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Philippines ETF Breaks Out of Slump on Robust GDP


The Philippines ETF does not have the same problems that other emerging countries are grappling with. On Thursday, the country-specific exchange traded fund roared back after reports of robust economic data for the second quarter.

The iShares MSCI Philippines ETF (EPHE) rose 4.6% Thursday. EPHE is still down 14.2% year-to-date.

Unlike its neighboring countries, the Philippines does not have a current-account deficit, writes Victor Reklaitis for MarketWatch. Developing markets took the brunt of the damage after investors dumped emerging markets with quickly depreciating currencies.

“A current account surplus, a high level of foreign exchange reserves and low foreign currency debt means the Philippines is in a good position to cope with the turnaround in investor sentiment,” according to a Capital Economics research note.

Moreover, the Philippines is less exposed to China’s economic slowdown.

The Philippine government announced that the economy expanded a higher-than-expected 7.5% in the second quarter of 2013, the fourth consecutive quarter of growth higher than 7%, reports Amrutha Gayathri for International Business Times.

“We remain the fastest growing economy among emerging economies in the ASEAN region,” Arsenio Balisacan, the Philippine Socioeconomic Planning Secretary, said , according to Philippines’ Business World website. “The 7.5% growth, which is the same as China’s, surpassed Indonesia’s 5.8%, Vietnam’s 5%, Malaysia’s 4.3%, Singapore’s 3.8%, and Thailand’s 2.8%.”

Bolstering the economy, domestic demand and government spending was still high, and the Philippine market saw increased investments in fixed assets.

“The growth came mainly from consumer and public spending, buttressed by increased investments in fixed capital,” Jose Ramon Albert, secretary general of the National Statistical Coordination Board, said in a Reuters article.

Looking ahead, the economy may face some growth risks in the second half of the year.

“Government spending may slow post-election, with some concerns that the ongoing case on the abuse of a discretionary fund may curb state expenditure,” Bernard Aw, analyst at Forecast PTE Ltd, said in the Reuters article.

iShares MSCI Philippines ETF

For more information on the Philippines, visit our Philippines category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.