Investing in the Philippines Series I: What’s in Store for Investors After the Recent Elections?
By Eliseo "Jojo" Prisno, CRPC, MS
Chartered Retirement Planning Counselor
PE CAPITAL INVESTMENTS
Last month the Filipinos elected a new president in a fairly clean and peaceful election resulting in a clear winner. The new president-elect has a populist stance and seems focused on the fundamentals for clean governance anchored on the eradication of organized criminality, graft and corruption. Though the known methods of his approach in achieving this goal is something unpalatable to the western democratic perspective (extra-judicial killings, etc.), it is quite clear that his new mandate comes from the electorate’s clamor for a new approach in governance or a “change” from the traditional oligarchy.
His first 100 days in office for sure will keep the world watching on how he will try to effect “change” in a country whose economic performance in the past 10 years ranks as one of the world’s bright spots. Bloomberg very recently ranks our island nation as one of the fastest growing economies in the world (second from China). Will this new administration continue on with the march to progress or will the planned “changes” derail its current viability? This question will certainly put investors on a “look and see” mode.
Before I come up with my “two-cent” perspective, let me share with you the most recent report (Fund Fact Sheet) of the Philippines’ number one performer and most successful actively managed mutual fund, First Metro Asset Management’s Save and Learn Equity Fund (First Metro is part of Metrobank’s Investment Banking Unit in Manila). The fund’s inception dates back to September 6, 2005; about a decade ago. A 10-year history which covers two presidencies, from an economics professor in Ateneo (Ms. Gloria M. Arroyo) to her former student (Mr. Noynoy Aquino). Two presidencies with the former marred with graft and corruption and the latter crusading to eradicate graft but unable to fully deliver because of “political” accommodations, a maddening curse in an oligarchy. Despite the contrast of the two leaderships, this span delivered the best growth in the Philippine economic history. Looking deeper into the brochure, the total yield since inception to date is a whopping 436%. Simply put, your $1000 turned into $4,360 in 10 years. This performance by the way covers the 2008 economic debacle where most markets in the world lost almost a third of its value (and the Philippines wasn’t spared). Comparing this to the S&P 500, our US index; this period only delivered a 65% return ($1000 turned to $1,650); the island’s performance is almost 7 times that of the US. Will this new administration, led by a drop out of Ateneo, continue on with this economic performance?
If this new leadership will focus on its promise of eradicating crime and corruption; and uplift the flight of the 35 million impoverished Filipinos but leave the current economic fundaments rolling on ( mainly supporting the rights of the 10 million expatriates bringing in almost $30 billion in remittances, enticing foreign investors to further engage via incentives and tax breaks creating more jobs, improving the peace and order situation bringing in more tourists, expanding infrastructure reach to underdeveloped areas bringing in economic activity and continue curving graft in governance); I believe our country will be resilient and will continue the march to achieve its place in the global economic order, to be the 16th biggest economy in the world by 2030.
The only event that can potentially derail this is a “Venezuela” like economic move, transforming a vibrant globally oriented economy to a myopic populist governance ruled by socialist dictator which drove foreign investments to exit.
I believe this newly elected leader though declaring openly his socialist agenda is pragmatic enough to continue on with what is working economically. He knows that a vibrant economy is key for him to deliver his populist promises and improve the flight of the impoverished citizenry.
Let’s all be hopeful and do our share to keep our island nation marching on as one of the best economic performer in the world. We may not agree with the moral appeal of this newly elected leader but we can surely support him through solidarity and being optimistic; yet vigilant to ensure that his promises are kept in check.
By the way I am not promoting this particular mutual fund but simply citing its performance as a bench mark of the Philippine economic performance. If you want to invest back home talk to your investment advisor but make sure they are well versed of the current investment environment in the Philippines.
ABOUT THE WRITER: Eliseo Jojo Prisno is a Chartered Retirement Planning Counselor (CRPC).He founded P/E Capital Investments in 2010, a State Registered Investment Advisory Firm (CRD# 172695) and is currently the firm’s Managing Director and Senior Investment Advisor. Mr. Prisno also manages a Fund of Funds investment program with Ameritas and runs an All-Equity Growth and Income customized portfolios in separate accounts via E*Trade Securities. If you have questions email j.prisno@PEcapitalinvestments.com or call 1-888-929-2825. Visit our website www.PEcapitalinvestments.com