Philippine stock market up 4.1% despite political turmoil

Asian Economic News, May 7, 2001

MANILA, May 2 Kyodo

Philippine stocks closed more than 4% higher Wednesday, a day after the government declared a state of rebellion in metropolitan Manila.

The 30-share composite index of the Philippine Stock Exchange rallied, gaining 57.04 points to close at 1,435.88.04. Early tallies show 59 gainers, 11 losers and 17 issues unchanged on a trade volume of 4.27 million shares.

Fitz Aclan of KGI Securities said the market reacted favorably to the government's handling of attempts by forces loyal to ousted President Joseph Estrada to unseat President Gloria Macapagal-Arroyo and reinstate the deposed leader.

Aclan said the government's ''firm political decision'' to declare a state of rebellion in Metro Manila was ''taken positively by the investors, which boosted the market today.''

''Since (Arroyo) took over in January, we have seen some decisive action being taken politically to ensure that peace and order are intact, and to make sure that democratic process is observed and that due process is observed,'' he said.

''Once these things are in place and investors see this...that should continue to boost confidence in the Philippine market.''

Aclan stressed, however, that the situation remains unstable, as the declaration of a state of rebellion remains in effect in the Philippine capital.

He also noted that the May 14 mid-term senatorial and local elections are a further source of concern for investors, given the country's history of violence at the polls.

''Many fear that the election will be one of the more violent ones that we've seen in the last few years, given all the violence that we've seen in the past few weeks.''

He added, however, that ''If we do see generally peaceful elections, then I think the market and investors will see that as a positive sign and an opportunity to buy the market.''

Arroyo's swift action Tuesday to subdue the violent demonstration taking place just meters from her official residence at the Malacanang presidential palace ''clearly shows that she is in control, that things have to be done according to law.''

At least seven people, including two policemen, were killed and scores were wounded on both sides in the melee that broke out shortly before dawn Tuesday as supporters of the jailed former president marched on palace in an attempt to seize power.

The protesters, mostly poor slum dwellers, have been protesting Estrada's arrest on a charge of economic plunder. Estrada and his son, Jinggoy, who was also criminally charged by the Sandiganbayan antigraft court, are both in jail.

Arroyo has vowed to imprison the pro-Estrada politicians who allegedly hatched the plot to unseat her. So far, the government has arrested Sen. Juan Ponce Enrile and two high-ranking police officials, and the hunt continues for more of Arroyo's political foes.

The Philippine peso also gained slightly as the market showed confidence that the government can defend itself against any destabilization moves by Estrada's supporters.

The Bankers Association of the Philippines (BAP) said the peso averaged 51.088 to the U.S. dollar in midday trading, after moving between 50.940 and 51.600 during the day.