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THE
surge in oil and rice prices has dampened investor
confidence in the Philippines to “neutral,” the first
time in four consecutive quarters, according to the
latest ING Investor Dashboard Survey.
Investor
sentiment in the Philippines followed the general trend
of markets across Asia, having moved into “neutral” in
the second quarter of the year from “optimistic” the
past four quarters.
ING
noted that while the country is currently placed fourth
among 13 Asian markets included in the
investor-confidence survey, the Philippines’ investment
sentiment score fell to 110 in the second quarter of the
year from 121 in the first quarter.
The
Philippines displayed one of the steepest declines in
investor sentiment in Asia, along with Thailand,
Malaysia and Indonesia.
“The
sharp increases in the prices of fuel and rice in the
Philippines coincided with the latest survey, which was
conducted from late May to June 2008. The country had
greater exposure to extreme oil price increases. Rice
and fuel might have been the biggest contributors to the
decline in investor confidence,” ING Investment
Management Philippines CEO Cesar Zulueta said in a
statement.
“However, the country’s score has not yet dropped to the
‘pessimistic’ level because there remains the outlook
that the Philippines can weather the US economic
slowdown through overseas Filipinos’ remittances. The
Philippines’ investment sentiment score of 110 remains a
point higher the pan-Asia index of 109,” Zulueta added.
Of the
Philippine investors surveyed, 62 percent said they feel
the economy deteriorated in the second quarter, which
represented a big drop from the 26 percent posted in the
previous quarter.
Philippine investor sentiment, however, was also better
than Korea’s with 85 percent of respondents, saying that
the Korean economy deteriorated in the second quarter.
The same was true for Thailand and Indonesia: 82 percent
of Thai respondents and 76 percent of Indonesians said
their respective economies deteriorated.
The
study also showed more domestic investors were
optimistic the economy will improve in the following
quarter. Only 31 percent of Philippine investors
surveyed in the second quarter say the economy will
deteriorate in the next quarter, compared to 37 percent
in the previous quarter. The outlook for the stock
market, however, remained largely unchanged.
On
inflation, the ING survey showed that 65 percent of
Philippine investors expect inflation to rise. The
latest National Statistics Office (NSO) data showed
inflation rising to 11.4 percent in June, a 14-year
high, due to soaring prices of rice and other food
items.
The
subprime meltdown impacted significantly on Filipinos’
investment sentiments in the second quarter, and is also
expected to continue to have an effect in the third
quarter.
ING also
said that while investors are almost equally split
three-ways regarding their views on the US economy in
the third quarter, 75 percent of those surveyed feel
that the US economic situation will have an effect on
their investments, particularly since the US is the
Philippines’ major trading partner.
In other
parts of Asia, survey results show developing markets in
Southeast Asia lead the overall decline in investor
sentiment as local market and political developments
coupled with global economic pressures weigh on
investors.
On
average, investors across Asia said they made fewer
investment transactions in the second quarter. The
survey also revealed inflation to be a key worry, with
65 percent expecting inflation to rise even further.
The ING
Investor Dashboard is the first quarterly survey in the
Asia Pacific that provides a pan-Asia investor-sentiment
index covering 13 markets in the Asia Pacific.
The
survey covered Hong Kong, China, India, Indonesia,
Korea, Malaysia, the Philippines, Singapore, Taiwan,
Thailand, Japan, Australia and New Zealand. The pan-Asia
investor-sentiment index includes all Asia markets and
excludes Japan, Australia and New Zealand.
The
survey provides market insights on investor attitude and
outlook, as well as allowing each market to be
benchmarked and tracked against the overall investor
sentiment across Asia using the pan-Asia index. |
