BPOs) with high occupancy rates at 92% as of end September 2022.
Furthermore, Bridgetowne is an underappreciated source of value for RLC. With 19 hectares of land bank valued at PHP 66.8 billion (more than half of RLC’s current market cap) yet to be developed, we see that Bridgetowne can provide RLC with a visible earnings runway over the next decade. Accumulating once RLC breaks above PHP 15.00 is advisable. Set stop limit orders below PHP 14.00 and take profits at around PHP 16.80/PHP 17.50, and PHP 25 for long-term investors.

Apex Mining Co., Inc. (APX) — BUY ON PULLBACKS

APX’s positive performance this year tracked the price of gold, which has rallied by as much as 11% year-to-date. Gold has outperformed this year due to risk aversion on concerns over the global recession.

Note that for the past three years (full year 2020-FY2022), revenues from gold have accounted for 94.4% of APX’s total topline. As for price action, APX is now trading at PHP 2.65, the highest since February 2017. However, the stock is currently trading at extremely overbought levels, with the Relative Strength Index (RSI), a measure of momentum in price action, at 76.

It is optimal to wait for the pullback before accumulating. Meanwhile, those who bought from our buying level can take some profits. Assuming the stock continues to rally, the next level where profit-taking can occur is around the 1.618 level at PHP 3.43. Those planning to enter for the first time can accumulate once APX pulls back to PHP 2.30/PHP 2.25. Set stop limit orders below PHP 2.11 and take profits at around PHP 2.65/PHP 2.80.

SP New Energy Corp. (SPNEC) — BUY ON PULLBACKS

Since March 2023, SP New Energy Corp.’s (SPNEC) share price has rallied by as much as 18.5% after Metro Pacific Investments Corp. (MPI) announced that it has entered into a definitive agreement to invest PHP 2 billion to acquire 1.6 billion common shares of SPNEC from its parent Solar Philippines Power Project Holdings, Inc. (SPPPHI).

In our previous report on SPNEC entitled “On its way back to the PHP 1.80 level”, we mentioned that the stock formed a megaphone bottom pattern, a long-term bullish pattern. The measured price target after SPNEC broke out of its megaphone bottom pattern is PHP 1.81– PHP 1.89, according to Technical Insight, our automated chart pattern recognition program.

Those who bought it since our previous report can continue to hold the stock. Those looking to enter can accumulate once SPNEC pulls back to PHP 1.65. Set stop limit orders below PHP 1.55 and take profits at around PHP 1.85-PHP 1.90.

PSEi TECHNICAL ANALYSIS

Resistance: 6,600 / 6,800

Support: 6,400

The market continued to trade in a tight range last week, with the PSEi still below the 200-day moving average (MA). On a positive note, the 6,400 level proved to be a new support as the market managed to bounce from the said level.

Nevertheless, we think that once the PSEi breaks above 6,740/6,800, there will be a reversal of the market’s short-term downtrend.

TRADING PLAN

Gradually accumulate once the PSEi trades back above 6,800.

KEY DATA RELEASES

Monday, April 17, 2023
– Overseas Cash Remittances y-o-y for March 2023 (consensus estimate: 3.9% y-o-y; February 2023: 3.5% y-o-y)

Tuesday, April 18, 2023
– US Housing Starts for March 2023 (consensus estimate: 1,400k; previous: 1,450k)

Wednesday, April 19, 2023
– Overall Balance of Payments (BOP) Position and final GIR and NIR of the BSP for March 2023 (February 2023: USD 895 million);

Thursday, April 20, 2023
– US Initial Jobless Claims as of April 15, 2023 (consensus estimate: 238k; previous: 239k)

Friday, April 21, 2023
– US Preliminary S&P Global Manufacturing Purchasing Managers’ Index (PMI) (consensus estimate: 49.2)