Buy Philippine Banks Shares, Sell Utilities, ING's Garcia Says

By Ian C. Sayson

Sept. 2 (Bloomberg) -- Investors should buy Philippine banks and reduce holdings of utilities to benefit from an expected slowdown in inflation, ING Investment Management Ltd. said.

ING Investment, which manages the country's biggest equity fund, is holding more bank shares than are represented in the benchmark Philippine Stock Exchange Index, and fewer utility shares, said Paul Joseph Garcia, chief investment officer at the firm's Manila unit. He's also buying more property stocks.

The Philippine Stock Exchange Index has slumped 25 percent this year on concern record oil prices, rising inflation and widening credit losses in the U.S. will slow global growth and squeeze corporate earnings. The measure climbed 4.3 percent in August, on speculation falling oil prices will ease inflation. Crude dropped 7 percent last month.

``Inflation may have already peaked in August,'' Garcia, who oversees 7 billion pesos ($151 million) of stock investments, said in an interview. ``We can afford to become less defensive.''

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net