Investor confidence in the Philippines has dropped to the second worst among 10 countries in the pan-Asia region based on the latest survey of global financial services giant ING.
The quarterly ING Investor Dashboard Survey showed the local investor confidence index slipping slightly to an index score of 134 in the last quarter of 2009 from 135 in the previous quarter.
The drop in the score in the ING survey placed the Philippines at ninth position ahead only of Korea which got the lowest index score of 128 in the latest survey.
In the third quarter, the Philippines was at seventh place ahead of Malaysia, Indonesia and Thailand in the confidence index.
ING said the slide in investor confidence in the country may have been related to the effects on the economy of the damage caused by strong typhoons that hit the country around October and the political disturbance caused by a mass murder in Mindanao that happened in November.
With the significant losses following one of the worst flooding disasters in the country’s history, increases in commodity prices and in the number of unemployed are potentially expected scenarios, according to ING.
ING said the impact of the natural disaster, along with widespread news of a political mass murder in Mindanao, may have been key factors in the weakened consumer sentiment in the fourth quarter of last year as well as in the flattening of investor optimism and confidence.
The survey noted a sharp decline in Philippine investors’ evaluation of the economic situation with 43 percent saying that it had improved in third quarter of last year compared to only 35 percent who said it improved in last quarter.
Their outlook also that the economic situation will improve in the next three months dropped from 67 percent in third quarter to 58 percent in the fourth quarter.
The survey also showed majority of investors at 40 percent believe that the presidential elections in May will have a positive impact on their investment portfolio.
While this figure is slightly lower than the third quarter of last year’s score of 41 percent, the number of investors saying the elections will have a negative effect on their investment portfolio has decreased from 33 percent in the third quarter of last year to 23 percent in the final quarter.
The top three policy programs that Filipino investors want the next president to focus on in order to drive a stronger investment climate are: economy (74 percent), education (60 percent) and healthcare (44 percent), the survey showed.
Investors’ view of the local stock market remains somewhat cautious, with 27 percent saying they plan to increase investment in the next three months; 42 percent indicate they expect the market to rise in the first quarter, which was virtually unchanged from 43 percent in the last quarter of 2009.
“The figure is still a vast improvement from the results of the second quarter of last year, when 58 percent said the stock market would drop and only 20 percent said it would rise,” ING stated.
“Numerous industry professionals believe that the local equity market continues to hold good upside for 2010. Barring negative developments, especially in relation to the elections, the country’s strong corporate fundamentals and healthy consumer and overseas remittance sectors should bode well for the market,” Cesar Zulueta, managing director of ING Bank N.V. Manila branch, said.
The survey showed investors’ views on their household financial situations in the last three months fared better in the latest survey with 39 percent indicating that it improved in the third quarter of last year compared to 47 percent who saw improvement in the last quarter. Similarly, 42 percent of investors noted an improvement in their personal financial situation in the third quarter survey against 51 percent for the fourth quarter.
The investment climate at the end of the third quarter of 2009 was challenging, yet in the final quarter of 2009 study, 49 percent of investors noted that their return on investment (RoI) increased in the last quarter, a significant jump from 34 percent in the third quarter study.
“When asked about their outlook for the first quarter of the year, there was a slight dip in optimism. With regard to their personal financial situation, 64 percent of investors said it would improve in the next quarter compared to 67 percent in third quarter of 2009, while 61 percent believe that their household financial situation will improve in the next quarter compared to 62 percent in the third quarter,” ING added.
Similarly, the number of investors who believe RoI will increase in the coming quarter dropped from 59 percent to 56 percent while those who said RoI would not change in the next quarter increased from 30 percent to 35 percent, it said. –Daily Tribune
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