The year 2013 finally ended this week, wrapping up a rough, turbulent year for stock investors.
On Friday, December 27, the market had its last trading day of the year. The 30-company Philippine Stock Exchange index (PSEi) closed at 5,889.83 points — up a meager 0.20% from the previous day’s trading.
What’s more appalling, though, is the fact that the PSEi managed to rise a mere 1.33% in value for 1 whole year. This means if you invested P100,000 in the PSE index from the start of 2013, that money would only amount to P101,330 by the end of December.
Despite a small gain, that money technically “lost” value already, because inflation rate in the Philippines hit an average of 3.0% this 2013.
2006-2013 Annual Performance of the PSE index
What’s also saddening is that this performance is the lowest return generated by the PSEi since 2008. (See Annual PSEi Performance chart)
Actually in the past 8 years that we have been tracking the PSEi here at PinoyMoneyTalk, last year’s 1.33% growth is the second slowest growth of the PSE index, only better than the -42.70% slide in 2008 during the aftermath of the subprime mortgage crisis.
Interestingly, the year 2013 was not predominantly defined by losses. In fact, during the first months of the year, the PSEi registered all-time highs in several occasions, generating profits for most investors, although still unrealized.
And then midway through the year, the QE tapering issue emerged. The U.S. Federal Reserve announced it is winding down its bond-buying program which provided stimulus to the U.S. economy in the past years.
(To learn more about QE taper, read Impact of QE taper on the Philippines and other emerging markets)
As a result, the Philippine stock market tanked due to fears that foreign investments that poured into the local markets would be siphoned back to the U.S. From a high of 7,403.65 in May 2013, the PSEi closed at 5,889.83 on the last trading day of the year — a 20% decline from its peak.
As we enter the new year 2014, hopefully, it will be a better year for all of us!
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