The Philippines is safe from Brexit — for now
The Philippines is safe from Brexit — for now
Brexit may still have something in store for the seemingly impervious country
While the UK referendum to rescind its European Union membership has roiled many markets, it is another story altogether for the Philippines.
The country had a tempered reaction to the Brexit vote, thanks to sound macroeconomic fundamentals, Antton Nordberg, head of KMC MAG Group‘s research team, noted in a blog post. However, investors should steel themselves for mid-term aftershocks.
The UK, Nordberg reports, is the third largest source of foreign direct investments (FDI) in the Philippines, and it has contributed in total 20 percent of net flows in 2015.
“Any form of decline in investments increases the risk to PH growth’s sustainability as our foreign investments is already low. It is therefore important, now more than ever, that the Philippines open up the market and relax the laws on foreign ownership to attract more investors and retain, if not increase, the amount of investments in the country,” Nordberg said.
More: Malaysia to suffer most from Brexit, say Japanese economists
Last month, the Philippine Stock Exchange broke the 8,100-mark for the first time this year, propelled in part by an inaugural State of the Nation Address by President Rodrigo Duterte and a rosy outlook of markets in general.
Immediately after the Brexit vote, the equity market had slipped by 100.06 points, coupled with a 41.5-centavo slump of the peso.
“The outcome of the referendum had a negative impact on various asset classes and currencies including our own market. This was the foreseen reaction in a Brexit case which may prevail for the next few days as markets settle,” said Philippine Stock Exchange president Hans Sicat, reassuring investors that the country’s market will not be adversely affected in the medium term.
Read next: A look at the Philippines’ emerging secondary real estate markets
Source: Property Report