Philippines, one of Asia’s top 3 
sitesDUTCH financial giant ING has chosen the Philippines as one of the top three investment sites in the Asia-Pacific region this year.
Hong Kong-based ING Investment Management regional head of equity Nicholas Toovey on Friday endorsed the Philippines to investors for the second straight year, saying equities would likely outperform bonds in the world’s fastest growing region this year.
Toovey’s top three market picks are the Philippines, Hong Kong and Taiwan.
Last year, his choices were Hong Kong and Malaysia.
ING Investment’s chief investment officer in the Philippines, Paul Joseph Garcia, said ING’s 12-month view showed corporate profits would surge by about 20 percent this year and lift the main-share Philippine Stock Exchange index (Phisix).
He said the Phisix -- now trading at its best level in 10 years -- could reach even 3,500-3,700 points by the fourth quarter of the year.
The Phisix peaked near 3,400 points just before the Asian crisis 10 years ago.
“Macroeconomic fundamentals are supportive of higher corporate earnings this year, based on expansion of net margins, especially with interest rates at historical low,” Garcia said.
He said he expected inflation to ease further and the gross domestic product to grow by over 5.5 percent this year. He added that the favorable interest rate regime -- thanks to the government’s success in applying financial reform measures -- would benefit debt-ridden corporations.
The elections oral in May are also expected to boost incomes, with about 5,000 candidates spending for their respective campaigns and with the government doing some economic pump-priming.
Garcia estimated election spending at P5-P10 billion that would be infused into the economy and the government’s infrastructure spending at over 3.0-4.0 percent of GDP.
“There will be some catching up that’s going to be very supportive of infrastructure-related stocks,” he said. “We’re also more bullish on cyclical stocks. We favor banks and property issues.”
In the years ahead, he said, the property market will likely be more buoyant and banks are expected to be more aggressive in lending to small and medium-scale enterprises and mid-sized corporations.
Garcia said Toovey’s picks for this year were a “good call.”
On his choice of Hong Kong for this year, Toovey said, “There are a lot of Chinese stocks listed in Hong Kong, and they have a lot of momentum at the moment.
Hong Kong stocks “are actually becoming quite expensive, but investors don’t seem to be worried about that,” he said.
Toovey added that there were many new corporate issues and a sharp expansion in corporate activity in Hong Kong.
Malaysia was also chosen as top investment site this year because of a huge market upside, he said.
“The cheapest market is Thailand, purely based on value ... that’s where we would usually place bets,” Toovey said. “But as you know, there are a lot of complications there right now.”
The Thai central bank recently introduced fresh capital controls to curb the Thai baht’s sharp appreciation.
Doris C. Dumlao, with INQUIRER.net
and from an ING Report:Manager’s ReportPhilippine stocks were off to a strong start. The Philippine Composite Index
(PSEi) opened 2007 on a strong note, rising 8.6% past the 3,000 level for the first
time since April 1997. As T-bill rates fell to unprecedented lows, investors
continued to pour money into the Philippine equities market – with average daily
turnover soaring 22% in the month of January to US$80mn.
Inspired by favorable macro news flow. The budget deficit came in at P62bn
for 2006, vs the programmed deficit of P125bn. Full-year GDP growth was at
5.4%. Meanwhile the Monetary Board kept the tiering system in place, hinting that
it would keep policy rates steady until after the May elections. December inflation
was announced on the lower end of expectations at 4.3%, on easing oil prices
and a strengthening PHP (at P48.88/USD month-end). OFW remittances grew
27.8% YoY and hit above the US$1bn mark for the seventh straight month in
November. Driven by a benign inflation outlook, the 91-day T-bill rate fell 167bps
to a record 3.17%.
Banks, construction and power companies again led gains. With record-low
interest rates seen increasing loan demand, the banking sector drew interest.
RCBC outperformed, soaring 64.6% after announcing new management and a
follow-on share offer. Benpres (+43.5%), together with subsidiaries First Phil
Holdings (+19.8%) and Meralco (+29.1%), surged for a second month following
the recent Supreme Court decision upholding its distribution rate hike.
Construction firm EEI also rose 41.3% after announcing a stock-rights offer, with
the approval of the 2007 budget calling to double infrastructure spending through
2010.
Rosy full-year targets remain intact, amidst potential volatility. We maintain
our year-end PSEi target of 3,570 points, as stronger economic growth and lower
inflation/refinancing rates support an environment conducive to corporate revenue
growth, lower costs and, ultimately, stronger corporate earnings. Following the
market’s strong rally month-to-date, however, we can expect some volatility –
especially approaching the May elections. Meantime, focus could shift to second
& third-liners. Our favored sectors are banks, property, infrastructure, power and
consumer.
Also:Philippines' production of Copper and Gold has also significantly risen with reports of having 2006 production of Gold at the Canatuan Mine in Zamboanga Peninsula hitting 112% compared to its previous year. 
