Bloomberg Anywhere Remote Login Bloomberg Terminal Demo Request


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Philippine Stocks May Have Peaked This Year, Union Bank Says

Philippine stocks may have passed this year’s peak as concerns about Europe’s debt crisis and U.S. economic growth outweigh slowing domestic inflation, according to Union Bank of the Philippines.

“It would be foolish to expect the market to rally from now until the end of the year and exceed the peak it reached in August,” Michael Garcia, who runs the nation’s best-performing stock fund in the past three years at the bank, said in a phone interview. “It’s not the time to place aggressive bets.”

The Philippine Stock Exchange Index has fallen 14 percent from a peak on Aug. 2 amid a rout in global equities. The MSCI Emerging Markets Index slumped 23 percent in the same period. The nation’s stock gauge may trade between 3,700 and 4,500 for the rest of the year, Garcia said.

“We won’t see a strong trend in the short term because sentiments will be damped by developments in the U.S. and Europe,” he said. Touching this year’s low “wouldn’t be out of the question, especially if markets panic on the back of the European contagion.” The index dropped to this year’s lowest closing level of 3,730.84 on Feb. 24.

The MSCI Emerging Markets Index sank 6.3 percent to 880.64 yesterday, the sharpest loss since November 2008 and the lowest close since May 2010, after the Federal Reserve said on Sept. 21 it will purchase $400 billion of long-term debt amid “significant downside risks” to U.S. economy. The gauge dropped 1.7 percent at 3:01 p.m. Singapore time, bound for an 11 percent loss this week.

Valuation Premium

The Philippine stock index slumped 5.1 percent to 3,885.96 at the noon close today in Manila, the sharpest loss since October 2008 and a 9.4 percent decline this week.

Inflation eased to a four-month low of 4.7 percent in August. Philippine economic growth slowed for a fourth straight quarter in the three months through June, expanding 3.4 percent from a year earlier as faltering global demand curbed exports and investment eased.

The Philippine central bank will “remain mindful of ensuring policy settings that could help sustain the growth we are now enjoying, given the lower risk of inflation that is looming,” bank Governor Amando Tetangco said yesterday.

Companies on the Philippine index traded at 15.2 times reported earnings on Aug. 19, compared with 13 times on the MSCI Asia Pacific Index, the widest premium since December 2002, data compiled by Bloomberg show. Philippine shares traded at 13.3 times today, compared with 12.3 times on the Asian gauge.

‘Next Investment Wave’

“Those valuations are not going to get any higher without earnings doing their part,” said Garcia, who helps manage $1 billion. “First-half earnings were generally disappointing, not what most people expected.”

Still, Philippine government infrastructure projects will help stoke profits and economic growth, he said.

“Infrastructure will be a very dominant sector moving forward and will lead the next investment wave,” Garcia said, recommending investors buy into industries that gain from these investments, such as banks, cement and property.

The UBP Large Capitalization Philippine Equity Portfolio fund run by Garcia has returned 167 percent in the past three years, the most among Philippine equity funds tracked by Bloomberg and more than twice the benchmark index’s 66 percent advance. The fund has declined 4.4 percent from end-2010 through yesterday, compared with a 2.5 percent loss in the index, data show.

Overseas funds were net buyers of $475 million of Philippine shares, and a net $1.27 billion of Indonesian stocks, making the two nations this year’s most “crowded” equity trades, Credit Suisse Group AG said in a Sept. 20 report.

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.