BDO exec sees economy on solid growth path

MANILA, Philippines - No fundamental economic reason presently exists that will derail the country’s strong growth trajectory, according to BDO Unibank Inc.

BDO senior vice president and chief investment officer Marvin V. Fausto said the only possible impediment would be external in nature.

“Economically, there is no reason for the strong momentum to be derailed,” Fausto said in an interview on the sideline of the 2013 PIRA Stakeholders Convention.

The peso has remained strong, and it is forecast to remain at 43-43.50 to the dollar by the end of the year.

“It will be steady this year, stable next year to 41,” the BDO senior vice president added.

Even more bullish is the continued dominance of the country’s bourse in the region.

The Philippine Stock Exchange index (PSEi) will likely hover at the 6,800-level this year, and march forward to the 7,200-level. 

Fausto said that government’s infrastructure spending as a share of the gross domestic product (GDP) is programmed to increase substantially.

From roughly P300 billion or 2.5-percent of GDP this year, it will increase to P418 billion (three percent of GDP) next year. By 2016, it will account for five percent of GDP to P834 billion.

In the latest Nielsen Consumer Confidence and Spending Intentions Study of 58 countries, the Philippine ranked second best. It outperformed Brazil, Russia, India, China, Hong Kong and Saudi Arabia.

Meanwhile, Fausto expects the migration of special deposit accounts (SDAs) to find its way mainly in bank savings and time deposits as well as the money market.

The P1.5-trillion worth of SDAs are looking for an alternative as interest rates fell to just two percent.

Fund managers expect that aside from deposit and money market, migrating SDAs may tap unit investment trust funds (UITF), mutual funds, variable unit linked (VUL) life insurance products, property, jewelry, and even art pieces.

The returns for example of BDO’s UITFs have remained competitive.

Its money market funds reported a 4.52-percent return while its bond fund reflected returns of 7.24 percent.

Top performer equity funds had returns as high as 20.75-percent while its balanced funds at 13.91 percent.

Fausto advised participants of the forum to invest in direct bonds if they had a medium term outlook and acquire stocks or equity funds if they had a longterm perspective.

Among the universal banks, BDO is the leader in the UITF market accounting for 27-percent of the total. It also has a bancassurance joint venture between Generali of Italy, which markets VULs.