Philippine Markets Get No Lift From Pro-Reform Election Results

(Bloomberg) -- A Philippine election that strengthened President Rodrigo Duterte’s mandate to overhaul the nation’s tax system and boost infrastructure spending got little applause in financial markets on Tuesday, with traders focused instead on trade-war tensions.

As markets reopened in Manila after a long weekend, traders caught up to the sell-off seen across Asia Monday and on Wall Street overnight. News that China has retaliated with tariff hikes on American products threatens to exacerbate the hit to global trade, in turn damaging Philippine export and growth prospects.

Market Highlights
  • The peso closed 0.6% lower at 52.44 per dollar, the biggest loser in Asia
  • The benchmark stock index slumped as much as 2.1%, before paring its loss to 1.2% to close at its lowest level since March 1

“The election result should have been positive for the markets, as the vote of confidence gives the president more room to speed up reforms,” said Jonathan Ravelas, chief market strategist at BDO Unibank Inc. in Manila. “But the trade war is casting a shadow of worry.”

Should the worries over trade tensions subside, investors may have more time to consider the implications of the election victory for Duterte’s senate allies. The president is pushing tax reform to finance an ambitious ($170 billion) infrastructure plan.

©2019 Bloomberg L.P.