Coup jitters to drag down stock market, say analysts
- Zinnia B. Dela Peña () - July 28, 2003 - 12:00am
Ongoing plots to overthrow President Arroyo’s administration are seen to drag down the equities and foreign exchange markets as investors do not have much choice but to steer clear from the market.

Analysts see activity on the Philippine Stock Exchange (PSE) bearing the brunt of new upheavals on the political front as a group of junior military officers had abandoned their posts and staged a coup to destabilize the government.

"The market is expected to tread in negative territory as the issue of peace and order remains unresolved. Uncertainties and fears of public unrest will keep market players from taking the risk of investing at the local bourse," an analyst at a local brokerage house said.

"Such an atmosphere will only mean that turnover will be thin and trading will be lackadaisical. We’re in such a tough market where the only thing that seems to move it is negative news. We hope it stops and confidence is restored," the analyst said.

Prospective foreign investors are also expected to hold on to their funds because of the news they hear about the Philippines.

The rogue officers are reportedly not satisfied with the government, the bureaucracy and their organization, and the meager benefits they are getting for their services.

This prompted Archbishop Jaime Cardinal Sin to immediately issue a pastoral letter, urging the public to be alert and vigilant amid attempts to destabilize the government.

The Philippine Association of Brokers and Dealers and the Philippine Stock Exchange (PSE) condemned the coup plot and appealed to put a stop to it for the good of the country.

Analysts said the market will closely watch the movement of the peso in reaction to new developments. A weaker peso would put pressure on local interest rates and corporate earnings performance.

A falling peso puts companies in a vulnerable spot, weakening their ability to pay off dollar debts and increasing import costs.

Last week, the peso dropped to its lowest level in four months on rumors that a coup d’ etat was in the offing. The coup rumors, together with the decline in the Thai Baht and the Indonesian Rupiah, pulled down the peso to as low as P54.23 before ending the week at P54.01 to the dollar.

Analysts said the country’s outlook has turned "grim" due to the possibility of violence in the streets.

"But it’s too early to downgrade our forecasts. Of course we need to see a quick and peaceful resolution to the situation. And we also need to see peaceful elections," the analyst said.

Last week, the Philippine composite index went down by 1.57 points or 0.09 percent week on week to 1,283.80 as traders opted to cash in gains due to jitters brought by coup d’etat rumors and the weakening of the peso against the dollar.

The military rebellion followed the escape of Jemaah Islamiah terrorist Fathur Roman Al Ghozi, an Indonesian who allegedly confessed to his involvement in the bombings in Manila that killed 22 people, from a heavily guarded building in Camp Crame. The escape prompted the US to again issue travel advisories warning its citizens about terrorist threats in the Philippines.

In its weekly market outlook, online stock portal Philstocks.net said: "Technically, the Phisix is showing signs of further weakness. The main index failed to make a higher top beyond 1,300. The RSI has moved below the overbought level but the bearish divergence has remained."

ARCHBISHOP JAIME CARDINAL SIN CAMP CRAME FATHUR ROMAN AL GHOZI JEMAAH ISLAMIAH MARKET PESO PHILIPPINE ASSOCIATION OF BROKERS AND DEALERS AND THE PHILIPPINE STOCK EXCHANGE PHILIPPINE STOCK EXCHANGE PRESIDENT ARROYO THAI BAHT AND THE INDONESIAN RUPIAH
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