Stocks rose for a fourth day, following a positive lead from the US and Europe, tempered by the declaration of martial law in Mindanao to suppress violence in Marawi City.
The Philippine Stock Exchange index, the 30-company benchmark, rose 25 points, or 0.3 percent, to close at 7,837.82 Wednesday as three of the six sectoral indices advanced. The bellwether was up 14.6 percent since the start of the year.
The heavier index, representing all shares, also gained 9 points, or 0.2 percent, to settle at 4,671.49, on a value turnover of P5.9 billion. Losers outnumbered gainers, 97 to 94, while 45 issues were unchanged.
Eight of the 20 most active stocks ended in the green, led by food manufacturer Universal Robina Corp. which climbed 3 percent to P170 and casino operator Melco Crown (Philippines) Resorts Corp. which went up 2.5 percent to P9.10.
President Rodrigo Duterte said martial law in the southern region of Mindanao could last a month or a year, as he vowed it would be similar to the late Ferdinand Marcos’s dictatorship. “If it would take a year to do it, if it’s over within a month, then I’d be happy,” Duterte said in a video posted online by the government.
The security issue initially affected market sentiments, but investors looked overseas for inspiration. Most Asian markets traded higher Wednesday. Shanghai recovered from early selling fueled by Moody’s decision to cut China’s credit rating on worries about its growing debt mountain.
The ratings agency said its downgrade on the world’s number two economy was prompted by the likelihood of a “material rise” in debt throughout the economy and as potential growth slows.
Beijing has tried to address a toxic brew of unregulated and risky lending, which is increasingly seen as a threat to global financial stability.
But analysts are unsure about leaders’ willingness to push on with the reforms since huge borrowing has been a key driver of the growth on which the Communist Party relies for political legitimacy.
China’s economy grew last year at its slowest pace in a quarter of a century and there are expectations it will continue to ease in coming years.
“It is a psychological blow that China will not take kindly to and absolutely speaks to the rising financial pressures in China,” Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen, told Bloomberg News.
The ratings cut was the first by Moody’s since late 1989 when it assessed the impact of the Tiananmen Square crackdown on China’s trade with the world.
While Moody’s also upgraded China’s outlook to stable from negative, equity traders sold up.
Shanghai fell one percent early on but reversed the losses to end up 0.1 percent, although the yuan fell 0.1 percent against the dollar. Hong Kong was down 0.1 percent in the afternoon.
But elsewhere, investors tracked a Wall Street gain. Tokyo finished 0.7 percent higher while Sydney put on 0.2 percent, Singapore gained 0.3 percent and Seoul added 0.2 percent.
Wellington and Taipei were each comfortably higher.
US stocks rose for the fourth straight session after Donald Trump’s administration unveiled a 2018 budget that includes swingeing cuts to services over 10 years but also a huge rise in military spending.
There was little carry-over from Monday’s terror attack in Manchester that killed 22 people including children at a concert. Stephen Innes, senior trader at OANDA, said in a note “the initial market response is subdued on the surface, but concerns about future attacks remain elevated”. With Bloomberg, AFP