Tuesday, June 17, 2014

Philippines Investors Remain Most Optimistic in the Region – Manulife Survey

·         Philippines investor sentiment remains most optimistic in the region, alongside Malaysia
·         There is strong support for raising the retirement age
·         Over two thirds say leaving an inheritance to their children is their primary retirement concern

·         Reliance on private healthcare expected to rise in retirement, yet healthcare insurance ownership levels remain low

Philippines investor sentiment slipped in the first quarter of 2014 but remains the highest in the region, alongside Malaysia, according to Manulife’s latest quarterly survey into investor sentiment in the country. 

While optimism is down slightly from the previous quarter (-8 to 58), more investors still regard it as is a good time to invest and sentiment remains overwhelmingly positive. At the asset class level, sentiment dropped across the board except towards cash; although again, investors remain optimistic about all asset classes (equities lost 7 points to reach 41, fixed income was down 15 to 45, mutual funds declined 16 to 35, and investment property slipped 9 to 70).

“Our second survey of investor sentiment in the Philippines continues to reveal great optimism. A strong stock market performance during the quarter and strong economic growth expectations look to be underpinning the upbeat sentiment,” said Ryan Charland, President and CEO, Manulife Philippines.
The research, part of the Manulife Investor Sentiment Index (MISI) survey,* shows that sentiment in the Philippines is joint highest with Malaysia, and at 58 is more than double the regional average of 24 (up two points from 22 in the previous quarter).

“Stocks were up 9 percent in the first quarter thanks to company earnings being in line with or better than estimates. Yet, sentiment may have built in a higher inflation outlook and the rise in banks' reserve requirements, which was interpreted as a prelude to further tightening measures to curb strong liquidity growth,” said Ms. Aira Gaspar, Chief Investment Officer, Manulife Philippines. “We expect sentiment towards equity to pick up from here, as resilient domestic consumption and rising investment spending are supportive of an upward corporate earnings trajectory.”
Official retirement age should rise

Despite the optimism, the research does show that Philippines investors are concerned about their retirement, including the need to continue working beyond the official retirement age and their ability to meet family responsibilities during retirement.

Philippine investors are strongly (64 percent) in favor of increasing the official retirement age, a good deal higher than the Asia average (51 percent). The official retirement age in the Philippines at only 60 years is below the Asian average, with most countries in the region currently setting retirement at 65 years.
Also, with life expectancy in the Philippines up significantly in recent decades1 there is a sense that the official retirement age is out of step, leaving investors an increasingly lengthy retirement to save for.

“People know that the social safety net is not going to cover all their needs when they retire and that they’re going to have to fend for themselves,” said Ryan Charland, President and CEO, Manulife Philippines. “The gap can be made up by working in old age, but an alternative route is to invest as soon as there’s some extra to put away and to do so consistently throughout your working life. That way, by the time retirement comes around, the compound returns from investments can provide a much-needed income top-up.”

Concerns for the financial health of the family a top priority

The investor sentiment survey also highlights the importance that Philippines investors place on providing financial security for their families.

Their largest retirement concern is their ability to leave an inheritance to children or heirs (69 percent of investors). Their second biggest concern is health deterioration (60 percent) followed by a fear that they will need to support their children financially (37 percent). In addition over four fifths of investors in the Philippines, more than any other country in the region, expect to support their spouse in retirement.

Healthcare anomalies

Almost nine out of ten investors expect private healthcare services to handle their medical needs during retirement, which runs counter to the rest of the region where the average is just over one in four. However, only 40 percent of Philippines investors have private medical insurance and only 60 percent expect to purchase or maintain personal health insurance during retirement. Despite such large numbers not having or not expecting to have private healthcare insurance, only 15 percent are worried that healthcare will be unaffordable in retirement (less than half the regional average).

“Investors think that healthcare will be somewhat affordable, but if they don’t have insurance, it will be an out-of-pocket expense,” said Mr. Charland. “With medical expenses continuing to rise over time and at a greater rate than inflation, Philippines investors would be wise to factor that into their retirement planning.”

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 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 14 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
Manulife is a leading Canada-based financial services group with principal operations in Asia, Canada and the United States. Clients look to Manulife for strong, reliable, trustworthy and forward-thinking solutions for their most significant financial decisions. Our international network of employees, agents and distribution partners offers financial protection and wealth management products and services to millions of clients. We also provide asset management services to institutional customers. Funds under management by Manulife and its subsidiaries were approximately C$635 billion (US$574 billion) as at March 31, 2014. Our group of companies operates as Manulife in Canada and Asia and primarily as John Hancock in the United States.
Manulife Financial Corporation trades as ‘MFC’ on the TSX, NYSE and PSE, and under ‘945’ on the SEHK. Manulife can be found on the Internet at manulife.com.