INVESTORS will continue to be attracted to the Philippines because of its strong fundamentals, which should push up the peso and the main stock index, the asset management arm of the Bank of the Philippine Islands (BPI) said yesterday.
Theresa Marcial-Javier, senior vice-president and group head of BPI Asset Management, told a briefing yesterday that given the low interest rate environment in Europe and the United States, many institutions are moving funds to Asia.
“Prospects in US and Europe are not very encouraging so many are moving funds to Asia,” she said.
Ms. Javier pointed out that local firms are expected to post strong earnings due to the good macroeconomic environment.
She said BPI expects the eco-nomy to grow by 6.5% to 7.5% this year on the back of resilient remittances, manageable inflation, a strong peso and lower political risk with the new government enjoying unprecedented high trust rating, which is positive for investments.
Cecilia P. Tanchoco, head of BPI Credit and Investment Research, told the same briefing the bank had initially forecast growth of 4% to 4.5%.
The new forecast is higher than the government’s target of 5% to 6% this year. As of the first half, the economy grew by 7.9%.
“For next year, we expect growth of 6% to 6.5%,” Ms. Tanchoco said.
This forecast is lower than the government’s 7% to 8% growth target for 2011.
Ms. Tanchoco said the bank is looking at a P42.95-P43.45 per dollar range for the peso by yearend, which will be sustained by remittances, the growing business process outsourcing sector and the foreign participation in local markets.
Ms. Javier said inflation is expected to continue to be benign.
The National Statistics Office reported yesterday that inflation in September slowed to 3.5% from 4% in August.
Ms. Javier said the bank expects the Philippine Stock Exchange index to reach 4,200 for this year and 4,800 next year.
“Strong macroeconomic environment and corporate earnings outlook support our view of a sustained rise in the PSEi,” she said.
“International flows also show evidence of increasing investor interest in Philippine equities,” she said.
Ms. Javier also said the property sector would perform strongly this year with overseas Filipino workers (OFWs) buying real properties.
“We are seeing the rise of the middle class due to the OFW remittances,” she said.
She said that as of end-August the BPI’s assets under management amounted to P496 billion. Comparative figures for the same period were not available.
Ms. Javier said that a 12% to 15% growth in assets under management is expected this year.
“With the rise of the middle income class, many are looking for other places to invest apart from deposits,” she said.
She said that as investors look for yields, the more-than P900 billion parked in the central bank’s special deposit account would eventually move to riskier but higher-yielding investments.
She said the bank is looking at launching an education trust product for overseas Filipinos next year.
“We are structuring it in a way that it will be invested in stocks and bonds and we’ll see if we can wrap in some insurance. This is still in the product development stage,” she said.
She also said the bank is looking at launching the use of the Internet for transactions for its products next year.
BPI Asset Management has mutual funds and unit investment trust funds invested in equities and fixed-income instruments. — Louella D. Desiderio, Businessworld
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