The Market Monitor Minding the Nation's Business
By Tracy Cabrera
Amid speculations that the arrest of former President Rodrigo “Rody” Duterte could pose greater risks to local trade, analysts believe it may not directly affect stocks and bonds. However, investors remain wary of global trade uncertainties.
Fears of possible “political instability” rattled investors, causing the Philippine stock market’s main index to drop by 2 percent and erase recent gains. The Philippine Stock Exchange Index (PSEi) declined by 2.42 percent, or 154.22 points, closing at 6,206.55.
China Bank Capital Corporation managing director Juan Paolo Colet noted that major investors are not overly concerned about Duterte’s arrest by the International Criminal Court and his transfer to The Hague, Netherlands.
“Naturally, they will observe how the situation evolves, but their primary focus is on (United States President Donald) Trump, the Fed (Federal Reserve), and US markets,” Colet said in a text message.
While Duterte’s arrest may have contributed to the market’s decline, Philstocks Financial Incorporated (PFI) research head Japhet Tantiangco cited Trump’s tariff policies as the primary driver.
“Investors also digested the US 25-percent tariffs on steel and aluminum imports, which had already taken effect, and the ensuing retaliation from the European Union,” Tantiangco noted.
In the bond market, Philippine Dealing and Exchange Corporation (PDEx) president and CEO Antonino Nakpil said domestic investors remain largely unfazed by local political developments.
“Our domestic investors remain hungry … people are looking for yield,” Nakpil said, citing P65.7 billion worth of domestic bond listings from five issuances this year and forecasts suggesting gains could hit P600 billion in local bond listings, surpassing P508.66 billion in 2022.
GlobalSource country analyst Diwa Guinigundo acknowledged that Duterte’s arrest on crimes against humanity may cause short-term market disturbances but noted that “over time, people will realize that something can be done here in the Philippines (and) we don’t tolerate this kind of offenses.”
Tantiangco added, “For now, we don’t see former President Rodrigo Duterte’s arrest having an impact on the market since it has no significant effects seen on the economy and its outlook.” He warned, however, that prolonged and escalated political turmoil could pose risks.
Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort pointed out that external factors, particularly the US stock market’s downturn amid Trump’s tariff threats, largely influenced the local stock market’s movement.
Ricafort also said the “relatively orderly process” of Duterte’s arrest “could send positive signals on respect for the law, authorities, and institutions locally and internationally.”
“There could be risk of political noises locally, but still wait-and-see in the coming days/weeks, though that could remain as noise for as long as there are no large protest rallies and no other forms of destabilization,” he concluded.