June 30 marked a new and exciting chapter in the political and economic climate of the Philippines. It is on this day that President-elect Rodrigo Duterte, also known as the Philippine Trump, was sworn in as president. Along with all his bluster about killing enough criminals and throwing them into the sea so that the fish could become fat, comes the menu for his inauguration party.
A very humble affair, with mainly appetizers such as banana fritters, mung bean soup, buns filled with cheese, and fruit tarts, and then to top it all off, the toast to the new president was made with coconut juice, of which the Philippines has plenty, and not the usual champagne of which the Philippines has very little.
As quartz.com reports, Mr. Duterte wants to do away with extravagant formal events and will stream the event live via Facebook, which means that I will not be able to watch. Oh well. But what his election has done by all accounts is to increase the confidence among the population that he means what he says and pulls no punches. What a breath of fresh air. There was, among some circles, distress and hand wringing as to what his unique style of governing will do to the economy, much in the same way that some elites predict doom and gloom for Britain after their popular revolt.
In my humble opinion, I believe that the Philippines will do very well, and in fact according to an article from Philstar, the Philippine economy is set to outpace China. That’s a bold statement, but not one without merit. After all, China is slowing down while the Philippine GDP accelerated to 6.9% in the first quarter of 2016, up from 6.5% in the prior quarter. The acceleration in GDP is due to growth in the services sector, which accounts for 57% of that number.
Mr. Duterte’s agenda for his term is vast and ambitious, and as the Inquirer.net points out, the population will hold his feet to the fire. If he succeeds, then the Philippines could become a top investment destination.
The Philippines stock market benchmark index (PCOMP:IND) is up 12% for the year; however, it is up nearly 9% since the election on May 9. iShares MSCI Philippines ETF (EPHE) is up 16% YTD, but a couple of its components, SM Prime Holdings Inc(SMPH:PM) up 24% YTD and Aboitiz Equity Ventures Inc(AEV:PM) up 34% YTD, may be better investments. So as Mr. Duterte takes the oath of office, please join me in wishing him well and the best of luck in accomplishing his goals. We, as foreign investors, are on his side.
Peter Kohli, CEO of emerging market specialist DMS Funds.
