Philippines Immigration Focus on Philippine Economy: As the Philippines faces its largest historical capital outflow, the Philippine national pension fund, which previously successfully exited at the market peak, has begun re-entering the market to purchase domestic stocks. 4In April, the fund chose to sell as the Philippine stock index hit a historical high; subsequently, the index fell for 6 consecutive months, marking its longest losing streak in 13 years.
Robert Vergara, President of the Philippines' largest pension fund—the Social Security System (SSS)—stated on Monday that the fund entered the market aggressively in 8th month, spending 5 billion pesos to buy stocks, an amount equivalent to 1/3 of the fund's annual stock budget.
Vergara believes that while the pension fund chose to take profits when the market was previously overheated, the market is now very close to the bottom, so the fund's current strategy will be to buy aggressively.
Vergara stated that although Asian economic growth is slowing, the Philippines is less susceptible to external factors compared to other emerging markets, so the overall outlook remains positive. The Asian Development Bank predicted in 9th month that the Philippines' 2016 GDP growth rate could reach 6.3%, higher than the 6% in 2015.
However, Dennis Lim, Co-CEO of Templeton Asset Management Ltd. in Singapore, believes that although the outlook for the Philippines is relatively favorable compared to its neighbors, this benefit has already been priced into the stocks, and valuations already reflect all positive factors.
Under the dual pressures of the Federal Reserve's interest rate hike expectations and China's economic slowdown, investors are accelerating their withdrawal from the Philippines. From 7-9th month, foreign investors sold a record 1.28 billion USD in Philippine stocks, causing the stock index to record its largest quarterly decline in seven years.
Vergara also admitted that stock prices may go lower, causing the price-to-earnings ratio to fall back to around 14 times, but as long as the economic outlook and corporate earnings remain positive, it is still a reasonable buying zone.