Markets Ignore Political Issues, but Temporarily
Byline: LEE C. CHIPONGIAN
Current political issues hounding Malacanang have given money and stock investors pause, but most view these issues as just temporary.
"Political developments, which have a significant impact on stock market performance, are difficult to predict," according to UBS Investment Research. "(But) while these political issues could drag, we view them as temporary and therefore providing a good opportunity to accumulate quality stocks at a more attractive levels," UBS Philippine analyst Jody Santiago said in a report.
Bangko Sentral ng Pilipinas Deputy Governor Amando M. Tetangco Jr. agrees, that portfolio investments or foreign exchange inflows will remain strong, despite displaying some negative reaction in the first weeks of June, following the political worries that pulled the Philippine Stock Exchange index 7.5 percent down in just three days. Investors avoided the markets after it was reported that some members of the Arroyo family are involved in the illegal numbers game or jueteng.
The latest twist in the political commotion alleged that President Arroyo committed election fraud. However Tetangco said "investors for the most part are ignoring it."
"The stockmarket has recovered some lost ground over the last few days. But it will most likely look for a clarification of current issues before regaining the bullish trend seen earlier this year," the BSP chief added.
ATR-Kim Eng Securities Inc. said investors abroad have indeed dismissed the election-related scandals as just simply political noise. "This is because the sequence of recent events is not something that is wholly new," Luz Lorenzo head of ATRKim Eng research said.
Lorenzo called attempts by some sectors to instigate an impeachment as what happened to former President Joseph Estrada is almost "farcical".
"What foreign investors see is that positive steps have been taken to stabilize the governments finances and this is being taken favorably. Evidence of this can be seen from the trends in transactions by foreign investors in the Phisix," she said. …