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Philippine Stocks Gave World’s Best Returns

CARL HARTMANApril 26, 1989

WASHINGTON (AP) _ An investor looking for a place to put $1,000 in 1984 might not have thought of the Manila stock market, but if he had taken the plunge he would have found the average return on his investment at the end of last year to be $14,880, said a study published Wednesday.

On U.S. markets, the average return for the four years - the value of the stocks themselves plus dividents - would have been a tame $1,910.

Manila showed the best average return worldwide in a study by the International Finance Corporation, which looked at stock markets in both major money centers and 31 Third World countries.

The corporation, owned by 133 governments, is the agency of the World Bank that lends to private industry.

The corporation’s Charles O. Sethness said the large gain in the value of stocks on the stocks on the Manila exchange ″was all due to the instability until (former President Ferdinand) Marcos left.″

The Manila exchange jogged along through 1985 without much change, despite the violent political campaign that led to the victory of President Corazon Aquino, but took off after Marcos flew to exile in Hawaii in February 1986.

By June 1987, the average return on stocks had reached a level nearly 16 times the level of 1985.

There was a sharp drop in Manila when markets worldwide crashed in October 1987. But, by the end of last year, total returns were back almost to their peak.

Returns on stock in the Third World seem to have little to do with a country’s prosperity. According to the World Bank, the average Filipino had an annual income of only $590 in 1987, a slight increase after a decline of several years. The country has an active Communist insurgency and a $30 billion debt.

An investor in the market of relatively prosperous South Korea would have done well, but only a little more than half as well as in the Philippines. His $1,000 would have turned into $7,890 in the four years.

In the southern African republic of Zimbabwe headed by President Robert Mogabe, a professed Marxist, the return would have been only a little less, $7,320.

The survey does not cover other countries where governments call themselves socialist but are experimenting with capitalism. Sethness said a market in Shanghai deals only in what he considers preferred stocks, while in Budapest the trading has been largely in bonds. He reported that the Yugoslav government has been consulting with the corporation on the possibiity of opening a market but has not yet done so.

Brazil turned in the best market performance in 1988 although the country has the Third World’s largest debt and inflation was running at more than 1,000 percent by the end of the year. The hottest stock was Acesita, a steel company, which chalked up a return of $8,313 for shares worth $1,000 at the start of the year.

As in any market, investors can lose their shirts on Third World exchanges. Stock prices were mostly down last year in southern Europe and Africa, by 37 percent in Turkey and Venezuela and by 25 percent in Portugal.

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