Tuesday, 31 January 2012

JP Morgan sees foreign funds flocking to PH

Roderick T. dela Cruz
Manila Standard

Global funds will continue to flow into the Philippines this year, given the manageable inflation environment and low interest rate, according to a US bank.

“The Philippines would be doing well this year. I expect international investors to put more money in this market,” said Arian Mowat, the chief emerging market and Asian equity strategist of JP Morgan Chase & Co.

The Philippines is one of the few countries where JP Morgan is bullish in terms of growth prospects and the performance of its financial markets.

Mowat said the bank had an overweight position in the Philippines, which it shares with Indonesia, Thailand, Chile and Russia.

He said the record low interest rate, stable political environment and inflation rate and sustainable foreign exchange inflows from remittances and business process outsourcing were positive factors for the Philippines.

JP Morgan expects the gross domestic product of the Philippines to grow 4 percent this year and inflation to end the year at 4 percent.

Gilbert Lopez, the Philippines equity strategist of JP Morgan, predicted the Philippine Stock Exchange index would breach the 5,000-point mark and close the year at 5,100 to 5,150.

“We are looking at 10 to 12 percent earnings growth this year,” he said, while recommending banks and conglomerates as the stock picks this year.

He said the stocks of Bank of the Philippine Islands, Metrobank, Security Bank, Ayala Corp. and Metro Pacific would be among the largest gainers this year.

First Metro Investments Corp. president Roberto Juanchito Dispo shared the optimism about the performance of the local stocks this year, adding the index was poised to breach the 5,000 mark.

Bangko Sentral Governor Amando Tetangco Jr., however, noted that most of the foreign capital funds went to government securities and local stocks last year.

He said these funds contributed to the liquidity in the market and made funding available in the market.

Tetangco, however, said there is a need to be prepared for reversal of capital flows, if the global headwinds deteriorate.

“Capital inflows are good but at the same time they present some kind of challenge,” he said.

The Philippines, he said, had enough foreign exchange to handle any risk, given its gross international reserves of about $75 billion and foreign currency deposits amounting to $25 billion.

Tetangco, meanwhile, said remittances from Filipinos overseas would reach about $21 billion this year, despite the impact of the European debt problems.

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