www.businessmirror.com.ph
Banking&Finance BusinessMirror
Five strategies for diversifying your financial portfolio
A
RE you currently experiencing fluctuations in your investments? Are you a trader or an investor? These are the usual questions that we ask fellow investors this season. Because of the changes in the economic landscape, we are always emphasizing the importance of a diversified portfolio. We always hear the phrase: “Do not put all your eggs in one basket” to manage risks and maximize profit. Diversification is about having variety of investments. If we invest in vehicles that are not directly correlated, we can be more comfortable because if one asset class is not performing well, there’s a chance that the other assets will perform better. We should remember that investing is about discipline and strategic thinking, this concept will help you become wise in deciding where to invest. Here are five steps that can help you achieve a diversified portfolio. 1. Know the risks of asset classes. Each type of an investment has an inherent risks-and-reward ratio. For example, investing in the stock market or crypto-currencies brings more reward but, at the same time, it can also fluctuate high compared to other investment types such as money market funds, bonds or real estate. Understanding the potential movements can help you decide if how many percent you will allocate in a risky type of asset. A classic example is dividing your portfolio into three asset type, let’s say you allocate 33 percent each for conservative, moderately aggressive and aggressive type of fund. This will bring in more security for you. 2. Consider Peso-cost averaging. Add to your investments on a regular basis. If you have P10,000 to invest and consistently add the same amount on a monthly basis, you’ll buy more shares when price are low and fewer when prices are high. Steady investing can help you build your investment volume over time. 3. Set your entry and exit point. In every type of investment, setting parameters will help guide us when to capitalize profits and mitigate losses. If you’re new to investing, setting sell or buy signal through fundamental and technical analysis can help you make a sound decision. You may also get insights from seasoned investor but having your own conviction can help you grow in timing the market and aligning it with your goals and timeline. 4. Rebalancing allocation after five years. Every time our life season changes, we may also consider rebalancing our portfolio allocation. For example, if you are single and have minimal responsibilities, you may take a more
Karlo Biglang-Awa
personal finance aggressive allocation to maximize returns. For someone who has a family and kids going to college, consider a moderate aggressive and conservative type of investments allocation to maintain the value of investments. Always check your season and goals to avoid losing your hard-earned money. 5. Study your options. Choosing which platform suites you will entail additional time to study the pros and cons of asset types. Here are quick summary of asset classes. 1. Stock market Investing in the stock market can be direct or indirect. Direct investing means that you will be the one to buy and sell your stock pick through online or traditional brokerage firms. If you are investing in stocks, it is considered a high risk, high return type of investment. 2. Real estate Real estate is a type of asset that is lesser aggressive than the stock market. The value of properties increases over time and the demand is consistent depending on the location and development type. If you are planning to create passive income in the future, this can be a suitable type of investment for you. 3. Real Estate Investment Trust (REIT) A REIT is a company that has income-generating real estate through rental properties. It is like mutual funds; REITs pool the capital of numerous investors. This makes it possible for individual investors to earn dividends from real estate investments without having to buy, manage, or finance any properties themselves. Here in the Philippines, REITs are becoming famous because of the numerous launching since last year of major developers such as Ayala Land, Megaworld, Double Dragon and Robinsons Land. This can be accessed through online brokerage platforms. 4. Life insurance Getting an insurance plan is one of the cheapest asset. Once you are covered with life, accident or health benefits, the company will shoulder the risks related expenses to avoid depletion of your savings and investments in other asset types. An adequate coverage can help you achieve a protection for your family in case of unforeseen life events. Karlo Biglang-Awa is a registered financial planner of RFP Philippines. To learn more about personal-financial planning, attend the 92nd RFP program this October 2021. To inquire, e-mail info@ rfp.ph or text at 0917-6248110.
Editor: Dennis D. Estopace • Tuesday, October 5, 2021
Treasury fully awards ₧15B in T-bills despite high rates
H
By Bernadette D. Nicolas
@BNicolasBM
IGHER inflation expectations pushed rates up across the board on Monday’s auction of Treasury Bills (T-bills). Despite the uptick, the Bureau of the Treasury still fully awarded P15 billion in T-bills. The auction ended up nearly four times oversubscribed as it attracted P56.36 billion in total submitted bids. National Treasurer Rosalia V. De Leon told reporters that upward movement in rates can be attributed to the expected rise in inflation.
However, De Leon pointed out that the rates fetched by debt papers with longer tenors, especially the 182-day and 364-day T-bills, did not move that much. The Bangko Sentral ng Pilipinas (BSP) earlier said inflation is expected to average 4.4 percent this year, an upward adjustment from the 4.1 percent in August. The inflation accelerated to 4.9
percent in August from 4 percent in July. This is the highest inflation recorded since January 2019. With the August inflation, the country’s average 8-month inflation rate stood at 4.4 percent. The BSP revised upwards its inflation forecast from 3.1 percent to 3.3 percent for 2022. For 2023, inflation is expected to average at 3.2 percent from the earlier 3.1 percent the BSP projected. The 91-day T-bills’ average rate was capped at 1.085 percent, rising by 2.5 basis points from the previous auction’s 1.06 percent. Tenders for the tenor reached P13 billion. Meanwhile, the 182-day T-bills fetched an average rate of 1.391 percent, higher by 0.6 basis points from 1.385 percent. Bids for the security amounted to P22.42 billion.
As for the 364-day T-bills, the average rate stood at 1.584 percent. This was a slight increase from 1.582 percent. The debt paper registered P20.93 billion in bids. For this month, the Treasury is aiming to raise P200 billion from the local debt market. This year, the national government programmed to borrow a total of P3.1-trillion, most of which is expected to be raised from the local debt market. The government borrows to meet its spending requirements as well as to finance its budget deficit. As of end-August this year, the national government’s outstanding debt has hit a new record-high of P11.64 trillion, up by more than a fifth from P9.62 trillion a year ago.
Govt lender approves ₧5.6-B borrowing for MSMEs By Tyrone Jasper C. Piad @Tyronepiad
T
HE Small Business Corp. (SB Corp.) announced it has approved P5.634-billion worth of borrowings for local micro-scale, small and medium enterprises (MSMEs) adversely affected by lockdown measures the Duterte administration used as response to the Covid-19 pandemic. In a briefing last Monday, SB Corp. Board Director Voltaire Magpayo said these approved borrowings benefited 56,421 applicants. The figures are as of September 27. According to Magpayo, the loans extended were under the government financial institution’s microfinancing program. He said the lending window caters
to MSMEs across the country who need financial assistance amid the pandemic. Magpayo added that the program allows businesses to borrow funding without interest and collateral; they are also provided grace period. The program originally drew P1 billion in funds from the 2021 General Appropriations Act and P4 billion through Republic Act 11494. But as the loan facility is getting maxed out, Trade Secretary Ramon M. Lopez previously said they have secured additional funding to continue lending to MSMEs. As such, Lopez encouraged the small businesses to still apply for loans to plug budget leaks and keep operations running. Meanwhile, Magpayo said that SB Corp. and parent agency the Department of Trade and Industry (DTI) are
still ironing out some details of the shipping-loan facility for exporters. Previously, Lopez told the BusinessMirror that SB Corp. will soon start accepting applications for the shipping loans, which is payable up to 90 days from shipment date. The trade chief said the Export Development Council requested for the financing program, eyeing borrowers from exporters who are ready to ship their products. The SB Corp. official said the lending window will allow exporters in financing the demurrage fees— charged by the port authority to a shipping line when the loaded containers are not transported within the given laytime—and other costs. In June, SB Corp. and the Alliance of Concerned Truck Owners and Organizations (ACTOO) inked
a memorandum of agreement, extending a loan program to qualified truck owners as aid to the logistics sector’s recovery. Over 2,000 ACTOO members may apply for loans which are not subject to interest and collateral. Those who can submit financial statements may secure loans amounting to P600,000 to P5 million, while those without may apply for borrowings between P10,000 to P200,000. Last month, Deputy Speaker for Trade and Industry Rep. Weslie Gatchalian filed a resolution to hike the budget of the DTI by P1.6 billion to further assist MSMEs amid the closures due to mobility restrictions. The Trade department and its attached agencies have been allocated P23.7 billion for next year’s budget.
Customs to donate seized face shields, masks to DOH
T
HE Bureau of Customs (BOC) is set to donate seized face shields and face masks to the Department of Health (DOH). Customs Commissioner Rey Leonardo B. Guerrero said they are already in the process of turning over about 11,500 face shields, 7,000 pieces of surgical face masks, 19,000 pieces of children’s disposable face masks and 12,000 pieces of disposable adult face masks. These goods were seized in the Port of Manila. Aside from these, a forfeited 40foot container of various medical supplies and equipment stored in the Port of Davao would also be donated to the Southern Philippines Medical Center in Davao City, according to the BOC official. Guerrero also said they have already donated cellular phones, laptops, educa-
tional materials and other seized goods to the Department of Education (DepEd) and other government agencies. The cellular phones and laptops from the Pork of Clark in Pampanga were turned over by the BOC to the Deped last January while learning packets from the port of Ninoy Aquino International Airport were donated last March. From March 2020 to August this year, the BOC said in a report it has also turned over abandoned or confiscated broadcasting equipment, food items, temporary shelters, face shields and various medical supplies and equipment to government agencies. “Rest assured that the process of donation and turnover of the items for donation are being expedited in compliance with existing laws, rules and regulations,” Guerrero said. The BOC also donated to the Presi-
dential Communications Operations Office (PCOO) in October last year abandoned broadcast equipment from the Port of Davao. Guerrero said the agency also donated 17 packages of live broadcasting room equipment with FM broadcast transmitter last July. The BOC is also set to turn over to the PCOO a separate set of live broadcast room equipment and medium wave transmitter abandoned in the Port of Cebu. Nine 40-foot containers and one 20-foot container of steel beams and accessories, 487 pieces of coated pipes and uncoated pipe tubes, 35 40-foot containers and a 20-foot container of steel parts seized in the Port of Subic were initially turned over by the BOC to the Department of Transportation. Guerrero said these are now in the process of being transferred to the
Philippine Navy. The official said the BOC will also turn over to the Navy three 20-foot empty containers located in the Port of Batangas. The agency also turned over 40 boxes of face shields to the Department of Social Welfare and Development (DSWD) on July this year while a 40-foot container of Libby’s Vienna Sausage was also donated to the department on May 1, 2020. Other seized goods turned over to the DSWD include ten boxes of assorted apparel from the Port of Iloilo last March and ten packages of canvas tents, with accessories and 2 units of stretch tents from the NAIA last August. Eight drums of oil seized in the Port of Surigao will also be turned over to the Surigao city government, he said. Bernadette D. Nicolas
Japan’s longest-serving finance chief bows out as officials seek post-Covid reboot
T
aro Aso on Monday leaves his post as Japan’s longest serving finance minister in modern times. He exits as the ruling party attempts to reboot with a new cabinet amid public dissatisfaction over its handling of the pandemic. Aso’s departure marks another step away from the Abenomics experiment that helped spur periods of economic growth, but couldn’t deliver sustained income gains or cut the aging nation’s massive debt pile. After nearly nine years on the job, Aso is replaced by his 68-year-old brother-in-law, Shunichi Suzuki, a former Olympics minister and ruling party lawmaker who helped install Japan’s new premier, Fumio Kishida. Kishida, after winning a party leadership vote last week, said he wanted to appoint younger lawmakers to key positions, in an attempt to freshen up the government before national elections this fall. After
being made prime minister on Monday, Kishida formed his cabinet and replaced the 81-year-old Aso. In his final news conference as finance chief earlier Monday, Aso said his successor was an experienced policy maker who might do a better job of explaining things to the public than he had. Aso himself had a short stint as premier between 2008 and 2009, but will be remembered more for his years as finance minister and deputy prime minister, first under former premier Shinzo Abe and then under Yoshihide Suga. In that role, he coordinated the “Abenomics” policy with the Bank of Japan, which bought record amounts of government bonds as part of a stimulus program that drove down the currency and temporarily lifted inflation. “You could say that he provided steady support for the Abe administration, by providing consistency
B3
it done. To pay for rising social security costs as Japan’s population aged, Aso oversaw two hikes in the sales tax that doubled the levy to 10%. The increases helped boost revenue, but also triggered recessions in 2014 and 2019. Higher revenues also didn’t stop Japan’s budget deficit from widening even in years when the economy was expanding as the inevitable growth in social security costs drove up spending.
Japan’s mountain Japan Finance Minister Taro Aso speaks before the Diet last July. Bloomberg News
within a long-term policy approach,” said economist Harumi Taguchi at IHS Markit. The policy, however, didn’t succeed in getting the economy out of its slow growth or generating the sustained price gains promised. Aso often criticized Japan Inc. for
hoarding cash rather than boosting investment and wages, but failed to get much change to happen. Kishida, for his part, has dangled the idea of a “new type of Japanese capitalism,” favoring redistribution and pay increases, but has only sketched the outline of how he’ll get
OVER the near-decade that Aso has been in charge of Japan’s finances, government debt has risen to above 250 percent of gross domestic product. Even with central bank bond purchases keeping interest rates near zero, debt payments consume almost a quarter of the budget. In his final year, Aso oversaw record borrowing as the world was hit by Covid-19. Three extra budgets
meant an additional 80 trillion yen ($720 billion) of new bonds issued, adding to Japan’s already enormous debt pile. While it’s unclear whether Suzuki or Kishida might bring fundamental changes to economic policy, they will be left with the task of dealing with the country’s fiscal imbalances. The government has a goal of balancing its budget by the year ending March 2026. The target excludes the costs of paying for debt, but is still seen as unreachable this decade even by the government’s own projections. The first order of business for Kishida’s new administration will be preparing for the upcoming election, and that likely means additional stimulus. Kishida has said that tens of trillions of yen must be spent in the near term to support the recovery. Economists including Masaki Kuwahara at Nomura Securities expect a stimulus package of about 30 trillion yen. Bloomberg News
