Philippine Investor Confidence
I recently read an article published by ING Asia on Philippines’ Investor Sentiment. According to the published report, the investor confidence level during Q1 of 2009 further dropped 6% from the 4Q of 2008 values.
Majority of the Filipino respondents in the survey view that the current situation was just an economic slowdown rather than a recession or depression as what other neighboring countries have been experiencing. However, majority of Filipino investors remain concerned about job security.
The survey also said that 60% of Filipino investors are choosing to hold on to cash and deposits rather than invest in 2nd Quarter 2009. This is due to the fact that the credit crunch in the US coupled with inflation will have a higher impact on their investments, thus going to safe investments that aims capital preservation such as cash and deposits.
Looking forward to 2nd Quarter 2009, fewer Philippine investors believe that the economic downturn will worsen and a greater majority are still optimistic that their personal and household income will improve in the next quarter.
As for the return on investments, more and more investors expect a decline. Investor confidence in the telecom and technology industries continued to decline among Filipino investors. Compared to 4th quarter 2008, the two industries experienced a drop following lower consumer demand for related products and news of layoffs and closures by telecom and technology companies.
Filipino Investors have instead focused on the agriculture sector, which was evidenced by the highest increase in confidence. It grew from 25% (Q4 2008) to 43% (Q1 2009), exhibiting the highest investor confidence increase among all surveyed industries.
According to ING Philippines Managing Director Cesar Zulueta, “majority of Filipino Investors are continuing to be more cautious in their investments even as they believe the economic situation would not get any worse.”
He added that “the Philippines is currently one of the better performing markets in the region. Its currency is doing well and its fiscal and external accounts remain sound. The Philippines has gone into this global economic crisis in a resilient position. In light of this, we encourage to consider gradually returning to the market with a long-term view in their investment approach.”
According to the business mirror report, the Philippine Stock Exchange (PSE) index topped other Asean indices with an increase of 6.05% from January to March 2009. This is followed by Indonesia with an increase of 5.8% while the rest of the countries like Malaysia, Singapore, Thailand, and Vietnam experienced a dropped in their stock indices.
What will be your investment decision then? Is it the right time to invest again in risky stocks? As for me, I think I belong to those respondents who belong to the 60% that said they will hold on to cash and deposits for capital preservation. We don’t know yet what to expect from one of the worst global financial crisis that caused the recession of a lot of countries.
How about you, what will be your investment decision?
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April 16th, 2009 at 9:28 am
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April 16th, 2009 at 7:49 pm
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Cutting unnecessary costs would really be the first step, or else, we’d not have the excess money to save or invest. Increasing take-home compensation through higher productivity, enhancing skills, improving competence, getting promoted, or embracing additional part-time or “side-line” job, would also be of great help in increasing your net worth.
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Of course, if your savings are just modest, it would be best to keep them as cash or short-term deposits in stable banks. But if after assessing yourself, you find that you have a comfortable level of cash and short-term deposits, and a stable job, you may consider investing in medium to long-term investments, but definitely, do not pour everything into stocks. Equities have reached very low levels, with some signs of picking up, but there is still room for further drops.
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As for me, although I believe that having a diverse portfolio of hand-picked equities and equity funds will soften the impact on my net worth during market crashes, I only buy stocks using money that I am willing to lose up to 80% in value in a worst case scenario.
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April 16th, 2009 at 8:19 pm
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In my opinion, this crisis posed a good opportunity for young investors since they have a lot of time before retirement. Because of that, they can ride the volatility of the stock market. I assume the stock market will stabilize possibly next year or year 2011.
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April 17th, 2009 at 7:20 pm
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