MARKETS CHEER GMA VICTORY
MANILA, June 22 , 2004 (STAR) By Rica D. Delfinado - The local financial markets cheered yesterday President Arroyo’s victory for a fresh six-year term after a marathon count of the May 10 election results.
At the Philippine Dealing System (PDS), the peso recovered sharply, gaining 26.50 centavos to settle at 56.165 from Friday’s record closing low of 56.430 to the dollar.
In another sign of fresh confidence, the 30-company Philippine Stock Exchange composite index (Phisix) went up by 7.77 points to 1,540.52 points after trading between 1,531.26 and 1,544.56.
Volume was 7.9 billion shares worth P263.44 million compared to 763.87 million shares worth P368.48 million on Friday.
"This is a relief that finally the uncertainty is over. At the same time, the market’s preferred candidate won," said Jose Vistan of AB Capital Securities.
"The market had predicted Arroyo’s victory as early as April. The result of the congressional (count) is just a confirmation of what investors knew months before," Vistan added.
Mrs. Arroyo beat her closest opponent, film star Fernando Poe Jr., by 1.12 million votes, Congress said Sunday at the end of a count that lasted more than a month.
The peso opened at 56.350 before hitting a high of 56.160 and a low of 56.350. Total volume traded amounted to $193.50 million on an average rate of 56.252 to the dollar.
Currency traders said the market was relieved that the count was finally over, regardless of the surrounding controversy.
According to the Bangko Sentral ng Pilipinas (BSP), the market only needed some indication that Congress was capable of concluding the process after weeks of delay.
"The political uncertainty is perceived to have been removed," BSP Governor Rafael B. Buenaventura said yesterday. "Plus, regional currencies also strengthened and that took the peso with it," he added.
Buenaventura said the BSP expects the peso to be range-bound for the rest of the week although some degree of volatility could not be ruled out.
"What’s important is that people are seeing some milestones being crossed," Buenaventura said.
Late in the day, however, news of destabilization attempts came out, with reports that a plastic bomb had been discovered in one of the churches in Metro Manila.
Traders said that if such developments continued, apprehension over an opposition-led unrest could shake the currency market over the next few days and even weeks.
"No matter what is said, you don’t want to hear more reports of bombs or see marches in the streets because they give an impression that things are not under control," said one trader.
"Investors are still cautious," Edwin Mendoza, an analyst at RCBC Securities said. "They’re waiting for the official proclamation of the winner."
The outcome of the final election tally, in which market-friendly incumbent Mrs. Arroyo won by a margin of 1.1 million votes, will still be debated and voted on by members of the Senate and House of Representatives before the winner can be officially proclaimed.
"The conclusion of the vote canvassing is a relief to the market," said Astro del Castillo, managing director at First Grade Holdings. "Investors, however, are still waiting for the process to actually cross the line - for the elected to be proclaimed."
Gainers beat losers 44 to 10, while 46 stocks were unchanged.
The all-shares index was up 6.55 points to 990.22, the commercial-industrial index gained 18.59 to 2,397.47, property shed 3.95 to 527.56, mining was up 48.58 to 1,532.71, oil gained 0.16 to 2.18 and banking and finance was up 1.58 at 463.61.
Harry Liu of Summit Securities said that while "settlement of the issue is most welcome, the low turnover suggests cautiousness remain among investors.
"The market will be broadly sideways with an upward bias" in the coming sessions, Liu said.
Philippine Long Distance Telephone Co. was up P20 to P1,090.
Globe Telecom added P5 to P825.
Manila Electric Co. B, available to foreign investors, gained P1 to P30.50, while its A shares added 50 centavos to P18.75.
Food and beverage giant San Miguel saw its B shares, which are available to foreign investors, up 50 centavos at P72, while its A shares remained unchanged.
Investors’ worries of destabilization efforts against the government aren’t entirely unfounded.
Police detonated a bomb found near a government office Sunday and by early Monday, police were blaming political troublemakers for putting spikes on Manila’s roads that flattened the tires of more than 100 vehicles and caused traffic jams. – with Des Ferriols, wires
Reported by: Sol Jose Vanzi
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