Latest posts by Jaycee De Guzman (see all)
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Carlos asked, “Sir Jaycee, will Ebola virus affect the Philippine Stock market just like what happened in 2002 in the case of SARS?”
First things first, let me bring you back to the era of the dinosaurs.
Okay, kidding aside, let me just rewind the tape of the Philippine Stock Exchange Index (PSEi) from 1995 to 2005, together with the factors that affected the index’s performance during those years. Here’s what happened in those years.
Once upon a time…
Dot Com Bubble
This is the 3-year worth of stock market speculation that ranged from 2007 to 2010. Back in those years when I was still using DOS (Windows GUI today), Word Star (MS Word today), and Lotus 123 (MS Excel today), PSEi dropped by 1,683.31 points or 50.85% from 3,421.91 to 1,681.72.
PSEi on January 1997 – 3,421.91
PSEi on March 2010 (peak of the Dot Com Bubble) – 1,681.72
Look at the chart above. Do you see the obvious downtrend from January 1997 to March of 2010?
That’s the Dot Com Bubble – the year when Bazooka bubble gum was still my favorite chewing gum because of the free comic strip wrapped around it. What’s the relation between the Dot Com Bubble and Bazooka bubble gum? Nothing. Bear with me. I lack sleep.
Stock Market Crash of 2000-2002
What happened from 2000 to 2002 was the aftermath of the Dot Com Bubble. From January 2000 to December 2002, PSEi dropped by 1,134.77 points or 52.70%. It was a bigger drop than the 50.85% during the Dot Com Bubble years.
PSEi on January 2000 – 2,153.18
PSEi on December 2002 – 1,018.41
It was reported that roughly 48% of dot com companies survived through 2004. But it was during the three years before 2004 that US had had employment problems. Do you still remember those news when programmers went back to school to study accountancy or law as they thought there were no more rooms for programmers during those years? I do because I was in college during those years doing the exact opposite of what they were doing. I was busying myself with my Computer Science course as most programmers in the US were shifting courses and careers.
[Alright Jaycee, tell us now about the timeline of SARS virus.]
SARS Virus in November 2002
Your wish is my command. Taddddaannnn!
Based on my research, SARS virus was first detected in November 2002. Correct me if I am wrong with the month, but whether your own research shows January 2002 or December 2002, it won’t affect my one big message on whether SARS virus affected the Philippine Stock Market during those years or not.
During the outbreak of SARS virus in November 2002 until December 2004, our market’s index recovered (not exactly “grew” for it was debunked during the Dot Com Bubble and the 2000-2004 aftermath years) by 655.16 points or 56.11%.
PSEi on November 2002 – 1,167.67
PSEi on December 2004 – 1,822.83
So, did SARS virus affect the Philippine Stock Market during its outbreak? I think not. If it did, it was an insignificant, indirect, and negligible effect. What happened in 2002 and the prior years was not because of SARS.
What About the Possible Effect of the Ebola Virus in the World Market?
According to the World Health Organization (WHO), West Africa is alarmed to face up to 10,000 new Ebola cases per week in two months time. Add to the agony the 70% death rate.
Honestly, I do not know if the Ebola virus outbreak will have or is already having its significant or insignificant effect in the world markets. Far greater than hoping and praying that it won’t negatively impact the world markets is the healing of the victims and the immediate and possible discovery of a vaccine or any medicine that can kill the virus.
The major factors that cause the correction in the world markets and in the Philippine stock market are the global political issues, recession in Europe, downgraded growth forecast of the world economy in 2014 by the International Monetary Fund (IMF), among others.
Does the Ebola Virus Outbreak Affect the Philippine Stock Market?
I don’t know. Maybe yes. Maybe no.
But let me change your psychology on this matter. For a minute, instead of dwelling on what could negatively impact the market, let me tell you something that can positively impact your stock market portfolio – my Stock Signals Program. Shameless plug you said. Well, had it not been because of this program and my sponsors, these free stock reviews and reports you’re reading right now would have not been made possible. You’ll never know what you’re losing or gaining until you read how my Stock Signals Program works.
I’ll see you on the 7,800-8,000 side of the Philippine stock market in 2015!