CASH is king and investors are seen to turn to fixed-income instruments in response to prevailing market conditions.
“It will be back to basics,” said Rafael Algarra, senior vice president and treasurer of Security Bank Corp. (SBC), during an economic briefing last Friday.
He added that market players will mainly invest on “easily quantifiable” products this year with a preference for simple products and shorter terms.
With this, the housing market might be slightly affected since people are expected to stay “liquid” and real estate cannot be easily disposed of during an economic crisis, he said.
Algarra explained that since investors will be cautious this year, market players are likely to invest in government bonds because these provide security and still earn interest.
“Sovereign papers earn in two ways, through interest and capital appreciation,” he said.
But he warned that dividend payments cannot always be relied on when the market is unstable since these are dependent on equity policy.
“Not all policies are good,” he said.
He also said that in the hierarchy of investment portfolios, commodity will be the least invested instrument this year because one earns from it based solely on capital appreciation.
Commodities—including oil and gold—are only good when the market “feels good.”
Meanwhile, the peso is expected to close the year at P45 to P47 to the dollar as the weakening exports and smaller remittances will continue to affect the currency’s performance.
Algarra also said the year’s inflation rate will average between four to six percent, lower than the 9.3 percent in 2008. (DME)
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