RP among Asian nations with good potential for stock market investment -Credit Suisse
Manila (20 November) -- The Philippines is among the four countries in Asia with good potential for stock market investment.
Switzerland-based Credit Suisse, in its global market equity report, cited the Philippines as one of its recommended markets in emerging Asia, alongside China and Thailand. The report excludes Japan as an emerging market in Asia.
Likewise, Credit Suisse said share prices in emerging markets in Asia have cheaper valuations and offer stronger returns on equity investments.
The financial company recommended 30 stocks wherein eight are PSE-listed firms, namely, Philippine Bank of Communications (PBC), Union Bank of the Philippines (UBP), Energy Development Corp. (EDC), Metropolitan Bank & Trust Company (MBT), Globe Telecoms, Inc. (GLO), Manila Electric Company (MER) and Megaworld Corporation (MEG).
The same report pointed that markets in Asia are attractive investment destinations than the markets in Europe because of low macroeconomic risk, high exports, high domestic sales and current account surplus.
In measuring macroeconomic risk, Credit Suisse considered the following factors: current account balance, loan-to-deposit ratio, level of external debt, level of leverage and net commodity exports.
The Philippines ranked 2nd with a reading of 46, following Singapore's score of 39. Low scores indicate less risk.
The country posted a surplus in its current account balance with a ratio of 3.0 percent to GDP.
This means that when a country's current account balance is positive (also known as running a surplus), the country is a net lender to the rest of the world.
However, when a country's current account balance is negative (also known as running a deficit), the country is a net borrower from the rest of the world.
The country's loan-to-deposit ratio is one of the lowest at 61 percent, next only to China's 60 percent, making the Philippines well-leveraged among its peers in Asia.
This ratio measures the amount of a bank's loans divided by the amount of its deposits at any given time. A higher ratio means more costs for banks as it generally needs to rely more on borrowed funds.
Philippine Stock Exchange (PSE) president and chief executive officer Francis Lim said the Credit Suisse report is a further testament that the local stock market and Philippine economy have the necessary elements to be resilient amidst the global financial crisis.
"We at the PSE are delighted that a reputable financial company such as Credit Suisse has taken notice of the many opportunities in our stock market. This is a recognition of our market's potential and encourages us to intensify our efforts in promoting stock market awareness among the public," he said. (PNA) [top]