Donald Trump Shocked the World
It was Wednesday morning (Manila time) on November 8 while I was on my way to work when I received a twitter notification that says “Trump is winning!” Are you kidding me? That was my initial reaction for not expecting that Donald Trump would ultimately beat Hillary Clinton over the presidency. I’m sure a lot of you we’re shocked as well. For someone who has no experience in politics to win the election against Clinton who has held different positions in the US government for so many years came as a big surprise to the whole world.
I know a lot of people fear about how Trump will govern the most powerful country in the world. This is because of his antics and rhetoric style which made him known for his insulting comments against other races, women, and immigrants. Despite that, we heard the voice of America, they wanted Trump to be the new president, and so he won.
After all, he’s a successful businessman who built an empire not only in the United States but also in some other parts the world. It’s either that Americans do trust his business acumen and his promise to make the United Stated great again, or that they are tired of traditional politicians and therefore are whining for a big change?
My Equity’s Largest One-Day Decline
Upon hearing the news, I quickly checked my stock portfolio. Trump's near-victory (since it’s not official yet at that moment) sparked a bloodbath in the Philippine Stock Market. I knew it’s gonna be bad! All my stocks positions turned red. In fact, most of the stocks on that day were red. Ten in the morning, my total equity was down by P22,000. A couple of hours later, it already fell by P35,000. It made my eyes bleed. It was so far the largest decline I experienced in just one day ever since I started investing in the stock market.
Asian Stocks Slump on Trump's Victory
It’s not only the Philippines that felt the stock market hysteria after big time investors rushed into selling amid fears of Trump’s possible unfavourable foreign policies against the Asian countries. Japan’s Nikkei 225 took a nosedive by 5.4%. Hongkong’s Hangseng dropped 2.2% while South Korea’s Kospi finished 2.7% lower. China’s Shanghai Composite dropped by 0.6%. Australia’s ASX 200 ended 1.9% lower. The Philippine Stock Exchange Index (PSEi) tumbled by 2.58%, one of the major decliners as a result of Trump’s dramatic win.
Will Trump’s Win Affect the Philippines Negatively?
President Duterte’s recent series of angry outbursts against the United States have caused alarm and concern over the weakening relationship between the two countries which over the years have maintained very close ties not only in terms of military but also economically. Now that Trump has won the presidency, many Filipinos are even more worried that it’s going to be catastrophic should clash between the two leaders of strong characters arises.
President-elect Trump have blatantly expressed his strong stance on tighter immigration, one of his campaign promises. According to Philip Goldberg, US Ambassador to the Philippines, about 43% of the total remittances from OFWs abroad comes from the United States, a key contributor of foreign inflows to the Philippines. It is something that cannot be downplayed.
Trump’s anti-immigration policies would force a lot of Filipinos to be deported back home especially the undocumented ones. Furthermore, the number of new immigrants would surely fall following a tougher immigration controls. If this happens, revenue from OFW remittances will certainly take a hit. But how big the impact would be, we have yet to see.
On the other hand, April Lee Tan, the Head of Research at COL Financial said that the potential impact of Trump’s victory on the Philippines economy is not significant. She mentioned that exports to the United Stated is low compared to other countries such as China ($19B) and Japan ($11.1B).
She also claimed that only 12% of the Filipinos in the US are illegal immigrants. In addition, the OFW remittance estimates exaggerate the percentage coming from the US due to the limitation of the data collection method. Although the BPO sector is feared to be the most likely vulnerable sector, it is not practical for the US companies to stop outsourcing the operations to the Philippines because of the significant wage difference (Philippines $2/hr vs US $10.5/hr).
What You Should Do Now as an Investor
Fear has dominated the market for the past few weeks. If you saw this coming early on, and you acted quickly to sell your position, you’re lucky and job well done. On the other hand, if your stocks are already down now because you did not manage to sell early, I suggest you just hold on.
For me, it’s too late to cut losses now especially if you’re down by more than 10% already. Remember, the PSEi breached the 8000 level just a couple of months ago. But now, it’s already trading below or slightly above 7000.
Fear pulled the market down. But the Philippine’s economy is still resilient. In fact, we are now the fastest growing economy in Asia with a sweet 7.10% GDP growth in the 3rd quarter. Soon enough, we will see the market soaring again when the fear subsides and optimism takes over.
Be patient. In the meantime, sit back and relax. Accumulate your funds to increase your buying power, then wait for the reversal. When the market starts to recover, buy more. This is an opportunity to make money in the future.