A benign pace of tightening by the U.S. Federal Reserve and ramped-up stimulus by the European Central Bank should support portfolio inflows, while the country’s rising credit rating is attracting increased FDI. Last year, Fitch, S&P and Moody’s raised the Philippines’ sovereign rating to investment grade, broadening the country’s investor base. In May, S&P further boosted its rating to BBB from BBB-.

At the same time, the government is boosting infrastructure spending to lift the country’s growth potential to as much as 8 percent. Projects worth 404 billion pesos are targeted in 2014, double the amount in 2011. Investment rules allowing greater foreign participation will be finalized this year and applied next year, in time for planned integration with Asean.

?Overseas remittances, which account for 8 percent of GDP, should be supported by rising incomes in Asia and improved economic traction in the U.S. Remittances provide a buffer even during global downturns as many overseas workers are employed in recession-proof professions. Currency depreciation during these periods also amplifies translated earnings.

Eoin Treacy's view

Moving up to investment grade and becoming a new creditor to the World Bank were big achievements of the Philippines which was subject to serial devaluations and debt troubles in decades past. The settling down of the domestic political landscape and the transition of fiscally prudent policies between administrations is an additional bullish factor for the country’s long-term growth potential. 

The Philippines Composite Index hit a medium-term peak a year ago and experienced its largest correction since 2008. Following three failed breaks below 6000, the Index rallied to break its progression of lower rally highs by late March and a sustained move below the 200-day MA, currently near 6500, would be required to question potential for continued higher to lateral ranging. 

The Philippine Peso fell by 10% against the Dollar in 2013 but stabilised around the same time as the stock market in January and ranging appears to be the most likely scenario.