The Philippine peso and local stocks surged Tuesday, after the generally peaceful elections gave a clear mandate to Davao City mayor Rodrigo Duterte as the next president.
The peso rose the most in six weeks against the dollar as Duterte sought to ease investor concerns after claiming victory in the nation’s presidential election. The peso gained P0.34 or 0.7 percent on Tuesday to close at 46.75 against the US dollar, the strongest close since April 22.
Nicholas Antonio Mapa, research officer of Bank of the Philippine Islands, said in a statement that “as long as there are no anomalies, it won’t matter who wins, the peso will bounce back.”
“Today’s performance shows that was true, with the peso appreciating as there is no doubt of who will be our next leader,” Mapa said.
The currency also strengthened versus all of its 10 Asian peers as preliminary results showed Duterte, the tough-talking mayor of Davao city, won about 39 percent of the vote. He said on Monday it was time to start a process of “healing,” and named potential cabinet members.
Uncertainty about his economic plans and lack of policy-making experience had sent investors to the sidelines in the weeks before the election.
“A Duterte win had been flagged for some time now, and the market has already largely priced it in,” said Julian Wee, a senior market strategist at National Australia Bank Ltd. in Singapore. “Going forward, the market will be watching what Duterte does, and the initial signs are mildly positive in that he seems to be making some overtures to the other players in the political establishment. ”
The Philippine Stock Exchange index, the 30-company benchmark, rose 183 points, or 2.6 percent, to close at 7,174.88 Tuesday. The bellwether was up 3.2 percent since the start of the year.
The heavier index, representing all shares, also gained 109 points, or 2.6 percent, to settle at 4,272.24, on value turnover of P8.8 billion. Advancers led losers, 133 to 50, while 47 issues were unchanged.
Local financial markets were shut on Monday.
Duterte told reporters he might appoint Carlos Dominguez, a former agriculture secretary to the late President Corazon Aquino, as finance or transport chief, and may turn to his running mate Alan Cayetano as foreign secretary. Dominguez owns a hotel and is Duterte’s childhood friend.
Once labeled Asia’s “sick man,” the nation of 101 million people has earned World Bank praise as the continent’s “rising tiger” under outgoing leader Benigno Aquino III, posting average annual growth of 6.2 percent over the past six years, the fastest pace since the 1970s.
“The business sector will also be anxious to see what policies Duterte has planned for the economy and investment,” NAB’s Wee said. “In the meantime, the market is likely to wait and watch, and we would expect that the dollar-peso would be fairly supported around current levels.”
The 71-year-old mayor stormed to victory with a landslide in Monday’s election after an incendiary campaign dominated by his profanity-laced vows to kill criminals.
Philippine shares had fallen more than 5 percent over the past six weeks as Duterte looked set for victory, with traders concerned about his economic plans.
“There will be a honeymoon period moving forward as investors give Duterte the benefit of the doubt,” Smith Chua, chief investment officer for the asset management and trust arm of Bank of the Philippine Islands in Manila, said.
Eighteen of the 20 most active stocks ended in the green, led by property developers. Robinsons Land Corp. jumped 8.6 percent to P29, while SM Prime Holdings Inc. advanced 6 percent to P24. Megaworld Corp. added 4.1 percent to close at P3.85.
Meanwhile, Tokyo led Asian markets higher Tuesday as exporters were lifted by a weakening yen, while tighter Chinese inflation data also provided some cheer. With Bloomberg, AFP