MANULIFE ASSET Management and Trust Corp. (MAMTC) said the bond market in the Philippines is a “little bit more attractive” as inflation is widely expected to decelerate in the coming months.
On Wednesday, Manulife Asset Management (Hong Kong) Ltd. Asia Head for Client Portfolio Management Thierry Taglione said the domestic fixed-income market is a “little bit more attractive” in 2019 compared to last year or when the pace of price increases surged to a nine-year high.
“Last year, the challenge in the Philippines was the high inflation — over 6%. When inflation is high, the BSP (Bangko Sentral ng Pilipinas) had to hike interest rates. When rates go higher, it’s a bad news for bond investors,” Mr. Taglione told reporters on the sidelines of MAMTC’s press briefing in Makati City.
Inflation settled at 5.2% last year — the fastest since 2008’s 8.2% and exceeding the central bank’s 2-4% target band — amid higher oil prices and issues in rice supply.
For this year, the Bangko Sentral ng Pilipinas expects inflation to return to below 4% as early as March, or back within its target range.
“Now, inflation is coming off in the Philippines. It’s going down to 4.4%, since the BSP is now in a situation where they don’t need to hike — they will be accommodative,” Mr. Taglione said, adding that it will be good news for investors if rates go lower.
During its Feb. 7 meeting, the BSP’s Monetary Board kept its key rates steady while lowering its headline inflation forecast for this year to 3.07% from the previous outlook of 3.18%.
Mr. Taglione said MAMTC’s unit investment trust fund (UITF) has exposure to the Philippine bond market, albeit small.
“In our Asia Dynamic Bond Fund, we have exposure to Philippine bonds. It’s not a major holding — it’s a small exposure.”
Launched in December 2018, MAMTC’s Manulife Asia Dynamic Bond Feeder Fund provides investors exposure to a diversified portfolio of fixed-income securities primarily in Asia for a minimum investment of $100 or P5,000.
“The beauty of the fund is that we can access dozen markets across the region. If we don’t see compelling case for a specific market, we find opportunities elsewhere,” Mr. Taglione said.
On Wednesday, MAMTC also launched its Dragon Growth Equity Feeder Fund, another UITF that gives exposure to a diversified portfolio of equity-related instruments of public companies listed in Hong Kong and China.
“The Dragon Growth Equity Feeder Fund enables investors to take advantage of China’s transformative growth story and access its impressive domestically-driven economy,” MAMTC President and Chief Executive Officer Aira Gaspar was quoted as saying in a statement. — Karl Angelo N. Vidal