$30 Billion Philippine Stock Rout Draws Domestic Fund Buying

(Bloomberg) -- As Philippine stocks tumbled to a one-year low Thursday, some of the nation’s biggest money managers put cash to work, betting against the relentless selloff led by foreign investors that has wiped out over $30 billion in market value in about three months.

Fund managers at Bank of the Philippine Islands and Rizal Commercial Banking Corp. added to holdings of domestic stocks as the Philippine Stock Exchange Index pushed its loss for the year to over 10 percent, the world’s worst performer. While conceding that the country’s rising inflation may not have peaked yet, the managers expect it to moderate later in the year and remain within the central bank’s target.

“It’s a once in a lifetime opportunity,” said Erwin Balita, who bought stocks in the benchmark index for the funds he manages at Bank of the Philippine Islands, the nation’s second-biggest money manager. “The Philippines continues to be a growth story. Unless that changes we will not take money off the table.”

Stocks fell Thursday as oil’s rise to the highest level since 2014 rattled a market hounded by rising inflation, Asia’s worst-performing currency, and lingering concerns that the central bank is out of step for holding off an inevitable interest rate increase. The PSEi closed at 7,682.24, with its valuation sinking to as low as 16 times estimated 12-month forward earnings, the lowest since December 2016. The gauge rose as much as 1.3 percent Friday.

$30 Billion Philippine Stock Rout Draws Domestic Fund Buying

Steven Ko, a trader at Rizal Commercial Banking, said he used the latest drop to add shares of conglomerates and property developers that he abstained from at the start of the year because of expensive valuations. His acquisitions included JG Summit Holdings Inc. and Ayala Land Inc., two of the top 10 decliners on the benchmark Thursday.

BPI’s Balita favors conglomerates, banks and property. Conglomerates are proxies on one of Asia’s fastest growing economies, while banks will gain from rising interest rates, he said.

Overseas investors sold a net $51 million Thursday, the most in four weeks and bringing total withdrawals to over $860 million since the PSEi’s record high on Jan. 29. The benchmark’s 15 percent slide in that span is one of the worst selloffs Rizal’s Ko has seen.

“It’s a good time to cover our underweight positions,” said Ko, who pegs the market’s support at 7,350 to 7,500. “We could be near bottom as it seems that foreign investors who want out are close to completing their exit. Valuations are more reasonable now.”

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