MANILA - Philippine shares opened lower on Tuesday, a day after the historic election that is poised to make Ferdinand “Bongbong” Marcos Jr the country's 17th president.
The Philippine Stock Exchange Index (PSEi) opened at the 6,632 level, lower by 1.89 percent compared to Friday’s close.
It has since widened the losses and was trading at the 6,553.45 level, down by 206.45 points or 3.05 percent as of 10:11 a.m.
COL Financial Vice President and Head of Research April Lee Tan believes that the market performance is mainly driven by global performances and not necessarily the election results.
The US market is reacting to the recent interest rate hike by the US Federal Reserve to arrest record-high inflation.
US Fed chair Jerome Powell earlier announced a half-percentage-point-rate hike, the "biggest" since the year 2000.
“I think the performance of the market today is largely due to what’s happening globally…Those are more front and center although the market would have appreciated a victory by our VP Leni Robredo,” Tan told ANC.
Historically, a presidential candidate also does not “conclusively” lead to strong market performance, she added.
“I think it’s too soon to say that the market doesn’t really like a Marcos presidency. At this point, it’s too early to conclude,” Tan added.
It would also be unfair to judge a president based on his or her performance and its impact on the market when there are other issues that influence investors.
Under President Rodrigo Duterte, for example, the Philippines has and maintained investment-grade credit rating and economic growth improvements, she said.
His administration had also passed legislation that could attract more investors, she added.
"So I don’t think it's fair. There were a lot of other issues. There are a lot of factors that make the Philippines a lot less attractive compared to regional markets. There are a lot of factors, not just the president, which are the reasons why the market is where it’s at," Tan said.
During the COVID-19 pandemic, credit rating agencies kept their investment-grade ratings for the Philippines despite downgrades globally.
Although the economy plunged 9.6 percent, its lowest since the end of World War 2 due to the COVID-19 pandemic, it was able to recover to 5.6 percent in 2021.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the next administration would inherit a "better economy" compared to what the Duterte administration started with.
However, the next admin will also inherit higher debt, which hit P12.68 trillion as of the end of March, due to pandemic borrowings. The country's debt-to-GDP ratio also ballooned to 60.5 percent in 2021 from 39 percent before the pandemic.
But this level of debt remains manageable as long the government is able to maintain robust economic growth, economic managers have said.
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