In ASEAN, GDP forecasts were pulled lower, with the exception of the Philippines,where we pushed up our growth estimates to top consensus. Our relative comfortwith the Philippines is not just because of its growth outlook, but also because of theinsular nature of its economy, which may serve it well amid heightened globaluncertainties. Factors favouring the Philippines at the moment include the country’slow reliance on exports, its resilient consumption, the promise of investments, a lowpenetration rate, and relative political stability. The typical pushback on the countrywill be valuations, as its latest FY17e PE of 18.3x is above the historical mean of17.2x and the ASEAN average PE of 13.7x. In fact, the PCOMP is not only the mostexpensive index in ASEAN, but also in Asia. The Philippines is not known for beingan inexpensive market, as the PCOMP PE did not hit the single digits even at itslows in 2002, and the market lags in terms of its dividend appeal. Our preferredPhilippine Buy ideas are Metrobank (MBT PM, TP: PHP114) and Ayala Land (ALIPM, TP: PHP43.35 – a constituent of both the HSBC Asia Super Ten and the GEMsSuper 15 portfolio). Our non-consensus Reduce rating is on URC (URC PM,TP: PHP160).