The Philippine casino sector is proving an unexpected beneficiary of the coronavirus outbreak, says the Financial Times. With more Chinese gamblers staying indoors, “Asia’s online gambling hub” is enjoying a boost.
Yet there is more to this 105-million strong economy than big bets and baccarat. The country has since emerged as a significant centre for back-office outsourcing (known as “business process outsourcing”) and high-tech manufacturing thanks to its well-educated, English speaking workforce.
In 2010 it overtook India as the world’s leading supplier of call centres, notes Felipe Salvosa II for India’s ABS-CBN network. That started “the most prosperous” decade that the country has ever seen. Growth in the 2010s averaged 6.3%. Historically reliant on overseas Filipino workers, who sent home an estimated $30bn last year in remittances, the economy has rebalanced and is now generating its own middle-class jobs.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Chidu Narayanan of Standard Chartered expects growth to hit 6.3% this year thanks to higher infrastructure investment and domestic consumption. Meanwhile, the central bank cut rates by 0.75% last year, which should bolster private-sector business investment.
Yet rapid growth has caused new problems. The World Economic Forum ranks the Philippines 96th out of 141 countries for the quality of its infrastructure, notes The Economist.
President Rodrigo Duterte has pledged to spent $177bn on new infrastructure such as roads, ports and airports in a policy he dubs “Build, Build, Build”. By 2022 such investment should reach 7% of GDP. A country where residents spend 16 days every year stuck in traffic jams may finally “start to unclog”.
A new crony class?
Massive public infrastructure can invite corruption, warns William Pesek for Nikkei Asian Review. Economists warn that construction contracts could enrich a crony class of “Dutertegarchs”. The country has fallen 14 places in the latest Transparency International corruption perceptions index and is now on a par with Kazakhstan.
This and other concerns about the quality of governance may be weighing on equities. Last year the local PSEi index badly lagged global indices, returning just 4.7%. But on a cyclically-adjusted price/earnings (Cape) ratio of 18.7 the local market is not unduly expensive (India trades on a Cape of 21.7).
That seems a reasonable price to pay to buy into a country with fast growth, a young population and plenty of domestic demand to offset global trade turbulence. The Xtrackers MSCI Philippines UCITS ETF (LSE: XPHI) is therefore worth researching.
-
How much could your cash ISA save you in tax?Official data reveals ISAs will collectively save us an estimated £6.7 billion in tax this year. We’ve crunched the numbers to find out how much a cash ISA could save you
-
The 8% pension rule: what is it and is it enough to retire on?
You are probably saving this amount into a pension each month without even realising with the 8% pensions rule. But is what is this and is it enough to give you a comfortable retirement?
-
Halifax: House price slump continues as prices slide for the sixth consecutive month
UK house prices fell again in September as buyers returned, but the slowdown was not as fast as anticipated, latest Halifax data shows. Where are house prices falling the most?
-
Rents hit a record high - but is the opportunity for buy-to-let investors still strong?
UK rent prices have hit a record high with the average hitting over £1,200 a month says Rightmove. Are there still opportunities in buy-to-let?
-
Pension savers turn to gold investments
Investors are racing to buy gold to protect their pensions from a stock market correction and high inflation, experts say
-
Where to find the best returns from student accommodation
Student accommodation can be a lucrative investment if you know where to look.
-
Best investing apps
We round up the best investing apps. Looking for an easy-to-use app to help you start investing, keep track of your portfolio or make trades on the go?
-
The top funds to invest in
Tips Investors put Scottish Mortgage Investment Trust back on top, and India is the new investment hotspot - We look at what investors have been adding to their portfolios in the last month
-
The world’s best bargain stocks
Searching for bargain stocks with Alec Cutler of the Orbis Global Balanced Fund, who tells Andrew Van Sickle which sectors are being overlooked.
-
Revealed: the cheapest cities to own a home in Britain
New research reveals the cheapest cities to own a home, taking account of mortgage payments, utility bills and council tax
