MANILA, Philippines – The surprising win of Republican presidential candidate Donald Trump mainly caused Philippine stocks to plunge to their lowest level in over 7 months, as investors feared Trump’s recent pronouncements could hurt the flow of remittances, trade, and aid.
A few minutes after Trump snatched victory from his rival Hillary Clinton, the Philippine Stock Exchange index (PSEi) plunged to 2.58% or 188.76 points to close at 7,119.04 on Wednesday, November 9.
This is the lowest level the bellwether index has closed since the 7,112.89 finish on March 14. Meanwhile, the broader All Shares dropped 81.87 points or 1.88% to 4,282.35.
“This is clearly in line with the Trump victory. Gross risk off sentiment dominated trading in Asia given Trump’s supposed anti-globalization stance and his vitriol against migrants, which could hurt remittances flows, trade and aid,” Nicholas Antonio Mapa, associate economist at the Bank of the Philippine Islands, said in an interview.
“Thus, Asian markets are reeling and we can expect the same as Europe opens trading,” Mapa added.
Remittances, trade, aid
This was echoed by other analysts and Bangko Sentral ng Pilipinas (BSP) Governor Amando Tetangco Jr.
Tetangco told reporters in a text message that regional currencies including the Philippine peso fell on renewed risk aversion surrounding market surprise in early results showing a Trump victory.
“We will continue to closely monitor developments and provide liquidity to the market as needed to address market price action on renewed global political risk,” he added.
The BSP chief also said the market was cautious about the “possible retreat of the Federal Reserve from a December interest rate hike because of this market reaction.”
COL Financial head of research April Lee Tan said Trump is generally viewed as unfavorable for Asian economies given his protectionist stance, like his plans to impose tariffs on imports from other countries.
“Concern is he could possibly impose taxes on companies that outsource to Philippines, hurting the BPO sector,” Tan added.
For Jonathan Ravelas, chief strategist at BDO Unibank, regional markets plunged because of the “uncertainty arising from the US elections.”
“It is definitely the US elections that brought down the global financial markets. Investors panicked because Donald Trump is a new political name,” also said Harry Liu, chief of brokerage firm Summit Securities Incorporated.
“He is famous as a businessman but not as a politician. But this is just a mere short-term reaction. Investors will monitor the policies of Trump in the next few weeks,” Liu told Rappler in a phone interview.
Local partner of Trump Org goes up
Even as regional markets declined and local property firms’ shares plunged, shares of Century Properties Group Incorporated, the local partner of Trump Organization, went up by 20% or 12 centavos to close at 72 centavos on Wednesday.
This is even as property shares plunged by 3.47% or 112.43 points to 3,131.34 on Wednesday.
“It is more of a psychological buy. As you know, they are the local partner of Trump Organization for Trump Tower Manila, and its founder Jose Antonio is named as the envoy to the US,” Liu said.
Late last month, President Rodrigo Duterte named Century Properties chairman and CEO Antonio as special envoy to the US. – Rappler.com