Investor confidence climbs to 2-year high

Investor confidence in the second quarter reached levels unseen in two years based on the quarterly ING Investor Dashboard Sentiment Index which showed 157 points for the country in the second quarter, second only in the region to India which got a score of 172 in the survey.

Global financial firm ING attributed the 18-point surge in confidence on the country from the previous quarter’s 149 points to strong remittance trends and the transition to a new administration.

The survey also showed a rising optimism in the Philippines property sector in contrast to most Asian markets outside Japan which were more pessimistic in the second quarter compared to the first quarter in terms of local property prices.

“Philippine investors see an increasing positive impact from US economy on their investment decisions in the second quarter while investors from other markets see otherwise,” it added.

ING also cited the Philippine Stock Exchange index (PSEi) rising by 12 percent during the period which likely drove investors to increase their positive outlook toward both the stock exchange and the high risk-high return investment sector in the next three months.

The survey showed 75 percent of local investors believe that the new administration can promote a stable investment climate in the Philippines.

Based on the ING survey, the Philippines has been experiencing growth in investor confidence since the final quarter of last year.

“The fact that average daily turnover in stock market is higher 31 percent from a year earlier and mostly driven by local activity is affirmative of investors’ combined optimism on the economy and prospects of a new government,” PJ Garcia, head and chief investment officer of ING Investment Management Philippines, said.

“Foreign investors have also been supportive of the local market after pumping in a net inflow of $377 million to date,” he added.

The rise in the country’s gross domestic product (GDP) growth forecast this year from 3.6 percent to six percent in June on back of strong consumption may lead Philippine investors to be increasingly optimistic about the country’s economic situation in both the second and third quarters, according to ING.

ING added that while it is generally acknowledged that the new administration will not drive significant reforms and policy direction, it is likely that the removal of political uncertainty was reason enough to spark a substantial 39 percentage point leap in the second quarter to 79 percent in the number of investors who believe the new administration will make a positive impact on the economy.

The survey showed in the second quarter, 79 percent of local investors are now confident that the economy will progress after the elections, while 80 percent believe that the elections will also have a positive impact on investment decisions and activities.

According to the latest survey, 39 percent of investors said inflation had a positive impact on their investment decisions, a large increase from 24 percent in the first quarter.

In the next three months, 52 percent of Philippine investors expect inflation to rise further. At the same time, a considerable 70 percent see inflation climbing throughout the year, the survey showed.

Among investors who said their investment decisions will be affected by inflation, there is a slight increase in the percentage of investors who will invest more for higher returns, re-allocate their current investment portfolio to invest less, and build on reserves to beat inflation.

Philippine investors rank cash or deposits (46 percent), properties (38 percent), and foreign currency (34 percent) as the top investment tools to beat inflation.

The positive impact of domestic interest rates on investment decisions by Philippine investors in the past three months had quite a sizeable increase from 33 percent in the first quarter to 49 percent in the second quarter.

Eight percent more investors expect a rise in domestic interest rates in the next quarter, as opposed to the first quarter.

Respondents remain optimistic as they expect more positive impact and less negative impact on their investment decisions from domestic interest rates in the next three months, the survey showed.

Among investors whose investment decisions will be affected by domestic interest rates, a majority (45 percent) will invest more and re-allocate their current investment portfolio, while 28 percent are undecided, and 27 percent will invest less and re-allocate their current investment portfolio. –Daily Tribune