EPHE: A Problem for the Philippines ETF

Seasoned investors know that political volatility is always a consideration when investing in emerging markets and that consideration becomes all the more important when evaluating single-country exchange traded funds.

Although the Philippines usually is not the first developing economy to mind when thinking of political volatility, that could be changing as global investors grow increasingly concerned about the antics of newly elected President Rodrigo Duterte.

Earlier this year, Philippine presidential race weighed on investor sentiment as Rodrigo Duterte had been tight-lipped on what he would do to support the economy, fueling uncertainty over the economic outlook. In the weeks before the election, investors dumped Philippine equities, expressing uncertainty over Duterte’s economic plans and lack of policy-making experience, reports Lillian Karunungan for Bloomberg.

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“Foreign investors are pulling money out of the country’s stock market rapidly, riled by a series of remarks made by the acid-tongued Duterte against key ally U.S. and China that have cast doubts over the future of the country’s foreign policies as well as his handling of the economy,” according to CNBC.

Philippine stocks currently traded at a slightly higher multiple than their Thai counterparts and are about inline with Indonesia, two markets against which the Philippines is frequently compared.