A victory for the tough former Mayor of Davao City in the 2016 election contest ended a month of volatile activity in the Filipino markets as stocks rallied and the peso gained against its major Asian competitors.
Rodrigo Duterte, looked to calm investors in his triumphant speech on Monday as he announced his cabinet. The Philippine Stock Exchange Index reacted with a 2.7% jump.
“The recent rally is mostly due to relief of investors. I think the markets are just happy the whole process has being completed without major violence or controversy” said James Summers, Global Co-Chief Operating Officer of Equities at Acom Alliance, whose firm manages around $4bn in Asia. “A smooth transition is expected.”
With Duterte holding an unassailable lead in the polls, his thoughts will now turn to winning the confidence of investors who spurred on 6.1% economic growth under the former leader of the country Benigno Aquino, while also delivering on his promises regarding crime.
Investors had shied away before the election process due to a fairly vague economic strategy and markets fell more than 4% last month, wiping out most of the nation’s gains for the year. The peso sank 1.7 percent last month.
“Last month was unstable, I want to reach out to my competitors,” the new President commented in a press release in Davao after the voting. “Let’s start the healing process.”
The Filipino Index gained for the first time in three weeks, even though local markets were closed at the start of the week. The peso jumped 0.6% to 46.79 per dollar at the close, after first sinking as much as 0.4 percent from last week. The nations bonds, due in 2041, progressed for a fourth consecutive day.
Duterte said to journalists on Monday that he may bring in Carlos Dominguez as economic minister. Dominguez and Duterte were childhood friends and Dominguez was agriculture minister for the late President Aquino.
Once thought of as Asia’s “poor man,” the country of 102 million has earned accolades from the World Bank as the continent’s “rising star” under Aquino, with its 6.1 percent growth rate outperforming previous decades.
Regardless, poverty rates remained at unacceptable levels and Duterte made the issue a running policy, gaining popular support. Increased growth and 3.5 million jobs created in Aquino’s term resulted in a massive increase in car sales, but also had a negative effect on Manila’s already overworked roads as spending on infrastructure failed to keep pace with the economy.