Stock market likely to escape Brexit fallout

MANILA, Philippines - The Philippine stock market is in a good position to weather the storm in the wake of Britain’s decision to exit the European Union due to the country’s solid macroeconomic fundamentals, Philippine Stock Exchange (PSE) president Hans Sicat said.

Sicat said last Friday’s trading slump merely reflected a knee-jerk reaction to the massive global selloff triggered by Brexit.

“The outcome of the referendum had a negative impact on various asset classes and currencies including our own market. This was the foreseen reaction in a Brexit case which may prevail for the next few days as markets settle. Medium term, however, we think the Philippine market will not be adversely affected as it is supported by the country’s solid economic fundamentals and the inherent strength of the local financial market,” Sicat said.

Victor Felix, equity analyst at AB Capital Securities Inc. said that while the local equities market would continue to react negatively, it would only be temporary as the market remains strong.

Most of the locally listed companies have limited exposure to the United Kingdom and the European Union.

“Our market remains strongly insulated against Brexit, although we may see a possible dip in OFW remittances in the region if the United Kingdom plunges into recession. Our exports to the UK represent less than one percent of total shipments for January to April this year, while imports from the UK are also less than one percent. Meanwhile, UK portfolio investments in the Philippines is less than 2.4 percent of total 2014 portfolio investments. As such, overall impact is seen to be limited,” Felix said.