NOW THAT the Omicron variant has started spreading in Metro Manila, one question people may ask is how bad is it going to be?
Well, the PSEi (Philippine Stock Exchange Composite Index) may give us a clue.
Although the stock market generally lags behind bonds and other economic indicators, it does offer some insights given enough time.
One of the most important lessons I’ve learned about investing is this: The market looks sixth months into the future. If it reacts to a particular event, the effects of said event on both the economy and society could be serious. On the other hand, if it doesn’t, the effect may be marginal.
For example, when super typhoon “Rai “(local name: “Odette”) hit the Philippines, the PSEi fell to around 6,950 points, but it quickly recovered to 7,100 in the following days.
On the other hand, when the coronavirus disease 2019 (COVID-19) hit the country, I remember the PSEi falling to around 5,000 points, and it took a long time for it to climb back to its previous levels.
Going back to the Omicron variant, we can make certain assumptions based on how the market reacts in the coming days. If it falls down and stays there, the Omicron variant’s effects may be serious.
On the other hand, if the PSEi stays above 7,000 points, or falls but quickly recovers, we may expect then the effects can be the opposite.
It’s worth mentioning that in the US, where the Omicron variant has already hit, they have suffered some losses in recent weeks. However, those may have been caused by high inflation, so the variant’s effects are uncertain.
Note that this analysis is about the society and economy in general, not health. The PSEi, like all stock indices, is an economic indicator. Nevertheless, it can be used as a proxy for other indicators when making predictions./PN
