The iShares MSCI Philippines Investable Market Index Fund
long one of our favorite ETFs around these
has fallen on hard times recently.
Swept up in the global calamity that has punished nearly every
emerging markets ETF under the sun, EPHE has slid 6.1% in the
past month. To EPHE's credit, that performance is vastly superior
to what the iShares FTSE China 25 Index Fund (NYSE:
), the iShares MSCI Thailand Investable Market Index Fund (NYSE:
) and the Market Vectors Indonesia ETF (NYSE:
) have offered over the same time.
Interestingly enough, EPHE could be on the receiving end of a
near-term boost and that catalyst has nothing to do with emerging
markets strength or the Philippine economy itself. You see, Manny
Pacquiao, arguably the greatest boxer of his generation and
easily the most accomplished and recognizable Philippine athlete
of all time, defends his WBO welterweight title Saturday night in
Las Vegas against American Timothy Bradley.
Think another Pacquiao fight is meaningless to EPHE? Think
again. The ETF, now home to $142.2 million in assets under
management, debuted in late September 2010. Since then, Pacquiao
has fought three times, winning on all three occasions. The last
two victories, one against Shane Mosley and the next against Juan
Manuel Marquez, came at the MGM Grand Garden Arena, site of
The relevance to EPHE is this: In two instances, the ETF was
higher the Friday after Pacquiao victories than it was the Friday
before the fights. The outlier of the three was the last fight,
but EPHE was only lower by about 50 cents a week after the fight.
More importantly, EPHE gained nearly 10% in the 60 days following
Pacquiao's win's against Mosley and Marquez.
Admittedly, a lot of this can be deemed conjecture,
coincidence or just some fun stuff with which to pass the trading
day. Then again, there is something to the way
global markets react following major sporting
events involving their countrymen
. It's been documented and proven, so laughing at the idea is,
As for the more legitimate fundamentals, EPHE has those. The
Philippines is poised to see its credit ratings upgraded as it's
absurd this country has junk status and Spain does not, at least
not from S&P and Moody's. Other things to like about the
Philippines: A current debt-to-GDP ratio of around 50%.
Controlled inflation relative to many other emerging markets.
Then there is the World Bank GDP growth forecast of 4.2% this
year and 5% in 2013.
So if you don't want to bet on boxing, bet on EPHE. A Pacquiao
victory would just be icing on the cake.
For more on the Philippines ETF, please click
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