If there be any other countries in the world for investing now it's the Philippines- Phillip Hagedorn

ATR-KimEng Asset Management Chairman Phillip Hagedorn: if there be any other countries in the world for investing now it’s the Philippines.

Two fund managers said Philippine stocks, which rose to an all time high in second week of July, will extend their gains, citing the country's debt rating upgrades, a narrowing budget deficit, and rising corporate earnings.

"If there's any country in the world I’d like to be investing, it's in the Philippines right now," Phillip Hagedorn, investment committee chairman at ATR-KimEng Asset Management, said in ABS-CBN News Channel (ANC) interview.

"What other country is getting upgrades? And our companies are being moved to investment grade. We’ve got growth. I think we're going to see stronger growth in the second half of the year than we did in the first half," he said.

Fitch Ratings and Moody’s Investors Service raised the Philippines’ debt rating last month, indicating Philippine bonds are less risky. That allows the government – and companies – to borrow at cheaper rates which benefits the economy via lower borrowing rates, expansion and investment.

Hagedorn indicated recent gains are the early part of a longer term rally because the market has come from an 8-month rest. It closed on Tuesday at 4,439.61.

"The market has not peaked above the 4,400 level, since October of last year," Hagedorn said. "So it’s been about an 8-month period of consolidation, of taking a break from the last 2 years that the market has had a very strong run up.’’

Hagedorn said company earnings should grow faster in the second quarter than the 11 percent increase for Philippine Stock Exchange Index companies in the first quarter. He projected this should continue through 2012.

"There are really a lot of interesting developments on the macroeconomic front,’’ BPI Asset Management Senior Vice President Theresa Marcial-Javier said on ANC. "There are the credit ratings upgrades by Fitch and Moody's, that has contributed to the strong sentiment in the stock market.  Also there is the fiscal progress."

Marcial-Javier said while inflation rose in June, it was below expectations. She said the central bank may refrain again from raising interest rates at its July 28 monetary policy meeting, partly because of recent declines in crude oil. Inflation edged up to 4.6 percent in June, from 4.5 percent in May.

"Expectations about declining inflation over the long term is sort of already being discounted in equity prices,’’ Marcial-Javier said. "Given the recent decline in oil prices, there is a reason for the Bangko Sentral ng Pilipinas to pause come July 28. But I'm not discounting the fact that in the September meeting, there is possibly another 25 basis point increase, if not maybe another increase in the reserve requirement.’’

The central bank paused last month after 2 successive increases in its overnight borrowing rates. Instead it raised reserve requirements, or the percentage of deposits banks must park with it instead of lending out, to reduce money supply.

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Filipino officials ban Chinese diplomat amid spat

Philippine officials have banned a senior Chinese diplomat from meetings for alleged rude behavior, in the latest fallout from a feud over the potentially oil-rich Spratly Islands, officials said Tuesday.

Department of Foreign Affairs officials said Chinese Embassy First Secretary Li Yongsheng, who heads its political section, raised his voice at a Filipino officer last month while discussing Philippine allegations of Chinese intrusions in Manila-claimed areas in the Spratlys.

A memorandum from the department's Asian and Pacific Affairs office said Li exhibited "conduct unbecoming of a diplomat" and that the Chinese embassy had been informed he would not be allowed to attend future meetings at the Philippine office.

Foreign Secretary Albert del Rosario has been informed about the incident, according to the memo, which was seen by The Associated Press.

The memorandum did not provide details of what happened at the meeting, but at least three senior Filipino diplomats said Li raised his voice in an offensive manner during a discussion of Manila's claims that Chinese forces intruded into Philippine territorial waters in and near the Spratlys. The diplomats spoke on condition of anonymity because they lacked authority to talk to reporters.

The Chinese Embassy did not immediately respond to requests for comment.

The Spratlys, a chain of barren, largely uninhabited islands, reefs and banks in the South China Sea, are claimed in entirety by China, Taiwan and Vietnam and in part by the Philippines, Malaysia and Brunei. They are believed to be rich in oil and natural gas and straddle busy sea lanes.

Speaking before diplomats Tuesday, Aquino said Filipinos should not allow themselves to be bullied by bigger nations in an obvious reference to China. "If we allow ourselves to be pushed around, maybe tomorrow our 7,100 islands would be down to just two digits," he said.

"Nobody wants trouble but this doesn't mean that we'll allow ourselves to get dragged by bigger countries," he said.

The Philippines has accused Chinese vessels of intruding at least nine times into Philippine waters in recent months, and Vietnam says Chinese vessels have hindered its oil exploration surveys in an area 200 nautical miles (370 kilometers) off its central coast that it claims as its economic exclusive zone.

China says it has sovereign rights over the entire South China Sea. The reported intrusions have set off anti-China protests.

About a dozen protesters burned two Chinese flags near the U.S. Embassy on Monday. In Vietnam, dozens of people held protests for a fifth straight week in Hanoi on Sunday, waving Vietnamese flags and chanting anti-Chinese slogans.

In the latest reported foreign intrusion into Philippine-claimed waters, an unidentified fighter plane buzzed just 20 feet (six meters) over the tip of an antenna on a boat carrying Filipino fishermen at Dalagang Bukid Shoal near the Spratlys, Defense Secretary Voltaire Gazmin said Tuesday.

The fishermen, shaken but unharmed by the June 4 incident, immediately left the area, about 130 miles (210 kilometers) off Palawan province's Balabac Island. The fishermen failed to identify the aircraft, Gazmin said.

On Feb. 25, a Chinese naval vessel allegedly fired to scare away Filipino fishermen from Jackson Atoll, also near the Spratlys. Chinese Ambassador to Manila Liu Jianchao denied that Chinese forces fired at the Filipino fishermen.

 

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