Sun Life sees PH growing at 6.4%-7%

The Philippines can grow at a faster pace of between 6.4 percent and 7 percent in the next five years, sustaining the strong momentum this year, said global insurance giant Sun Life of Canada.

For 2017, Sun Life is “cautiously optimistic” on business in the Philippines in 2017 but despite some external headwinds, it expects the local main-share stock index to rise to at least 7,400.

“Long term, we’re very bullish on the Philippines because [macroeconomic] fundamentals are good. But short term, it’s usually driven by sentiment,” Sun Life Financial Philippines president Riza Mantaring said in a recent interview.

She said the market was waiting for clearer direction on newly-elected US President Donald Trump’s policy while assessing the direction of US interest rate policy.

After hiking interest rates last week, the US Federal Open Market Committee dots now point to three rather than two rate hikes in 2017, and three hikes each in 2018 and 2019.

During the campaign, Trump’s rhetoric about “America first” policy raised concerns on business process outsourcing (BPO).  The thrust to bring back jobs lost to offshore operations is also seen to affect the electronics industry, which also benefits from the outsourcing of electronic components.

For the local market, Mantaring said the stock market would still have room to rise next year, targeting 7,400 on the back of a sustained growth in average corporate earnings at around 10-15 percent.

At the end of the day, she said it would also greatly depend on the movement of foreign funds.  To date, while local investors are keeping the market afloat, total value turnover was noted to remain very low.

Sun Life, for its part, will continue to invest to boost its operations in the Philippines.

“We’ve been here through ups and downs. Our outlook is always long-term and over the long-term, the outlook is good,” she said.

On Sun Life’s insurance business, Mantaring said the group would still likely end this year with growth over last year. “But it’s not like the previous years when growth averaged 25-30 percent a year,” she said.

Most likely, she said Sun Life would likely post a single-digit growth in business due to the industry-wide slump in sales of single-premium protection products.