Nomura says Phl is most resilient market in SEA

MANILA, Philippines - Foreign investors should go back to Philippine financial markets as Southeast Asia’s fastest growing economy in the first quarter boasts of resiliency against potential threats to growth versus its neighbors, an investment bank said in a report.

“We find ourselves more comfortable with the macro-momentum in the Philippines compared with Thailand or Indonesia. This serves as a usual backdrop to our allocation,” Nomura said in its report titled Asean Navigator released yesterday.

“We are now overweight (for) Singapore and Philippines. We are neutral (in) Thailand and Indonesia. And we are underweight (in) Malaysia,” it added.

The countries mentioned in the report comprised five of the 10 nations of the Association of Southeast Asian Nations (Asean).

According to Nomura, investors should place 10.2 percent of their Asean assets in Philippine financial markets, including bonds and equities. The bank’s recommendation is higher than the benchmark of 6.3 percent.

Across the region, the bulk of the placements is still recommended to be invested in Singapore at 43.9 percent, higher than benchmark’s 33.7 percent. Nomura, meanwhile, was “neutral” for Indonesia and Thailand at 17.3 percent and 15 percent, respectively.

The lone “underweight” was Malaysia, where the Japanese bank told investors to just set aside 13.5 percent of their total Asean portfolios, much lower than the benchmark of 25 percent.

On the stock market, Nomura said investors should infuse more money in local holding companies and other services, wind down on banks, property and mining, and stay neutral on utilities, consumer firms and telecommunications. 

In defending its advice, Nomura noted that the Philippines has the “most resilient” economy in the region now, characterized by a 7.8-percent growth in the first three months of the year, beating market expectations.

The country’s bright prospects, it said, easily showed during the financial market volatility from May to June when signs of recovery in the US prompted policymakers there to signal a tapering of stimulus measures.

Signals of scaling down of the $85-billion bond buying program provoked investors to reposition their holdings back to the US, hurting Asean markets where outflows persisted for months.

The Philippines, Nomura said, was “hurt the most” with a 25-percent drop in the local equity markets just from May to June. This however was survived by the country’s “solid fundamentals.”