Stocks hit 7-week low on pre-election jitters

MANILA, Philippines - Election jitters sent the local stock market spiraling into the red again with share prices falling to their lowest in seven weeks.

The benchmark Philippine Stock Exchange index (PSEi) shed 105.41 points or 1.47 percent to close at 7,053.88 yesterday.

The PSEi fell to as low as 6,980.18, its lowest level since March 10 as the presidential frontrunner Davao City Mayor Rodrigo Duterte continued to maintain a wide lead with only a week to go before the May 9 national elections.

It has been on a downward trend for seven consecutive sessions as foreign investors continue to dump their holdings amid pre-election jitters.

Investors have raised concern over Duterte’s lack of clarity in economic policy.

“Heightening the country/political risk factor is that the leading contender (insofar as the survey shows) has yet to make a clear pronouncement of his economic program – bungling an opportunity to do so in a recent forum.

Pronouncement alluding to a possible declaration of a revolutionary government, the abolition (closure) of Congress and a negotiated coalition government with the Communist Party of the Philippines under exiled Jose Maria Sison has struck a sensitive nerve in some sectors, lending further uncertainties to an already uncertain environment,” said Justino Calaycay of A&A Securities.

“Previous presidential elections have seen the market move sideways with a very slight positive bias. The current year seems to be a deviation to the norm, however. Technical signals are magnifying the concerns as internal measures deteriorate,” Calaycay added.

All counters, except for the mining and oil index, closed in negative territory.

 Total value turnover reached P5.1 billion with decliners edging out advancers 157-47.  About 35 stocks were left unchanged.

At the foreign exchange market, the peso touched the 47 to a dollar level before closing down 7.5 centavos at 46.965. Trading volume also fell to $591 million, tracking the weakness of its couterparts in Hong Kong, Indonesia and Malaysia/

Nicholas Antonio Mapa, research officer at the Bank of the Philippine Islands, said the weakening of the peso against the greenback is due to uncertainties over the presidential and national elections.

“Overall its still anxiety ahead of the elections with just seven days to go before we troop to the polls and there still is no clear front runner based on credible surveys,” he said.

Astro del Castillo, managing director at First Grade Holdings Inc., said investors are “more concerned about having orderly and honest elections, rather than whoever wins.”

Del Castillo said developments overseas could also affect the movement of the local stock market.

“Global economic growth in China and data coming from the US are pointing somewhat to a slowdown. Investors are concerned it will hamper global growth,” Del Castillo said.

Moving forward, the market may look for more economic data, both onshore and offshore to set its directions. Among others, Philippine inflation and US jobs data are set for release over the next two weeks.

“We can expect this trend to continue until we finally see a front runner,” Mapa said.

“The dollar might show weakness on Thursday as the US jobs data likely weakened in April,” the trader added.