The prolonged general community quarantine (GCQ) in Metro Manila and other key provinces in the country has paid off. This was one of the positive observations of Sun Life Philippines Chief Investments Officer Mike Enriquez.
During the recent annual year-end Market Outlook press briefing organized by Sun Life Asset Management Company, Inc. (SLAMCI), Enriquez said the continuously declining number of daily coronavirus cases is “a sign of better management of Covid-19 cases.” He noted that unlike in many other countries across the globe, the Philippines is currently spared from a resurgence of reported infections.
“Now, the government needs to continuously control the spread of Covid-19 with or without the vaccine,” Enriquez said. “That is the only way the economy will win this battle.” The financial and economic expert also warned that the economy may not be able to really survive prolonged high rates of unemployment. “The year 2021 has the potential to be a strong recovery year, but only if a fiscal stimulus is passed early and it impacts households,” he added.
Possible economic rebound
Enriquez reiterated the positive outlook he has for the Philippine economy. “Based on the latest GDP (gross domestic product) forecasts, we are anticipating a 4% to 5% growth for 2021. The full-year 2020 GDP is projected at -8%, which implies an estimated -5.7% in the fourth quarter of 2020.” In comparison, the country’s GDP in 2019 was at 5.9%.
However, while many of the major economies have started reopening, Enriquez warned that volatility may persist in 2021 especially in financial markets rebounding from their recent lows and sentiments. “The economy is not where we want it to be just yet, but a recovery is on the horizon as it always is after a period of recession,” he said.
Enriquez advised investors to remain committed to their financial goals. “By riding the wave of volatility, investors can reap the rewards later on,” he said. One of the main investment avenues is the Philippine Stock Exchange (PSE) whose index has been rising and has been cutting on losses following hopeful news about possible vaccines.
“The index remains at overbought levels and a correction is possible in the near term,” he warned. “We expect the PSE index (PSEi) to reach 8000 next year with an EPS (earnings per share) growth of 45%, driven by the expected recovery of the consumer discretionary, real estate, and industrial players in the stock market.”
Investment products offered by SLAMCI could also match various risk profiles. For instance, the Sun Life Prosperity Equity Fund could be best for investors who may tolerate market fluctuations for high returns. The Sun Life Prosperity Money Market Fund and/or the Sun Life Prosperity Bond Fund are for those who want a steady ride throughout their investing journey.
“No matter what direction an investor takes, what is important is that he commits to his financial goals and invests regularly and consistently. Time in the market will pay off in the long run, so it is always best to stay the course,” Enriquez said.