Market in wait-and-see mode pending new cabinet names

LOCAL markets are still in a wait-and-see mode after the elections, as investors await the appointment of key Cabinet officials under the incoming administration, a local economist said.

Rizal Commercial Banking Corporation (RCBC) chief economist Michael Ricafort said the recent movement in the local bourse and the foreign exchange market reflects investors’ search for cues on the next administration’s direction.

“In view of the transition phase before the new administration takes office on June 30, 2022 or more than a month from now, the financial markets are still waiting for additional details on the new administration’s Economic Team,” Ricafort said.

Investors, according to the economist, are particularly looking at whether the new appointments of the incoming government will follow a continuity narrative, at the very least, of the previous administration’s work.

They will also be looking at potential reform measures, especially on fiscal policy and debt management, as well as other policy priorities.

The Philippine Stock Exchange Index (PSEi) ended the previous trading week on a positive note, rising by +86.28 points or +1.3 percent to close at 6,746.33.

Data from the Bankers Association of the Philippines (BAP), meanwhile, showed that the local currency also ended last week on an upbeat note, closing at P52.23 to a dollar against the P52.45 to a dollar in the previous day.

Earlier this month, Fitch Solutions—the research arm of the Fitch Group—said they expect the current administration as a “continuity candidate,” as economic reforms and foreign policies are “most similar” to the outgoing Duterte administration.

Overall, Ricafort said the recent national and local election campaign led to increased election-related spending, and could have boosted economic activities in terms of higher gross domestic product (GDP) growth prospects especially for the second quarter of 2022 onwards.