THE WAY I SEE IT | Susan Amoroso
Four of the country’s biggest private commercial banks were downgraded to negative by FITCH’s Ratings, an international credit rating agency. These are the BDO Unibank Inc. of the Sy conglomerate, the Metropolitan Bank and Trust Co. (Metrobank) founded by the late George K. Ty , Bank of the Philippine Islands (BPI) of the Ayalas, and Philippine National Bank (PNB) of the Lucio Tan group. Included in the downgrade are two government banks, the Land Bank of the Philippines (Landbank) and the Development Bank of the Philippines (DBP).
The downgrading of the top private banks came not as a surprise to me. All of these taipan-owned banks are involved in massive property development and land banking in the last ten to 15 years. With the pandemic, their expected growth and profit margins did not materialize. This to my analysis led to some liquidity challenges.
Gone are the days when savings in the bank is the surest way to financial security and independence. It is wiser to put your money in long term investments. Save a little for the rainy days but invest the bulk of your earnings. I do not recommend investing in the stock market right now. The stock market is too risky and so volatile and so hard to contain unless you do insider trading which is not easy to do and hard to come by. Many have lost the shirts on their backs for putting their hard earned money in stocks. Stocks can lose their value overnight.
One alternative is crypto-currency like bitcoin. Bitcoin is the hottest thing and getting hotter by the day. However, the price of bitcoin has gone so high and the risks are altogether unknown. Cryptocurrency has not been regulated yet so the risk is also high. What for me is the better alternative to bitcoin is gold and silver. The price of gold and silver has never gone down as far as I can remember.
The number one investment for me is real estate. The earth’s land surface will remain pretty much the same for the longest time unless floods , earthquakes, volcanic eruptions disrupt the natural scheme of planet earth in a big, big way like what happened in Noah’s time and the volcanic eruption of Mount Vesuvius. The big cities, developing urban and rural areas, highly prized vacation islands like Boracay will increase their value in terms of square meters. Farm lands will also be coveted as food security is primal in all civilizations.
Fiat money which comes in the form of US dollars and Philippine peso or the Chinese Yuan will start losing their value over time. But real estate, gold and silver will be there forever.
Secret billionaires and multi-millionaires I know have begun withdrawing their money from the banks and putting it in real estate, gold, silver and cryptocurrency like bitcoin.
Time will come when the cost of money will go up exponentially not because of lack of it in circulation but because banks have run out of enough money to lend. Banks will not lend unless the loans are fully secured and at high lending rates. Here in the Philippines, all the big banks have large loan exposures in property development projects. But with the pandemic, many developer-borrowers are defaulting.