Philippine $11 Billion Fund Diversifies Amid Stock Market Slump

(Bloomberg) -- The Philippines’ Home Development Mutual Fund is broadening its investments, releasing more money to scoop up the nation’s equities as the market sinks.

The fund, known as Pag-IBIG, has over 570 billion pesos ($10.8 billion) in net assets that are mostly in housing and real estate loans. It has “just deployed” 500 million pesos more to its five external fund managers, bringing to 4.5 billion pesos the total assets its allowing external parties to invest in equities on its behalf, said Chief Executive Acmad Rizaldy Moti.

“We are taking advantage of the market situation to achieve our goal,” Moti said in an interview. “This volatility opens the opportunity for us to diversify our portfolio.”

The Philippine Stock Exchange Index fell as much as 3% on Thursday, the biggest intraday loss in Asia, amid an extended global selloff sparked by fears of a U.S. recession. The gauge closed 0.4% lower at 7,828.86, with its valuation, which sank to a three-month low, rebounding to 15.7 times 12-month forward earnings.

Pag-IBIG was set up in 1978 to provide home financing for state and private employees. In addition to property, the fund also holds government securities and wants to deploy 5 billion pesos to stocks.

“Smart money comes in whenever the market hits extremes that we could be building a bottom at 7,700 already,” said Justino Calaycay, an analyst at Philstocks Financial Inc. “Some value is emerging for long-term investors.”

Since racing to a 16-month high in mid-July, the benchmark stock gauge has slumped more than 6.4% through Thursday, as investors turned cautious amid an escalating U.S.-China trade war, a devaluation in the yuan and slowing Philippine economic growth.

“This weakness is a good window to look for bargains considering the prospects of the economy and consumer spending remain positive,” Moti said. “We are still among the fastest growing economies.”

To contact the reporter on this story: Ian Sayson in Manila at isayson@bloomberg.net

To contact the editors responsible for this story: Lianting Tu at ltu4@bloomberg.net, Naoto Hosoda, Kurt Schussler

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