Ano Nga Ba Ang Tapering?

Tapering title

TaperingTuwing may nangyayari sa market — ke umakyat o malaglag (usually laglag), ang sinasabing dahilan ay “Tapering”. Ano ba talaga ang “Tapering” at bakit ganun na lang kalakas ang epekto nito sa atin? Ganito kasi yan…

For the past several YEARS, the U.S. government has been printing U.S. dollars in HUUUUUGGGEEEEE amounts. Trillions and trillions of dollars. They called this program “Quantitative Easing”. Now since dumami ang supply ng dolyares, natural na malalaglag ang halaga nito — Law of Supply and Demand. So kung may hawak kang dolyar, gugustuhin mong palitan ito dahil you EXPECT the U.S. to print more of it and if they continue to do so, then the VALUE of the dollar you hold will decrease. Kaya, ang ginawa ng marami, kinonvert ang U.S. dollar nila into other currencies and bought assets in those other currencies. That way, if the dollar continued to weaken, kahit walang change yung halaga ng asset dun sa currency, dahil sa pagbaba ng dollar eh kikita ang isang tao ON A DOLLAR BASIS.

Halimbawa: Bumili ka ng Jollibee share at 100 pesos a share nung panahon na ang palitan ay 50 to 1. You had $1,000. You converted it to 50k pesos and used that money to buy 500 JFC shares. After 4 years, sabihin nating 100 pesos pa din ang presyo ng JFC. Hindi ito tumaas o bumaba. Kaso, dahil sa dami ng dollars na inimprenta ng U.S. government, ang exchange rate ay 40 to 1 na. So, kung ibenta mo yung shares mo, 50k pesos makukuha mo — talo ka pa sa inflation. Kaso, hindi naman peso ang gagastusin mo kundi dollars at kapag ipinalit mo yung 50k pesos mo into dollars, makakatanggap ka ng $1,250. Kumita ka pa din ON A DOLLAR BASIS.

Ngayon, isipin natin kung ano mangyayari kapag ihinto ang “Quantitative Easing”? Kung sa tingin ng tao na hindi na dadagdagan ang supply ng dolyares, malamang eh hindi na nila ito gugustuhing ipalit pa sa ibang currency. Put another way, this means that people will begin to ask for more money in order to be convinced to change their dollars. This will then lead to a strengthening of the dollar compared to other currencies.

Example: Lets say you had $1,000 early this year and converted it to pesos. Let’s say that the rate when you converted was 40 to 1 — you got 40,000 pesos. You then invested this in a stock at 100 pesos a share so you had 400 shares. Fast forward to today, lets ASSUME that the stock is still at 100 pesos but the exchange rate has become 44 to 1. If you sell your shares, you still get 40,000 pesos (less comms) so parang ok lang. But if you convert that 40k pesos back into dollars, you will only get $909.09 — talo ka ng almost 10%

illustration

So nasaan naman diyan ang “Tapering”? Simply put, “Tapering” is the name they have given to the process wherein they will slowly cut back on the amount of dollars they will print.

Tuloy, if a fund manager has been invested in the Philippines for the past several years, MALAMANG kumita na siya on a Peso basis. But, he will ultimately be evaluated on a DOLLAR basis so in order to protect his Dollar gains, he has to sell Peso assets — especially if he believes that the exchange rate will continue to move in favor of the dollar.

So what does that mean for you? As a trader, things don’t look good since SHORTING is not really allowed in the PSE. At least not in the way most people believe it should be done. As an investor, you should begin to consider whether your company will benefit in an economic situation wherein the U.S. economy is growing and the U.S. dollar is strengthening. If they will benefit then HOLD or MAYBE even BUY. If not, then SELL.

As always, ARAL MUNA BAGO INVEST. :)

Aya Laraya

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Comments

  1. Thanks Sir Aya for this easy to understand explanation about tapering. Kaya pala madaming foreigners ang nagbebenta ngayon ay dahil sa tingin nila na malulugi ang investments dito sa Pinas nila on a dollar basis, kahiy pa pataas ang ekonomiya ng bansa.

  2. ruperto nambio says:

    Hi Aya, say for example I invested in US stocks, using the same algorithms above. If after 5 years of investing in US equities, I convert my dollar to Phil. pesos, do you think I am losing or gaining of my dollars to pesos, if the same trend shall continue?

  3. Hi Rupert,
    Mas kikita ka.
    For example naginvest ka ng 40,000php at 40 to 1 rate. so meron ka worth 1,000usd to invest. Same sa example ni Aya assuming di ngbago ang investment mo meron ka padin 1,000usd. Pero ngaun ang palitan ay 44 to 1 na. Ang equivalent na ng pera mo ay 44,000php!
    Tandaan na dahil lumakas ang palitan ng usd, mas marami ka mabibili na php kapag naconvert mo ito.
    Sa case ng US investors, gusto na nila ipalit pabalik sa dolyar ang pera nila to lock their gains. Kaya kung my investment ka in USD at pwede mo naman makuha, I think this is the best time to bring back your investment at ipalit mo sa php dahil mas mataas na ang value nito at mas madami ka mabibili.

    Tama po ba sir Aya?

    • ruperto nambio says:

      Thanks pstocksmaarket, Oo “madaming mabibili” mga investments (equities) . Sa sample na bigay mo, tama ka. Pero ang pagdami ng halaga ng peso ay di maganda kung sa panig ng importer, kasi maraming pesos ang gagamitin. Kung sa panig naman ng OFW ito ay ok, malaki ang palitan. Sa foreign debt ng ating bansa pabor ang less pesos to a dollar. Tanong: alin ang mas mabuti: tumaas ang value ng ating pera (less pesos to a dollar) o more pesos to a dollar)? Alin ang pipiliin mo at bakit?

      • gaya nga ng sabi mo, ang pagbaba o pagtaas ng halaga ng piso ay maaring pabor sa isa ngunit hindi naman sa iba, Sa tanong na kung ano ang pipiliin ko, mas gusto ko na bumaba ang halaga ng piso upang mas maraming mamumuhunan ang mahikayat sa atin. Kahit na progresibo ang ating ekonomiya sa ngayon, hindi natin maipagkakaila na nahuuli pa rin tayo sa imprastraktura at transportasyon kumpara sa mga karatig bansa natin. Sa huli, ang sapat na balanse at stable na palitan sa pananalapi ay mahalagang aspeto at batayan ng pagunlad ng isang bansa.

  4. Sir Aya, ang galing ng explanation, good to know may mga kagaya mo po na nagsishare ng mga ganitong lessons and knowledges about finances. keep it up Sir, two thumbs up here. Very useful article.

  5. thanks you… at last naintindihan ko din sya… :)

  6. len v. argote says:

    Many thanks sa inyong lahat for the info shared on the abovementioned topic. This is a big help to us who are trying our luck in the stock market.

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