EPHE - EPHE: Staying Sidelined On The Philippines

2024-06-05 06:25:23 ET

Summary

• Philippine large caps have been in decline for over a decade now.
• Fundamentals offer little evidence of a change in fortunes.
• Pending a meaningful shift in the investment case, I’d remain sidelined.

iShares MSCI Philippines ETF ( EPHE ) has seen quite a bit of volatility since I last covered the name (see EPHE: More Headwinds On The Horizon ), and this year has been no different. After a big rally in Q1, the fund has suffered a steep decline in reaction to a hawkish repricing in interest rate expectations. As things stand, EPHE is now down in the high-single-digits % to date. The big issue with buying this dip, though, is that domestic rates look increasingly likely to stay ‘higher for longer’ in light of rice inflation pressures and a hefty minimum wage hike . The central bank’s recent commentary also emphasized the need to guard against further currency weakness, so a Philippine pivot seems unlikely anytime soon....

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