New admin, OFW money keep investors’ confidence high
Investors remain confident in the Philippine market because of strong remittance trends and the smooth transition to new administration, a global financial services group said Thursday.
In its quarterly Investor Dashboard Survey, ING Group showed an 18-point increase in investors’ sentiment to 157 points in the second quarter of the year from 139 points a quarter earlier. This increase marks the highest since the fourth quarter of 2007.
“The fact that average daily turnover in stock market is higher by 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,” said PJ Garcia, head and chief investment officer of ING Investment Management Philippines.
“Foreign investors have also been supportive of the local market after pumping in a net inflow of $377 million to date,” Garcia added.
The Netherlands-based firm said that the rise in the Philippines’ gross domestic product – forecast this year from 3.6 percent to 6 percent in June due to strong consumption – may lead to increased optimism, among investors, about the country’s economic situation in both the second and third quarters of the year.
The recent national elections, ING Group said, had positive effects on investors’ sentiment.
The firm also said, “The Philippine Stock Exchange index significantly picked up in the second quarter of 2010. With a 12-percent growth rate as against the first quarter’s 4-percent growth rate, it is not surprising that the number of Philippine investors with a positive outlook towards the stock exchange in the next three months increased, as did interest in high risk or high return investment.”
Garcia said growth assets will continue to outperform defensive assets in this environment where the economy looks poised for sustainable growth, and the global recovery continues to drive overseas Filipino workers’ remittances to record levels and stimulate domestic consumption.
“We continue to enjoy a low interest-rate environment and this encourages investment,” he said, elaborating that on a global picture, emerging markets will continue to outperform developed markets because of favorable dynamics between growth and risk.
“Despite their momentum, leverage remains modest in these parts of the world,” Garcia said.
When asked where Filipinos should invest their money, Garcia said, “The best way to play this recovery is to invest in a fund so you can get the benefits of asset class appreciation without the time-consuming aspect of having to manage the money yourself.”