How the Russia-Ukraine crisis will impact the peso, according to an investment officer 2
A study by Japan-based global financial firm indicates that the Philippines would be among the biggest losers in the ongoing Ukraine crisis. Photo by George Calvelo, ABS-CBN News

How the Russia-Ukraine crisis will impact the peso, according to an investment officer

Should you be on panic mode now or should you be buying more stocks?
ANCX Staff | Mar 11 2022

The Ukraine-Russia conflict has entered its third week. While news sites continue to update us on the damage the war has caused in Ukraine, we also started feeling it’s impact in our part of the world particularly with the rise in gas prices over the past week.
What else can Filipinos expect in the coming days and months as the crisis continues? BDO’s Chief Investment Officer Fritz Ocampo gives his fearless forecast in the latest episode of finance adviser Salve Duplito’s Salve Says.

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Ocampo doesn’t see a bigger war erupting. “I would expect that Russia has its objectives,” he says, “but it’s not to go to war with the US. Maybe it would replace the Ukrainian administration. Maybe it’s to carve out part of Ukraine, but both the US and Russia know it is foolish to go to war with each other.” 
Still, any war has damaging consequences and would impact us in more ways than one. Higher oil prices is just one aspect. Ocampo quotes a study by Nomura, a Japan-based global financial firm, indicating that the Philippines would be among the biggest losers in the ongoing Ukraine crisis. Why? Because the Philippines is a net importer of oil—we buy more from other countries than we sell to them—and we don’t have an oil prize stabilization fund.
Prices of goods and services will also see an increase due to inflation, Ocampo adds. The prices of wheat and flour going up—a big part of the world’s wheat supply is from Russia and Ukraine—would mean prices of our pandesal and other breads will also go up. “Later on, the price of transporting goods tataas din yan. Yung pamasahe tataas din yan.”
Because we have fellow Filipinos working in Ukraine, another immediate impact of the war on the Philippine economy would be on the flow of inward remittances. Instead of sending money to their families, our OFWs would likely choose to hold on to their cash in case the war extends and they need to flee from the conflict zone.
Ocampo reports that in January, “while all global and equity markets were negative, it was only the Philippines that was in positive territory.” But when the war broke, there was an immediate local stock correction. “Siyempre may takot, may pangamba. So there would definitely be a tendency to cut positions (meaning, to sell),” he says. But he advises investors to stay calm. “It’s either you hold or you buy on the dip.”
What other advice can Ocampo give to investors to safely navigate the market in light of this ongoing conflict? For a novice investor who has started to accumulate index funds, he recommends averaging down, or purchasing additional shares after the price drop. But for more seasoned investors, who have training in stock picking, he suggests buying the cyclical stocks.
Before this Ukraine-Russia conflict, there were already signs the Philippine economy was opening up again, and Ocampo says this will just continue to pick up even with the European crisis in the background. He advises to buy “the banks, property sector, and the conglomerates that own them. The transport sector is another one, both International Container Terminal Services, Inc. (ICTI) and Cebu Pacific, as global trade eventually will begin to pick up once again as it did last year, and eventually global tourism as many of the countries are starting to open up already.”

Utility stocks such as the power sector would also be another area to consider investing on, says Ocampo. “Both Meralco and Aboitiz Power were among the top five best performing stocks for the year,” he says.
For more on this discussion, watch Salve Says thru this link