Investor pessimism over 2010 elections eases

More investors now expect the upcoming elections to hurt the economy but pessimism over the event's impact on profits has eased, a survey released on Wednesday by financial service group ING found. Along with this, the respondents' upbeat outlook for the first quarter has slightly dimmed, according to the latest ING Investor Dashboard Survey. The poll was conducted in December and culled responses from 308 affluent Philippine-based investors. "The percentage of investors who believe the upcoming elections in the Philippines will have a negative effect on the economy has increased from 15-24 percent" ING said. Foreign business chambers and even the Trade department have said investor interest might be lukewarm in the first half as companies wait and see how the elections go. "However, respondents' anticipation of the incoming elections having a negative impact on their investment portfolio decreased from 33 percent to 23 percent," ING said. Asked what the next President should focus on, respondents most commonly tagged the economy, education and health care. In the meantime, the number of those upbeat about the first quarter decreased. While half said profits would increase, this was down by three points from 59 percent in an earlier survey. The ING report did not provide likely reasons for this dip, but did note that investor confidence at the time the survey was being conducted had dipped in the aftermath of two devastating storms and political violence in Maguindanao. These events, it said, had halted an uptrend in investor confidence seen in the first three quarters of 2009. In the last quarter, the Philippines' investor confidence index slipped by a point to 134 from 135 in the third quarter. This was in contrast to an increase in the regional average to 147, up by five points from the third quarter. The Philippines' score in the fourth quarter puts investor confidence here as the second least optimistic among ten economies in Asia, the others being India, China, Taiwan, Singapore, Thailand, Hong Kong, Malaysia, Indonesia, and Korea. Moving forward, Philippine-based investors still favor low-risk instruments, the survey found. This type of investment found favor among 56 percent of the respondents, better than the 50 percent who answered similarly in an earlier survey. Cash and deposits, foreign currency, and local real estate were the most common investments that respondents said they would increase their exposure to in the first quarter of 2010. "Barring negative development, especially in relation to the elections, the country's strong corporate fundamentals and healthy consumer and overseas remittance sectors should bode well for [the] market," said Cesar C. Zulueta, managing director of ING Bank's Manila branch. Also, fewer investors (down 12 points to 29 percent) are concerned about the impact of inflation on their investments. — Jessica Anne D. Hermosa, BusinessWorld