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MANILA, Philippines – State pension fund Government Service Insurance System (GSIS) announced Friday it was investing an initial $1 billion in overseas markets, three days after equities markets across the globe plunged due to increased fears of a US recession.

GSIS president and general manager Winston Garcia said this was the perfect timing for the pension fund to invest overseas. “Why now? The GSIS is investing abroad because, whether today or tomorrow, GSIS still has to address the serious and nagging problem of absence of diversification and dearth of investment opportunities which prevent the fund from maintaining its actuarial solvency,” he said.

Garcia also said he wanted to send a strong message that GSIS has confidence in the Philippine market, because it is investing in both local and overseas markets.

Garcia signed an agreement with ING and Credit Agricole Asset Management for them to each manage an initial $300 million and invest these in equities, fixed-income instruments and other investments outside the Philippines. The total agreement is $1 billion and could still go up.

Garcia said the recent equities market rout has given GSIS “the luxury of assessing which stocks could withhold a turmoil.” He also said diversifying globally is crucial for GSIS to meet future claims and benefits of its members. The state pension fund has 1.4 million members.

“The Philippine market is simply too small for the GSIS,” he said.

GSIS now has P400 billion in funds it can invest, a three-fold increase from P150 billion in 2000.

Market players believe GSIS’ move will embolden local investors to venture into other markets, something that investors have been waiting for. “Local investors are now getting bigger, enough for them to get into the foreign market,” said Marvin Fausto, chief investment officer of BDO Unibank.

Fausto said he believed that while there may continue to be a long-drawn out consolidation in the market, the Philippines has most likely seen the worst of the market volatility.

“When do you buy? When there’s uncertainty in the market,” Fausto said.

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• Heavy Davos traffic spoils Arroyo’s meeting with chief execs
• Asian markets rebound on Wall St advance
• Arroyo sees GDP growth continuing at around 7%

• Ex-negotiator now a busy entrepreneur