Philippine Officials Seek to Soothe Investors Spooked by Duterte

QuickTake: Philippines' Splintered Democracy
  • Take out the noise, look at fundamentals, Tetangco says
  • Foreigners sold local stocks for 21 days, longest since 2007

Philippine central bank Governor Amando Tetangco sought to soothe investors spooked by President Rodrigo Duterte’s rhetoric around his anti-drug war, with stocks poised for the longest outflow since 2007.

“If you take out the noise and look at the fundamentals, look at the economic program, look at the quality of the members appointed to the economic team, then these are all solid,” Tetangco told bankers, traders and fund managers late Thursday in Manila.

Tetangco joins a host of economic officials including Finance Secretary Carlos Dominguez, who on Wednesday said economic policies have been clear and consistent since Duterte took office in June. S&P Global Ratings this week warned of “rising uncertainties surrounding the stability, predictability, and accountability” under the new government.

"All this negative news about the president is going to affect investor sentiment, but as long as the economic team can push through with their plans, the economy will remain strong," said Gundy Cahyadi, an economist with DBS Group Holdings Ltd. in Singapore. "For the time being, we still think there is plenty of positives to look at."

Drying Up

Money that flowed into the Philippines after the May elections is drying up. Philippine stocks slid 0.7 percent on Friday, and foreign funds have been selling for 21 straight days as of Thursday, the longest outflow since 2007.

The peso slumped to an eight-month low against the U.S. dollar and is the worst-performing Asian currency after the yuan this year. Foreign direct investment shrank 41 percent in June from a year earlier.

Duterte has defied international criticism of his anti-drug war that has killed more than 3,000 people, lashing out at the United Nations and European Union and unleashing an obscenity-laden tirade where he warned U.S. President Barack Obama against interfering in his campaign.

The current account and balance-of-payments will remain in surplus, economic growth will continue to be strong, and stability in monetary and financial conditions will be preserved, Tetangco said. The Philippine economy expanded 7 percent last quarter from a year earlier, the fastest in Asia after India.

"Political noise is part of transition," central bank Deputy Governor Diwa Guinigundo said on Thursday. The “President is getting used to the position and the responsibilities that it involves. Let’s focus on the message.”

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