The Asian Pivot: Equity Managers Look to Asia Even as Markets Plunge
I had some Chinese last night and my local takeaway hero gave us some fortune cookies to go with it. My wisdom-in-a-biscuit read “The Chinese use two brush strokes to write the word ‘crisis.’ One brush stroke stands for danger; the other for opportunity.” This is a pertinent statement about the current development in Asia, and a timely one too. While half the world is predicting doom, there is another half that sees boom.
What’s happening in the Philippines
This relatively new powerhouse of the Far East has been a surprising under-dog in recent years. President Rodrigo Duterte elected to power in 2016 has been a force not to be reckoned with. This shoot-from-the-hip leader has been ruthless on his war on drugs and terrorism and attracted international criticism. His economy policies, on the other hand, is far from dangerous. Philippines has had a growth spurt the last decade.
The Filipino society are experiencing an increase in urbanization and a growing middle-class. Business activities are buoyant with notable performance in the services sector including the Business Process Outsourcing (BPO), real estate, and finance and insurance industries. Unemployment has reached historic low rates. Underemployment, however, remains high, near its 18-20 percent decade-long average.
In 2017, the Philippines was among the top three growth performers. The Philippine economy grew from 6.9 percent year-on-year in 2016 to 6.7 percent year-on-year in 2017. On paper, one would think President Duterte is doing the right thing.
Despite this, the World bank recently downgraded this country’s growth, citing “"heightened global market uncertainty and rising domestic inflation weighed on the Philippine economy in the first half of 2018." This is quite telling as the Philippines is starting to see chink in their armor.