Many are questioning, "Is the Philippine President to blame for our weak financial markets today"?
To clear our minds on this thing, below is an article explaining well the attributes to the weak performance of our stock market and the depreciation of the Philippine peso.
Still, it is the best time to invest in the Philippine stock market.
Many attribute the weak performance of the stock market and the depreciation of the peso to President Duterte’s ongoing war against drugs and his negative reaction to criticisms against his campaign. Although President Duterte’s actions are negatively affecting investor sentiment, it is not fair to blame him completely for the stock market and the peso’s weakness in our opinion.
The sell-off of the stock market that began in August was triggered by the start of the ghost month and hints from the U.S. Fed that it may raise interest rates in September. The stock market’s expensive valuation also gave investors an excuse to lock in gains (at its high of 8,100, thePSEi was trading at 18.7X 17EP/E, significantly above its 10 year historical average of 15.7X). Finally, there seems to be an ongoing rotation into Chinese stocks as the Chinese economy is showing signs of stabilizing. While the PSEi was down by 4.2% during the last two months, the Shanghai Composite Index was barely changed while HK’s China heavy HSCEIwas up by 7.0%.
As far as the peso is concerned, the possibility of a Fed rate hike in September, the narrowing of the current account surplus to only 0.1% of GDP during 2Q16 and the 5.4% drop in OFW remittances for the month of July all contributed to the weakness of the peso. Despite the negative sentiment created by President Duterte’s rhetoric, we maintain our positive viewon the economy and the stock market’s long term prospects.
The Department of Budget and Management Secretary Benjamin Diokno said on ANC's "20/20 The View Ahead", "The weakening of the peso just like the weakening of other currencies, is because the dollar is strengthening."
Diokno said Duterte's controversial statements have nothing to do with the weak peso and its depreciation was caused by an impending increase of interest rates in the US economy.
He added thatof overseas Filipino workers on the instability of the economy are also a factor, saying that OFWs are holding back speculations money. sending
It is much clearer now. The Philippine President's controversial statements have nothing to do with the weakening of the Philippine peso.
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Source:
ANC
