Few investment stories in Asia were quite as exciting as the Philippines last year. The headline growth rate increased dramatically, to 6.6% in 2012 from 3.9% the year before. And the government of President Benigno S. Aquino III, elected in 2010, launched several encouraging measures to tackle endemic corruption and jumpstart long-overdue public-works projects. Foreign capital has flooded into the Philippines. This is a boon for the Philippines, but also a significant challenge. The problem is the kind of investment the Philippines is attracting. Nearly $4 billion flowed into its asset markets last year from hedge funds, mutual funds, pension funds and the like, fueling a greater than 40% run-up in stock prices. This portfolio investment may accelerate later in the year if, as is expected, the Philippines attains an investment-grade rating on its sovereign debt, which global investors would interpret as a sign of economic strength.
Posted on: Sat, 10 Aug 2013 23:55:57 +0000
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