BSP’s Tetangco: Emerging markets remain attractive to global investors

Global investors will continue to place the money in emerging markets, including the Philippines, because of higher returns and sound fundamentals, Bangko Sentral ng Pilipinas Gov. Amando Tetangco said Tuesday.   That is why the Philippines will continue to benefit from global money flows in terms of both direct and portfolio investments, Tetangco said at a roundtable discussion on the Philippine Economic and Business Outlook sponsored by Global Finance.   Investors remain in search of higher yields in emerging markets where interest rates are better than the zero to 0.25 percent in the United States, the central bank chief noted.   “Emerging markets will remain the driver of global growth this year,’ Tetangco said.   “Most emerging markets still have policy space on the monetary policy side. Their interest rates are higher than those in advanced economies, so there is an attraction for flows to move to emerging markets,” he added.   On Jan. 19, the Bangko Sentral Monetary Board lowered its policy rates by 25 basis points that brought the overnight borrowing rate to 4.25 percent and the overnight lending rate to 6.25 percent   The main rationale for reducing interest rates was the ease of managing inflation. It was also intended to support the economic growth.   “We expect portfolio inflows to continue coming. We also believe we will have higher [foreign direct investments] due to increased investments, particularly in infrastructure projects,” Tetangco said, noting that “As infrastructure is developed, private investments tend to follow suit.” — VS/KG, GMA News