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BUSINESS HEADLINES THIS PAST WEEK...
(Mini Reads followed by Full Reports below)

PESO AT 7-YEAR LOW (48.25): NEGATIVE SENTIMENTS FUEL WEAKNESS
[RELATED: SEPTEMBER 28 - Peso recovers, remains above 48 to $1 (48.35)]

[RELATED(2) OCTOBER 2: Government debt dips to P5.9 T  (48.33 on Thursday)]


SEPTEMBER 27 -
A ranking central bank executive said the country's strong macroeconomic fundamentals have never changed. The STAR/File
A ranking executive of the Bangko Sentral ng Pilipinas (BSP) said the negative perception of the market is driving the weakness of the Philippine peso. BSP Deputy Governor Diwa Guinigundo on Monday said the country’s strong macroeconomic fundamentals have never changed. ”They have remained stable and robust. But because of perceived risks which may not really be justified and continuing uncertainty about the unknown in the calculus of foreign exchange traders, they have embraced negative sentiment rather than focus on fundamentals,” he said. ”No even the real interest rate differentials which are rather manageable could justify the sharp fall of the peso except the negative perception of the market,” he added. The local unit finished Monday at 48.25, the weakest after the 48.33 last September 15, 2009. READ MORE...RELATED,
Peso recovers, remains above 48 to $1...RELATED2),Government debt dips to P5.9 T  (48.33 on Thursday)...  

ALSO: From Bloomberg - Philippine Officials Seek to Soothe Investors Spooked by Duterte unpredictability
[RELATED: Government mulls launch of major tax amnesty next year]

[RELATED(2): OCTOBER 2 -Uncertainty over Duterte alarms investors]


SEPTEMBER 23 - GETTING OUT: Foreign funds pulled money out of the philippines everyday this month -
Philippine central bank Governor Amando Tetangco sought to soothe investors spooked by President Rodrigo Duterte’s rhetoric around his anti-drug war, with stocks poised for the longest outflow since 2007. “If you take out the noise and look at the fundamentals, look at the economic program, look at the quality of the members appointed to the economic team, then these are all solid,” Tetangco told bankers, traders and fund managers late Thursday in Manila. Tetangco joins a host of economic officials including Finance Secretary Carlos Dominguez, who on Wednesday said economic policies have been clear and consistent since Duterte took office in June. S&P Global Ratings this week warned of “rising uncertainties surrounding the stability, predictability, and accountability” under the new government. "All this negative news about the president is going to affect investor sentiment, but as long as the economic team can push through with their plans, the economy will remain strong," said Gundy Cahyadi, an economist with DBS Group Holdings Ltd. in Singapore. "For the time being, we still think there is plenty of positives to look at." READ MORE...RELATED,
Government mulls launch of major tax amnesty next year... RELATED(2) Uncertainty over Duterte alarms investors...

ALSO
From 6% to 6.4% this year: IMF, ADB hike Philippine growth forecasts [RELATED: Philippines, Vietnam agree to level up trade]


SEPTEMBER 28 -In a report, the IMF raised the gross domestic product (GDP) outlook for the Philippines to 6.4 percent instead of six percent this year and to 6.7 percent instead of 6.2 percent next year. Crissa Tenorio/CC BY-NC-ND
Multilateral lenders International Monetary Fund (IMF) and Asian Development Bank (ADB) both raised their economic growth forecasts for the Philippines this year and next, citing the country’s improved fundamentals and resiliency to external headwinds. In a report, the IMF raised the gross domestic product (GDP) outlook for the Philippines to 6.4 percent instead of six percent this year and to 6.7 percent instead of 6.2 percent next year. Meanwhile, in an update to its Asian Development Outlook 2016, Manila-based ADB similarly raised its GDP forecast for the Philippines to 6.4 percent this year from an earlier six percent. It also raised the 2017 growth projection to 6.1 percent from 6.2 percent. The country’s economic managers expect GDP to expand between six to seven percent this year and 6.5 to 7.5 percent in 2017. “The outlook for the Philippine economy remains favorable despite external headwinds,” IMF said. IMF said the Philippine economy continued to perform strongly as GDP growth accelerated to seven percent in the second quarter from 6.8 percent in the first quarter, boosted mainly by election-related spending. READ MORE...RELATED,
Philippines, Vietnam agree to level up trade...

ALSO: Phl competitiveness drops in Workd Economic Forum (WEF) survey (Among East and Asia Pacific economies, Singapore posted the highest standing followed by Japan, Hong Kong, New Zealand and Chinese Taipei. “The competitiveness gap in East Asia and Pacific is widening. Although 13 of the 15 economies covered consecutively since 2007 have been able to improve their GCI score over the past decade, this year sees reversals for some of the larger emerging markets in the region,” the WEF said.)
[RELATED: DTI clarifies decline in competitiveness ranking; done before May polls]
(“The new ranking brings us further away from our intermediate goal of being in the top-third of global rankings. We will need to focus even more on our challenges – bureaucracy, infrastructure, technology, and innovation – to make the country more competitive,” according to Luz, private sector co-chairman for the NCC)
[RELATED(2): Noy ends term with huge 10-point WEF ratings fall]


SEPTEMBER 28 -The country ranked 57th among 138 economies this year, a drop from its 47th position among 140 economies last year, the WEF Global Competitiveness Index 2016-2017 report showed. Michal Jarmoluk/Stock
The Philippines ended nearly a decade of gains in the World Economic Forum (WEF) Global Competitiveness Index, slipping 10 notches in this year’s report that ranks the most competitive economies. The country ranked 57th among 138 economies this year, a drop from its 47th position among 140 economies last year, the WEF Global Competitiveness Index 2016-2017 report showed. WEF said the Philippines’ 10-point decline in this year’s rankings marks the first time in the 10 years under its current methodology the country has gone down in the standings. “The country appears to be going backwards vis-a-vis its peers in some of the more complex areas of competitiveness,” the WEF said. The Philippines’ technological readiness ranking fell 15 places to 83rd, while business sophistication dropped 10 spots to 52nd. Its innovation standing also slipped 14 notches to 62nd and goods market efficiency ranking went down 19 places to 99th. READ MORE...RELATED,
DTI clarifies decline in competitiveness ranking; done before May polls... RELATED(2), Noy ends term with huge 10-point WEF ratings fall...

ALSO: Coco sugar, tilapia ice cream ready for global market
[RELATED FROM THE WSJ: PH markets, long popular with foreigners, turn rocky under Duterte]
(Other investors who have sat on the sidelines as valuations grew increasingly stretched in the Philippines say they are now watching the selling with interest. “We haven’t held anything in the Philippines for a while. We like to, if we can, buy markets that are out of favor,” said Gary Greenberg, head of global emerging markets at Hermes Investment Management in London. “Looks like the Philippines is coming our way.”)


SEPTEMBER 28 -Coconut sugar
LOS BAÑOS, Laguna, Philippines — Two award-winning products created by Filipino researchers are ready to conquer the global food market. Take coco sugar. The sugar product produced from the sap of cut flower buds of the coconut palm is now distributed in Australia, the US and as far as Germany and the United Kingdom. The product has also been exhibited in 19 trade fairs and promoted through television and radio programs. The other “rising star” is the Daerrys Tilapia Ice Cream, which won the Innovator Gold award of the Salon International de L’Agroalimentaire (SIAL) held in Manila last May. Selected from among 350 exhibitors from 25 countries, it will soon be showcased in the SIAL network in France, Canada, China, Indonesia and the Middle East. Half a decade ago, at the First National Coconut Sap Sugar Congress held in Davao City, the coconut sugar venture had been considered as a “sunrise industry” and was expected to be the “new superstar product” in the food export world. READ MORE...RELATED, FROM THE WALL STREET JOURNAL: PH markets, long popular with foreigners, turn rocky under Duterte...


READ FULL MEDIA REPORTS HERE:

Negative sentiments fuel peso weakness – BSP exec


A ranking central bank executive said the country's strong macroeconomic fundamentals have never changed. The STAR/File

MANILA, 0CT0BER 3, 2016 (PHILSTAR) By Joann Santiago September 27, 2016 - (Philippines News Agency) — A ranking executive of the Bangko Sentral ng Pilipinas (BSP) said the negative perception of the market is driving the weakness of the Philippine peso.

BSP Deputy Governor Diwa Guinigundo on Monday said the country’s strong macroeconomic fundamentals have never changed.

”They have remained stable and robust. But because of perceived risks which may not really be justified and continuing uncertainty about the unknown in the calculus of foreign exchange traders, they have embraced negative sentiment rather than focus on fundamentals,” he said.

”No even the real interest rate differentials which are rather manageable could justify the sharp fall of the peso except the negative perception of the market,” he added.

The local unit finished Monday at 48.25, the weakest after the 48.33 last September 15, 2009.

READ MORE...

Monetary officials and economists alike are one in saying that anticipations for the eventual increase in the Federal Reserve key rates are the primary reason for the volatilities in Asian financial markets to date.

But other factors such as this week’s meeting of the Organization of Petroleum Exporting Countries in Algeria and the first official presidential debate in the US are contributing to the volatilities.

Some analysts said results of the November 2016 national polls in the US is a cause of concern for businessmen since both candidates back policies that would give more opportunities to US residents.

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RELATED FROM PHILSTAR

Peso recovers, remains above 48 to $1 By Lawrence Agcaoili (The Philippine Star) | Updated September 28, 2016 - 12:00am 0 0 googleplus0 0

MANILA, Philippines – The peso managed to gain eight centavos yesterday but remained above the 48 to $1 level after plummeting to its weakest level in seven years last Monday due to uncertainties over the impending interest rate hike in the US as well as negative investors’ sentiments.

The local currency closed at 48.17 from Monday’s 48.25 to $1. It opened weaker at 48.35 and hit an intra-day low of 48.405 before recovering to an intra-day high of 48.17 to $1.

Volume amounted to $666.1 million, lower than Monday’s trading volume of $758.5 million.

The Bank of the Philippine Islands (BPI) said the peso would potentially continue to be confronted with downside risk should foreign outflow in the local equities market continue.

Foreign funds have been pulled out of the Philippine Stock Exchange (PSE) for 24 straight days.

The peso weakened against the dollar as foreign selling continued in the local equities market over the past few weeks.

“Among select Asian currencies, the peso was one of the few that were sold down during the week as inflows in other markets turned positive following accommodative central bank actions,” BPI said.

The Bangko Sentral ng Pilipinas (BSP) last week kept interest rates steady amid robust domestic demand, as well as the benign inflation environment.

The US Federal Reserve also decided to keep interest rates unchanged but signaled it would hike key rates before the end of the year.

Valentin Araneta, a member of the seven-man Monetary Board of the BSP, said in his speech during the Public Investment Conference organized by CFA Society believes the Philippines would benefit from another rate hike in the US.

“At the outset let me say that my personal view is that rising interest rates in the US would be a good sign at this stage because it confirms the world’s biggest economy and a major trading partner of the Philippines is robust and that by raising the interest rates it means the monetary authorities are confident of achieving their inflation targets,” Araneta said.

However, he pointed out adjustment shocks would have to be absorbed because of the huge amount of fickle portfolio capital sloshing around the global financial markets searching for yield that would go back to the US markets due to higher rates.

Araneta said the strong macroeconomic fundamentals of the Philippines would allow it to weather stresses emanating from policy adjustments among its trading partners.

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RELATED(2) FROM PHILSTAR

Government debt dips to P5.9 T By Prinz Magtulis (The Philippine Star) | Updated October 2, 2016 - 12:00am 0 0 googleplus0 0

MANILA, Philippines - A stronger peso in August tempered the National Government’s (NG) debt burden in the first eight months, but this could prove to be just a blip and may have hit a record-high last month as the local currency slumped.

The debt pile amounted to P5.98 trillion as of August, down 0.04 percent from P5.982 trillion in the first seven months, data from the Bureau of the Treasury showed.

Since the beginning of the year, however, liabilities already climbed 0.4 percent. Obligations are compared every month than year-on-year since they add or subtract to an existing pile.

“For the month, NG debt slightly declined...from its end-July level due to currency revaluation,” Treasury said in a statement on its website.

In particular, the government computed its debts using an average peso-dollar exchange rate of 46.552, much stronger than July’s 47.09.

This, in turn, lowered the value of external liabilities, more than 60 percent of which were denominated in US dollars. They went down 1.4 percent to P2.1 trillion, data showed.

“For August, forex (foreign exchange) adjustments on US dollar- and third-currency-denominated debt reduced the peso value by P2.19 billion...,” Treasury said.

In addition, the government settled than secured more external debts during the month for a net repayment worth P3.13 billion.


OCTOBER 1 -The currency closed at 48.50 to $1, down 17 centavos from Thursday’s 48.33 to $1. This is the lowest since the local currency closed at 48.62 last Sept. 4, 2009. STAR/File photo MANILA, Philippines - The Philippine peso further weakened yesterday, closing at 48.50 to $1 amid market volatility caused by uncertainties in the global financial market. The currency closed at 48.50 to $1, down 17 centavos from Thursday’s 48.33 to $1. This is the lowest since the local currency closed at 48.62 last Sept. 4, 2009. It opened slightly lower at 48.40 to $1 as compared to 48.19 the previous day. Total volume reached $871.8 million, higher than Thursday’s $583.5 million. Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr. told reporters the weakening peso was driven mainly by external factors, including uncertainties arising from the possible interest hike to be implemented by the US Federal Reserve.

Lower foreign obligations more than offset the 0.7-percent increase in their domestic counterparts to P3.88 trillion, data showed.

This is “in line with the net issuance of government securities,” which means more Treasury bonds and bills were issued to finance the budget deficit or pay existing debts.

Sought for comment, Emilio Neri Jr., lead economist at Bank of the Philippine Islands, said the peso’s plunge to the 48-to-a-dollar level this month could increase debts for September.

The local unit stayed at a seven-year-low against the greenback for much of last week, closing 48.33 on Thursday. It traded at a weaker average of 48.47 at noon yesterday.

“That decline will reverse because the peso fell more in September than it gained in August. (This) means peso value (of debt) will increase by a bigger amount,” Neri said in an e-mail yesterday.

“It may cross the P6-trillion mark,” he said.

“The good thing (though) is this administration wants to do a 80/20 (borrowing) mix ,” he said, pertaining to 80 percent domestic borrowings and 20 percent external.


BLOOMBERG

Philippine Officials Seek to Soothe Investors Spooked by Duterte Siegfrid Alegado Ditas B Lopez  September 23, 2016 — 12:16 AM EDT

QuickTake: Philippines' Splintered Democracy (video)

•Take out the noise, look at fundamentals, Tetangco says
•Foreigners sold local stocks for 21 days, longest since 2007


http://bloom.bg/2ciRPdd

Philippine central bank Governor Amando Tetangco sought to soothe investors spooked by President Rodrigo Duterte’s rhetoric around his anti-drug war, with stocks poised for the longest outflow since 2007.

“If you take out the noise and look at the fundamentals, look at the economic program, look at the quality of the members appointed to the economic team, then these are all solid,” Tetangco told bankers, traders and fund managers late Thursday in Manila.



Tetangco joins a host of economic officials including Finance Secretary Carlos Dominguez, who on Wednesday said economic policies have been clear and consistent since Duterte took office in June. S&P Global Ratings this week warned of “rising uncertainties surrounding the stability, predictability, and accountability” under the new government.

"All this negative news about the president is going to affect investor sentiment, but as long as the economic team can push through with their plans, the economy will remain strong," said Gundy Cahyadi, an economist with DBS Group Holdings Ltd. in Singapore. "For the time being, we still think there is plenty of positives to look at."

READ MORE...

Drying Up
Money that flowed into the Philippines after the May elections is drying up. Philippine stocks slid 0.7 percent on Friday, and foreign funds have been selling for 21 straight days as of Thursday, the longest outflow since 2007.

The peso slumped to an eight-month low against the U.S. dollar and is the worst-performing Asian currency after the yuan this year. Foreign direct investment shrank 41 percent in June from a year earlier.

Duterte has defied international criticism of his anti-drug war that has killed more than 3,000 people, lashing out at the United Nations and European Union and unleashing an obscenity-laden tirade where he warned U.S. President Barack Obama against interfering in his campaign.

The current account and balance-of-payments will remain in surplus, economic growth will continue to be strong, and stability in monetary and financial conditions will be preserved, Tetangco said. The Philippine economy expanded 7 percent last quarter from a year earlier, the fastest in Asia after India.

"Political noise is part of transition," central bank Deputy Governor Diwa Guinigundo said on Thursday. The “President is getting used to the position and the responsibilities that it involves. Let’s focus on the message.”

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RELATED FROM PHILSTAR

Government mulls launch of major tax amnesty next year By Prinz Magtulis and Jess Diaz (The Philippine Star) | Updated September 30, 2016 - 12:00am 0 1 googleplus0 0


The Duterte administration is planning to launch next year what could be the biggest tax amnesty program in 16 years. STAR/File photo

MANILA, Philippines - The Duterte administration is planning to launch next year what could be the biggest tax amnesty program in 16 years.

“We are thinking of four tax amnesty (programs),” Finance Secretary Carlos Dominguez III told a tax consultation forum Wednesday night.

He said the program will cover arrears on property tax, estate tax, income tax and those with pending tax cases, and will be included under one of the five tax reform packages.

Finance Undersecretary Karl Kendrick Chua said the measures would be “complementary” to the first package the government submitted to Congress last Monday.

“These are tax administration and not policy measures. They are being designed as we speak and the details we will let you know once it is clear,” Chua told reporters after the forum.

Once passed, the amnesty program will have the widest coverage since the second voluntary assessment program (VAP II) undertaken in 2001 under the Arroyo administration.

READ MORE...

VAP II covered all internal revenue taxes and ran for four months. It gave delinquent taxpayers the chance to settle their arrears without penalties.

Congress records showed the program raised P3.45 billion, accounting for 0.88 percent of Bureau of Internal Revenue collections.

Chua declined to provide estimate of revenues to be raised from the planned amnesty program.

Dominguez said the tax amnesty should help in clearing tax delinquencies, especially in estate taxes.

“Sometimes, the only problem is that they were not able to change the name on the title for years,” he told reporters earlier at the House of Representatives, explaining shortfall in estate tax collection.

For pending cases, the finance chief said the goal is to “clear up” court dockets by allowing taxpayers to settle “at least 40 percent or whatever percent they (legislators) desire.”

The Department of Finance (DOF) is preparing to submit to Congress tax reform packages that it hopes would be implemented separately until 2019.

The package includes lowering of personal income tax rates and removing value-added tax exemptions.

“Package 1-B” seeks to raise excise levies on tobacco and alcohol as well as impose new tax on sweetened drinks.

“It is going to be a healthy tax. It is a tax reform for a healthy Philippines,” Chua said.

Package 2 will include lowering of corporate taxes to 25 from 30 percent, while rationalizing fiscal incentives for investors.

Package 3 will contain lower estate tax to six from 20 percent as well as donor’s taxes, while package 4 seeks an adjustment in the capital levy on bank deposits and investments to a uniform 10 percent.

Anti-poor

For Rep. Carlos Zarate of Makabayan, the Duterte administration’s tax proposals are “anti-poor,” as they would burden low- and middle-income workers more than high-income earners and the rich.

He said the suggestion to exempt from income tax annual earnings of up to P250,000 only, or P20,833 a month, would hurt many employees of both the private and government sectors.

“Where did this figure come from? What is the basis for this? The amount of P250,000 is way below the annual family living wage of a Filipino family that is now pegged at P396,390 or P1,086 a day based on a study,” he said.

He added that this was the basis of his proposal to set the amount of annual tax-free income at P396,390.

Zarate pointed out that aside from giving workers insufficient tax exemption, the administration would burden them and the rest of the public with higher fuel and consumer prices with its proposal to increase the tax on oil products.

“They will impose a P6-per-liter tax on diesel, kerosene and cooking gas, which will directly hit poor households. Since diesel is widely used for transportation, the imposition of a P6 tax will result in higher fares and cost of transporting goods, which will translate into increased consumer prices,” he stressed.

Aside from the P6 tax on diesel, kerosene and cooking gas, the proposed tax reform package the DOF has submitted to the House calls for increasing the levy on gasoline from P4.35 per liter to P10.

Zarate urged DOF’s Dominguez to come up with a genuinely progressive tax system that would tax the rich more than the poor.

“The country’s tax system should be designed according to the country’s concrete condition of severe inequality and widespread poverty – not from what is seen as ‘doable’ for being unopposed and supported by the rich and by big corporations,” he said.

He said at least 17 million Filipino families who earn P20,000 a month or less “should not be taxed at all.”

He said Dominguez should instead impose higher taxes on the “50 richest oligarchs, who have a combined net worth of $79.5 billion or P3.8 trillion, bigger than next year’s proposed national budget of P3.35 trillion and the 690 ultra high net worth Filipinos who have at least P1.4 billion each.”

He added that the finance secretary should also collect more from other rich Filipinos, including corporate executives, and the top 1,000 corporations.

“These rich families and large corporations benefit the most in the exploitation of our economy, natural resources and our cheap labor. It is only just and equitable that they shoulder a large part in funding the social and other amelioration program of the government,” he stressed.

Speaker Pantaleon Alvarez said the House of Representatives would study the DOF-proposed tax reform package to determine if it is doable.

He has frowned upon the proposal to remove the value added tax exemptions of millions of senior citizens and persons with disability.

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RELATED(2) FROM PHILSTAR

Uncertainty over Duterte alarms investors By Teresa Cerojano (Associated Press) | Updated October 2, 2016 - 12:43pm 16 299 googleplus0 0


In this Friday, Sept. 30, 2016 photo, a Filipino trader stands in front of an electronic board showing the exchange rates during afternoon trading at the Philippine Stock Exchange in the financial district of Makati, south of Manila, Philippines. Analysts and businessmen point to uncertainties about Philippine President Rodrigo Duterte's policies and flip-flopping pronouncements as largely to blame for foreign selling in the stock market and the peso's plunge to a seven-year low, reversing initial optimism after his June 30 inauguration. AP/Aaron Favila

MANILA, Philippines — President Rodrigo Duterte's bloody anti-drug war and his foul-mouthed outbursts in defense of the campaign have unnerved foreign investors in one of Asia's fastest-growing economies.

Analysts and businessmen point to uncertainties about Duterte's policies and flip-flopping pronouncements as largely to blame for foreign selling in the stock market and the peso's plunge to a seven-year low, reversing the initial optimism after his June 30 inauguration.

Some experts say unpredictability is slowing longer-term foreign investment in the Philippines. Photos and reports in the media of killings of suspected drug dealers and users — more than 3,000 since July 1 — have contributed to sagging confidence.

"We can all deal with risks. We can put measures in place to provide for risks," said Guenter Taus, the head of the European Chamber of Commerce in the Philippines. "But uncertainty is a factor that we do not like in business, and that is exactly what we're experiencing right now because we don't know where we are heading."

Taus said several companies that had intended to establish operations to the Philippines now prefer to wait and see what happens under Duterte. He declined to say which companies had changed their plans.

He said investors unsure about the Philippines may choose to look at other Southeast Asian countries to gain access to the region's common market of more than 600 million people.

The American Chamber of Commerce of the Philippines said this month that while the country's economic fundamentals are strong and its potential high, there is growing concern that Duterte's policies and behavior could affect long-standing optimism by American businesses in the Philippines.

The chamber said that the large number of deaths in the anti-drug campaign is harming the Philippines' image, and that some investors are asking if the drug war "reduces the rule of law."

"In addition, traditionally excellent bilateral relations between the U.S. and the Philippines have recently been strained by language from Philippine leaders," the chamber said.

Earlier this month, before heading to a regional summit in Laos where he had been scheduled to meet with President Barack Obama, Duterte used the Tagalog phrase for "son of a bitch" as he told Philippine reporters he wouldn't accept questions from Obama about extrajudicial killings that have occurred during the drug crackdown. Obama cancelled the meeting.

After the European Parliament recently called for an end to the drug killings and expressed concern over the scale of deaths, Duterte hit back with a profane insult and raised a fist with his middle finger thrust out. And this week Duterte said U.S.-Philippine joint military exercises end this year, though his foreign minister said later that they will continue until 2017 as previously agreed.

On several fronts, Duterte has had an uneasy relationship with Western countries, including the United States, an important treaty ally. He has said he's charting a foreign policy that is not dependent on the U.S., and has taken steps to bolster relations with Russia and revive ties with China that had been strained under his predecessor, Benigno Aquino III, over territorial conflicts.

He said he won't allow government forces to conduct joint patrols of disputed waters near the South China Sea with foreign powers, apparently scrapping a deal Aquino reached with the U.S. military earlier this year. Duterte has also said he wants U.S. forces out of the southern Philippines, saying minority Muslims there resent the presence of American troops.

All of this has raised concerns about a Philippine economy that grew 7 percent in the second quarter and 6.9 percent over the first half of the year compared to the same periods last year — among the fastest rates in the region.

The credit-rating agency S&P Global warned last week that the stability and predictability of policymaking in the Philippines "has diminished somewhat under the new presidency." It kept the country's credit rating at investment grade, with a stable outlook, but said that rating was unlikely to rise over the next two years.

Last Monday, the peso hit its lowest level against the dollar since September 2009. It fell further Friday, closing at 48.50 pesos per U.S. dollar.

Central bank Deputy Gov. Diwa Guinigundo said foreign direct investment continues to grow. It stood at $4 billion for January to June this year compared to $2.2 billion for the same period a year ago. He noted that while Duterte became president June 30, his election victory came nearly two months earlier.

"As far as fundamentals are concerned I think they are outstanding fundamentals, but then the sentiment is something else," he told reporters late Wednesday on the sidelines of an economic forum. Sentiment is driven by both external and domestic factors and it's difficult to attribute negative sentiment to a specific factor like Duterte's statements, he added.

Guinigundo said the government's economic program follows the broad strokes that have produced 70 quarters of economic growth, low and stable inflation and a healthy banking system. "And yet the stock market is dropping and the exchange rate is moving consecutively down such as we are now the worst-performing currency in the region," he said.

Budget Secretary Benjamin Diokno said Wednesday that the depreciation of the peso is a result of the strengthening of the dollar more than the weakening of the local currency, and should not be a cause for concern.

But Joey Cuyegkeng, ING Bank's senior economist in Manila, said the peso was the only Asian currency that slid last week from a week earlier, despite favorable economic reports, including an increased balance of payment surplus in August.

Presidential spokesman Martin Andanar said that the fundamentals of the economy are solid and strong, and that the anti-drug campaign will enhance the Philippines' image to attract more foreign investment.

In a speech to troops the day after the S&P Global warning was released, Duterte shrugged off the agency's remarks. He said if business and the economy are affected, "so be it."

"Get out, then we start on our own," he said, apparently referring to Western investors. "I can go to China. I can go to Russia. I had a talk with them. They are waiting for me. So what the hell."


PHILSTAR

From 6% to 6.4% this year: IMF, ADB hike Philippine growth forecasts By Lawrence Agcaoili and Czeriza Valencia (The Philippine Star) | Updated September 28, 2016 - 12:00am 2 5 googleplus2 0


In a report, the IMF raised the gross domestic product (GDP) outlook for the Philippines to 6.4 percent instead of six percent this year and to 6.7 percent instead of 6.2 percent next year. Crissa Tenorio/CC BY-NC-ND

MANILA, Philippines – Multilateral lenders International Monetary Fund (IMF) and Asian Development Bank (ADB) both raised their economic growth forecasts for the Philippines this year and next, citing the country’s improved fundamentals and resiliency to external headwinds.

In a report, the IMF raised the gross domestic product (GDP) outlook for the Philippines to 6.4 percent instead of six percent this year and to 6.7 percent instead of 6.2 percent next year.

Meanwhile, in an update to its Asian Development Outlook 2016, Manila-based ADB similarly raised its GDP forecast for the Philippines to 6.4 percent this year from an earlier six percent. It also raised the 2017 growth projection to 6.1 percent from 6.2 percent.

The country’s economic managers expect GDP to expand between six to seven percent this year and 6.5 to 7.5 percent in 2017.

“The outlook for the Philippine economy remains favorable despite external headwinds,” IMF said.

IMF said the Philippine economy continued to perform strongly as GDP growth accelerated to seven percent in the second quarter from 6.8 percent in the first quarter, boosted mainly by election-related spending.

READ MORE...

This brought the GDP expansion to a three-year high 6.9 percent in the first half of the year from 5.5 percent in the same period last year and closer to the higher end of the six to seven percent target set by economic managers.

“The Philippine economy has performed well in recent years with rising potential growth and strong macro fundamentals. Economic growth is supported by robust domestic demand and is broadly in line with potential while the outlook for inflation is well within the target band,” IMF said.

However, the Washington-based multilateral lender noted underemployment and poverty rates have remained stubbornly high despite the sustained economic expansion.

“The strong economic performance, however, has not yet fully benefited a wide range of the population. Poverty and inequality remain high. Poor infrastructure has constrained private investment and job creation. Public investment has risen but continues to be low due to weak implementation capacity, while progress has been made on fiscal transparency,” it said.

Upside risks to growth include stronger domestic demand spurred by low commodity prices and further improvements in budget execution, IMF said.

On the other hand, it pointed out downside risks include the lower growth in China, tighter global financial conditions, and a surge in global financial volatility that could lead to capital outflows.

IMF said President Duterte has an opportunity to put the economy on a higher and more equitable growth path under its 10-point socioeconomic agenda.

The Duterte administration raised the budget deficit ceiling to three percent of GDP instead of two percent of GDP as it intends to ramp up infrastructure spending to as much as five percent of GDP.

IMF added the country’s monetary policy setting are currently appropriate but the central bank should stand ready to tighten if there are signs of overheating or credit growth accelerating with inflationary pressures.

ADB said the Philippines is performing better than expected on a surge of investment and strong expansion in consumption, prompting an increase in its growth forecast to 6.4 percent.

“Vigorous economic growth is expected to continue through 2016, though at a more moderate pace in the second half as the impact of election spending fades,” said ADB.

The bank said sustaining the Duterte administration’s economic reform agenda would be “vital to sustaining solid economic growth performance” specially when the country is in a position wherein risks form volatility on global financial markets are “cushioned by the improved macroeconomic fundamentals and a robust banking sector.”

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RELATED FROM THE INQUIRER

Philippines, Vietnam agree to level up trade SHARES: 300 VIEW COMMENTS By: Julie M. Aurelio @inquirerdotnet Philippine Daily Inquirer 06:07 PM September 29th, 2016


President Rodrigo Duterte shakes hands with Vietnamese President Tran Dai Quang at the State Palace in Hanoi on September 29. KING RODRIGUEZ/ Presidential Photo

HANOI, Vietnam – President Duterte is encouraging more Vietnamese businessmen to invest as well as to consider importing more products from the Philippines.

The President made the appeal in his bilateral talks with Vietnam state president Tran Dai Quang on Thursday at the state palace of Vietnam.

Trade Secretary Ramon Lopez said both countries “agreed to really level up the trade that we have by increasing trade numbers.”

“The President invited Vietnamese corporations to invest in the Philippines. We’ll protect your investors and your investments, contracts will be honored,” Lopez told reporters.

He said that Duterte gave the assurance that Vietnamese investments will be protected, aside from providing a more conducive investment climate in the country.

There are more Philippine investors in Vietnam, citing the Universal Robina Corporation, San Miguel Corporation, Ayala Group, Jollibee, Splash, among others.

Duterte also urged the Vietnamese government to consider importing Philippine products to improve the trade balance between the two nations.

The Philippines imports around 48 percent of its rice requirements from Vietnam. For this, Duterte extended his gratitude to Vietnam for being a very reliable source of rice.

Lopez said the Philippines “has a lot of products that have great potential in the Vietnamese market,” such as food and food preparations, high value processed agriculture products, furniture, metal fabrication, etc.


PHILSTAR

Philippine competitiveness drops in WEF survey By Richmond Mercurio (The Philippine Star) | Updated September 28, 2016 - 9:17am 6 172 googleplus0 3


The country ranked 57th among 138 economies this year, a drop from its 47th position among 140 economies last year, the WEF Global Competitiveness Index 2016-2017 report showed. Michal Jarmoluk/Stock

MANILA, Philippines — The Philippines ended nearly a decade of gains in the World Economic Forum (WEF) Global Competitiveness Index, slipping 10 notches in this year’s report that ranks the most competitive economies.

The country ranked 57th among 138 economies this year, a drop from its 47th position among 140 economies last year, the WEF Global Competitiveness Index 2016-2017 report showed.

WEF said the Philippines’ 10-point decline in this year’s rankings marks the first time in the 10 years under its current methodology the country has gone down in the standings.

“The country appears to be going backwards vis-a-vis its peers in some of the more complex areas of competitiveness,” the WEF said.

The Philippines’ technological readiness ranking fell 15 places to 83rd, while business sophistication dropped 10 spots to 52nd.

Its innovation standing also slipped 14 notches to 62nd and goods market efficiency ranking went down 19 places to 99th.

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“Entrepreneurs will note that Philippines is the second lowest ranking country in the world when it comes to number of procedures to start a business,” the WEF added.

Meanwhile, minor improvements have been made in the country’s basic requirements sub-index, where it moved up one spot to 65th.

The basic requirements sub-index includes institutions, infrastructure, macroeconomic environment, and health and primary education.

The country’s macroeconomic environment improved four places to the 20th spot worldwide, while health and primary education inched up five spots to 81st.

In the Executive Opinion Survey which was part of the report, business leaders cited inefficient government bureaucracy, inadequate supply of infrastructure, corruption, tax rates, and tax regulations as the top five most problematic factors for doing business in the Philippines.

Overall, Switzerland ranked as the most competitive economy in the world for the eighth consecutive year.

Singapore came at second, followed by the US, Netherlands and Germany.

Among East and Asia Pacific economies, Singapore posted the highest standing followed by Japan, Hong Kong, New Zealand and Chinese Taipei.

“The competitiveness gap in East Asia and Pacific is widening. Although 13 of the 15 economies covered consecutively since 2007 have been able to improve their GCI score over the past decade, this year sees reversals for some of the larger emerging markets in the region,” the WEF said.

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RELATED FROM THE MANILA BULLETIN

DTI clarifies decline in competitiveness ranking; done before May polls by Bernie Magkilat September 30, 2016 Share0 Tweet0 Share0 Email0 Share0

Trade and Industry Secretary Ramon M. Lopez yesterday clarified that the survey for the latest Global Competitiveness Index was done before the national elections in May this year.

In a Viber message to reporters, Lopez seemed to convey that the results of the survey where the Philippines dropped 10 notches lower to 57 from 47 among 138 countries does not reflect the performance of the Duterte administration, which only took office on June 30 this year.

“On the Competitiveness report, kindly clarify that the survey was done before May 9 election,” said Lopez.

The Switzerland-based World Economic Forum which conducted the GCI said that the data gathering was conducted before elections, and the Executive Opinion Survey was conducted during the campaign period

Nonetheless, Lopez cited minimal drop in score from 4.39 to 4.36 translated into 10 points ranking drop.


DTI Sec. Ramon M. Lopez

He cited gains in education, health and macro environment.

He also noted of drops in global market efficiencies, technology readiness, institutions, innovation, and infrastructure factors.

The National Competitiveness Council noted of its disappointment saying Stressing this is the first time the country dropped in the rankings in the past seven years.

“It is, of course, disappointing to experience this fall in spite of all efforts to improve competitiveness. Our score dropped minimally from 4.39 to 4.36 out of 7 but it was enough to bring us down by countries. The world is so competitive that even small changes make a big difference in ranking,” stated Guillermo M. Luz, private sector co-chairman for the NCC.

In the 2016 WEF-GCR release, Philippines dropped in eight of the 12 pillars of the survey.

The largest drops were reported in Goods Market Efficiency (down 19, from 80th to 99th); Technological Readiness (down 15, from 68th to 83rd); Institutions (down 14, from 77th to 91st); Innovation (down 14, from 48th to 62nd) and Business Sophistication (down 10, from 42nd to 52nd).

The country also recorded declines in Infrastructure (down 5, from 90th to 95th); Labor Market Efficiency (down 4, from 82nd to 86th); and Market Size (one notch down from 30th to 31st).

On the positive side, the Philippines showed gains in Higher Education and Training (up 5, from 63rd to 58th); Health and Primary Education (up 5, from 86th to 81st); and Macroeconomic Environment (up 4, from 24thto 20th). Macroeconomic management remains the country’s strongest performing pillar in the overall index. The Financial Market Development indicator rank remains unchanged at 48th.

“The new ranking brings us further away from our intermediate goal of being in the top-third of global rankings. We will need to focus even more on our challenges – bureaucracy, infrastructure, technology, and innovation – to make the country more competitive,” according to Luz.

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RELATED(2) FROM THE TRIBUNE

Noy ends term with huge 10-point WEF ratings fall Written by Tribune Wires Thursday, 29 September 2016 00:00



The last review of the country’s global competitiveness under President Aquino was disappointment as the Philippines slipped 10 notches to rank 57th out of 138 countries in the World Economic Forum (WEF) index this year from 47th place last year.

Aquino has anchored his six-year rule on well-trumpeted claims of economic gains and improved business perception.

The survey period for the Global Competitive-ness Index (GCI) 2016 to 2017 was conducted prior to the May 9 national elections that President Duterte won.

The WEF annual competitiveness survey showed the most problematic factors for doing business in the Philippines were the inefficient government bureaucracy, inadequate supply of infrastructure, and corruption.

The country’s score dropped from 4.39 to 4.36 out of a perfect seven but it was enough to result in a huge fall for the country in the ranking.

“The world is so competitive that even small changes make a big difference in ranking,” NCC private sector co-chairman Guillermo Luz said in a statement.

The GCI measures a country’s competitiveness, or the set of institutions, policies, and factors that determine its level of productivity, through 12 pillars.

Among the 12 pillars, the country has low rankings in goods market efficiency at rank 99, infrastructure at rank 95, and institutions at rank 91.

The Philippines has notable rankings in macroeconomic environment at 20th place and market size at 31st place.

Luz said the latest ranking has brought the countryaway from its goal of being in the top-third of global rankings.

“We will need to focus even more on our challenges — bureaucracy, infrastructure, technology, and innovation – to make the country more competitive,” Luz said.

Aside from the Philippines, rankings of other Southeast Asian countries have also declined.

The report showed that the Philippines has the biggest slide in the region.

Malaysia dropped out of the top 20, falling seven places to 25 from last year’s 18th place while Thailand drops two notches to rank 34 and Indonesia falls four places to 37.

“A consistent theme for all the region’s developing countries is the need to make inroads into the more complex areas of competitiveness related to business sophistication and innovation if they are to break out of the middle-income trap,” the report noted.

Switzerland, Singapore most competitive

For the eighth consecutive year, Switzerland ranks as the most competitive economy in the world, narrowly ahead of Singapore and the United States. Following them is Netherlands and then Germany. The latter has climbed four places in two years.

The next two countries, Sweden (6) and the United Kingdom (7) both advance three places, with the latter’s GCI score being based on pre-Brexit data. The remaining three economies in the top ten; Japan (8), Hong Kong SAR (9) and Finland (10) all move backwards.

While European economies continue to dominate the top ten, there remains no end in sight for the region’s persisting north-south divide.

Spain improved by one point climbing to 32, however Italy dropped back one place to 44 and Greece reverses 5 places to 86. France, the Eurozone’s second largest economy, climbs one place to 21. For all economies in Europe, maintaining and improving prosperity levels will depend heavily on their ability to harness innovation and the talents of their workforces.

There is some sign of convergence in the competitiveness of the world’s largest emerging markets. China, on 28, remains top among the BRICS grouping although another surge by India – which climbs 16 places to 39 – means there is now less of a gap between it and its peers.

With both Russia and South Africa moving up two places to 43 and 47 respectively only Brazil is declining, falling six places to 81.

The competitiveness gap in East Asia and Pacific, meanwhile, has widened. Although 13 of the 15 economies covered consecutively since 2007 have been able to improve their GCI score over the past decade, this year sees reversals for some of the larger emerging markets in the region.

A consistent theme for all the region’s developing countries is the need to make inroads into the more complex areas of competitiveness related to business sophistication and innovation if they are to break out of the middle-income trap.

The drop in energy prices has heightened the urgency of advancing competitiveness agendas across the Arab world. With three economies in the top thirty; the United Arab Emirates (16); Qatar (18); and Saudi Arabia (29) there remains a clear need for all energy-exporting nations to further diversify their economies and for much greater effort to improve basic competitiveness among the region’s energy-importing nations.

Two countries in Latin America and the Caribbean make it into this year’s top 50. Chile, the outlier in the region on 33, climbs two places although the gap is closing with the second highest ranked economy, Panama (up 8 places to 42).

Next comes Mexico which performs strongly with a 6-point climb to 51. Argentina and Colombia, the third and fourth largest economies in the region, rank 104 and 61 respectively.

One of the most improved nations in sub-Saharan Africa is Rwanda, which rises 6 places to 52. It is closing in on the region’s traditionally most competitive economies, Mauritius and South Africa, although both these countries register more modest improvements, climbing to 45 and 47 respectively. Lower down the ranking, Kenya climbs to 96, Ethiopia holds steady at 109 while Nigeria slips three to 127.

“To me, the interest in economic growth comes from the fact that it is potentially so important for improving human welfare.


PHILSTAR (BUSINESS AS USUAL)

Coco sugar, tilapia ice cream ready for global market By Rudy Fernandez (The Philippine Star) | Updated September 12, 2016 - 12:00am 0 29 googleplus0 0


Coconut sugar

LOS BAÑOS, Laguna, Philippines — Two award-winning products created by Filipino researchers are ready to conquer the global food market.

Take coco sugar.

The sugar product produced from the sap of cut flower buds of the coconut palm is now distributed in Australia, the US and as far as Germany and the United Kingdom. The product has also been exhibited in 19 trade fairs and promoted through television and radio programs.

The other “rising star” is the Daerrys Tilapia Ice Cream, which won the Innovator Gold award of the Salon International de L’Agroalimentaire (SIAL) held in Manila last May. Selected from among 350 exhibitors from 25 countries, it will soon be showcased in the SIAL network in France, Canada, China, Indonesia and the Middle East.

Half a decade ago, at the First National Coconut Sap Sugar Congress held in Davao City, the coconut sugar venture had been considered as a “sunrise industry” and was expected to be the “new superstar product” in the food export world.

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Tilapia ice cream

Coco sugar has low glycemic index (GI) compared with other natural sweeteners that are sugarcane-based. Low GI products can help control diabetes mellitus, reduce bad cholesterol and maintain weight.

With these as some of the benchmarks, a project aimed to further unravel coco sugar’s potentials was conducted by the Southern Philippines Agri-business and Marine and Aquatic School of Technology in Malita, Davao del Sur.

The project won the first prize in the 2016 National Symposium on Agriculture and Aquatic Resources Research and Development, Development category, held under the aegis of DOST in observance of this year’s National Science and Technology Week. A PCAARRD initiative, NSAARRD showcases the most outstanding contributions of individuals and institutions in the improvement of the agriculture, aquatic and natural resources sectors in the country through research and development.


VIRAL: Tilapia Ice Cream won international Award -The Tilapia flavored ice cream bested 350 exhibitors from 25 countries at the event held at World Trade Center in Pasay City, Manila, August 10, 2016. WEB.PH Mcqueen

Through the project, Davao del Sur farmers have been trained on the application of science and technology to increase coconut sap production, processing and marketing coco sugar in the local and international markets, reported PCAARRD, currently headed by acting executive director Reynaldo Ebora.

The Daerrys Tilapia Ice Cream, on the other hand, was the result of a project undertaken by researchers Dana Vera Cruz and Dr. Tereso Abella of the Central Luzon State University in the Science City of Muñoz, Nueva Ecija. Its name was coined from the combination of the researchers’ nicknames, Dana and Terry. Vera Cruz conducted the study while Abella developed the recipe.

The unique ice cream won the SIAL Innovation Gold award during the SIAL-ASEAN Manila 2016 at the World Trade Center in Pasay City last May. The event was organized by Comexposion Group and Manila Foods and Beverages Expo.

Made of tilapia fillet, all-purpose cream, condensed and fresh milks, chopped walnut and diced cheese, the ice cream has no fishy smell and aftertaste.The Daerrys Tilapia Ice Cream line includes original flavored, sansrival, pops and sandwich.

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RELATED FROM THE MANILA BULLETIN

PH markets, long popular with foreigners, turn rocky under Duterte by The Wall Street Journal September 30, 2016 Share0 Tweet0 Share0 Email0 Share1 By Mia Lamar and Rachel Rosenthal

A volatile new Philippine president is testing the faith of investors.

The country’s tiny markets – its stock market is about two-thirds the size of those in Thailand and Indonesia – have long been a favorite of global fund managers thanks to low debt levels, a growing middle class and an economy that has expanded faster than even optimistic projections. A rally in emerging markets this year that sent investor cash coursing everywhere from Pakistan to Peru further fueled market gains. By late July, the main Philippine stock index had gained 33% in just six months.

But it has hit the skids in recent weeks, and 2016′s gain is down to just 11%. The Philippine peso has slid 3.6% against the US dollar this month, a large move by currency standards.


Traders work at the Philippine Stock Exchange trading floor in Makati City in this file photo.

Analysts have blamed the rockier markets on the erratic behavior of Philippine President Rodrigo Duterte, who took office on June 30, and some investors do say Mr. Duterte’s methods – including a bloody war on crime and lashing out against US President Barack Obama with profanity this month – have become too unpredictable. But others insist they remain focused on the country’s solid economic stance.

That tension is clear in the country’s bond market, where yields on 10-year government bonds denominated in dollars – preferred by foreign investors to peso-denominated debt – have edged higher this month, a sign of unease, but remain not too far above the yields on similar US debt.

The yield for such Philippine bonds traded at roughly 2.4% this week, compared with about 1.6% for 10-year US Treasuries. Jittery foreigners aren’t likely to destabilize the market, as foreign investors hold just 13% of Philippine government bonds, compared with roughly 40% in Indonesia and 51% in Malaysia.

“Should yields be higher than the US? I’m not sure they should be,” said Jason Pidcock, head of Asian income strategy for UK based Jupiter Asset Management, noting that the Philippines isn’t burdened by the large debt loads and sluggish growth plaguing many developed economies. Mr. Pidcock’s fund had a 7.5% weighting in Philippine stocks at the end of August, according to fund materials, far more than the roughly 1% prescribed by major Asian stock benchmarks.

Others are less upbeat

“Changing political dynamics have got us to flip our view completely,” said Kieran Curtis, an emerging-market portfolio manager at Standard Life Investments in London, which has $360 billion under management. Over the past two months, he said, the fund has sold its peso-denominated bonds and bought credit-default swaps on Philippine government bonds.

“If you’re having rule-of-law issues, and people with the money [to invest] are feeling threatened or antagonized, the investment is quite likely to slow down a bit,” he added, referring to Mr. Duterte’s tense relationships with a small group of powerful families that invest heavily in public-private partnerships.

Foreign investment in the Philippines’ stock and bond markets slumped 60% in August from July, to a net $427 million, according to the country’s central bank. It blamed the decline on investors’ “hesitancy to invest during ‘ghost month,’” a period in some Asian cultures where spirits and ghosts are believed to return to earth.

In an interview with The Wall Street Journal this week, the country’s finance secretary, Carlos Dominguez III, urged investors to look beyond Mr. Duterte’s bombastic remarks and focus on the government’s plans for tax cuts and infrastructure spending.

“We’re in a good moment economically,” Mr. Dominguez said. “But of course, every bit counts; we would much rather [foreign investors] stick around.”

POLITICAL RISKS

Concerns around Mr. Duterte highlight the political risks that often come with investing in emerging markets, which have surged in popularity this year with ordinary investors. The rush into emerging-market funds has cooled in recent weeks, though cash is still rolling in, according to fund tracker EPFR Global. As of last week, emerging-market stock funds had drawn a net $2.4 billion in September, down from a record $6.3 billion in July.

As of the end of the day Thursday, investors had to pay $170,000 a year to insure against the default of $10 million of Philippine government bonds for 10 years, according to Thomson Reuters. It cost $138,000 on Sept. 8, a recent low.

“It’s pretty clear investors are unnerved,” said Khoon Goh, Singapore-based head of Asia research at Australia & New Zealand Banking Group Ltd. Still, Mr. Goh and others see bright prospects for this country of 100 million people. Mr. Goh recently raised his forecast for economic growth this year to 6.4% from 6.1%, and he expects the peso to strengthen by year-end.

Other investors who have sat on the sidelines as valuations grew increasingly stretched in the Philippines say they are now watching the selling with interest.

“We haven’t held anything in the Philippines for a while. We like to, if we can, buy markets that are out of favor,” said Gary Greenberg, head of global emerging markets at Hermes Investment Management in London. “Looks like the Philippines is coming our way.”


Chief News Editor: Sol Jose Vanzi

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