MANILA, Philippines - Philippine investors are the most upbeat in Asia over economic growth prospects, according to a survey conducted by Manulife Financial.
Manulife Investor Sentiment Index for Asia showed that Philippine investor sentiment, along with a growing interest towards equities, lifted overall regional investor sentiment slightly higher in the fourth quarter of 2013.
Manulife Philipines president and chief executive officer Ryan Harland said the Philippines emerged at the forefront of Southeast Asia’s developing markets, based on the strong gross domestic product (GDP) growth for two consecutive years in 2012 and 2013.
Manulife Philippines is a member of Manulife Financial, one of the world’s leading insurance and financial institutions.
“The upbeat sentiment of Philippine investors at 66 points mirrors consumers’ mounting confidence in this economy which has been able to withstand natural disasters as well as tolerate global market volatility,†Charland said. “Investors’ high sentiment is also an indicator of the growing demand for investment vehicles enabling them to take advantage of market conditions and strong economic fundamentals.â€
Despite widespread speculation about tapering of the quantitative easing program in the US and its potential impact on bonds, Philippine investor sentiment towards fixed income (60 points) remained substantially above equities (48 points).
However, fixed income ranked low when it comes to actual investment, with investors holding just five percent of their portfolios in bonds.
The Manulife chief executive said investors tend to shift their exposure from a non-performing asset class, like cash to fixed income securities, with higher recurring income potential for 2014.
Local bond rates are expected to move upwards in the near term because of rising supply-side price pressures, thus local bonds are expected to generate positive returns in the long-term given the country’s favorable growth prospects, which are supportive of continued debt and fiscal consolidation.
“While the local bond market is not immune to shifts in global risk appetite, it is less vulnerable to fund outflows and tightening of funding conditions. In this case, the Philippines is benefitting from relatively low offshore participation and continued domestic liquidity formation, which is underpinned by structural inflow of foreign exchange receipts,†the chief executive added.
In Asia, investor sentiment towards equities increased.
Investor sentiment towards equities in Japan climbed to 36 from 21 in the fourth quarter, driven by a 57-percent rise in the Tokyo stock market in 2013. However, the index for Japan still lagged the US (52 points), where the Dow Jones Industrial Average rose 26.5 percent during the year.
The gains in the Japanese stock market were spurred by better corporate performance as unprecedented government stimulus – popularly coined “Abenomics†– has driven rounds of currency depreciation, a pick-up in the economy and modest inflation. However, the gains were not mirrored in Japanese investors’ equity holdings, which dropped three points to 16 percent of their portfolios.
In Malaysia, sentiment towards stocks rose to 30 from 18 in the third quarter, perhaps getting a boost from the local stock market’s strong finish to the year – up 10.5 percent in 2013.
In the Philippines, many investors were positive towards stocks (48) as those in the US (52), with optimism over its economy being one of the fastest growing in Asia, rather than the stock market, which rose only 1.3 percent during the year.
Manulife Philippines ranks among the top 10 life insurance companies in the country.