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For nearly all of last year and the first several months of this year, the iShares MSCI Philippines ETF (NYSEARCA:EPHE) was a juggernaut among emerging markets ETFs, a scenario some prescient analysts and investors predicted would be the case.

Buoyed by a thriving domestic-demand driven economy, the country's status as one of the world's top business process outsourcing destinations and a strong government balance sheet, EPHE climbed higher as ratings agencies lauded the country with its first taste of investment-grade credit.

Fast-forward to May and although EPHE had been outperforming ETFs tracking far larger emerging markets for months, the specter of the U.S. ending quantitative easing became too much for this fund and others like it to bear. The peso plunged and so did EPHE, tumbling to a second-quarter loss of 13.5 percent. That may have been the buying opportunity some were waiting for in an ETF that offered precious few buyable dips dating back to 2012.

However, investors that actively follow what global banks have to say will find a split decision on the Philippines. On Monday, Goldman Sachs lowered its outlook for Asian equities. The bank is currently overweight South Korea, Singapore and Thailand and underweight Australia, Hong Kong, Malaysia, Philippines and Taiwan, according to CNBC.

ANZ sees the Philippines in a different light. The bank sees the country posting GDP growth of 7.1 percent this year, which is not far below what some economists are forecasting China will deliver.

"Government finances have room to further support growth. The 2013 government budget was increased by 10.5% from the previous year....In Q1, public consumption got a 13.2% y/y boost due to spending on direct subsidies for the poor and other social related programmes," said ANZ according to the Financial Times.

The bank is particularly bullish on the construction and manufacturing sectors. A bullish outlook for Philippines builders should translate to a strong view on the financial services sector, which represents almost 41.4 percent of EPHE's weight. Industrials are the next biggest sector within the $374.1 million ETF at weight of nearly 25 percent.

The weak peso situation may also be overdone. Indeed, some banks have revised their USD/PHP forecasts to account for more peso weakness. For example, HSBC adjusted its previous forecast of 40.2 pesos to one dollar to a year-end forecast of 43.5 to a buck. Even that and other bearish peso outlooks come to fruition, it may not be all bad news for the Philippines .

Obviously, the weak peso is a boon for exporters and is also seen as a help to the business process outsourcing industry. Overlooked is the fact that many Filipino expatriates living in the U.S. send dollars to family members back home. Those dollars buy more pesos today than they did a few months ago, enabling the strong domestic consumption trends to continue.

Then there is fact that the second-quarter swoon made Philippine equities cheaper than they had been in at least a year. The country's stocks are still pricey relative to other Southeast Asian markets and EPHE looks richly valued compared to a broader gauge of emerging markets fare, the Philippines Stock Exchange Index traded at 18 times projected 12-month earnings last month,according to Bloomberg.

That P/E ratio is below that seen on February 25 when the PSE traded at nearly 19 times 12-month earnings. From there EPHE rallied from around $39 to its May highs above $43.

Disclaimer: Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Source: Revisiting The Philippines ETF