Top Philippine managers keep faith as once hot stock market gets cold

JUST a month ago, Philippine shares were flirting with a bull market. Then came the brutal breakup and since then, they’re back to being some of the world’s worst performers.
But the nation’s biggest fund managers are closing an eye on the reasons for the sell-off — a re-balancing of indexes and last year’s corporate earnings that weren’t good enough. Instead, they’re doubling down on Philippine equities on bets that slowing inflation and a growing economy will help the market.
BDO Unibank, Inc., the country’s largest money manager with $20 billion, is scooping up laggards with cash from some of its gainers. ATR Asset Management, Inc., which runs the nation’s best-performing fund this year, is adding to its winners while cutting back on picks that haven’t paid back as much.
“This is a good time to rotate the money from those that ran up sharply and plow it into laggards that promise growth this year,” said Fritz Ocampo, BDO Unibank’s chief investment officer. “Inflation is falling, while the outlook for accelerating economic growth is getting better. This isn’t time to get out.”
The Philippine Stock Exchange index lost as much as 6.2% from a 10-month high on Feb. 1 as investors had to modify their holdings to reflect changes in equity benchmarks. Those for the PSEi and MSCI Philippines Index already happened, while tweaks in FTSE gauges will take effect in mid-March.
But this week things are looking better. First, data showed that inflation slowed for a fourth month in February. And then, the president named a new central bank governor, Benjamin Diokno, who is seen as favoring lower interest rates and a weaker peso. When he was budget chief, he advocated for robust state spending to spur growth.
“Diokno’s appointment bodes well for the Philippine economic growth story and equities,” said Julian Tarrobago, head of equities at ATR. “What would be very interesting under his watch is how the government will monitor, address and manage the fiscal imbalances that will come about from a strong pro-growth strategy.” — Bloomberg