Global fund managers turn to
the region in the face of volatility and uncertainty
(L-R) Citi Investor Sales
Asia Pacific head Julia Raiskin, Citi Philippines Country Treasurer and Global
Markets and Securities Services head Paul Favila and Citi Asia Pacific Economic
and Market Analysis head Johanna Chua
Citi remains bullish about
the growth prospects in Asia, as global investors turn to the region in the
face of volatility in Europe and North America and general uncertainty in the
markets.
Citi shared key investment
trends and macroeconomic views during the Citi Investor Conference 2018 at the
Citi Plaza building in Taguig.
“Global fund managers are
looking carefully at Asia, and China is a big part of that,” said Julia
Raiskin, head of Investor Sales, Asia Pacific, at Citi. “Interest in the region
is partly due to the inclusion of 200 large cap Chinese stocks in the MSCI, as
well as the opening of the China Bond Connect.”
According to Raiskin, global
fund managers are investing in equities and fixed income as top choices, with
local currency bonds becoming increasingly attractive. “Investors are looking
into more liquid markets – Hong Kong, Australia and, gradually, ASEAN,” she
said. “Intra-Asia flows are also increasing with key corridors flowing from
China, Japan and Korea to ASEAN.”
Citi notes that intra-Asia
trade corridors have the potential to pick up slack from China and U.S. supply
chains that may be threatened.
“This region represents a
much bigger opportunity as it is currently under-penetrated,” said Johanna
Chua, head of Asia Pacific Economic Analysis at Citi. “Industries are well
developed, but the long-term savings industry and asset management is not. So
we’re seeing bigger allocations towards Asia from fund managers.”
Philippine equities are
underweight in Citi’s global equity allocation due to broad-based, cyclical
upswings and the performance of other economies, explained Chua. But recent
data has been good, given increased government spending and the peso
stabilizing. “There’s a lot of traction growth,” Chua said. “The growth story
is there.”
To spur further growth, Citi
says the key is more foreign direct investments. “We need more FDI. The
Philippines is still conservative with regards to foreign financing,” Chua
said.
Infrastructure is seen as a
key growth driver, especially the government’s ongoing ‘Build, Build, Build’
program. Additional growth drivers include services exports such as tourism,
manufacturing with preferential tax treatments, and agricultural development
and energy.
“As the contracts of the IPPs
(Independent Power Producers) expire in 2020, power and energy will potentially
be huge growth drivers for the Philippine economy,” said Paul A. Favila, head
of Markets and Securities Services.
Overall, Citi explained that
last year was a good year for everybody and moving forward, 2018 is progressing
well. “There are a lot of good things going for the Philippines,” said Chua.
“It’s one of the only economies without any fuel subsidies and domestic demand
story in the Philippines has traction, especially on the investment side.”
Citi’s GDP growth projection
for the Philippine economy is 6.9% in 2018.
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