The Philippine Stock Exchange. INQUIRER FILE PHOTO
MANILA — Volatility is expected to persist this week, as investors weigh the uncertain global environment and a drama-filled presidential election season that an observer has said is still too close to call ahead of voting on May 9.
The benchmark Philippine Stock Exchange Index slid for a 7th straight session on Monday. The PSEi closed the session at 7,053.88, down 1.47 percent or 105.41 points, paring losses early in the day that saw it fall below the key 7,000 level.
“What we’re seeing is more a series of unfortunate events,” Jonathan Ravelas, chief strategist at BDO Unibank Inc., said in an interview on Monday.
He cited worries about growth in the United States, the timing of added rate hikes by the powerful United States Federal Reserve, lackluster corporate earnings here coupled with questions over domestic valuations of stocks.
“When you add to that the outcome of the elections, it is very difficult to call,” Ravelas said.
The most recent Pulse Asia for ABS-CBN survey from April 19-24 showed Davao City Mayor Rodrigo Duterte maintaining his lead at 33 percent.
Duterte, who is running on a platform focused on ending crime, drugs, and corruption but vague on economic policies, was followed by Sen. Grace Poe with 22 percent. Mar Roxas, the Aquino administration’s bet, got 20 percent, while Vice President Jejomar Binay got 18 percent. Sen. Miraim Defensor Santiago got 2 percent.
“If you look at the survey frontrunners, since January, this has shifted from Binay, Poe then Duterte. So we’re wondering if this will stay or will it change,” Ravelas said. “Given this state, that’s also causing near-term volatility,”.
It is not unusual for markets here to retreat just before voting, data from the PSE showed.
The PSEi sank 4.5 percent week-on-week to 3,142 on May 7, 2010, the last day of trading before voting that year. Smaller declines were seen in 2004 and 1992.
Bucking that trend was the presidential victory of Manila Mayor Joseph Estrada in 1998, when the PSEi rose 1.3 percent the week before voting.
PNB Securities president Manuel Lisbona agreed that the nearing elections was top of mind for investors.
“The focus remains on the elections, particularly in terms of peace and order as well as voter turnout,” he said. Lisbona saidMonday’s drop was also a good opportunity for bargain hunters to enter the market.
Ravelas noted the country is expected to do well, no matter who is named president.
“The engines of the economy are already in place,” Ravelas said. “If you believe this is just noise, then any correction below 7,000 could be an opportunity to get in.” SFM