Posted at 05/04/2011 4:16 PM | Updated as of 05/04/2011 8:32 PM
MANILA, Philippines (UPDATE) - The country's biggest state pension fund, GSIS, has started withdrawing foreign placements worth $675 million and will reinvest these locally as uncertainty over the pace of global economic recovery grows, and with prospects of better returns in the country, its president said on Wednesday.
Robert Vergara, president of the Government Service Insurance System (GSIS), said the agency expects to receive the full amount from its overseas investments in June, but the impact on the foreign exchange market should be minimal as the fund had already hedged this amount.
"Nobody foresaw the turmoil in the Middle East and North Africa, nor did we see the tsunami that devastated Japan," Vergara, former managing director of a Hong Kong-based hedge fund, told Reuters in an interview at his Manila office.
"The unclear outlook for the global economy relative to the improving prospects of the local markets justified our decision to bring these (investments) back here," he said. "We have an improving fiscal position and we have the momentum of growth from last year."
The Southeast Asian economy grew 7.3% in 2010, the fastest in more than three decades, and the government is aiming to grow the economy by a similar rate this year. The Philippines is also on track to meet its target of a narrower budget deficit of 3.2% of GDP this year from 3.7% in 2010.
GSIS began its overseas placements in 2008 before the global financial crisis peaked, investing $600 million in stocks and bonds in countries such as the United States, United Kingdom, Germany, France, Japan, and Australia-- a move some critics said then were ill-timed.
More than $400 million of GSIS' overseas investments are managed by Amundi -- the fund management unit of Credit Agricole -- which invests in fixed income and equities in developed markets, while the rest are handled by Pimco, the world's largest bond fund manager.
GSIS, with assets of more than P550 billion ($12 billion), said it wants to raise its equities portfolio from the current 6% to 7%. Vergara said the pension fund was interested in investing in energy, banking, and mining stocks but did not specify the companies it was considering.
Vergara also said GSIS was keen on investing in real estate investment trusts and major infrastructure projects under the government's public-private partnership (PPP) program.
"If we find investments within the president's PPP program which meets and match our requirements, then we will look at them with the intention of maybe participating directly in each investment," Vergara said.
GSIS has already committed to buy the governmentinfrastructure bonds worth P50 billion, part of a P200-billion funding facility for the PPP projects.
Vergara said the pension fund may consider going back to the overseas markets once the global economy was on a solid recovery path.
Robert Vergara, president of the Government Service Insurance System (GSIS), said the agency expects to receive the full amount from its overseas investments in June, but the impact on the foreign exchange market should be minimal as the fund had already hedged this amount.
"Nobody foresaw the turmoil in the Middle East and North Africa, nor did we see the tsunami that devastated Japan," Vergara, former managing director of a Hong Kong-based hedge fund, told Reuters in an interview at his Manila office.
"The unclear outlook for the global economy relative to the improving prospects of the local markets justified our decision to bring these (investments) back here," he said. "We have an improving fiscal position and we have the momentum of growth from last year."
The Southeast Asian economy grew 7.3% in 2010, the fastest in more than three decades, and the government is aiming to grow the economy by a similar rate this year. The Philippines is also on track to meet its target of a narrower budget deficit of 3.2% of GDP this year from 3.7% in 2010.
GSIS began its overseas placements in 2008 before the global financial crisis peaked, investing $600 million in stocks and bonds in countries such as the United States, United Kingdom, Germany, France, Japan, and Australia-- a move some critics said then were ill-timed.
More than $400 million of GSIS' overseas investments are managed by Amundi -- the fund management unit of Credit Agricole -- which invests in fixed income and equities in developed markets, while the rest are handled by Pimco, the world's largest bond fund manager.
GSIS, with assets of more than P550 billion ($12 billion), said it wants to raise its equities portfolio from the current 6% to 7%. Vergara said the pension fund was interested in investing in energy, banking, and mining stocks but did not specify the companies it was considering.
Vergara also said GSIS was keen on investing in real estate investment trusts and major infrastructure projects under the government's public-private partnership (PPP) program.
"If we find investments within the president's PPP program which meets and match our requirements, then we will look at them with the intention of maybe participating directly in each investment," Vergara said.
GSIS has already committed to buy the governmentinfrastructure bonds worth P50 billion, part of a P200-billion funding facility for the PPP projects.
Vergara said the pension fund may consider going back to the overseas markets once the global economy was on a solid recovery path.
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