Foreign selloff shows 'discomfort' with Duterte rhetoric, analyst says


Posted at Sep 23 2016 12:09 PM | Updated as of Sep 23 2016 01:09 PM

President Rodrigo Duterte inspects a power plant in Misamis Oriental. Malacanang photo

MANILA – A foreign selloff in the stock market indicates “discomfort” with President Rodrigo Duterte’s tough rhetoric, as investors gauge whether the government’s economic reform agenda is on track, an analyst said Friday.

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 foreign selling demonstrates the discomfort that they have with, maybe, what they hear from the President,” John Padilla, investment management head at Metrobank Trust Banking Group told ANC’s “Market Edge with Cathy Yang.”

In the last few weeks, Duterte directed curse-filled jabs at the United States, the United Nations and the European Union for criticizing his bloody war on drugs. On Thursday, he said he did not care about credit ratings agencies.

American debt-watcher Standard & Poor’s said this week that the predictability of the country’s economic policy-making had “diminished somewhat” following the President’s attacks on the country’s traditional allies and as he focuses on his anti-crime drive.

Investors will be “watching more on deviations” from policy, Padilla said.

“Investors like the infrastructure story, the tax reform story, all the other reforms that the government is pushing forward. If there won’t be any deviations from there, I think, the patience on the market will remain, will be sustained,” he said.

While it maintained its investment grade score on the Philippines’ sovereign debt, S&P said a rating upgrade was unlikely in the next two years.

“The move to investment garde really catapulted the Philippines to a new dimension. I think we were back on the radar screen of major investmwent houses and major investors as well,” Padilla said.

“To lose that, would be like, look at us in the same way that they were looking at us – the Sick Man of Asia. I really wouldn’t want to see that happen,” he said.

The Philippines enjoys investment grade status in all three major debt-watchers—S&P, Fitch Ratings, and Moody’s Investors Service.

An investment grade rating gives the country access to a wider market for its debt offerings, which will help raise funds to spend on infrastructure and other development projects