Four Pillars of GDP: Private Consumption and Investment

At 6.6%, The Philippines has the second fastest GDP growth in Asia (only India’s is faster). Private consumption and investments are the main drivers of the economy, but net exports created a large drag on GDP growth at -1.6%.

Expensive but moderately attractive

The Philippines totes the highest valuation in Asia on a price-to-earnings basis at 21x in 2017CE*.

However, analysts are expecting earnings to grow at a low 3.4% this year.

A. Stotz Four Elements: The Philippines’ rank relative to Asia

Overall, The Philippines is a moderately attractive market in Asia, considering all our four elements: Fundamentals, Valuation, Momentum, and Risk.

Fundamentals: The nation sported a moderate ROE in the past 12 months, relative to Asia as a whole.

Valuation: It remains expensive, because PE is the highest in Asia and earnings growth is low.

Momentum: The country offers poor price and earnings momentum.

Risk: The country offers low beta to Asia ex Japan with moderate volatility.

Real Estate did best among top 3 largest sectors in 3Q17

Top 3 largest sectors: Industrials: 26% of the market; Financials: 23%; Real Estate: 18%.

Best sector & stock:  Information Technology: +17.9% & Integrated Micro-Electronics Inc.: +38.7%.

Worst sector & stock: Materials: -5.9% & D&L Industries Inc.: -16.4%.

*CE is consensus estimates