Vantage Equities, Inc. posted a consolidated net income of P630.12 million as of December 31, 2013, higher by 11% compared to P569.25 million in 2012. On a per share basis, the Company earned P0.28 as of December 31, 2013 compared to P0.26 centavos as of December 31, 2012.

2013 was quite the tumultuous year for global markets in general. The first half of the year was a continuation of the uptrend the Company experienced in 2012. We had record stimulus coming from Japan with Abenomics. Meanwhile, growth in the US seemed to be finally back on track. It looked as if we had a goldilocks environment, not too hot, not too cold. However, the good times finally ended in May, when we got a surprise from the US FED that they would start tapering their bond purchases. This was a complete game changer for the markets, as most expected tapering to come much later. This caused a complete selloff in risky assets. Emerging market stocks fell off a cliff, bond yields shot up, and foreign exchange markets went on a wild rollercoaster ride. For the year, the S&P 500 and the MSCI World Index registered returns of 29.6% and 24.1%, respectively, compared to already good growth of 13.4% and 13.2%, respectively, in 2012.

The US held its value despite the threat of higher interest rates and bond purchase tapering because finally, good news was good news. It looked like the US would start becoming a global growth engine again. However, this was especially bad news for emerging markets, as foreign fund flow suddenly reversed from these countries. It was a mass exodus from EM to DM ever since the announcement by the Fed in May. Foreign funds and ETFs had orders to zero out their positions in the Philippines and were forced to sell at any price. So after hitting record highs of 7,400 in May, the PHISIX gave up all its gains for the year and then some, before fighting to get back to even at the end of the year. For 2013, the PHISIX and the Company’s equity portfolio gained 1.3% and -4.4%, respectively, compared to 33.0% and 30.6%, respectively, in 2012.

On the fixed income side, yields followed the movement in equities, hitting record lows up to May and then reversing all its gains until the end of the year. Despite flush liquidity coming from funds released from the BSP SDA, bonds were out of favor because foreign investors flocked to get our of any emerging market assets. This was exacerbated with the PHP depreciating from 40.50 all the way up to 44.80 with foreign banks predicting that it would even reach 48. Thus fund managers had a fire sale on PHP assets and went back to holding USD. Those USD eventually found their way back to US markets. Still, 10-year and 20-year benchmark yields were lower by 60 bps and 78 bps respectively from end-2012 to end-2013, but at the low, they were lower by 140bp and 240bp respectively. The Company’s fixed income portfolio gained 7.4% in 2013, outperforming the benchmark HSBC Local Bond Index which gained 5.1% during the same period. In 2012, the Company’s fixed income portfolio and the HSBC Local Bond Index gained 9.5% and 8.9% respectively.