MANILA, Philippines - Investor confidence in the Philippines remained at a record high in the third quarter of 2010, mainly due to higher level of trust in the Aquino government, according to results of a periodic survey by Dutch financial giant ING.
ING's quarterly Investor Dashboard Survey also revealed that investors are confident in the local market despite continued signs of slowdown in the US economy.
The Philippines scored 157 in investor sentiment during the third quarter, the same as the second quarter and up from 139 in the first.
ING said the country ranks considerably higher than the overall pan-Asia rating, which rose 7% to 146 in the third quarter from 136 in the previous quarter, and is leading among emerging markets in Southeast Asia.
"Local and foreign investors alike have reflected this optimism by pumping more money into Philippine stocks," said PJ Garcia, head and chief investment officer of ING Investment Management Philippines. Garcia noted that average daily turnover in the local bourse has doubled to over P6 billion in September from only P3.9 billion in the previous months.
Garcia said investors are confident that the performance of the Aquino administration, whose main platform is to curb graft and corruption, will translate to gains for the local economy.
In the second quarter, 69% of Philippine investors responded positively when asked about the impact of the new administration on economic growth.
Garcia also said investors believe that the country's strong macroeconomic fundamentals will offset any negative effect of the continued slowdown of the US, a key market for Asian exports.
The ING survey showed that Philippine investors are less optimistic about the US economy next quarter, with a drop in the number of those expecting it to improve (62% in Q3 from 71% in Q2). However, there was a rise in the percentage of those who believe this will have no effect on investment decisions (31% in Q3 from 25% in Q2).
"The Philippines, along with many emerging market economies, is increasingly becoming more resilient to external developments. Record high OFW remittances and the strengthening of the peso against the US dollar have made a strong case for consumption-driven growth," Garcia explained.
He added: "Infrastructure investments are also a key priority of the Aquino government and the roll-out of such projects will have a multiplier effect that should be felt even outside the infrastructure space."