To our valued clients,
With over 100,000 confirmed cases of Covid-19 in the country, Metro Manila and neighboring provinces were placed back to a stricter modified enhanced community quarantine or MECQ from August 4 to 18. The decision was reached following the call of our medical frontliners for a ‘timeout’, who sounded off a distress signal concerning our healthcare system. Under MECQ, the movement of people shall be limited anew as quarantine passes are required and public transportations are suspended. This re-imposition of stricter lockdown guidelines is seen to be a double-edged sword as the government has to do a delicate balancing between the public health and the economic health of the country. Analysts believe the two-week MECQ at work will help reduce the spread of the coronavirus disease. However, the Department of Finance cited the return to MECQ may be a ‘one step back’ to economic recovery as it may further hurt livelihood, consumer demand, as well as several industries’ operations and profitability in the near-term.
As the government enforced lockdown measures since mid-March or for nearly five months, the nation’s economy slipped to a technical recession. For the second quarter alone, the country’s gross domestic product growth rate plunged to as low as two digits alongside weak corporate earning potentials with investments becoming limited as the business climate remained downbeat. Accordingly, GDP nose-dived by 16.5%, the lowest recorded quarterly growth starting 1981 series. Note that this data is the first real look at the economic brunt of the pandemic on the Philippine economy. Nonetheless, we don’t see the MECQ to be worse than the initial lockdowns last March to May period. While it is impossible to flatten the curve within just two weeks, this period will provide our government the time to strengthen our medical resources, and reevaluate plans and implement better means of refining the pandemic response.
Many would ponder, is now a good time to buy stocks? We are in a bleak situation and it is unclear how the stock market will fare over the short-term. But here’s what we know. Over time our economy has been resilient, steadily rising albeit occasional periods of contraction, enduring world wars and recessions. It may be a long way for the economy to return to the pre-Covid-19 levels as we grapple with the challenges induced by the pandemic, we are hopeful that economic recovery will commence eventually. Thus, now is a good start to position in the market and take advantage of lower stock prices. Just imagine your favorite branded shoes or bag suddenly on steep discounts, wouldn’t you grab the opportunity to buy? As long as you have the extra cash you’re willing to invest over the long haul, buying stocks today will lead to wealth creation over the next years. Remember, ‘time in the market’ beats ‘timing the market’.
Very truly yours,
Mr. Artemio A. Tanchoco, Jr.
President
