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The Best Shares to Buy in the Philippines

Updated: 9 Dec 2021

Global investors have been biding their time during the COVID pandemic and the continuing prevalence of a low-interest-rate environment. Timing will be everything when the economic recovery surge commences, and the potential for accelerated growth appears to be the greatest in the Asia-Pacific arena. Several markets are poised to ride the wave to come, and one of those markets is the Philippines.

Situated centrally in the western Pacific Ocean, the Philippines is an archipelago of around 7,600 islands and is called home by roughly 110 million inhabitants, 12th in world rankings. Its economy is vibrant, having transitioned from agriculture many decades back. Nominal GDP in 2021 was $202bn, and the COVID pandemic has slowed things down considerably, as it did across this region.

Analysts are positive, however, that the Philippines will resume its success-story status in the near term. One report cites: “According to the World Bank, the Philippine economy is forecast to grow at 4.7% in 2021, before accelerating to 5.9% in 2022. Businesses and economies are expected to regain their profits after the global recession caused by the pandemic” (source: dailyPik).

Support for this hypothesis can be gleaned from the following weekly chart for a popular Exchange-Traded Fund that follows a basket of companies from the Philippines. There are several of these types of fund, but the one selected here is the iShares MSCI ETF for the Philippines. The ‘COVID Dip’ in 2020 is evident, but the remarkable comeback from 18 months back is evidence of investor confidence in the market and in what the future may hold.

iShares MSCI ETF for the Philippines

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Source: IG

How does an investor participate in this market and establish a position to benefit from future growth potentials? There are essentially two approaches. The conservative method is to buy into an ETF that covers the Philippines, thereby ensuring risk mitigation and a highly liquid asset for whatever may come.

The second path involves finding a safe broker who can give you access to individual Filipino securities, denominated in Philippine pesos, which has been reasonably stable versus the US dollar and other major currencies. In some cases, these companies do list in other stock markets, but the liquidity and spreads may not be favourable.

Best Philippine stocks to buy

1. SM Investments Corp.
2. Ayala Corporation (AC)
3. SM Prime Holdings (SMPH)
4. International Container Terminal Services, Inc.
5. Jollibee Foods Corporation
6. BDO Unibank
7. Puregold Price Club Inc.

If you are an investor who prefers to buy shares in individual companies rather than in an ETF for your country of focus, then you will need a broker that can assist you in that effort and provide guidance as to the best long-term companies in the region of interest. The safest route for long-term investing timeframes of five years and more is to choose from a list of blue-chip stocks that have proven track records over a long time span.

Based on local recommendations, the seven best shares to buy in the Philippines are below. This discussion is not investment advice. Perform your own due diligence on each company and decide when might be the best time to buy each.

  1. SM Investments Corp. (SM): This firm is a major property management and banking consortium founded in 1958. Its property division handles everything from and including mall, residential, and commercial development to the operation of hotels and convention centres. It operates 36 shopping centres in the Philippines and 7 in China. Its retail division is into the retailing and wholesaling of dry goods, wearing apparels, food, and other merchandise. Its banking area handles capital management and other financial services from over 1,400 branches. This firm is the largest company on the Philippine stock exchange and has established an impressive track record for returns.
  2. Ayala Corporation (AC): Ayala is another large Philippine conglomerate. Founded in 1834, it provided a model for competitors like SM Investments to follow. It, too, focuses on property management, both domestic and international, and banking services. It, however, has a broader play in that it is heavy in the telecommunications industry and the manufacture of electronic infrastructure products. The firm is also prominent in water services, power generation, onshore and offshore outsourcing, air-charters, consultancy, agri-business, education, human capital resource management, health, and transport infrastructure. It is considered one of the best blue-chip companies in the Philippines.
  3. SM Prime Holdings (SMPH): This firm is a diversified real estate management company. It has chosen to stay in one lane consisting of property development business in the Philippines, China, and Southeast Asia. It has four segments: 1) Mall – operates shopping centres and theatres and amusement arenas; Residential – development and sales of condominiums, residential units, and leisure homes; 3) Commercial – office buildings, and 4) Hotels and Convention Centres – 8 hotels and 5 convention centres. It is the largest real estate development firm on the Philippine stock exchange.
  4. International Container Terminal Services, Inc. (ICT): This company is the number one terminal operator in the Philippines and literally has no competition on the Philippine Stock Exchange. Founded in 1987, it acquires, develops, manages, and operates container ports and terminals serving the shipping industry in the Asia Pacific region, Europe, Middle East, Africa, and The Americas. The firm operates 32 terminal projects in 19 countries. ICT is one of the top listed companies on the Philippines Stock Exchange and is primed to deliver above-average earnings during the post-COVID recovery.
  5. Jollibee Foods Corporation (JFC): This firm is a king in the fast-food industry, operating nearly 6,000 outlets in North America, Europe, Middle East, Africa, China, Southeast Asia, and India. Branded outlets include Jollibee, Chowking, Greenwich, Red Ribbon, Yong He King, Hong Zhuang Yuan, Burger King, Mang Inasal, PHO24, Hard Rock Cafe, Dunkin' Donuts, Smashburger, The Coffee Bean & Tea Leaf, Tim Ho Wan, Tortas Frontera, Highlands Coffee and Panda Express names. JFC is the leader for the food network on the Philippine Stock Exchange.
  6. BDO Unibank (BDO): With respect to assets, capital, deposits, loans, and receivables, BDO is the largest banking institution in the Philippines. It engages in all banking related services from a base of nearly 1,500 branches. It was founded in 1967 as Banco De Oro Unibank Inc., but changed its name to BDO Unibank in 2011. It is considered the leader in the domestic banking sector with an impressive track record.
  7. Puregold Price Club Inc. (PGOLD): This firm operates department stores, engaging in the retail and wholesale of consumer goods in the Philippines. Known as the Walmart of the Philippines, Puregold operates 403 stores, covering a full spectrum of hypermarkets, supermarkets, extras, and minimarts, including twenty membership warehouse clubs and 46 quick-service restaurants. Founded in 1998, PGOLD has built a very loyal fan base and sports a market cap of $2.5bn.

How to buy stocks in the Philippines

Whether you lean towards an investment in an ETF covering the Philippines or you prefer to invest directly in local companies, you will want to ensure that your chosen broker has a free demo system. Practice sessions will acquaint you with your broker’s trading platform, while also permitting you to get acquainted with local market conditions and refine your plan of attack for an unfamiliar market. If and when you are favourably inclined, you will then be well on the way to investing in the Philippines. These five steps will ensure that you remain on the right track.

  1. Choose a broker: Depending upon your investment strategy, you will need to choose a broker that can provide access to the targets that you seek, whether ETF shares or individual shares in Filipino companies. Let safety and security be your guide.
  2. Open and fund an account: The global brokerage community must comply with various Know-Your-Customer and Anti-Money Laundering statutes. In this regard, you will be asked to submit personal identity information, which must be confirmed before your account can be approved and become active.
  3. Open an order ticket and set your position size: Take advantage of the broker’s demo system to acquaint yourself with the various ways to open an order ticket, close it, and use risk management principles to determine an appropriate position sizing.
  4. Set your stops and limits: Most trading platforms allow you to set stop-loss and take-profit limits at the time of order execution. Use the demo system to learn how to set or adjust these limits after the order has been executed. Also, practice closing a position.
  5. Make your purchase: It is now time to enter a real order with your chosen security, amount, and stop limits. When you are ready, hit the ‘buy’ button. Each broker has its own way of acknowledging the transaction. Check your portfolio to verify your purchase. Be sure to monitor your positions from time to time.

Summary

The Philippines is another central stock market in Asia that is primed for a post-COVID recovery. There are several ways to take advantage of the potential profit opportunity that this market affords. The best shares to buy in the Philippines are numerous and require due diligence before consideration is given. Purchasing shares in an ETF that focuses on this market is also a smart and diversified way to balance risks in your portfolio. In any event, remember to stick to a single strategy, be vigilant, and enjoy the process.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage . 68 % of retail investor accounts lose money when trading CFDs with this provider . You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money .