Philippine stocks close lower on election jitters, inflation woes

In this May 10, 2022 photo, the external display of the Philippine Stock Exchange building in Taguig City shows PSEi's closing a day after the presidential elections. Ferdinand "Bongbong" Marcos Jr. is poised to win the presidency after gaining a wide lead over his rivals.
PSE / Released

MANILA, Philippines (Update 1, 3:58 p.m.) — Local equities ended Tuesday with losses as investors focus on the results of the Philippine presidential elections and inflation's impact on global economic recovery.

The Philippine Stock Exchange index, a barometer of investor confidence, lost over 3% in the morning trade but managed to temper the bleeding to finish at 6,720.93, down 0.58%. The broader All Shares index was also in the red.

It was a bloodbath across all sectoral counters, except for holding firms which squeezed out a 0.43% gain. Luis Limlingan of Manila-based brokerage firm Regina Capital said the election results would be one of the major market drivers in the coming days.

“The results of the presidential election will also be in focus for majority of the week,” Limlingan said in a market commentary.

Partial and unofficial election tally shows Ferdinand “Bongbong” Marcos Jr. taking a strong lead in high-stakes election that would set the direction for the economy in the next six years amid the lingering pandemic.

If he emerges as the clear winner, the son and namesake of the late dictator will inherit an economy that is still recovering from its worst crash on record since the twilight years of Marcos dictatorship in 1984, as well as a government grappling with twin deficits and a heavy debt pile.

A Bloomberg poll of investors and analysts in March showed Marcos’ rival Leni Robredo is the market's most preferred candidate to facilitate economic recovery while Marcos ranked at the near bottom of the poll with just 46 survey points. Several analysts have said Marcos would likely continue the economic reforms and policies implemented by President Rodrigo Duterte.

READ: 'Lack of political expertise' the biggest risk to a Marcos presidency — EIU

But beyond the elections, Limlingan said Asian markets came under pressure on Tuesday “as concerns about a darkening economic outlook sweep across global markets and bolster the dollar.”

"Philippine shares slid, although at a smaller drop compared to the rest of the region as investors became concerned about the possibility of stagflation... " he added.

The Philippines Statistics Authority will release on Thursday the first quarter gross domestic product data, with the Duterte administration expecting to see the economy back to its pre-crisis level. However, economists said a quickening inflation, if uncontrolled, may spoil the recovery.

"Asian markets are all down today in reaction to the sell off in Wall St overnight. I think the (Marcos) win has already been priced in the market as surveys have been showing his strong win.The focus now for us is to wait for his economic team and the priority agenda for our country," Michael Enriquez, economist at chief investment officer at Sun Life Investment Management and Trust Corp., said. — Ian Nicolas Cigaral with Ramon Royandoyan

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