MANILA – Financial markets weakened on Wednesday, after fighting between government forces and extremists militants prompted President Rodrigo Duterte to place the entire southern region of Mindanao under martial law.
The peso opened at P49.95 to the dollar from P49.82 on Tuesday. The Philippine Stock Exchange Index was down 0.42 percent to 7,779.73 in early trading.
Investors will monitor closely how Duterte will use martial law to fight the long-running extremist problem in the south, analysts said. The President cut short his official visit to Russia because of the fighting and is expected back in Manila late Wednesday.
Militants torched buildings in Marawi City on Tuesday, sparking fighting that has left at least 3 security forces killed and 12 others wounded.
“Uncertainty forces you to become more conservative,” BPI Securities research head Haj Narvaez told ANC’s Market Edge with Cathy Yang.
“I would expect some downward pressure probably in the next 1 to 2 weeks as investors digest and try to collect more information and see if this situation in Mindanao can be controlled,” he added.
The military hopes to resolve the situation ahead of the 60-day constitutional limit on the imposition of martial law, according to its spokesman, Colonel Edgard Arevalo.
“Maybe it’s the kind of dramatic action that would actually trigger the collapse of this group, one would hope so,” Wallace Business Forum founder Peter Wallace said.
Fresh fighting in Mindanao is a concern because it can make moving goods more difficult, “but outside of that, I don’t see it as having much of an impact on business itself,” he told ANC.
Tycoon and philanthropist Washington Sycip said the President cutting short a foreign visit due to security worries was "not the publicity that we need."
"I think worldwide, the word martial law is not the best thing," Sycip said.