Posted at Manila Bulletin on February 20, 2012, 1:42am
MANILA, Philippines — While Filipinos generally cluck their tongues and shake their heads about the economy, employment, and growth prospects in general, foreign investors continue to set their sights on our country.
“We see an expanding interest in the ASEAN region, and mostly in the Philippines and Indonesia,” reports Adrian Mowat, leading global financial services firm J.P. Morgan’s Chief Emerging Market and Asian Equity Strategist. Here in the country recently to speak to the finance institution’s clients and investors, he revealed the company’s outlook on investing in the Philippines. “I have been bullish about the Philippines last year,” he says, “and I remain bullish about the country this 2012.”
For The Country
Mowat sites how foreign interest in China is beginning to diminish after 30 years of steady growth. “Investors were driven to focus on China because of their cheap labor,” he says. “They Liewere the manufacturing center and the center of demand. These (factors) attracted foreign investment meant for the ASEAN region,” Mowat adds.
Today, we see that China’s image is changing because of a relatively new phenomena. In 1979, they instituted their one-child policy. Today, they have a relatively small generation of young workers (19-year-olds). And as a result, Mowat says, “their manufacturing and construction rates are going down. Investors, while continuing to look at the ASEAN region, are now expanding to other countries.”
The Philippines and Indonesia are the top of such countries; some opine our country has a better standing chance with our strong demographic of very young, educated workforce. “The Philippines has an expanding young pool of labor, a commitment to education, and English as the prime business language. The country is already benefitting from this. The BPO industry is much more attractive for a country than building a factory. We have tested the stability of these offshore global services,” Mowat states.
J.P. Morgan Chase operates in more than 60 countries. Today, its Philippine offices, first set up in 1961, employs a total of 12,000, with a sizeable number of this figure belonging to the Corporate Global Services Center that was launched in 2005.
While inflation was a problem for countries in emerging markets in 2011, Mowat says this is no longer the case, from the investors’ eyes. “We are beginning to see quite a number of emerging-market central banks reducing interest rates.
This is the time you should buy emerging markets,” he shares, adding that “the Philippines’ inflation is relatively stable. I think the country is doing well. I’d expect foreign investors to put in their money in this country.”
Gilbert Lopez, J.P. Morgan’s Philippine equity strategist, supports this, adding, “In 2012, our main theme is increased infrastructure spending. We think government spending will be decent, from the investment standpoint.”
Lopez also shared that the banking and conglomerates sectors stand to benefit most. “2011 was the banner year of the banking sector in terms of asset expansion and loans growth,” he says, “and this year, this will even be stronger, even for ‘less exciting’ sectors like utilities and telcos.”
In the banking industry, he names BPI, Metrobank, and Security Bank among the top, while Ayala Corporation and Metro Pacific are the top choices for conglomerates (those at the forefront of budding projects). Adding another dash of hope for groups going public, Lopez concludes: “Investors are hungry for new names in the IPO.”