Still, EPHE has been riddled with selling pressure over the past six months as investors speculated Philippine equities would be just as vulnerable to the loss of U.S. easy money as stocks in Indonesia or Malaysia. Over that time, EPHE is off 13.2%. That is better than the 23.2% loss for the Market Vectors Indonesia ETF (NYSEArca: IDX), but far worse than the 1.3% gained by the iShares MSCI Emerging Markets ETF (NYSEArca: EEM).

While the Philippines is frequently measured against other Southeast Asian markets, prompting comparisons between EPHE and ETFs like IDX, that are distinct differences that may have been overlooked during the ETF’s recent downdraft. For example, the Philippines’ external balance sheet is strong and its external financing needs lower than comparable markets. The country also has a current account surplus while the likes of Indonesia are suffering because of deficits. [Good News For Philippines ETF]

“The factors that prompted the review remain intact, namely the sustainability of the country’s 1) robust economic performance; 2) ongoing fiscal and debt consolidation; and 3) political stability and improved governance.

“In addition, the stability of the Philippines’ funding conditions — during the recent bout of market volatility in emerging markets — points to the country’s relative lack of vulnerability to external financial shocks, such as those arising from anticipated tapering by the US Federal Reserve of its quantitative easing policy,” said Moody’s.

News of the Moody’s credit rating upgrade could also benefit some bond ETFs. The iShares Emerging Markets High Yield Bond ETF (NYSEArca: EMHY) has an 8.2% weight to the Philippines. The actively managed WisdomTree Emerging Markets Local Debt Fund (NSYEArca: ELD), which has an effective duration of just 2.5 years, has a 3.2% Philippines weight. Another actively managed ETF, the WisdomTree Asia Local Debt ETF (NYSEArca: ALD), has a 5.6% allocation to the Philippines.

iShares MSCI Philippines ETF

ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of EEM.