MONEY SENSE: Manulife Helps Investors To Make Sound Judgement

MONEY SENSE: Manulife Helps Investors To Make Sound Judgement

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Philippines investors look far and wide for opportunities, but stay close to home for investment and advice – Manulife Survey

• Philippines investors favor developed economies over emerging Asia and show least home-market bias of any investors in Asia 
• Personal networks, bricks and mortar dominate approach to investing 
• Philippines investors remain most optimistic in Asia

Investors in the Philippines are among Asia's most optimistic and most outward-looking, given their willingness to invest outside the Philippines to gain returns, according to the latest Manulife Investor Sentiment Index* covering the second quarter of 2014.

Philippines investors reach across emerging Asia to mature markets

When asked which region they think is best to invest in, Philippines investors point to developed Asia, Australasia and North America over emerging markets, including emerging Asia and the Middle East and North Africa.

Fig. 1 – Philippines investors favour developed and distant markets over China and emerging Asia

Philippines investors seem less affected by home-market bias than any other investors in the survey. Given a selection of single markets, they show most enthusiasm for Canada (76 points) and Japan (73) above the Philippines itself (51), and show least for China (44), which most other Asia investors rank relatively higher.

When it comes to growth, Philippines investors are also most optimistic about Japan and Canada, with 19 percent believing that Japan’s economy will be the fastest growing in the next two years, followed by Canada, China and Australia. This contrasts markedly with the average Asia investor, 27 percent of whom expect China’s economy to grow fastest, followed by much lower expectations for Japan Australia and Canada.

Fig. 2 – Philippines investors’ views of which markets will grow fastest contrasted markedly with investors elsewhere in Asia

"Our research suggests that Philippines investors’ preference for Japan is likely related to Japan’s first quarter GDP growth which came in at 6.7 percent on strong consumer demand ahead of the implementation of a new goods and services tax," said Aira Gaspar, CFA, Chief Investment Officer of Manulife Philippines.

“It's also interesting that Philippines investors seem so keen on Canada. We think there is a sound basis for this given that Canadian equities outperformed their developed market peers in the first quarter."

Philippines investors rely on friendly advice, ‘bricks and mortar’ approach to portfolios

Despite their international outlook, Philippines investors place their faith closer to home when it comes to making investment decisions, with 88 percent relying on or referring to family, friends or colleagues as a source of advice – the highest level in the region and well above the regional average of 58 percent. They are less dependent on industry staff, mass media or online sources of investment advice.

Philippines investors also have a very ‘bricks and mortar’ approach to portfolio composition, with 61 percent saying they own investment property (against the Asian average of 19 percent) and 75 percent owning their own home (against an Asian average of 50 percent). Cash and property together make up the bulk of their portfolios. Conversely, they have much lower ownership of stocks (15 percent versus the Asian average of 48 percent) and mutual funds (6 percent versus 23 percent) – even though their sentiment towards equities is the highest in Asia.

“Philippines investors rely largely on their own networks for their investment decisions" said Ryan Charland, CEO of Manulife Philippines. "While it is comforting to speak with family and friends for investment advice, investors would benefit from consulting investment professionals, who could help them build a sound and diversified portfolio that meets their medium to long-term financial goals.”

Philippines investors are Asia's most optimistic

In addition to their positive views about investing overseas, Philippines investors remain optimistic about investing at home with the sentiment index for domestic investment at 59, the highest in Asia. This optimism was spread across all asset classes in the survey, which all saw increases except cash. Fixed income saw the biggest increase, up 5 points to 50; followed by stocks, up 4 to 45. Mutual funds rose 1 point to 36. Property has taken the lead as the most favored asset class, with home property highest at 75, up 1 in the quarter, while investment property rose by 4 points to 74. Cash was the only asset class to see a decline, down 9 to 73, but still remains high.

”Filipino respondents were generally upbeat, despite weaker-than-expected first quarter 2014 GDP growth and uninspiring corporate earnings for the same period,” confirmed Ms. Gaspar. “We believe sentiment was boosted by a credit rating upgrade from Standard & Poor’s and an increase in government spending on much-needed infrastructure projects. The country’s resilient private consumption, rising investment cycle, recovering manufacturing industry and favorable consumer and business confidence bode well for economic activity and a positive earnings growth story. However, investors’ sentiment could turn sour if policy reforms aimed at addressing infrastructure deficiencies and fostering inclusive economic growth stall.”

For more findings and related information from the Manulife Investor Sentiment Index in Asia, please visit www.manulife-asia.com.

*About Manulife Investor Sentiment Index in Asia

Manulife’s Investor Sentiment Index in Asia is a quarterly, proprietary survey measuring and tracking investors’ views across eight markets in the region on their attitudes towards key asset classes and related issues. The Index is calculated as a net score (% of “Very good time” and “Good time” minus % of “Bad time” and “Very bad time”) for each asset class. The overall index is calculated as an average of the index figures of asset classes. A positive number means a positive sentiment, zero means a neutral sentiment, and a negative number means negative sentiment.

The Manulife ISI is based on 500 online interviews in each market of Hong Kong, China, Taiwan, Japan, and Singapore; in Malaysia, Indonesia and the Philippines it is conducted face-to-face. Respondents are middle class to affluent investors, aged 25 years and above who are the primary decision maker of financial matters in the household and currently have investment products.

The Manulife ISI is a long-established research series in North America. The Manulife ISI has been measuring investor sentiment in Canada for the past 15 years, and extended this to its John Hancock operation in the U.S. in 2011. Asset classes taken into Manulife ISI Asia calculations are stocks/equities, real estate (primary residence and other investment properties), mutual funds/unit trusts, fixed income investment and cash.

About Manulife Asset Management

Manulife Asset Management is the global asset management arm of Manulife, providing comprehensive asset management solutions for institutional investors and investment funds in key markets around the world. This investment expertise extends across a broad range of public and private asset classes, as well as asset allocation solutions. As at June 30, 2014, assets under management for Manulife Asset Management were approximately C$300 billion (US$281 billion).

Manulife Asset Management’s public markets units have investment expertise across a broad range of asset classes including public equity and fixed income, and asset allocation strategies. Offices with full investment capabilities are located in the United States, Canada, the United Kingdom, Japan, Hong Kong, Singapore, Taiwan, Indonesia, Thailand, Vietnam, Malaysia, and the Philippines. In addition, Manulife Asset Management has a joint venture asset management business in China, Manulife TEDA. The public markets units of Manulife Asset Management also provide investment management services to affiliates' retail clients through product offerings of Manulife and John Hancock. John Hancock Asset Management and Declaration Management and Research are units of Manulife Asset Management.

Additional information about Manulife Asset Management may be found at ManulifeAM.com.