Philippine Stock Exchange

[ANALYSIS] The West Philippine Sea dispute and the stock market’s performance

Den Somera

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[ANALYSIS] The West Philippine Sea dispute and the stock market’s performance

Raffy de Guzman/Rappler

(1st UPDATE) Looking at this week’s unfolding trading results, however, it looks like the unfortunate incident in the Ayungin Shoal did not leave any permanent negative impact

I can’t remember who exactly said that “Life is lyrical in its ideal form, tragic in its fate, but comic in reality.” This saying is what comes to my mind when I try to compare the condition of our country’s relationships with China before the Spanish period at the same time brand them this time around.  

I imagine that we had a “lyrical” trade relationship then, and a “tragic” fate now due to our ongoing dispute in the West Philippine Sea (WPS), which has gone up to its most serious level so far when the Chinese Coast Guard and People’s Liberation Army (PLA) Navy resorted to a ridiculously cheap and shameful act to stop our forces from resupplying our military outposts at the Ayungin Shoal last June 17.

Aside from its mental and emotional harm, the incident did not only include damage to property but this time also physical injuries to our troops, with one of our sailors irretrievably losing a finger.  

The same maxim seems to also define the wisdom of the measures taken, in turn, by President Ferdinand Marcos Jr. (PBBM) as a result of the latest unfortunate incident in the Ayungin Shoal.  

In the ceremonies held by the end of the week of the incident to raise the morale  of the troops, the act was considered “tragic” for it failed to reap approval as a grand scheme to raise common public opinion, too. PBBM’s pronouncements were even found “comic,” as they were called frustratingly ambiguous, inconclusive, if not totally amiss.  

This dissatisfaction has now gone further to include what actions he has done so far to mend the issue.  

PBBM’s statement to exercise “maximum restraint,” at the same time assertion that the incident “should not happen again,” are considered poor in substance and far too inept to hardcore oppositions.

Worst, PBBM’s statements might be construed to mean like the all-too familiar parochial plot of ala Fernando Poe-type of drama cum action movies wherein the featured hero, who is embroiled in an uphill battle against overwhelming bad elements, has to go through the long and lonely ordeal of self-restraint and suffering until he can’t stand it anymore but to fight back – almost literally with tooth and nail only.  

Seriously, this scheme is definitely a bad choice. This is neither the smartest way to resolve the realities of our issues with China nor the greatest way in how to invoke the umbrella provided for by our Mutual Defense Treaty (MDT) with the United States

Meanwhile, let’s see how these described “tragic” and “comic” developments have affected the performance of the market.

The PSEi

The main benchmark index for our stock market is the Philippine Stock Exchange Index or PSEi.  Curiously, before the latest incident in the Ayungin Shoal, the PSEi appeared to have been already trading on a downward trend.   

In fact, the PSEi has fallen down to 6,433.10 or by as much as 16.94 points or 0.26% below its starting level at the beginning of the year when it ended the month of May.  

Jofer Gaite, president and chief trader of Westlink Global Equities Incorporated, and stockbroker Rene de los Reyes of Abacus Capital & Investment Corporation, helped me identify several of the technical and fundamental factors largely weighing the market. These are the “lingering issue on inflation, the geopolitical landscape in the China-WPS; Israel-Hamas-Hezbollah war, and the long running Ukraine-Russia conflict; rebalancing of the Financial Times Stock Exchange (FTSE) for the Philippines; the general strength of the US dollar (USD) against world currencies, especially to emerging markets (EMs) together with the subsequent flight to safety, with the US currency.” 

Joel de la Peña, market strategist and chief trader of H.E. Bennett Securities, Inc., also chimed in to say about his observation on the “propensity of foreign investors’ to be net sellers in the market since the second quarter.” 

Next, the market made a rebound with all the counters up on the first week of June.  It erased the market’s deficit to cross into positive territory by 85.66 points or 1.33%.  This effectively brought back the market with a year-to-date (YTD) gain of 68.70 points or 1.07%.  Much of the reasons attributed to this uptick is due to the decrease in the selling volume of foreign investors. 

Because of the unfortunate incident in the Ayungin Shoal on June 17, the first trading day of the second week, the market dropped back into negative territory by as much as 225.22 points or 3.53% at the 6,158.48-mark by the end of the week. This was triggered by the heavy selling volume of foreign investors, who also accounted for up to 59% of total market turnover.  It was the worst weekly loss for the PSEi in the last two years. 

Looking at this week’s unfolding trading results, however, it looks like the unfortunate incident in the Ayungin Shoal did not leave any permanent negative impact. It has been erased and overridden by other unfolding positive technical and fundamental leads this week. 

Market support is estimated to play from 6,160 to 5,950 while market resistance is expected to come in from 6,400 to 6,600.

While the condition of the market is an indicator of investors’ confidence on the direction of the economy, it also represents investors’ satisfaction level on the performance of the government. You may find interesting how former president Rodrigo Duterte (PRRD) and present PBBM have affected the condition of the market with their different management styles and policy directions.  

PRRD ended his term in 2022 with the market – unfortunately – all worn out. The PSEi closed at 6,155.43, down with a year-to-date loss of 957.28 points or 13.44%. All five sectors of the market were as follows: Financials, -10.2%; Industrials, -12.4%; Services, -17.0%; Holding Firms, -16.0%; Property, -11.9%; and Mining & Oil, +17.0%. Total market capitalization was low at P15.90 trillion.  

In contrast, the PSEi now stands comparatively higher under PBBM’s watch.  At the end of 2023 or just after a year and a half upon his assumption in office, total market accounts grew 11.3% to 1.91 million, 98.5% of which are locals. Online accounts also grew by 21.2%, while the average age of investors also improved to 44 years old and below, as more younger investors are entering the market. More importantly, total market capitalization has grown to P17.65 trillion. Finally, the market may try again to break out higher this week from its close at 6,450.03 on July 3.  


With China presently saddled with many serious political and economic threats inside and out, I believe what it is doing in the WPS is purely a play of brinkmanship.  China could not afford going into a full-scale war just like that.   

The economic might it built over the last three decades or so is now under threat. It will not ignore the urgent need to mend it for an unproductive fancy like war. It cannot also risk diverting already diminished financial resources owing to its present problems on capital flight done even by its own citizens. Also, going into war now might change the present world order that it is enjoying at the moment.  

As if these are not strong enough reasons already, China is also facing the prospects of being imminently dragged into a three-prong war at the same time. One, is for its over-aggressive and belligerent stance for control in the WPS. Second, is on the possibility of an actual armed opposition by Taiwan owing to its objection to be forcibly taken back as a governed province of mainland China. Third, is about its serious quarrel with India in connection with their brewing dispute over water resources. The situation is very volatile and could easily blow up anytime. 

Obviously, too, it is counterproductive for the local political hierarchy to disturb the fragile political-economic landscape of the country. Going to war against a big power is dumb and reckless, as well.  Likewise, it is not ideal for the US to be directly involved in an escalated war at this time, too. So, the risk of being left alone in the fight is very real. Resorting to skillful diplomacy is, therefore, our best game plan.

These scenarios seemed to have been discounted in the market already that other fundamental or technical factors have easily erased investors’ jitters about the imminence of an actual shooting war within our fringes.  


In one of the presentations recently held in the Monday Circle Financial Forum, there is a strong argument in favor of the Philippines to improve its claim from just economic rights to actual sovereignty over the WPS, according to Nasser Salih Sharief, member of the board of the Tomas Ll. Cabili Foundation Incorporated, resident historian, genealogist, and paleographer of the Philippine Muslim Teachers’ College (PMTC) Institute of Iranūn Studies, and secretary-general of the Southeast Asian Islamic Chamber of Commerce and Industry.   

Sharief is replete with historical “kirim” manuscripts about the Iranūns of the Southern Philippines with respect to the “accounts of their sojourns to mainland Southeast Asia for trade, raiding and ferrying immigrants from the mainland Southeast Asia utilizing Sulawan, what is now known as the Spratly Islands.” 

Sharief avers that these recorded exploits of the Iranun in “Sulawan” are tantamount to what could be a state act in international law more than the “the (mere) Chinese experience (purportedly found in their ancient scrolls) of fishing in the vicinity” in which China is basing of its ‘Nine (or Ten) Dashed Line’ claim in the South China Sea and assertion as a sovereign part of its motherland for 2,000 years.”

For starters, read the book of Sharief entitled The Iranün and Philippines’ Historical Claims in the South China Sea: The binding tie of place, meaning, and memory.

Sharief is now invited in Australia for a lecture on the subject, sponsored by the Knights of Rizal and the Filipino community of New South Wales. –

(The article has been prepared for general circulation for the reading public and must not be construed as an offer, or solicitation of an offer to buy or sell any securities or financial instruments whether referred to herein or otherwise. Moreover, the public should be aware that the writer or any investing parties mentioned in the column may have a conflict of interest that could affect the objectivity of their reported or mentioned investment activity. You may reach the writer at  

[ANALYSIS] Search for stocks that continue to sizzle

[ANALYSIS] Search for stocks that continue to sizzle

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