This could be the beginning of a brighter 3rd quarter of the year.
We are now ending the first half of 2017 and the remaining 2 quarters offer opportunity for you to start accumulating more shares of stocks of great companies.
Despite the challenges on the peace and order – the threat of terrorism in the past few days, the market continues to run normally and it even performed better as it is reflected in the daily PSEi performance.
The PSEi or the Philippine Stock Exchange index is believed to be the pointer, the guide, or an indicator of the general state of the Philippine economy. It is believed that the higher the PSEi is, the better the country’s economy is. The PSEi closes on Friday at 7875.
I have learned that the reasons for this positivity are: the possibility of passing the tax reform program within this year; the continued increase in the OFW remittances; and the continued resiliency of the private sector.
How will these 3 factors may affect the stock market in the future?
Let’s take a closer look at each of these factors below.
1.Tax reform
The Philippine tax reform 2017 includes the lowering of personal income taxes except for high income earners.
Therefore, Filipinos who have an annual income of 250,000 Pesos will be exempted from paying their personal income tax, and so 83% Filipino tax payers will benefit from this.
2.OFW Remittances
You are of course familiar with the phrase “bagong bayani” and there is a good reason to that.
The foreign currency such as the US dollars coming from the OFWs monthly remittances to their families:
- eases foreign exchange liquidity limitations which helps reduce the sudden going up or going down of currency rates
- increases disposable income or amount of money a household has for spending which means a family will have more money to spend
- finances investments in SMEs or Small-to-Medium-Enterprises, so small to medium businesses will have opportunities to grow
The remittances from about 12 million Filipinos working abroad account for about 10% of the country’s GDP.
It has been reported that the OFW remittances hit its highest at approximately 2.91 Billion in the first quarter of 2017 and it is projected to be stronger because of the demand of more skilled Filipino workers abroad.
3.The Private Sector
The private sector has a crucial role in the social and economic growth of every country.
As the private sector in the Philippines continues to grow and becomes stronger, it will continue to contribute to the reduction of poverty suffered by many Filipinos.
The growth of the private sector will generate more job opportunities in many communities.
What do all these mean?
With all these reforms in taxes, increase of OFW remittances and stronger private sector more Filipinos will be given more buying power. The more people buying goods and services, the better it is for businesses.
Why Is This Good For Those Who Are In The Stock Market?
As more Filipinos can now afford to consume goods and services, there will be more demand of supply. More demand results to lower supply. Lower supply translates to higher prices of shares.
The bottom line is it might be a good opportunity to accumulate shares before the prices of stocks start to rise.
To switch from accumulating debts to accumulating shares.
