GSIS boosting stock investments by P2 B

MANILA, Philippines - State pension fund Government Service Insurance System (GSIS) said it is increasing its exposure in the local stock market, lured by the potential of higher yields in the long run.

The agency is boosting its investments in the local bourse by at least P2 billion as it continues to prefer banks, telecommunications and consumer-related stocks, its top official said yesterday.

“GSIS is still in a situation where we do have excess funds that we have to deploy in the market,” GSIS president and general manager Roberto Vergara told reporters on the sidelines of FINEX-ING CFO of the Year Awards in Makati.

“Our expectation is that equities present a better return profile over the next three to five years against investing in bonds,” he added.

Since the start of the year, the pension fund has been increasing its stock market exposure from 15 percent of its total investable funds.

So far, 16.5 percent to 17 percent of its P725-billion total investable funds is in the stock market, way above the three percent in 2010.

Despite the drop in the benchmark Philippine Stock Exchange index (PSEi), the GSIS official said they are still optimistic with regards to dividend yields and capital appreciation.

“We view the equity market valuations’ fall into lower levels as an opportunity to selectively add to some of the holdings that we have,” Vergara said.

“I think the ingredients are there for the markets to go higher,” Vergara said, adding that continuous economic growth will give more room for companies to post higher earnings.

GSIS expects the PSEi to end the year at 6,000-6,500 before climbing to 7,300-7,400 next year, Vergara said.

The pension fund is looking for new fund managers to facilitate its investments in the local bourse.