THE PHILIPPINES may benefit from potential intra-regional flows as more countries in Asia shift away from dollar assets and diversify their portfolios due to skepticism over US economic policy, ANZ Research said.
“However, potential inflows will extend more broadly to economies like India, Indonesia, and the Philippines, depending on investor risk appetite, return expectations, and absorptive capacities,” ANZ said in its Asia Insight report on Tuesday.
ANZ said more countries in the region have started a gradual shift away from US portfolio assets.
It cited the tariff and immigration policies, the potential passage of the ‘One Big Beautiful Bill’ and issues with institutional efficiency, which threaten to add $3.3 trillion in debt.
Among the economies that are diversifying their portfolios are Singapore, Taiwan, Hong Kong, and South Korea, countries that have “robust international investment position surpluses and significant non-central bank foreign holdings.”
These economies also host large non-central bank investors.
ANZ estimates that the diversification will likely be headed by investors rather than central banks, due to their bigger risk appetite.
“The theme of diversification away from US assets is essentially a shift in the ‘push’ factors for global portfolio flows. The dented safe-haven status of the US means a structurally different multipolar financial market environment going forward,” it said.
However, ANZ said identifying which Asian countries will benefit, and by how much, “is currently a challenging proposition.”
“It is probable that a substantial portion of portfolio money withdrawn from the US will initially move to other developed regions such as Europe, Japan, and Australia, or even safe haven assets like gold,” it said.
Meanwhile, ANZ said intra-regional flows could also play a “significant role.”
“Asian economies with substantial NIIP positions and large US asset holdings (such as Singapore, Mainland China, Taiwan, Hong Kong and South Korea) are likely to increase their exposure to the rest of Asian local asset markets, especially to NIIP-deficit economies, guided by economic prospects and absorptive capacity,” it said.
The Philippines’ net international investment position (NIIP) stood at a net external liability of $69.3 billion at the end of March, up 5.8% from the end of December, the Bangko Sentral ng Pilipinas reported. — Aubrey Rose A. Inosante
