Tuesday, 5 January 2010

2010: The year of more

John Mangun
Outside the Box
Business Mirror

The Christmas tree has been taken down and the colorful lights packed away for another year. For me, though, the holiday season is not officially over until the Christmas hams at the supermarkets are selling at “Buy 1, Take 1”. That is about the same time that I expect to see the Philippine stock market begin booming again, building on 2009 gains.

It was wonderful for me to see the stock market down yesterday, not only to counter all the experts in yesterday’s newspaper hyping you to buy in now, as they sell to raise cash. But also because so many individual issues are ready to explode once the weak players get out. As last year’s market rally left 80 percent of investors sitting with their mouths open, wondering what happened and how they missed the rally, this year is going to be more of the same only better.

What issues should you consider buying? Ask your stock adviser for a list of those shares that are the most below the 2009 high price. Eliminate the ones that rose or fell significantly based on one-time news or continuing confusion. In fact, those issues that grabbed the business headlines in 2009 probably should be at the bottom of your To-Buy list. Choose first those companies in industries that were flat in 2009. Property is No.1 on that list. Then ask your advisor for the projected Price Earnings Ratio for 2010. Pick the most attractive here, and you will now have a list of 10 or so buy-and-hold issues that will be up by at least 30 percent before 2011.

You want more money in 2010? Then buy more stocks.

2010 is going to be the year of “much more,” in many different ways.

I think we are going to see more new faces around the country this year as ten of thousands of balikbayan decide they have had enough of the “Great Recession” in the US and come home where their retirement dollars will actually be able to have some purchasing power. The last 18 months have been a disaster for those balikbayan Filipinos who are in or near retirement. The majority of Filipinos in the US populate those areas, California, Florida, Chicago, New Jersey/New York, that have been hit hardest by the economic meltdown. Most Filipinos are not as ignorant and naïve as their naïve-born American counterparts. They are not foolish enough to believe all the propaganda coming from the Obama administration that the economy is recovering. These repatriated Filipinos are going to quickly bring millions and millions of dollars into the Philippines during the next 18 months.

There will be much more outsourcing to the Philippines in 2010. The expansion plans that are being implemented to open new call centers around the country are moving forward as quickly as possible. One substantial player will add some 8,000 new employees by the middle of the year, simply because they have clients waiting in line to do business in the Philippines. These large US companies cannot afford to employ Americans to do a job that Filipinos can do better and more economically.

Anyone who characterizes this industry as not being beneficial for the country is either a fool or an economic traitor. Anyone who forecasts a slowdown for this sector is either ignorant or blind. There has never been a self-sustaining industry like this in the Philippines employing the numbers that it does, since independence. Foreign companies are now outsourcing to survive. But these jobs will never return to the West and when economic recovery does come, the industry growth rate will rocket up from where it is today. Much more foreign-currency inflows for this industry will mark 2010.

More is the forecast of overseas Filipino remittances also. The experts are calling for a 6-percent to 8-percent increase based on the global economic recovery. Wrong. In fact, wrong on both points. The Western economic recovery is a fantasy, since nothing can recover without the US economy recovering, and my growth estimate for remittances is 10 percent to 12 percent. More money coming in means more profits and excess cash for local companies and here also, we will see more.

Capital expenditures and business expansion in 2009 were minimal in the sense that companies spent just enough to remain stable without actually spending for growth. Local companies are sitting on a mountain of liquid funds and, in 2010, we will see more local business expanding.

A business cannot afford to miss opportunities as the clock is always ticking, and missed opportunities cannot be recaptured. The consumer- spending slowdown in the first half, particularly the first quarter of 2009, scared everyone. As a result, expansion plans were unfortunately put on the back burner. Now 2010 will be a catch-up year to get these projects to open as quickly as possible. Look at Shoemart. SM’s food retail group of SM Hypermarkets, Supermarkets, as well as Save More and Makro outlets, will open as many as 30 locations nationwide in 2010.

Hopefully, more common sense will prevail in 2010. Let us pray that the electorate will choose wisely and vote as if their future depended on it, which, of course, is true. That would be the best thing that could happen in 2010.

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1 comment:

  1. Stock exchange is the definite way to make money that determines your fate itself.