Now alot of readers may think lightly of how globalization has come to affect demand, supply and finance even at the local level. While most local and some foreign brokers appear to be overtly optimistic, I am however, cautiously optimistic since I am quite aware that sentiment borne out of cycles dictate on the flows of the market rather than what is concocted as fundamentals...in the words of Robert Folsom of the Elliott Wave International (emphasis mine), ``This is why "discipline" is usually the first word out of the mouths of consistently successful investors and traders, when they're asked how they managed to succeed. They know that while the market is a formidable foe, undisciplined investors face a far more lethal enemy -- namely their own emotions, and the emotional impulse to follow others.”
The chart below courtesy of Arthur Woo of HSBC as published by the leading local business broadsheet the Businessworld shows of the risk arising from a US impelled slowdown which COULD adversely affect sentiment over at the local market...
Periods of rising global growth (gray line) has accompanied rising remittances except during the Estrada Crisis in 2001 (reflecting the divergence).
In short, if the world economic growth slows, remittances which serve as one of the significant backbones to the Philippine economy (about 10% of GDP) could likewise be affected too. The constriction of remittance flows would essentially spillover to the industries presently benefiting from it.
Needless to say, the Philippine economy, as key exporter of labor is an integral part of the international division of labor and thus, subject to the volatility dynamics of the global economy. This is one year to be less aggressive and more defensive. Ignore this warning at your risk.
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