ON Tuesday, in a decision that baffled and infuriated the online public, the Supreme Court overruled the Comelec’s disqualification of Sen. Mary Grace Poe-Llamanzares, allowing her to continue her campaign for the presidency.
This is not a political column—and thank heavens for that, the last thing I need is another threat to my sanity—but in the interest of not misleading anyone as to what perspective I have on the issue, I was appalled by the ruling as I am by what MG Llamanzares represents as an avatar of this country’s deeply-flawed perception of what democracy is supposed to be. But the Supreme Court made a decision, and not giving that the respect it is due according to this country’s constitution would be unseemly. Besides, the ruling—on any question—is not the most important part, but rather its consequences, and that is where the ruling Tuesday became very interesting.
All day Tuesday, the local stock market was taking a fair and not at all unexpected beating, thanks to another drop in oil prices and, among other things, the alarming news that Chinese exports fell by more than 25 percent in February. By about 2 p.m. the PSEi was down by three-quarters of a percent, but after the news of the SC ruling in the Poe case flashed across the airwaves, sometime around 3 p.m., the index recovered more than a percent, about 68 points, in less than an hour to close up a modest but respectable 0.33 percent higher for the day.
Our market reporter spoke to several analysts over the course of the afternoon and evening, and somewhat surprisingly, a couple of them rather candidly attributed the market’s late gain—which bucked the trend set by the rest of the Asian markets—to the ruling favoring Poe. At least one suggested that the prospect of continuity of the present government’s program that Poe represents may have encouraged market investors, but other analysts were not willing to go quite that far; they agreed that there was a clear correlation between the ruling and the market’s quick gain, but avoided speculation about the specific causes.
The fact that there was even a correlation is itself unusual, because no one expected the Poe ruling to have any sort of economic impact. After all (with all due respect to the opinion of the analyst kind enough to speak with us late in the evening), she herself has given few signals of her likely economic direction during her campaign so far, other than the predictable feel-good rhetoric confirming that she does, in fact, feel a healthy economy for the Philippines would be something worth looking into. And she is still just a candidate; while some surveys suggest she has some advantage over her rivals, and seems likely to gain some more as a result of the favorable court ruling, she is by no means a runaway favorite at this point. In a market that has typically reacted much more strongly to external stimuli—as it did with the bad news from China earlier on Tuesday—a substantial change as a result of a local event with debatable practical significance is, as far as I can tell, something unique.
What the market’s reaction indicates, it would seem, is a strong desire for stability. The optimism expressed by the market’s gain was not so much about Grace Poe, perhaps not about Grace Poe at all, but rather an appreciation that a question that could have potentially destabilized the upcoming election has been resolved one way or another. With the ‘normal’ uncertainty of a wobbly Chinese economy, future action by the US Fed, oil prices, and geopolitical tensions constantly pulling at the market, the potential for domestic chaos in the upcoming election was simply an aggravating factor. In the absence of other positive stimuli, such as improved export and manufacturing figures, a big gain in inflation, or a cross-section of strong corporate results, the market jumped on the first piece of good news and made more of it than anyone expected.
The longer-view implications of this are not actually very good, because it shows that the local market is still very tenuous, and prone to overreaction to unexpected stimuli good or bad. That will probably continue as long as the economy fails to produce clear-cut gains. The next president, whoever he or she is, would be well advised to start preparing for what is going to be a tough job of managing the economy.