The Philippines is one nation which has been able to outperform other emerging markets in the recent past. This strength has been attributed to a solid consumer market and booming exports thanks to a weak currency.
This combination comes at a great time, as most of the developed economies are in the doldrums, leaving many emerging markets to fend for themselves (Buy These Emerging Asia ETFs to Beat China, India).
This has been no problem for the Philippines as the country has shown incredible resilience to the global turmoil, posting a solid GDP growth rate. In the third quarter, the region delivered a robust growth rate of 7.1%. This is much better than the GDP growth of 6% posted in the second quarter.
Meanwhile, in an effort to cut interest expenses and shore up its financial position, the Philippines government recently announced the repurchase of $1.46 billion in dollar and euro denominated bonds.
The initiative by the government can be viewed as an effort to improve the investment grade credit rating and further show that the country is an economic power in the region (Philippines ETF: A Rising Star in Emerging Market Investing).
Rating agencies have taken note as well, as in early 2012 S&P bumped the country's long-term foreign currency-denominated debt to BB+ from BB, the highest rating since 2003. This does not end here with Moody’s lifting its outlook on the economy to positive.
Clearly, the trends are continuing to be positive for the country, suggesting that some might want to consider the area for investment. One way to do this in basket form is via the MSCI Philippines Investable Market Index Fund (EPHE) which currently has a Zacks ETF Rank of 1 or ‘Strong Buy’.
We expect it to outperform its peers over the next year and continue to be a solid pick for emerging market ETF investors. Given this, the product could be worth a closer look by investors seeking exposure to this economy.
About the Zacks ETF Rank
The Zacks ETF Rank provides a recommendation for the ETF in the context of our outlook for the underlying industry, sector, style box, or asset class. Our proprietary methodology also takes into account the risk preferences of investors. ETFs are ranked on a scale of 1 (Strong Buy) to 5 (Strong Sell) while they also receive one of three risk ratings, namely Low, Medium, or High.