PH among the hottest emerging markets
Ferrer said.
Foreign portfolio inflows into the stock market are also keeping local stocks buoyant.
Based on PSE data, net foreign buying in the local stock market surged 382.3 percent year-on-year to P71.12 billion. This was nearly five times bigger than the P14.75-billion level in the same period last year.
“Fund mangers, while they were waiting for some positive developments or getting out of the so-called economic quagmire in EU, they’d like to put some bets in some markets like ours, to more or less have an idea of what the Philippine market is all about,” Claudio said. “But because they are so huge, it affects us significantly despite the rather poor performances of other markets.”
Whether or not the US Dow Jones industrial index goes up or down sharply, for instance, Claudio said “the attention of foreign fund markers are drawn back to their major markets.”
But for now, the Philippines is deemed one of the hottest emerging markets in the region, having outperformed other Asian bourses since the start of the year. At the same time, it also reaps the benefits of Southeast Asia as a whole now being on the radar screen of global investors.
“I think the theme that we’re thinking about for the next two or three or four quarters is that the Philippines stands out as a safe haven with what we’re seeing globally,” Melvyn Boey, Southeast Asian equity strategist at BofA Merrill Lynch Global Research said in a recent briefing in Manila.
There is also an increasing expectation in Wall Street that the US Federal Reserve will embark on a third round of quantitative easing—a strategy of buying back bonds to infuse additional liquidity into the system—by the second half of this year. “Under that scenario, Southeast Asian assets will appreciate, especially commodities,” Boey said. “Asean (Association of Southeast Asian Nations) is a beneficiary, especially those who are commodity exporters, a bit less so in Philippines but more for the likes of Thailand and Malaysia that are more reliant on commodities.”
Given the strong balance sheet of Asean governments, Boey said they have more scope to use monetary and fiscal stimulus to counter a global slowdown. In particular, he said the Philippines was a play on the “structural growth story.”
“It is one of the markets that we like for Southeast Asia and as a result of that, we think that in terms the sectors that we like to play would be some of the domestic sector, infrastructure, property as well as indirectly the banks,” Boey said.
In the first six months, cyclical stocks banking and property led the PSEi’s rise even as all indices were on the green.
The financials index emerged as the best performer in the first half after surging 34.6 percent to 1,304.42. The financial index was likewise the best performer in terms of bottomline based on first quarter earnings resulted culled by the PSE.
The next best performer was the property index, which jumped 30.1 percent to finish at 1,927.48. The holding firms index also rose 28.1 percent to 4,488.80. The industrial index rallied 10.8 percent to finish at 7,839.57; The services index also climbed 8.8 percent to 1,759.02, and the mining and oil index crept higher by 4.8 percent to 24,629.48.
“Just like our main index, investor confidence in Philippines Inc. is at an all-time high. What’s remarkable is that we have been able to achieve unprecedented growth even in the midst of ongoing uncertainties in the Western hemisphere and a cooling Chinese economy. This is a testament to the effectiveness of the reforms that the country has undertaken, which further contributed to the stable macroeconomic environment,” PSE president Hans Sicat said.
The combined market capital- ization of listed issues in the PSE during the January-to-June period stood at P10.05 trillion, up 12.8 percent from the level in the same period last year. Total value turnover for the first half reached P947.73 billion, or 43.2 percent higher than the P661.81 billion in the previous year. Average daily value turnover stood at P7.64 billion, an increase of 45.5 percent year on year.
“The market’s run in the first half has been nothing short of historic, and there’s a good chance that we will be able to extend this forward momentum as we anticipate better first-half earnings from our listed firms. The latest sovereign credit-rating upgrade also provides additional support for future growth so overall, I think we are in a terrific position to keep on improving,” Sicat said.