Swiss bank recommends buying Philippine stocks

MANILA, Philippines - Swiss investment banking giant Credit Suisse has picked the Philippine stock market as one of the best emerging markets for investors. In its latest global equity strategy report, Switzerland-based Credit Suisse cited the Philippines as one of its recommended markets in emerging Asia alongside China and Thailand. Stock market investors should look at the emerging markets in Asia particularly the Philippines, to take advantage of cheaper stock valuations and stronger return on equity investments, the investment bank said. It added that Asian markets are attractive investment destinations than European markets because of low macroeconomic risk, high exports, high domestic sales, and the 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 second with a reading of 46, following Singapore’s score of 39. Low scores indicate less risk. The Philippines registered a surplus in its current account balance with a ratio of three percent to GDP, indicating that it is a net lender to the rest of the world. The country’s loan-to-deposit ratio is one of the region’s 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. The financial institution 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 Co. (MBT), Globe Telecoms Inc. (GLO), Manila Electric Company (MER) and Megaworld Corp. (MEG). Francis Lim, PSE president and chief executive, said the Credit Suisse report is a further proof 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. GMANews.TV