Philippines Stocks May Overtake GDP

BPI Asset Management LLC, the 2nd biggest fund manager of Philippines thinks that the stock market of this small Asian country will exceed the total size of its economy in 2013 for the 1st time, thanks to the faster economic growth and low interest rates. It is expected that the Philippines Stock Exchange Index will increase by 29% in 2013 to 7500, thereby increasing the value of the entire market. When it comes to the Gross Domestic Product in current prices, the same may get expanded by around 9%. The company predicts that the Philippines economy will reach around $280 billion.

The 2012 GDP of Philippines was at $257 billion and the benchmark index increased by 33%, thereby taking the stock market’s value to a whopping $223 billion. On 8th February, the Philippines stocks went on to a record high of $247 billion, under the assumption that it will earn an investment grade sovereign rating. The investors currently have high confidence in the potential of Philippines market and they expect the same to perform well continuously for the next 12 or 24 months.

On today, the benchmark gauge increased by 1.8% and the same is at a record high of 6835.21 now. Since October, 2008, the stock has posted a total gain of 294%. Such a huge increase has made it the biggest equity bull market of the world. If the other emerging and developed nations are considered, the stocks are at least 134 percentage points above than any other bull market.

Philippines economy grew by 6.6% in 2012, whereas, for 2011, the same had expansion of 3.9%. According to forecasts, the GDP of Philippines is expected to grow as much as 7% in real terms in 2013. Benigno Aquino, the President of Philippines, has plans of boosting the spending to a record high and he seeks more than $17 billion of infrastructure investments. The news was confirmed on 31st January, by the Economic Planning Secretary, Arsenio Balisacan.

Amando Tetangco, the Governor of the Philippines Central Bank expects the credit rating of the country to be upgraded within the first 6 months of this year. Incidentally, the credit rating is at speculative grade at this point of time. On 20th December, the outlook was upgraded to positive from stable by Standard & Poor’s as they have complete faith in administrative stability of Aquino’s Government.