© Bloomberg. Pedestrians cast shadows on a walkway to the SM by the Bay amusement park in the SM Mall of Asia complex, operated by SM Prime Holdings Inc., at sunset in Pasay City, Metro Manila, the Philippines, on Tuesday, March 6, 2018. SM Prime became the Philippines’ most valuable property company after building 68 malls throughout the nation, but it may just be embarking on its most important project to date: an e-commerce platform to fight off the growing challenge from online retailers. Photographer: Carlo Gabuco/Bloomberg

(Bloomberg) — Wednesday marked the first day of foreign investments into Philippine equity funds after a record streak of withdrawals. But overseas traders remain skeptical.

The net $4.3 million inflow is just a drop in the ocean compared with the $422 million that fled the nation’s stock funds in the previous 44 days. Despite a 17 percent plunge in the Philippine equity index this year, the shares are still expensive relative to their Asian peers, and estimates for corporate-earnings growth aren’t appealing enough, according to Aberdeen Asset Management’s regional branch, HSBC Holdings Plc (LON:) and Banca del Sempione SA.

“Most markets have taken a beating so it’s very difficult to make the Philippines stand out because everything else is attractive,” said Bharat Joshi, a fund manager at Aberdeen Standard Investments. “The story is still good, but valuation has to be taken into context given the headwinds ahead.”

The Philippine Stock Exchange Index has become one of the world’s worst-performing equity indexes this year amid a sinking peso, rising inflation and economic growth that’s slowed to a three-year low. With the U.S. expansion on a strong path and the Federal Reserve raising rates, foreign outflows from the Philippines may continue after the market lured money in eight of the last 10 years, Joshi said.

Wednesday’s inflow was due to investors hunting for bargains after a strong beating, according to Jonathan Ravelas, the chief market strategist at BDO Unibank Inc. Any market rebound will get temporary support from a strengthening peso and drop in commodity prices, he added. The currency posted its biggest jump in almost a year last month on speculation inflation is reaching a peak as Bangko Sentral ng Pilipinas Assistant Governor Francis Dakila said consumer prices are likely to begin easing.

Cheuk Wan Fan, the head of investment strategy for Asia at HSBC Private Bank, said she’s keeping a two-year-old neutral rating on Philippine shares, citing bleak economic data, modest earnings growth, high valuations and the lack of support from dividend yields. She sees a bit of respite possibly coming in mid-2019, with a slower appreciation of the U.S. dollar and peak in U.S. interest rates.

But for now, Philippine shares may suffer some more as investors may keep pulling money from the market amid Fed tightening and rising bond yields, according to Federico Parenti, who helps manage $1.3 billion at Sempione Sim SpA in Milan.

“Money needs a nice reward to be back,” he said. “Philippine market valuations are not so compelling yet, and the currency is not stable. Many bottlenecks in infrastructure make it not the favorite location for investment, so many investors are looking to re-allocate their assets elsewhere.”

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The Worst May Not Be Over for Philippine Stocks By Bloomberg