Staff members sit at computers as screens show an official quick-count of the national election at a command center of the Parish Pastoral Council for Responsible Voting (PPCRV), the election watchdog organization in Manila, Philippines, May 9, 2022. REUTERS/Willy Kurniawan
The benchmark Philippine stock index slid amid a global selloff, as investors awaited Ferdinand Marcos Jr.’s economic policies following his landslide win in the presidential election.
The Philippine Stock Exchange Index fell as much as 3.1% before paring declines. Most of the 30 components of the benchmark dropped, with AC Energy Corp., San Miguel Corp., Wilcon Depot Inc and Robinsons Land Corp. leading the losses.
Equities are unlikely to rebound until Marcos lays out a plan to spur growth, tame inflation and address the nation’s ballooning debt, according to analysts.
The slide in the benchmark gauge also reflects losses in regional shares as rising U.S. interest rates and slowing Chinese growth hurt sentiment.
"Many investors are likely to be in a wait-and-see mode,” Robert Ramos, who helps manage 140 billion pesos ($2.7 billion) as head of the trust and investments group at Rizal Commercial Banking Corp., said before the start of trading. "They will wait for the new government to discuss its plan for the economy and how we get out from the impact of the pandemic.”
Based on the broader Philippine Stock Exchange All Share Index’s loss of up to 2.9%, today’s selloff erased as much as 488 billion pesos in market value.
The Philippine Stock Exchange Index has fallen more than 6% this year, outperforming the MSCI AC Asia Pacific Index which dropped almost 18%.
Here’s what analysts are saying:
Manny Cruz (strategist, Papa Securities)
"Marcos has to form his economic team right away to provide local market stability. Without an economic team and pronouncements on his economic agenda, it will be difficult to see a rally for investors will be reacting mainly to global headwinds”
Investors should take the opportunity to position amid pullbacks as Marcos will have a "super majority” in Congress, allowing him to push through legislation to boost economic growth and attract foreign investments
In the short to medium term, stocks will track the gains posted in 2016 when Rodrigo Duterte was elected and equities rallied when he named his economic team and presented his economic and fiscal agenda
Robert Ramos (head of trust and investments, Rizal)
A key topic is the nation’s debt to GDP, which is "quite high compared with the last six years”
Marcos and his economic team must also allay foreign investors’ fears by assuring them that contracts and agreements reached here and abroad will be honored
"Foreign investors would also like to hear assurances that clean and transparent governance will be pursued. If those fears are allayed, they might decide to buy into the Philippines.
The biggest headwind for the Philippines is that it’s a consumer-driven economy that is not on a high note
Jonathan Ravelas (chief market strategist, BDO Unibank)
"The surveys have already flagged this outcome” and the market will take this result as credible
Investors will stay on the sidelines until the new president provides a clear and concrete plan to tackle rising poverty, strengthen health care, deal with inflation and manage debt
Investors would like to see his economic team
