PH stocks dip over security concerns, political 'uncertainty'
MANILA, Philippines – Philippine equities sank to their lowest close in over 5 weeks, with foreign and local investors pulling their money out of the market as they became anxious over the political and security situation in the country.
On Wednesday, September 7, the bellwether Philippine Stock Exchange index (PSEi) closed 100.08 points or 1.30% lower at 7,619.10 – its lowest since July 27.
For Harry Liu, president of brokerage firm Summit Securities Incorporated, Duterte's "unclear political path" draws serious concern among foreign and local investors.
Duterte's controversial remarks against the US, his declaration of a "state of national emergency on account of lawless violence" due to the Davao City blast, and the rising number of drug-related killings are among the reasons investors are pulling their cash from the Philippine stock market, Liu said in a text message to Rappler.
Nicholas Mapa, senior research officer at the Bank of the Philippine Islands (BPI), shared the same sentiment.
"The recent terrorist attack and the resultant declaration of a national emergency due to a state of lawlessness has some investors skittish over its repercussions on earnings as implementation and fallout from which is still unclear," Mapa told Rappler in an email.
"The spotlight cast on the Philippines in international press may have also caused a slight selling tone, but the general sentiment has been of profit taking," he added.
Mapa also noted that investors booked gains also to participate in the recent retail treasury bond offering, which was oversubscribed.
Foreign funds pulled P7.17 billion on Wednesday alone.
The issue of terrorism, however, was overshadowed at the start of Duterte's trip to Laos for the ASEAN Summit, after he launched a foul-mouthed tirade against US President Barack Obama.
"These concerns should be addressed the soonest time possible by our government, so that their economic fundamental projections will not deteriorate," Liu said.
With the local bourse acting as "an investor confidence indicator," Liu said the government should closely monitor it and address uncertainty in politics, so its "long-term (economic goals) won't turn bearish."
Boosted by a strong start to 2016, the Philippine economy grew 7% in the second quarter of the year.
The Duterte administration has promised to boost infrastructure spending and indicated that it would raise the debt ceiling to do so. – Rappler.com