The Philippine stock market continued to attract foreign investors throughout 2013 despite fears over the tapering of US monetary stimuli, and the decline in net portfolio inflows by 85.83 percent from that of a year ago.
Based on Philippine Stock Exchange data, there was still net foreign buying of local equities in 2013 worth P15.59 billion—lower than the P109.98 billion in net inflows posted the previous year.
PSE president Hans Sicat is hopeful that investors will recognize the Philippines’ strong macroeconomic fundamentals and support the local market’s upswing.
The local market has already absorbed the US Federal Reserve’s decision to scale back its monthly bond buying operations to $75 billion, from $85 billion.
The good news about the announcement of tapering is that markets have factored it in very well, Sicat said.
Foreign investors accounted for 51.09 percent of transactions at the PSE in 2013, larger than the 44.88-percent share of the previous year.
This in turn supported a modest 1.33-percent rise in the PSE index for the year. The bourse also marked the fifth straight year it closed up.
Daily average value turnover for the whole year rose by 44.9 percent to P10.52 billion, from P7.26 billion, while total market capitalization expanded by 9.2 percent to P11.93 trillion.
The PSEi posted a record high of 7,403.65 in 2013, and hit its lowest point at 5,562.13 in August.
In 2013, the counters of holding firms (+5.41 percent) and services (+8.2 percent) gained the most. All other counters ended in negative territory: financials (-6.42 percent), industrial (-2.11 percent), property (-4.3 percent) and the worst performer was the mining/oil counter (-38.59 percent).
The sharp slump in the mining/oil counter reflected the uncertainties in the regulatory environment.
According to Japanese financial giant Nomura, the Philippines’ status as Asia’s “star performer” was not affected by Supertyphoon “Yolanda.”
The calamity could even serve as a catalyst for more infrastructure spending that will, in turn, fuel the country’s increasingly investment-led growth, it added.
In its yearend paper, Nomura said investors would become increasingly discerning over the quality of Asian growth. The Philippines, along with Korea and Malaysia, was identified by Nomura as emerging Asia’s “leader,” while China, India, Indonesia and Thailand were tagged the “laggards.”
For the Philippines, Nomura said it was seeing “virtuous spirals” from strong gross domestic product (GDP) growth as well as sound economic fundamentals and stable politics, setting off an investment boom both domestically and in foreign direct investments (FDIs).
Nomura lowered its 2013 GDP growth forecast for the Philippines to 7.1 percent, from 7.3 percent, taking into account the impact of the typhoons in the fourth quarter. But it has upgraded its 2014 growth forecast to 6.7 percent, from 6.2 percent, as reconstruction gets to spur economic activity in the months ahead.
Across Southeast Asia, Nomura said there would be three differentiating factors for 2014: quality of growth, scope for timely policy tightening and prospects of structural reforms.
“The Philippines stands out on all counts, and we maintain our bullish view,” it said, adding that the factors would provide the main buffers against significant external risks next year, particularly the removal of loose monetary policy by global central banks.