Filipino investors most optimistic in Asia, says Manulife

Philippine investors were tagged as the most optimistic in all of Asia despite volatile market conditions as of the end of last year, with overall sentiment getting a boost from solid economic growth.

Results of a Manulife’s latest Investor Sentiment Index for Asia, however, showed that most Filipinos were still content to keep the bulk of their assets in the form of idle cash, exposing them to losses due to higher inflation and interest rates, and currency depreciation.

“Having seen strong GDP (gross domestic product) growth for two consecutive years in 2012 and 2013, the Philippines has emerged at the forefront of Southeast Asia’s developing markets,” Manulife Philippines president and CEO Ryan Charland said.

The company noted that the upbeat sentiment of Philippine investors at 66 points, mirroring the consumers’ rising confidence in the economy which has been able to withstand natural disasters and global market volatility.

“The 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,” Charland said.

Philippine investors were seen as more optimistic toward fixed-income assets over equities, despite widespread speculation about tapering of the quantitative easing program in the United States and its potential impact on bonds.

“Local bond rates are biased to move upward in the near term because of rising supply-side price pressures, we expect local bonds to generate positive returns in the long-term given the country’s favorable growth prospects, which are supportive of continued debt and fiscal consolidation,” Manulife Philippines chief investment officer Aira Gaspar said.

In the meantime, Manulife noted the local investors’ “logic-defying” preference to keep their wealth in the form of cash.

Philippine investors keep a “massive” 56 percent of their total assets, excluding their own home and other property, in cash. For most investors, this was equivalent to about 11 months of personal income.

“They prefer to hold on to cash because they want safety and liquidity,” the firm said, but added that only a third of this cash is held for day-to-day and unexpected expenses. This leaves nearly two-thirds of the cash sitting idle.

The company noted that most Philippine investors were willing to give up solvency, but only if returns are guaranteed. More than half said they would consider investing more in products that offered guaranteed income (61 percent), Manulife said. The remaining 34 percent said they would move their cash if the investment offered steady returns (34 percent).