Thursday, 16 July 2009

Investors turn upbeat on the Philippines

Doris Dumlao
Philippine Daily Inquirer

MANILA, Philippines - Investor sentiment in the Philippines has turned more upbeat in the second quarter alongside a rosier global outlook but the pace of improvement lagged the pace seen in other Asian emerging markets, the latest quarterly survey by Dutch financial giant ING showed.

ING’s second-quarter Investor Dashboard Survey showed a significant 27-point increase in investor sentiment in the Philippines for the second quarter from 89 to 116.

“This quarter-on-quarter 30-percent improvement indicates revived investor confidence amid the gains in the global and local stock markets in the first half of the year,” ING said in a statement.

But ING also pointed out that the sentiment remained in the “neutral” category, lower than the overall pan-Asia index.

“While all markets had improved investor confidence for this quarter, the Philippines is one of five markets that are still in the neutral zone,” it said.

All key investment sentiment indicators for the Philippines increased in the second quarter but at a smaller degree than other markets, with the Philippines garnering one of the lowest improvement ratings among the 13 markets.

Commenting on the survey results, ING Manila managing director Cesar Zulueta said: “Despite registering modest improvement rates, the latest survey findings simply reinforce our belief that the Philippine economy is more stable than most in the region and less affected by global and regional market fluctuations.”

“We are seeing an increase in investor confidence, and depending on their risk profile, we recommend investors to begin considering more risky assets such as equities as the bottoming of interest rates may eventually lead to fewer opportunities for fixed income securities,” he added.

ING said that with the Philippine stock market growing 24 percent, Philippine investors’ economic and financial outlook brightened, but they maintained a “conservative” investment strategy. The survey showed that 40 percent of Philippine investors were expecting that the negative impact of the US economic crisis on investments would wane by the third quarter of this year.

The overall pan-Asia (excluding Japan) ING Investor Dashboard Sentiment index increased to 132 for the second quarter from 85 a quarter ago, despite continued economic uncertainty across most markets in Asia. The survey results showed the biggest quarter-on-quarter increase in investor sentiment since the Index was introduced in the third quarter of 2007, moving the index from the “neutral” into the “optimistic” category.

The survey is conducted across 13 markets in the Asia Pacific, and not only provides market insights on investor attitude and outlook but also allows each market to be benchmarked and tracked against the overall investor sentiment across the region using the pan-Asia index.

The rebound of regional and global markets is seen to have influenced the improvement in investor sentiment in the Philippines with 27 percent of investors believing that the economic situation in the country has improved versus 11 percent in the previous quarter.

The survey also showed that more Filipino investors believed that their household financial situation has improved (35 percent from 23 percent in the first quarter). They also said their personal financial situation also improved (32 percent versus 26 percent) and 50 percent believed that it would continue to improve in the next quarter, compared to 44 percent in the previous survey.

Majority of Filipino investors (52 percent) believed that the economic slowdown would have an impact on job security and 64 percent said it would influence their investment decision.

Inflation affected 68 percent of Filipino investors’ decision to invest last quarter, with 59 percent of Philippine investors indicating that inflation would rise in the third quarter, again suggesting this would impact their investment decision in the next quarter.

Strong financial market performance in the second quarter was marked by an increase in return of investment for 36 percent of surveyed Filipino investors compared to 20 percent in the first quarter. As a result of the positive return on investments observed last quarter, 49 percent of Filipino investors now expect investment returns to continue to increase in the third quarter.

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