The Market Monitor Minding the Nation's Business
The stock market index weakened more than any other regional stocks last month, completely erasing the rally that had taken place since President Duterte took office in June.
According to Bloomberg, the slide was accelerated by foreign-fund managers withdrawing some $248 million from the country since the middle of August. One Singaporean fund manager was quoted as saying “I can’t find a good stock to buy.”
The news will be disappointing to the leader who has been touted as good for business. , Bloomberg said.
It also noted that the development comes days before Duterte is expected to talk with US President Barack Obama when the two leaders meet next week at the Association of Southeast Asian Nations summit in Laos, where the US President is expected to press Duterte on human-rights issues.The stock index, however, closed higher last Friday as investors await the release of US jobs data later in the day, which may provide indications whether the US Federal Reserve will increase interest rates in the next few months.
The Philippine Stock Exchange Index (PSEi) closed at 7,807.42, up by 34.11 points from Thursday’s 7,773.31.
Mining and oil stocks led the increase as it closed 128.23 points higher at 10,172.42 followed by property stocks at 3,540.03, increasing by 53.56 points.
Until Thursday, however, the index had been on a successive decline.
Singapore-based Raymond Kong, who oversees $2.5 billion at One Asia Investment Partners said he had “moved to other Asean markets that give me more value and growth.”
The index rallied 33 percent from a January low through the July 21 peak as Duterte vowed to cut corporate taxes, relax business restrictions and ramp up infrastructure spending, while talking tough against crime, corruption and vice.
Even after August’s 2.2 percent slide, the equity measure is still up 12 percent this year.
Foreign investors, who pumped $1.3 billion into the stock market this year through Aug. 11, have taken some money off the table.
After a 12-week stretch of purchases, overseas investors have withdrawn $248 million since the middle of August, closing the month with $34 million in outflows, the first in four months.
The equity index is valued at 18.7 times 12-month projected earnings, near the most expensive level since May 2013. Some of the declines in Manila can be attributed to a broader pullback.
Emerging-market equities came under pressure in the second half of August as investors weighed the chances of higher U.S. interest rates ahead of comments from Federal Reserve Chair Janet Yellen.
The MSCI Emerging Markets Index dropped 2.1 percent from Aug. 18 when it reached the highest in more than year.
Some investors speculate about the impact of Duterte himself on the markets. Finance Secretary Carlos Dominguez has said the President is pursuing policies that will create jobs, boost growth and lead to higher credit ratings.
Buy Bloomberg noted that Mr. Duterte has also begun crackdowns on major industries in the Philippines.
He has gone after miners in the world’s biggest nickel ore supplier. The government’s audit of standards in the mining sector has led to shutdowns of several mines as he seeks to ensure that all of them comply with environmental and welfare standards.
He then zeroed in on gambling, ordering a stop to online gaming that sent the shares of PhilWeb Corp. and Leisure & Resorts World Corp. slumping. The President has since said he may reconsider provided they pay the right taxes and follow the prescribed zoning rules.
“It’s unclear how the new president is going to behave going forward,” said Mark Mobius, executive chairman of Templeton Emerging Markets Group who is least bullish on the Philippines., according to Bloomberg.
“If there is a feeling that the rule of law is going out the window in the Philippines, then this would not be good news. But the jury is still out,” he said. RIZA LOZADA