By: David Cagahastian .
Philippine investors are Asia’s most optimistic and most outward-looking in the region, with their willingness to invest both locally and outside the Philippines to gain returns, the latest Manulife Investor Sentiment Index covering the second quarter of 2014 indicated.
Philippine investors surveyed by Manulife seemed to be less affected by home-market bias than any other investors in the survey. They are most enthusiastic about investing in Canada (76 preference points) and Japan (73 points), above the Philippines (51 points) itself, and show the least for China (44 points), which most other investors in Asia rank higher.
Aside from being optimistic in investing overseas, Philippine investors are also optimistic about investing locally. The sentiment index of Philippine investors for domestic investment stood at 59 points, the highest in Asia.
This optimism in investing locally is evident in all asset classes in the survey, the sentiment scores of which all increased, except for cash. Fixed income saw the biggest increase, up by 5 points to 50 points; followed by stocks, up 4 points to 45. Mutual funds rose 1 point to 36. Property has taken the lead as the most favored asset class, with home property highest at 75, up 1 point in the quarter, while investment property rose by 4 points to 74. Cash was the only asset class to see a decline, down 9 points to 73, but still remains high.
“Filipino respondents were generally upbeat, despite weaker-than-expected first-quarter 2014 GDP [gross domestic product] growth and uninspiring corporate earnings for the same period,” Manulife Philippines Chief Investment Officer Aira Gaspar said.
“We believe sentiment was boosted by a credit-rating upgrade from Standard & Poor’s and an increase in government spending on much-needed infrastructure projects.
The country’s resilient private consumption, rising investment cycle, recovering manufacturing industry and favorable consumer and business confidence bode well for economic activity and a positive earnings growth story. However, investors’ sentiment could turn sour if policy reforms, aimed at addressing infrastructure deficiencies and fostering inclusive economic growth, stall,” she added.
In terms of investment portfolios, Philippine investors tend to favor cash and property over stocks. Of those surveyed, 61 percent said they own investment property, as against the Asian average of 19 percent, while 75 percent said they own their own homes, as against the Asian average of 50 percent.
Conversely, Philippine investors have much lower ownership of stocks (15 percent versus the Asian average of 48 percent) and mutual funds (6 percent versus 23 percent), even though their sentiment toward equities is the highest in Asia.