Stock market prospects secure from poll risk

In a forum held by the American Chamber of Commerce of the Philippines in Makati City on Thursday, PSE President and Chief Executive Officer Hans B. Sicat said elections have been historically good for the economy and the stock market on account of massive spending involved, with the benchmark Philippine Stock Exchange index (PSEi) rallying by an average of 8.3% in the second half of the past three election years.

"There is always hope. A lot of nice things happen [after the elections] because there is a lot of positive vibes," Mr. Sicat said.

In the second half of previous election years, the bellwether PSEi rose 11.9% in 1998 when Joseph Ejercito Estrada topped the polls, 15.4% in 2004 when Gloria Macapagal-Arroyo received a fresh six-year term and 24.6% in 2010 when President Benigno S.C. Aquino III secured an overwhelming mandate, according to data from the stock exchange.

A power crisis, however, greeted Fidel V. Ramos when he was elected in 1992, with PSEi slumping 18.8% in the first six months of his presidency, Mr. Sicat recalled.

"Election process credibility is number one. Right now, we are hoping there is no major problem, whether it's power outages or something else," Mr. Sicat said.

Despite election-related uncertainty, it is a relief that presidential aspirants have respectable "middle-of-the-road" advisers in their respective economic teams, he said.

"When it comes to the platforms of candidates, I think it will boil down to who the advisory team is. That to us is a much better indicator on where the administration will go on with their policies," the PSE chief said.

In his presentation, Mr. Sicat said economic advisers consist of businessman Manuel B. Zamora, Jr. and former Prime Minister Cesar E.A. Virata for Davao City Mayor Rodrigo R. Duterte; former Finance Secretary Margarito B. Teves and former Trade Secretary Peter B. Favila for Vice-President Jejomar Binay; former Socioeconomic Planning Secretary Cielo F. Habito, former Finance Undersecretary Romeo L. Bernardo and SyCip Gorres Velayo & Co. Founder Washington Z. SyCip for Senator Grace Poe-Llamanzares; as well as former Trade Secretary Gregory L. Domingo for former Interior Secretary Manuel A. Roxas II.

Mr. Sicat also dismissed speculations that have linked the recent weakness in the stock market to reports of Mr. Duterte topping the latest pre-election surveys, noting that concerns on the pace of interest rate hikes in the United States and volatile oil prices were the "bigger issues" at that time.

"It's coincidental," he said.

Mr. Sicat noted that the presidential contenders are focusing on key economic themes like good governance and infrastructure development, which are important drivers to sustain the country's strong economic growth momentum.

"We believe the infrastructure build-out is such a huge contributor to the growth of this economy that in the next few years even if nothing else happens -- with all these projects whether its (public private partnership) projects, straight-out government projects, or those from the private sector -- it will carry the (growth) story through," Mr. Sicat said.

The PSE chief said it is also "extremely good" that none of the presidential contenders have said they will interfere with monetary policy -- a key factor behind the strength of the Philippine economy.

"The central bank should remain an independent unit...," Mr. Sicat said, noting that "monetary policy is being driven by professionals of the BSP and Governor Say (Amando M. Tetangco, Jr., who) has proven he has been a steady hand, demonstrating the ability to keep inflation under control."

Source: B World Online