Manila markets dismiss martial law fears
It was “business as usual” in Mindanao on Wednesday after President Rodrigo Duterte declared martial law on the region the previous night, the central bank governor said, while financial markets in Manila shook off initial jitters and bounced back to a firm finish.
Bangko Sentral ng Pilipinas (BSP) outgoing Governor Amando Tetangco Jr. praised Duterte’s decisive action on the fierce fighting in Marawi City as soldiers and policemen battled a local terror group protecting one of the world’s most wanted Islamic militants hiding in the area.
“We have been monitoring the situation because we have branches in Mindanao, and the report is that—business as usual,” Tetangco said on the sidelines of a joint multi-sector business/finance testimonial luncheon in Makati City in honor of Tetangco, who is retiring after June.
Present at the event were members of the Financial Executives of the Philippines (FINEX), American Chamber of Commerce in the Philippines (AmCham), Credit Information Bureau, Inc. (CIBI), European Chamber of Commerce in the Philippines (ECCP), Makati Business Club (MBC), Management Association of the Philippines (MAP) and Philippine Chamber of Commerce and Industry (PCCI).
In Russia for an official visit with his government team, President Duterte decided late Tuesday (Manila time) to cut short his visit after learning of the deadly clash between his government troops and the Islamic State-inspired militants in Marawi City. He was scheduled to stay in Russia until May 25.
“I think it’s a very decisive move on the part of the government, and the main objective is really into the security and peace and order situation which should lead to even greater confidence down the row,” Tetangco said.
“There may be some transitory or temporary cautiousness, but in the end, it will lead to a positive impact on sentiment,” he added.
PSEI up 0.33%
The bellwether Philippine Stock Exchange index (PSEi) opened weaker on Wednesday at 7,788.11 points but bounced back to close at the day’s high of 7,837.82, gaining 25.68 points or 0.33 percent.
The wider All Shares finished 0.20 percent or 9.33 points firmer at 4,671.49.
Analysts said the market eventually shrugged off the initial apprehension after perceiving a decisive move by the Duterte administration.
“Initially, there was anxiety … but now the market seems to absorb the news quite well. I don’t think we should worry,” Regina Capital Corp. President Marita Limlingan said.
Joylin Telagen, research head at IB Gimenez Securities, said investors’ previous risk-off sentiment was driven by Duterte’s martial law statement, driving the index to open lower.
“However, I think investors realized that the problem in Mindanao is just temporary, so investors bought back the stocks sold earlier,” Telagen said.
Sharing the same view, ING Bank Manila Senior Economist Joey Cuyegkeng said the impact of Duterte’s statement that he was declaring martial law in Mindanao is “likely to be limited.”
The sectoral index for industrials gained 1.16 percent, while property advanced 0.90 percent and financials edged 0.21 percent higher at the close.
Holding firms, services, and mining and oil, meanwhile, finished in the red, losing 0.19 percent, 0.36 percent and 0.70 percent, respectively.
In Mindanao, five soldiers and two policemen were killed during the fierce battle as the government troops hunted for Isnilon Hapilon, a leader of the Abu Sayyaf Group, according to the military.
The gunmen attacked a hospital during the clashes, military chief of staff General Eduardo Ano said.
He said the fighting began when police and troops raided a house on Tuesday afternoon where Hapilon, the subject of a US State Department bounty of $5 million, was believed to be hiding.
This triggered fierce clashes throughout the afternoon and into the evening, with Ano estimating there were about 50 gunmen. Photos posted on social media by Marawi residents showed the gunmen walking through the streets of Basak, a Marawi suburb of about 1,700 people.
Reports reached Manila in the early hours of Wednesday that the Maute group had also taken some Christians hostage.