MANILA -- An executive of Manulife Asset Management expressed optimism about the Philippine bond market this year in the wake of a marked deceleration in inflationary pressures.
In a briefing Wednesday, Thierry Taglione, Asia head for Manulife Asset Management’s Client Portfolio Management, said interest rates are no longer expected to rise further after inflation continued to wane last January.
Domestic inflation rate peaked at 6.7 percent in September to October 2018 but has slowed to 4.4 percent last January.
Because of the elevated inflation rate last year, the Bangko Sentral ng Pilipinas (BSP) increased its key policy rates by a total of 175 basis points in an effort to rein in inflation expectations.
Taglione explained that when interest rates increase “it's bad news for bond investors.”
“BSP is now in a situation where they don't need to hike. They will be more accommodative. If rates go lower, it's actually good news for investors,” he said.
The Manulife executive said yield of the Philippines 10-year bond rate is over six percent to date.
“We feel (that) this is very attractive for regional investors,” he said.
In view of the improved environment, Manulife Asset Management and Trust Corporation (MAMTC) recently launched the unit investment trust fund (UITF) called Asia Dynamic Bond Feeder Fund, which has a minimum placement of PHP5,000 or USD100.
This product allows investors to diversify their investments since this portfolio is invested in fixed income securities issued by government and private entities in Asia.
Taglione said Manulife Asset Management has little exposure in bonds issued in the Philippines but stressed that investors need not worry because “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,” he said, adding that “Indonesia is a favorite holding” to date. (PNA)
