Some U.S. investors have already become acquainted with the Philippine investment thesis thanks to the previously high-flying iShares MSCI Philippines ETF (EPHE) . EPHE, the lone ETF to focus solely on the rapidly growing Southeast Asian economy, enjoyed an impressive start to 2013 before tumbling due to a falling peso and fears about the end of U.S. quantitative easing.
Despite EPHE’s recent woes, interest in Philippine stocks remains high due to upward revisions for GDP growth and multiple sovereign debt ratings upgrades that helped the Philippines land investment-grade credit ratings. Now, it looks like Philippine investors will get to try their hands at ETF investing. [Philippines ETF no Longer Benefiting From Good News]
Citigroup says the timing is right to introduce ETFs to investors in the Philippines. Prasanna Jha, director and regional head of fund administration and ETF product for Citi’s Asia Pacific Transaction Services, told the Philippine Daily Inquirer that ETFs are “growing elsewhere. I don’t see why it shouldn’t grow here. As investors become more sophisticated, they will look for such kind of product. The right time is now.”
Asia does represent a legitimate of new growth for the ETF industry. In May, Guotai Asset Management, a Chinese money manager, launched China’s first cross-border ETF, the Guotai NASDAQ-100 Exchange Traded Fund , on the Shanghai Stock Exchange. That fund gives Chinese investors an ETF avenue for accessing the NASDAQ 100 as the PowerShares QQQ (QQQ) for U.S. investors.[Chinese ETF Investors Can Now Access Nasdaq 100]
ETFs could take off in the Philippines because, as the Inquirer reports, special deposit accounts are about to be unwound there, creating the need for new investment products. Those accounts currently hold 1.8 trillion pesos, according to the paper. Jha noted the cost efficiency of ETFs compared to mutual funds and unit trusts could be appealing to Filipinos.
The concept ETFs coming to the Philippines is not far flung at all. Last week, it was confirmed that the frontier market of Kenya will become the latest developing market to introduce its first ETFs. Last Monday, Kenya’s Capital Markets Authority unveiled plans to bring ETFs to Kenyan investors. [Kenya to Launch ETFs]
iShares MSCI Philippines ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of QQQ.
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