After the recent US presidential election surprisingly won by Donald Trump, the Philippine stock market reacted negatively. At the time of this writing, the PSEi index fell below the 7,xxx mark and is now at 6,982.97.
This is because of the concerns how Trump’s policy would affect the Philippine economy specially the BPO sector or the call center industry. Going back in 2013, the revenue from BPO generated about $15.5B and $22B revenues last year (2015) which employed 1.1M Filipinos.
We can recall in Trump’s presidential campaign that he would bring back jobs to America in the manufacturing side. Although this has nothing to do with the BPO sector, there is a possibility that Trump would also influence Americans not to outsource non-manufacturing jobs in other countries such as the Philippines.
When this happens, it will surely hit our economy since 70-80% of the BPO employers are based in US. Among the publicly-listed companies in the property sector heavily affected are ALI, RLC and MEG.
Analysts believed that this negative market reaction is only short term. According to Bloomberg, the market reaction on US presidential election is not an indication of how the market will perform in the next 12 months.
One reason to consider is the difference between the hourly wage of Americans to Filipinos in the field of BPO. According to Glassdoor, the hourly wage for a Filipino call center agent is around $2 while in the US it’s around $10.5. That is a huge difference which will make them think twice pulling out their businesses.
On the other hand, there are other factors that drive the Philippine economy. That is, the government spending which is eyed by the president (infrastructure, banks & tourism) and investment spending excluding the BPO industry (consumer and power).
As a conclusion, analysts such as COL Financial believes that this is a buying opportunity for us at a cheaper price specially when PSEi falls below 6,700 which they recommend to buy aggressively. Time to accumulate more stocks!
Let us know your thoughts in the comments section.