PH due for a recession? But, where's all this money coming from?
I feel like this question has been thrown around for the last five years or so. What I see 'on the ground' is that real estate prices are insanely high, there is so much investment into new businesses (SMEs to large enterprises) and a lot more conspicuous consumption from a thriving new middle and upper middle class.
Where's all the money coming from? One significantly successful artist friend of mine said he personally sees a lot of success in his industry coming from China. He recently participated in an exhibition in HK and spoke well of Chinese interest in art and how it is buoying the prices of art even in the Philippines.
It's a similar story in Real Estate. The consensus had been that real property prices were ripe for a correction this year (2018). However, there was no such correction. Industry experts pointed to the influx of Chinese immigrants in Manila as to why instead of a correction, there was actually a price increase!
But, could all this money stop flowing? Well, if Trump had his way, it might. This commentary by Dr. Mike Ivanovich, writing for CNBC, sheds light on why there is enormous pressure for China to balance its trade with the U.S. It also states clearly that China has been benefiting tremendously from its surplus - which has been reinvested around the world (including in the PH, mostly indirectly I think). Much of that surplus (I'm speculating) is being spent here. At the very least, much of that money passes through the recently booming gaming industry.
Here's the cautionary tale: In as much as a stroke of the pen in Beijing can shut down the entire gaming industry overnight, a decision to balance the trade with the U.S. can end the era of easy Chinese money and drastically reduce the money supply in neighboring countries like the PH.
Ultimately, the theory is that a balanced trade is good for the global economy. But, in the short run, a change in the status quo as lobbied for by Trump would likely have strong negative pressure on PH stocks.
Where's all the money coming from? One significantly successful artist friend of mine said he personally sees a lot of success in his industry coming from China. He recently participated in an exhibition in HK and spoke well of Chinese interest in art and how it is buoying the prices of art even in the Philippines.
It's a similar story in Real Estate. The consensus had been that real property prices were ripe for a correction this year (2018). However, there was no such correction. Industry experts pointed to the influx of Chinese immigrants in Manila as to why instead of a correction, there was actually a price increase!
But, could all this money stop flowing? Well, if Trump had his way, it might. This commentary by Dr. Mike Ivanovich, writing for CNBC, sheds light on why there is enormous pressure for China to balance its trade with the U.S. It also states clearly that China has been benefiting tremendously from its surplus - which has been reinvested around the world (including in the PH, mostly indirectly I think). Much of that surplus (I'm speculating) is being spent here. At the very least, much of that money passes through the recently booming gaming industry.
Here's the cautionary tale: In as much as a stroke of the pen in Beijing can shut down the entire gaming industry overnight, a decision to balance the trade with the U.S. can end the era of easy Chinese money and drastically reduce the money supply in neighboring countries like the PH.
Ultimately, the theory is that a balanced trade is good for the global economy. But, in the short run, a change in the status quo as lobbied for by Trump would likely have strong negative pressure on PH stocks.
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