'Other ASEAN countries also seeing outflows'
MANILA - President Rodrigo Duterte's tough rhetoric and cursing aren't the reason for the foreign selloff in the Philippine stock market, one of the directors of the Philippine Stock Exchange (PSE) said on Friday.
Foreign selling is caused by the strengthening dollar and some investors betting that the US Federal Reserve will increase interest rates, said Vivian Yuchengo, president of the Philippine Association of Stock Brokers and Dealers Inc.
Yuchengo said foreign selling began even before Duterte threatened to curse at US President Barack Obama in a speech before he left for the ASEAN summit in Laos.
“It was already 10 days before that when money started leaving because the dollar was very strong, and so the funds were moving to the [United] States because they were anticipating a rate hike,” she told dzMM.
Foreign portfolio investments posted net outflows of $600,000 on Thursday, bringing the weekly total to $34.3 million and the monthly total to $344.8 million, according to Bloomberg data.
The selloff is also caused by investors taking a pro-dollar position as the peso continues to weaken.
The peso weakened on Friday to P47.99 to a dollar, its lowest level since January 26, as regional currencies tracked a weak yen following the US Federal Reserve's decision to hold interest rates.
“[Investors] were expecting higher rates, so they’ll get higher rates in return for their money rather than here. But then it didn’t happen, so very little is leaving the country now,” she said.
The selloff also occurred during the "ghost month" in August, when historically the stock market dips, she added.
Other ASEAN countries are also experiencing outflows due to similar factors, Yuchengco said, noting that other nations "don't have a Duterte."
Meanwhile, Finance Secretary Sonny Dominguez said he doesn't see investors heading for the exit.
Top executives of the World Bank, Japan International Cooperation Agency, Asian Development Bank, and the ambassadors of Spain, China and the European Union are "bullish on the Philippine economy and were in accord that the Duterte administration could sustain the economic overdrive," Dominguez said.
"We must not get distracted by the political noise. There's a lot of good things ahead for our country and our economy on the Duterte watch," he added.