Foreign investors in the stock market are not amused at President Rodrigo Duterte’s outbursts and his threat to swear at US President Barack Obama. With the uncertainty over the timing of the US interest rate hikes and the slow global economic recovery still dogging investors, the Philippine stock market plunged 1.3 percent Wednesday to extend its losses to three days.
Mr. Duterte’s diplomatic gaffe prompted President Obama to cancel their meeting during a break in the Association of Southeast Asian Nations summit in Vientiane, Laos. Those developments did not sit well with foreign stock market investors, who quickly dumped their investments. Foreign funds withdrew $58 million from the local market Wednesday and have sold a net $333 million in an 11-day run of outflows.
Stock market traders fear that President Duterte’s unpredictable behavior in politics could be disruptive and eventually spill into economics and business. Mr. Duterte’s controversial remarks followed the Sept. 2 bombing in his hometown Davao City that killed 15 and wounded 70 people. The terror attack led to the declaration of a state of lawlessness in the whole country, and investors and businessmen have started to fidget because of its possible long-term implications on the economy.
Moody’s Investors Service, a global credit rating agency, downplayed the security issue, saying it posed a limited credit impact in the near term. But the agency cautioned that if recent events “lead to prolonged uncertainty around security or economic policy, such a development would eventually dampen business confidence and consequently, economic outcomes.”
President Duterte remains popular with the masses and businessmen generally welcoming his economic policies amid the robust growth. The stock market, however, will always serve as the barometer of business confidence on the economy.
President Duterte, thus, should act as a responsible leader and cease his penchant for picking a fight with the United States or other major economies. The Philippines has plenty to lose if it alienates its key trading partners.
