SINGAPORE: Equities in emerging Asia, including the Philippines, are currently occupying a “sweet spot” on the global valuation map as investors find the markets’ strong macro-fundamentals still attractive despite recent years’ gains, according to an analysis by asset management firm Eastspring Investments (Singapore) Ltd.
A market such as the Philippines, although already expensive at current levels, still presents a viable investment option given its favorable demographics, increasing urbanization and economic modernization, said Eastspring Investments, the asset management business of Prudential Corporation Asia.
“The Philippines is a market that has the highest protection in the world [in terms of capital outflows]. It was not under fundamental pressure,” said Robert Rountree, Eastspring Investments global strategist.
That observation has prompted Eastspring Investments, along with the Philippines’ lone British life insurer—Pru Life UK—to launch here in Singapore the PruLink Global Emerging Markets Dynamic Fund (PruLink GEM Fund).
The Fund aims to capitalize on long-term investment opportunities and growth potential of emerging markets such as the Philippines.
PruLink GEM Fund is structured as a $130 million denominated feeder fund that seeks to identify undervalued stocks in global emerging markets, drawing on Eastspring’s expertise as one of Asia’s largest fund houses.
The Fund invests primarily in securities of companies that are incorporated, or listed in, or operating principally from emerging markets worldwide. It also invests in securities of companies carrying on significant business in, or derive substantial revenue from, or whose subsidiaries related or associated corporations derive substantial revenue from the emerging markets worldwide.
”We believe that current valuations across global emerging markets are cheap, offering an opportunity for investors over the long term,” said Irmak Surenkok, client portfolio manager of Eastspring Investments.
Surenkok said that 60 percent of the Fund is invested in emerging markets in Asia, while 3.9 percent is invested in three Philippine Stock Exchange-listed companies.
”Global emerging markets offer a rich stock-picking opportunity. We are active investors, hunting for value stocks across the emerging market universe and buy shares in companies that we believe are meaningfully undervalued—this provides investors with upside potential over the long term,” the Eastspring Investments executive said.
Eastspring Investments is an assets manager with operations in 14 markets, more than 2,000 employees and about $100 billion in assets under management. The asset management firm has been managing Pru Life UK’s underlying funds for its unit-linked or investment-linked product portfolio since the company pioneered the PruLink product line.
Pru Life UK said the PruLink GEM Fund enables its unit-linked policyholders to diversify their unit-linked investments and benefit from the growth potential of global emerging markets.
The life insurer cited the forecasts of the International Monetary Fund and Swiss global financial service company UBS AG that there is superior structural growth potential in emerging economies as they are projected to grow 2 percent faster per year than the pace expected in developed markets over the next decade.