Next president to win by low plurality of votes – J.P. Morgan

MANILA — The 2016 presidential race will be anybody’s ball game, such that American financial giant J.P. Morgan sees President Benigno Aquino III’s successor getting a “low plurality win.”

J.P. Morgan, in a note to clients dated Feb. 4, nonetheless said it has not been expecting the national elections in May to drastically affect economic growth prospects and investor interest in the Philippines.

“Given the neck-to-neck and highly fluid battle among the four leading candidates, we think there could be a high probability that the new president will receive a low plurality win,” J.P. Morgan said, referring to presidential aspirants Vice President Jejomar Binay, Senator Grace Poe, Liberal Party administration bet Mar Roxas and Davao City Mayor Rodrigo Duterte.

According to J.P. Morgan, “while a strong mandate for the new president will be a positive, we do not see a minority president posing a risk to political stability and to the new administration’s ability in pursuing important economic reforms.”

It pointed out that “the lack of a strong political party system makes it customary for the legislative body, particularly the Lower House, to shift allegiance to the new president’s party.”

J.P. Morgan cited the case of former president Fidel V. Ramos’ win in 1992, during which he had “the lowest plurality in the country’s electoral history.”

“But [Ramos] managed to improve the country’s growth trajectory and successfully pursued liberalization of important industries such as the telecoms, downstream oil, among others,” J.P. Morgan noted.

For the financial giant, it “[does] not see the presidential election as a game-changing event to the economy or equity market.”

“We think post-election policy changes are remote given that economic planning is institutionalized, particularly fiscal reforms that were put in place over the last two administrations,” J.P. Morgan said, while also acknowledging that “there could be policy execution risk depending on which candidate wins the mandate.”

“The bottomline for this election, in our opinion, is for the electoral process to be completed in a peaceful and credible manner,” according to J.P. Morgan.

The note titled “The Road to 2016 Elections: Binay wrests back lead but contest remains fluid” cited the Social Weather Stations (SWS) survey last Jan. 8-10, in which Binay topped the poll with a 31-percent rating.

In that survey, Poe was next to Binay with a 24-percent rating; Roxas had 21 percent; Duterte, 20 percent; and Senator Miriam Defensor-Santiago, 3 percent.

For J.P. Morgan, “while Binay has overtaken the rest and wrestled back the No. 1 position, we think that it’s too early to suggest a win.” Binay slipped behind Poe in popularity surveys mid-last year.  (In the latest Pulse Asia survey, Poe regained the lead from Binay.)

“We expect voter preference to firm up moving closer to the May 9 election day just as what happened in 2004 and 2010,” J.P. Morgan said, adding that such reflected their expectations of “a highly fluid” political landscape.”

“The SWS presidential popularity polls of the last two presidential elections in 2004 and 2010 suggest that voter preferences are fickle. While Aquino consistently led in the polls, the key surprise in the 2010 election was the decline of [former senator Manny] Villar from No. 1 to No. 3. Similarly, the 2004 presidential election saw Gloria Macapagal-Arroyo crawl her way up to victory after initially trailing Fernando Poe Jr.,” it noted.

As for a Binay win, J.P. Morgan said the incumbent vice president’s main strength has been “his long experience in government and his track record as a pragmatic government executive.”

“[Binay’s] government-style of emphasis on the lower socio-economic echelon might also help improve inclusive growth,” it added.

However, J.P. Morgan pointed to Binay facing a number of corruption cases not only against him but also his family members, who had likewise occupied top posts in Makati City, as the vice president’s “Achilles heel.”

“The perceived lack of good governance and the extent of the corruption charges are reasons why Binay does not appear to be popular with the middle class and educated voters,” it said.

As for Poe, J.P. Morgan sees the senator grappling with the disqualification cases lodged against her.

“Poe’s rating slid to mid-20s after a stack of disqualification (DQ) cases was filed against her. The Supreme Court is currently holding oral arguments on the DQ case. It is uncertain how long or how quick the case will get resolved. In our opinion, this uncertainty has capped Poe’s popularity,” J.P. Morgan said.

In the case of Duterte, J.P. Morgan said the Davao City mayor’s biggest weakness has been “his lack of political machinery to wage a nationwide campaign.”

Duterte, which led the SWS survey last November, also saw his ratings slide due to “controversies,” such as him cursing the Pope as well as waging a face slap challenge with Roxas, the financial giant noted.  SFM