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)

Philippine inflation substantially eased to 7.6% in March 2023, as price movements of food and beverages moderated, and price upticks of transport-related goods and services continued to slow down.

However, core inflation continued to accelerate as prices of non-volatile food items continued to rise, indicating the continued impact of second-round effects. Nonetheless, the March inflation print confirms our earlier outlook that inflation had already peaked in Q1 and is expected to continue going down, barring any new supply shocks.

Should inflation continue to slow down, Philippine policy rate hikes may take a pause in May albeit still dependent on how the April 2023 inflation print turns out. Thus, the overnight rate may peak at around 6.25% to 6.5% and is expected to end the year at the 6.0% level, with rate cuts likely before yearend.

Meanwhile, more hawkish signals from the US Fed given stubborn inflation might have strengthened the dollar as the peso breached PHP 55 per US dollar recently.

Considering these developments, we retain our forecasts for 2023 and 2024 as we continue to monitor new economic developments:

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 (released April 12, 2023) here.

Swiss regulators recently wiped out USD 17 billion of Credit Suisse’s Additional Tier 1 bonds as part of an agreement for UBS to rescue its struggling rival. The news about these two big Swiss banks sent shockwaves through the financial markets, with investors now wondering just what makes these bank-issued bonds so different from the rest.

1. The most junior form of liability… or is it equity?

True to its name, Additional Tier 1 (AT1) bonds add to a bank’s Common Equity Tier 1 (CET1), which measures a bank’s financial strength and includes its common shares of stock and retained earnings.

This makes AT1 bonds the most junior form of debt, and, in times of crisis, they are the first to incur losses after a bank’s shareholders.

 Source: CreditSights

AT1 bonds also fall under a broader term called Contingent Convertibles or CoCos – hybrid securities with features common to both bonds and stocks. In the case of AT1 bonds, a bank with severely low capital ratios may trigger a conversion of the bonds into equity shares of stock.

2. Regulators can enforce a complete write-off.

Worse yet, if a bank is no longer able to operate due to insufficient liquidity or capital or both, then the handling regulatory body can choose to completely write-off the bank’s outstanding AT1 bond issuances.

In the case of Credit Suisse, its AT1 bondholders were furious that a write-off was triggered, considering that the bank was still operational, and its shareholders would continue to benefit from the UBS takeover.

However, the bond prospectus contained language that allowed for the bonds to be written off if “extraordinary government support is granted.” The European Central Bank and Bank of England were quick to announce that bondholders of banks under their jurisdiction will continue to enjoy seniority over shareholders. Nevertheless, it does not change the fact that all AT1 bonds can be reduced to nothing if the situation calls for it.

3. Higher yielding… if the bank pays.

Given their low seniority in the capital structure and the possibility of conversion into equity or write-off, AT1 bonds tend to be issued at higher coupon rates to compensate investors for the added risks. However, a bank may choose not to pay coupons on these bonds if it is unable to do so.

AT1 bonds are also perpetual bonds, which means that they do not have a specific maturity date. Instead, they have call dates when a bank may choose to buy back the bonds from investors. Normally, this is done in a low-interest environment so that a bank can refinance its debt at a cheaper rate.

When traded on the secondary market, AT1 bonds sometimes offer above-average yields, since prices can be so volatile. This yield is also known as the yield-to-call (YTC). While the returns may look attractive relative to other more senior bonds, the YTC is realized only if a bank is able to pay its coupons and buy the AT1 bond back from the investor on the next call date.

In summary, Additional Tier 1 bonds are hybrid securities issued by banks to raise additional capital. During periods of financial distress, AT1 bonds may be converted into equity shares of stock or completely written off by regulators.

Because of these added risks, investors are compensated with relatively higher coupon rates. However, banks may choose not to pay coupons or the principal amounts as they are due.

Given all these conditions, are AT1 bonds for you? It will depend greatly on your own financial sophistication and risk appetite. A well-performing bank and the right economic conditions can help turn AT1 bonds into great investment opportunities.

But with global interest rates approaching their peak, we see just as much value in other safer investments issued by governments, such as sovereign bonds and peso government securities, which promise punctual coupon and principal payments.

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.

WHAT HAPPENED LAST WEEK

In last week’s session, follow-through buying was seen in the peso government securities (GS) market with the yield curve continuing to flatten.

Prior to any local economic data release, US Treasury yields were seen trending lower, providing additional support for peso GS. Buying interest was consistently seen in the 19.6-year Fixed Rate Treasury Note (FXTN) 20-25 amid the absence of bond supply in this month’s borrowing program.

Before the week ended for the local holidays, the market welcomed the March inflation print, which decelerated to 7.6%, lower than the market consensus rate of 8%. After hitting a 14-year high in January, prices of goods and services have cooled to a six-month low.

This news led to another round of buying from both dealers and clients. Department of Finance Secretary (DOF) Secretary Benjamin Diokno also said that the softer-than-expected inflation print supports the view that the Bangko Sentral ng Pilipinas (BSP) has done enough to tame inflation.

On a week-on-week basis, local yields fell by 5-14 basis points (bps) with long-term yields decreasing faster than those of short-term yields as

WHAT HAPPENED LAST WEEK

The Philippine Stock Exchange index (PSEi) had a three-day shortened trading week, closing lower by 0.17% week-on-week at 6,488.51 (-11.17 points). The market started the week in the green, tracking the increase in global markets as investors were optimistic over the US Fed’s rate decision following a slower-than-expected Personal Consumption Expenditures (PCE) index.

On the local front, investors positioned to reduce risk ahead of the Philippine CPI report and spike in oil prices, dragging the index. Meanwhile, losses were capped as the market cheered inflation slowing to 7.6% (consensus estimate: 8.0%; February 2023: 8.6%). Trade volume was thin ahead of the five-day-long weekend in observance of the Holy Week and the Day of Valor.

Top index performers were Aboitiz Equity Ventures (AEV) (+6.6%), JG Summit (JGS) (+5.9%), and Puregold (PGOLD) (+5.1%), while index laggards were PLDT (TEL) (-9.8%), Semirara Mining and Power Corp. (SCC) (-9.4%), and Monde Nissin (MONDE) (-6.0%).

The index breadth was negative with 11 gainers versus 18 losers. The average daily turnover value was PHP 3.6 billion. Foreigners were net sellers by PHP 262.9 million.

WHAT TO EXPECT THIS WEEK

We expect a volatile market with an upward bias as all eyes are on the following: (i) major earnings and data releases; (ii) the upcoming US Consumer Price Index (CPI) report on Tuesday, April 12, 2023 – which is projected to come in lower at 5.2%; and (iii) the cooler US change in nonfarm payrolls (consensus estimate: 240k; March 2023: 236k) data, which is considered one of the key factors in determining the US Fed’s next course of action.

Meanwhile, local fuel prices are also expected to increase by about PHP 1.50 to PHP 1.90 per liter of diesel, PHP 2.40 to PHP 2.80 per liter of gasoline, and PHP 1.75 to PHP 2.05 per liter of kerosene.

STOCK CALLS FOR THE WEEK

Security Bank Corp. (SECB) — BUY ON BREAKOUT

We believe SECB is on track to deliver 19.2% earnings compound annual growth rate (CAGR) in the next two years, allowing the bank to deliver Return On Equity at a multiyear high of 8.8% by next year. We also expect the impact of policy tightening to be more pronounced in the next 12-24 months, which will benefit SECB’s net interest margins, albeit tempered by slowing loan growth and competition.

We recommend to accumulate once price breaks above the PHP 95.00 to PHP 96.00 level. After which, set stop limit orders at PHP 87.40 and set profit levels at around PHP 109.25. For long-term investors, our target price for SECB is PHP 109.00.

San Miguel Food and Beverage, Inc. (FB) — BUY ON BREAKOUT

Year-to-date, San Miguel Food and Beverage, Inc.’s (FB) share price rose by as much as 41%, outperforming the PSE industrial sector, which rallied by only 2.4% in the same period. Our investment thesis on the counter remains intact: we like FB as a branded food & beverage (F&B) powerhouse – with its dominant market leadership across food, beer (>90% of market volume), and spirits (>40% of market volume) businesses.

FB is a major player in the Philippine consumption story. Accumulating FB once it breaks above PHP 55.00 is advisable. Set cut loss below PHP 52.00. Take profit at around PHP 61.00/PHP 63.00. For long-term investors, our target price for FB is PHP 70.00.

Philex Mining Corp. (PX) — BUY ON BREAKOUT

PX’s positive performance this year tracked the price of gold, which has rallied by 6.7% year-to-date (YTD). Gold has outperformed this year because of risk aversion on concerns over the global banking sector. For the past three years (fiscal years 2020 to 2022), revenues from gold have accounted for 51.3% of PX’s total topline.

PX also tracked the outperformance of copper, which surged by 6.6% YTD. Copper rallied amid the Chinese economic reopening and short-term supply issues brought about by the protests in Peru, which accounts for 10% of the world’s copper supply. Moving forward, copper prices are expected to be supported by the significant capital being invested in renewable energy.

As for price action, PX broke above the 200-day MA for the first time since April 2022. Now, PX is looking to break above its resistance level of PHP 3.30, which could propel the stock to retest PHP 3.60/PHP 4.20. Accumulating once PX breaks above PHP 3.30 is advisable. Set cut loss below PHP 3.03. Take profit at around PHP 3.80/PHP 4.20.

PSEi TECHNICAL ANALYSIS

Resistance: 6,600 / 6,800

Support: 6,400

The market traded in a tight range last week. However, the PSEi still closed below the 200-day MA. The market has to break back above the 200-day MA this week or else a further pullback is expected. A break above 6,740/6,800 will result in the reversal of the market’s short-term downtrend.

TRADING PLAN

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

KEY DATA RELEASES

Tuesday, April 11, 2023
– PH exports Year-on-Year for February 2023 (consensus estimate: -11.2%; January 2023: -13.5%)
– PH imports YoY for February 2023 (consensus estimate: -1.3%; January 2023: 3.9%)
– PH unemployment rate for February 2023 (January 2023: 4.8%)

Wednesday, April 12, 2023
– US CPI YoY for March 2023 (consensus estimate: 5.2%; March 2023: 6.0%);

Thursday, April 13, 2023
– Corporate Earnings: Emperador Inc. (EMI)
– Corporate Earnings: Alliance Global Group, Inc. (AGI)

WHAT HAPPENED LAST WEEK

The peso government securities (GS) market traded in a muted fashion for most of last week as dealers and investors patiently waited for stronger catalysts that could provide better direction for yields.

The Bureau of the Treasury (BTr) fully awarded the reissuance of the 7-year Fixed Rate Treasury Note (FXTN) 7-68 at an average of 6.162% and a high of 6.20%, or just within market indications. Yields proceeded to trade in the same range after the auction, with medium-term bonds just nestling within their recent ranges.

With the lower USD/PHP exchange rate, short-dated bonds and Treasury bills (T-bills) finally saw decent interest as dealers and investors looked for additional carry for their peso positions.

The BTr also announced that they will be issuing bonds in the 3-, 9-, 13-, and 7-year tenor buckets for the month of April. With the borrowing schedule not including a 20-year issuance, FXTN 20-25 immediately fell by around 5 basis points (bps) as market participants quickly bought the bond following the announcement.

In the latter part of the week, the BTr announced that the March inflation print may ease to 7.4%-8

The Bangko Sentral ng Pilipinas (BSP) hiked policy rates by 25 basis points to 6.25%, citing easing inflation in February and a softer global growth outlook. We believe the BSP will pause here and then cut rates down to 6.00% in December.

USD/PHP once again trades below 55.00 as the top performing Asian currency year-to-date, but we question the sustainability of its outperformance. We reaffirm our year-end forecast of 55.10 as economic fundamentals result in greater domestic demand for USD.

You may download our report, “We interrupt this program” for more details about our analyses and trade ideas here.

For peso investors, we see value in locking in 10 to 20-year government securities before the market chases after the peak in yields. We also see the lower USD/PHP as an opportunity to enter USD-denominated bonds, but we prefer staying in sovereign bonds due to the impact of Silicon Valley Bank and Credit Suisse on corporate credits.

EARL ANDREW “EA” AGUIRRE  is a Market