The Philippines is poised to become the first Asian equity market to crawl back from a bear market this year, rising 20 percent from its closing low reached on Jan. 21.
The Philippine Stock Exchange index climbed 1.3 percent Friday to close at 7,306.74, the highest since Oct. 27.
“This rally looks sustainable,” said Soo Hai Lim, a Hong Kong-based money manager at Baring Asset Management, which oversees about $41 billion.
“In the run up to the elections, Philippine consumer stocks will benefit from increased spending. We remain positive on the Philippines. We’re not really too concerned about the outcome of the elections as long as the new government pushes through with infrastructure projects,” Lim said.
“We like Philippine consumer stocks,” Raymond Kong, Singapore-based fund manager at One Asia Investment Partners, which oversees $2.5 billion of assets, said. “They’re not cheap because investors are paying a premium for growth. The elections will be beneficial for the consumer stocks.”
Filipinos will go to the polls on May 9 to elect the replacement of President Benigno Aquino, who is limited to a single six-year term that ends June 30. Aquino boosted growth in Southeast Asia’s fifth-largest economy as he raised taxes and increased infrastructure spending to a record.
Other Southeast Asian stocks are also bouncing back from a bear market, outpacing global indexes as foreign investors pour in amid recovering economies.
Benchmark indexes in Asia are close behind Manila, as emerging markets recover from a 22-percent drop from a November peak. Taiwan and Indonesia benchmark indexes are up 19 percent from last year’s lows, while Thailand equities have jumped 13 percent from a January low. The MSCI Emerging Markets Index is up 19.5 percent after reaching a nearly seven-year low in January.
Southeast Asian markets are rebounding as accelerating economic growth and calmer currencies attract investors seeking refuge from the volatility rocking markets in China and Japan this year. That’s a reversal of fortunes from 2015 when the region’s equity gauge plunged 21 percent as prospects for higher US rates spurred capital outflows.
“The risk-on trade is back on. This is a short term rebound after a tumultuous fourth quarter,” Geoffrey Ng, director at Fortress Capital Asset Management Sdn. in Kuala Lumpur, which oversees about $238 million, said by phone.
“This is fueled partly by greater certainties of the path of U.S. interest rates,” Ng said.
Southeast Asian assets have stabilized after Federal Reserve Chair Janet Yellen signaled in early February policy makers won’t rush to raise rates amid turbulence in global markets. The Fed earlier this week scaled back expectations for interest-rate increases this year.
